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2016 CAFR
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CTTY OF ROSEVILLE, MINNESOTA <br />NOTES TO FINANCIAL STATEMENTS <br />December 31, 2016 <br />D. Contributions <br />Minnesota Statutes Chapter 424A.092 specifies minimum support rates required on an annual <br />basis. The minimum support rates from the municipality and from State aids are determined as <br />the amount required to meet the normal cost plus amortizing any existing prior service costs <br />over a ten year period. The City's obligation is the financial requirement for the year less state <br />aids. Any additional payments by the City shall be used to amortize the unfunded liability of the <br />relief association. The Association is comprised of volunteers: therefore, there are no payroll <br />expenditures (i.e. there are no covered payroll percentage calculations). During the year, the <br />City recognized as revenue and as an expenditure an on behalf payment of $ 221,324 made by <br />the State of Minnesota for the Relief Association. <br />E. Net Pension Liability <br />The City's net pension liability was measured as of December 31, 2016 and the total pension <br />liability used to calculate the net pension liability was determined by an actuarial valuation as <br />of that date. <br />Actuarial assumptions: <br />The total pension liability in the December 31, 2016 actuarial valuation was determined using <br />the following actuarial assumptions, applied to a11 periods included in the measurement: <br />Inflation rate <br />Discount rate <br />Investment Rate of Return <br />2.75% <br />7.50% percent average, including inflation <br />7.50% percent , net ofpension plan investment expense <br />includ'mg inflation <br />The value of death benefits is similar to the value of the retirement pension. Because of low <br />retirement ages, the plan assumes no pre-retirement mortality. Post-retirement mortality does <br />not apply as the benefit structure and foi-m of payment do not reflect lifetime benefits. <br />The long-term return on assets has been set based on the plan's target investment allocation <br />along with long-ter�n return e�pectations by asset class. When there is sufficient historical <br />evidence of market outperfoi-mance, historical average returns may be considered. Best <br />estimates of arithinetic real rates of return for each major asset class included in the pension <br />plan's target asset allocation as of the measurement date are summarized in the following table: <br />71 <br />
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