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CITY OF ELK RIVER, MINNESOTA <br />NOTES TO THE FINANCIAL STATEMENTS <br />DECEMBER 31, 2017 <br />65 <br />NOTE 11: DEFINED BENEFIT PENSION PLANS – FIRE RELIEF ASSOCIATION - CONTINUED <br />D.Pension Costs (Continued) <br />At December 31, 2017, the City reported deferred outflows of resources and deferred inflows of resources, including its <br />contributions subsequent to the measurement date, related to pension from the following sources: <br />Deferred Deferred <br />Outflows Inflows <br />of Resources of Resources <br />Changes in actuarial assumptions 219,874$ -$ <br />Net difference between projected and <br />actual earnings on plan investments 32,760 - <br />Total 252,634$ -$ <br />Deferred outflows of resources totaling $0 related to pensions resulting from the City’s contributions to the plan <br />subsequent to the measurement date will be recognized as a reduction of the net pension liability in the year ended <br />December 31, 2018. Other amounts reported as deferred outflows and inflows of resources related to the plan will be <br />recognized in pension expense as follows: <br />Year Ending December 31,Amount <br />2018 86,355$ <br />2019 86,355 <br />2020 75,493 <br />Thereafter 4,431 <br />E.Actuarial Assumptions <br />The total pension liability at December 31, 2016 was determined using the entry age normal actuarial cost and level <br />dollar closed amortization methods with the following actuarial assumptions: <br />Retirement eligibility <br />Age 50 or after 20 years of service <br />If both age 50 and minimum 5 years of service but not 20 years, <br />pension reduced 4% for each year less than 20 years <br />Inflation 2.75% per year <br />Discount rate 6.00% per year <br />Investment rate of return 6.00% per year <br />20-year municipal bond yield 3.31% per year <br />The 6.00 percent long-term expected rate of return on pension plan investments was determined using a building-block <br />method in which best estimates for expected future real rates of return (expected returns, net of inflation) were developed <br />for each asset class using the plan’s target investment allocation along with long-term return expectations by asset class. <br />Inflation expectations were applied to derive the nominal rate of return for the portfolio.