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CITY OF ELK RIVER, MINNESOTA <br />NOTES TO THE FINANCIAL STATEMENTS <br />DECEMBER 31, 2018 <br />NOTE 9: DEFINED BENEFIT PENSION PLANS — STATE-WIDE - CONTINUED <br />D. Pension Costs (Continued) <br />For the year ended December 31, 2018, the City recognized pension expense of $237,279 for its proportionate share of <br />PEPFF's of the PEPFF pension expense. At December 31, 2018, the City reported its proportionate share of PEPFF's <br />deferred outflows of resources and deferred inflows of resources related to pensions from the following sources: <br />Differences between expected and <br />actual experience <br />Changes in actuarial assumptions <br />Net difference between projected and <br />actual earnings on plan investments <br />Changes in proportion <br />Contributions to PEPFF subsequent <br />to the measurement date <br />Total <br />Deferred Deferred <br />Outflows Inflows <br />of Resources of Resources <br />$ 131,737 $ 796,242 <br />4,199,560 4,778,031 <br />- 679,812 <br />435,691 145,352 <br />284,551 <br />$ 5,051,539 $ 6,399,437 <br />A total of $284,551 reported as deferred outflows of resources related to pensions resulting from City contributions <br />subsequent to the measurement date will be recognized as a reduction of the net pension liability in the year ended <br />December 31, 2019. Other amounts reported as deferred outflows and inflows of resources related to pensions will be <br />recognized in pension expense as follows: <br />Year Ending December 31, <br />Pension Expense <br />Amount <br />2019 <br />$ 198,648 <br />2020 <br />(117,379) <br />2021 <br />(369,534) <br />2022 <br />(1,304,411) <br />2023 <br />(39,774) <br />The City's and HRA's total pension expense for the year ended December 31, 2018 for all of the defined benefit pension <br />plans in which it participates, including the Fire Relief Association plan found in Note 11, was $356,980 and $640, <br />respectively. <br />E. Actuarial Assumptions <br />The total pension liability in the June 30, 2018 actuarial valuation was determined using the following actuarial <br />assumptions: <br />Inflation <br />Active member payroll growth <br />Investment rate of return <br />2.5% per year <br />3.25% per year <br />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 1.25% per year for GERF and <br />1.0% per year for PEPFF. <br />61 <br />