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CITY OF ELK RIVER, MINNESOTA <br />NOTES TO THE FINANCIAL STATEMENTS <br />DECEMBER 31, 2017 <br />61 <br />NOTE 9: DEFINED BENEFIT PENSION PLANS – STATE-WIDE - CONTINUED <br />D.Pension Costs (Continued) <br />For the year ended December 31, 2017, the City recognized pension expense of $423,689 for its proportionate share of <br />PEPFF’s of the PEPFF pension expense. At December 31, 2017, the City reported its proportionate share of PEPFF’s <br />deferred outflows of resources and deferred inflows of resources related to pensions from the following sources: <br />Deferred Deferred <br />Outflows Inflows <br />of Resources of Resources <br />Differences between expected and <br />actual experience 99,478$ 1,133,350$ <br />Changes in actuarial assumptions 5,887,128 6,018,859 <br />Net difference between projected and <br />actual earnings on plan investments - 360,125 <br />Changes in proportion 576,843 - <br />Contributions to PEPFF subsequent <br />to the measurement date 272,933 - <br />Total 6,836,382$ 7,512,334$ <br />A total of $272,933 reported as deferred outflows of resources related to pensions resulting from City contributions <br />subsequent to the measurement date will be recognized as a reduction of the net pension liability in the year ended <br />December 31, 2018. Other amounts reported as deferred outflows and inflows of resources related to pensions will be <br />recognized in pension expense as follows: <br />Year Ending December 31,Amount <br />2018 (32,911)$ <br />2019 385,438 <br />2020 59,552 <br />2021 (200,121) <br />2022 (1,160,843) <br />The City’s and HRA’s total pension expense for the year ended December 31, 2017 for all of the defined benefit <br />pension plans in which it participates, including the Fire Relief Association plan found in Note 11, was $881,784 and <br />$2,109, respectively. <br />E.Actuarial Assumptions <br />The total pension liability in the June 30, 2017 actuarial valuation was determined using the following actuarial <br />assumptions: <br />Inflation 2.5% per year <br />Active member payroll growth 3.25% per year <br />Investment rate of return 7.50% <br />Salary increases were based on a service-related table. Mortality rates for active members, retirees, survivors and <br />disabilitants were based on RP-2014 tables for all plans for males or females, as appropriate, with slight adjustments to <br />fit PERA’s experience. Cost of living benefit increases for retirees are assumed to be 1% per year for the GERF through <br />2044 and PEPFF through 2064 and then 2.5% thereafter for both plans.