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-40- NOTE 7 – DEFINED BENEFIT PENSION PLAN – STATE-WIDE (CONTINUED) D.Pension Costs GERF Pension Costs At December 31, 2022, the City reported a liability of $1,845,368 for its proportionate share of the GERF’s net pension liability. The City’s net pension liability reflected a reduction, due to the state of Minnesota’s contribution of $16.0 million. The state of Minnesota is considered a nonemployer contributing entity and the state’s contribution meets the definition of a special funding situation. The state of Minnesota’s proportionate share of the net pension liability associated with the City totaled $53,913. The net pension liability was measured as of June 30, 2022, and the total pension liability used to calculate the net pension liability was determined by an actuarial valuation as of that date. The City’s proportion of the net pension liability was based on the City’s contributions received by the PERA during the measurement period for employer payroll paid dates from July 1, 2021 through June 30, 2022, relative to the total employer contributions received from all of the PERA’s participating employers. The City’s proportionate share was 0.0233 percent at the end of the measurement period and 0.0244 percent for the beginning of the period. The amount recognized by the City as its proportionate share of the net pension liability, the direct aid, and total portion of the net pension liability that was associated with the City were as follows: City’s proportionate share of the net pension liability 1,845,368$ State’s proportionate share of the net pension liability associated with the City 53,913$ For the year ended December 31, 2022, the City recognized pension expense of $268,071 for its proportionate share of the GERF’s pension expense. In addition, the City recognized an additional $8,090 as pension expense (and grant revenue) for its proportionate share of the state of Minnesota’s contribution of $16.0 million to the GERF. At December 31, 2022, the City reported its proportionate share of the GERF’s deferred outflows of resources and deferred inflows of resources related to pensions from the following sources: Deferred Deferred Outflows Inflows of Resources of Resources Differences between expected and actual economic experience 15,414$ 20,621$ Changes in actuarial assumptions 436,762 7,763 Net collective difference between projected and actual investment earnings 904 – Changes in proportion 40,784 35,233 Contributions paid to the PERA subsequent to the measurement date 72,373 – Total 566,237$ 63,617$