OPEB_Audit_2024--Final.pdf

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Board of Trustees City of Scranton Other Post-Employment Benefits Trust Scranton, Pennsylvania

We have audited the financial statements of the City of Scranton Other Post-Employment Benefits Trust (Trust), a fiduciary component unit of the City of Scranton as of and for the year ended December 31, 2024, and have issued our report thereon dated August 25, 2025. We have previously communicated to you information about our responsibilities under auditing standards generally accepted in the United States of America and Government Auditing Standards, as well as certain information related to the planned scope and timing of our audit in our statement of work dated March 19, 2025. Professional standards also require that we communicate to you the following information related to our audit.

Significant audit findings or issues

Qualitative aspects of accounting practices

Accounting policies

Management is responsible for the selection and use of appropriate accounting policies. The significant accounting policies used by City of Scranton Other Post-Employment Benefits Trust are described in Note 1 to the financial statements.

No new accounting policies were adopted and the application of existing policies was not changed during 2024.

We noted no transactions entered into by the entity during the year for which there is a lack of authoritative guidance or consensus. All significant transactions have been recognized in the financial statements in the proper period.

Accounting estimates

Accounting estimates are an integral part of the financial statements prepared by management and are based on management�s knowledge and experience about past and current events and assumptions about future events. Certain accounting estimates are particularly sensitive because of their significance to the financial statements and because of the possibility that future events affecting them may differ significantly from those expected. here were no accounting estimates affecting the financial statements which were particularly sensitive or required substantial judgments by management.

CLA (CliftonLarsonAllen LLP) is an independent network member of CLA Global. See CLAglobal.com/disclaimer.

Board of Trustees Other Post-Employment Benefits

Financial statement disclosures

Certain financial statement disclosures are particularly sensitive because of their significance to financial statement users. The most sensitive disclosure affecting the financial statements was:

The disclosure of other post-employment benefits liability, assumptions and methods for the Plan in Note 5 to the financial statements were based on a third-party actuarial valuation.

The financial statement disclosures are neutral, consistent, and clear.

Difficulties encountered in performing the audit

We encountered no significant difficulties in dealing with management in performing and completing our audit.

Uncorrected misstatements

Professional standards require us to accumulate all misstatements identified during the audit, other than those that are clearly trivial, and communicate them to the appropriate level of management.

Management did not identify and we did not notify them of any uncorrected financial statement misstatements.

Corrected misstatements

Management did not identify and we did not notify them of any financial statement misstatements detected as a result of audit procedures.

Disagreements with management

For purposes of this communication, a disagreement with management is a disagreement on a financial accounting, reporting, or auditing matter, whether or not resolved to our satisfaction, that could be significant to the financial statements or the auditors� report. No such disagreements arose during our audit.

Management representations

We have requested certain representations from management that are included in the attached management representation letter dated August 25, 2025.

Management consultations with other independent accountants

In some cases, management may decide to consult with other accountants about auditing and accounting matters, similar to obtaining a �second opinion� on certain situations. If a consultation involves application of an accounting principle to the entity�s financial statements or a determination of the type of auditors� opinion that may be expressed on those statements, our professional standards require the consulting accountant to check with us to determine that the consultant has all the relevant facts. To our knowledge, there were no such consultations with other accountants.

Significant issues discussed with management prior to engagement

We generally discuss a variety of matters, including the application of accounting principles and auditing standards, with management each year prior to engagement as the entity�s auditors. However, these discussions occurred in the normal course of our professional relationship and our responses were not a condition to our engagement.

Other Post-Employment Benefits

Required supplementary information

With respect to the required supplementary information (RSI) accompanying the financial statements, we made certain inquiries of management about the methods of preparing the RSI, including whether the RSI has been measured and presented in accordance with prescribed guidelines, whether the methods of measurement and preparation have been changed from the prior period and the reasons for any such changes, and whether there were any significant assumptions or interpretations underlying the measurement or presentation of the RSI. We compared the RSI for consistency with management�s responses to the foregoing inquiries, the basic financial statements, and other knowledge obtained during the audit of the basic financial statements. Because these limited procedures do not provide sufficient evidence, we did not express an opinion or provide any assurance on the RSI.

This communication is intended solely for the information and use of the Board of Trustees and management of the City of Scranton Other Post-Employment Benefits Trust and is not intended to be, and should not be, used by anyone other than these specified parties.

CliftonLarsonAllen LLP

New York, New York August 25, 2025

CITY OF SCRANTON OPEB TRUST

(a Fiduciary Component Unit of the City of Scranton, Pennsylvania)

Financial Statements

December 31, 2024

(A Fiduciary Component Unit of the City of Scranton, Pennsylvania)

Table of Contents

Page(s)

Independent Auditors� Report 1�3

Management�s Discussion and Analysis 4-5

Statements of Fiduciary Net Position 6

Statements of Changes in Fiduciary Net Position 7

Notes to Financial Statements 8�15

Required Supplementary Information (Unaudited)

Schedule of Changes in Net OPEB Liability and Related Ratios 16

Schedule of Employer Contributions � Last 10 Fiscal Years 17

Schedule of Investment Returns 18

CLA (CliftonLarsonAllen LLP) is an independent network member of CLA Global. See CLAglobal.com/disclaimer.

CLAconnect.com

INDEPENDENT AUDITORS� REPORT

Board of Trustees City of Scranton Other Postemployment Benefits Trust Scranton, Pennsylvania

Report on the Audit of the Financial Statements

Opinion

We have audited the accompanying financial statements of the City of Scranton Other Postemployment Benefits Trust (Trust), a fiduciary component unit of the City of Scranton as of and for the year ended December 31, 2024 and the related notes to the financial statements, which collectively comprise the Trust�s basic financial statements as listed in the table of contents.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Trust of as of December 31, 2024, and the change in financial position for the year then ended in accordance with accounting principles generally accepted in the United States of America.

Basis for Opinion

We conducted our audits in accordance with auditing standards generally accepted in the United States of America (GAAS) and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Our responsibilities under those standards are further described in the Auditors� Responsibilities for the Audit of the Financial Statements section of our report. We are required to be independent of the Trust and to meet our other ethical responsibilities, in accordance with the relevant ethical requirements relating to our audit. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Responsibilities of Management for the Financial Statements

Management is responsible for the preparation and fair presentation of the financial statements in accordance with accounting principles generally accepted in the United States of America, and for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.

City of Scranton Other Postemployment Benefits Trust Scranton, Pennsylvania

In preparing the financial statements, management is required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the Trust�s ability to continue as a going concern for twelve months beyond the financial statement date, including any currently known information that may raise substantial doubt shortly thereafter.

Auditors� Responsibilities for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors� report that includes our opinion. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with GAAS and Government Auditing Standards will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the financial statements.

In performing an audit in accordance with GAAS and Government Auditing Standards, we:

Exercise professional judgment and maintain professional skepticism throughout the audit.

Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, and design and perform audit procedures responsive to those risks.

Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.

Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Trust�s internal control. Accordingly, no such opinion is expressed.

Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the financial statements.

Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about the Plan�s ability to continue as a going concern for a reasonable period of time.

We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit, significant audit findings, and certain internal control related matters that we identified during the audit.

Other Postemployment Benefits Trust Scranton, Pennsylvania

Required Supplementary Information

Accounting principles generally accepted in the United States of America require that the management�s discussion and analysis (MD&A), the schedule of changes in net OPEB Liability and related ratios, the schedule of employer contributions, and the schedule of investment returns be presented to supplement the basic financial statements. Such information is the responsibility of management and, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with GAAS, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management�s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audits of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance.

Other Reporting Required by Government Auditing Standards

In accordance with Government Auditing Standards, we have also issued our report dated August 25, 2025, on our consideration of the Plan�s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is solely to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the Plan�s internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the Plan�s internal control over financial reporting and compliance.

CliftonLarsonAllen LLP

New York, New York

Management�s Discussion and Analysis

This section of the financial report presents our discussion and analysis of the City of Scranton (�City�) Other Post-Employment Benefits (OPEB) Trust (the Trust) financial performance during the fiscal year ended December 31, 2024. Please read it in conjunction with the Trust�s financial statements, which immediately follow this section.

Overview of the Financial Statements

The financial section of this annual report consists of four parts: management�s discussion and analysis (this section), the financial statements and related notes to the financial statements, and required supplementary information.

The financial statements provide both long-term and short-term information about the Trust�s overall financial status. The financial statements also include notes that explain some of the information in the financial statements and provide more detailed data. The statements are followed by a section of required supplementary information that further explains and supports the information in the financial statements.

Financial Analysis of the Trust

Net Position and Change in Net Position

The Trust�s total net position at December 31, 2024 was approximately $2.61 million. The change in net position is comprised of the employer contributions to the Trust of $200,000 and net investment income of $251,000. Actual cash contribution by the City to the Trust was $200,000 in fiscal year 2024 and $2,000,000 in 2023. No benefits were paid out of the Trust during fiscal year ending December 31, 2024 or 2023.

2024 2023

Cash and cash equivalents $ 36,007 22,475$ Investments:

Fixed income securities - US 1,024,802 845,885 Domestic equity securities 1,552,018 1,291,385

Total investments 2,576,820 2,137,270

Accrued Interest Receivable 2,065 3,843 Total assets 2,614,892 2,163,588

Accrued Expenses � �

Net position restricted for OPEB $ 2,614,892 2,163,588$

Assets

Liabilities and Net Position

Management�s Discussion and Analysis (Continued)

December 31, 2024

2024 2023 Additions:

Employer Contributions $ 200,000 2,000,000 Benefit Contributions 10,173,877 9,797,583 Net investment income (loss) 251,304 163,588

Total additions 10,625,181 11,961,171 Deductions:

Benefit Payments 10,173,877 9,797,583 Total deductions 10,173,877 9,797,583

Change in net position restricted for OPEB 451,304 2,163,588

Net position restricted for OPEB, beginning of the period 2,163,588 � Net position restricted for OPEB, end of period $ 2,614,892 2,163,588

See accompanying notes to financial statements.

**The 2023 benefit contributions and payments show the gross amounts in the 2023 column for this presentation.

Other Post-Employment Benefits (OPEB) Trust

In December 2022, the City established the City�s Other Post-Employment Benefits (OPEB) Trust. The Trust was established for the sole purpose of providing for the advance funding of future costs of retired employee health insurance and other benefits provided to retirees. It is intended that the Trust shall constitute a �Qualified OPEB Trust� according to the standards set forth in GASB Statement No. 43, Accounting and Financial Reporting by Employers for Postemployment Benefits Other Than Pensions and the standards of GASB Statement No. 74, Financial Reporting for Postemployment Benefit Plans Other Than Pension Plans.

The OPEB ordinance establishes the initial trustee as the City�s Business Administrator.

The balance of the trust at December 31, 2024 was $2.61 million.

Investments

The Board of Trustees has prepared an Investment Policy to manage the growing portfolio of trust assets.

For the period ended December 31 2024, investment income was $251,000.

Contacting the Trust�s Financial Management

This report is designed to provide all interested parties with a general overview of the Trust�s finances. If you have questions about this report or need additional information, contact the City of Scranton, Business Administrator, City of Scranton, 340 North Washington Avenue, Scranton, Pennsylvania 18503.

Statement of Fiduciary Net Position

December 31, 2024

Cash and cash equivalents $ 36,007 Investments:

Fixed income securities - US 1,024,802 Domestic equity securities 1,552,018

Total investments 2,576,820

Accrued Interest Receivable 2,065 Total assets 2,614,892

Accrued Expenses �

Net position restricted for OPEB $ 2,614,892

See accompanying notes to financial statements.

Assets

Liabilities and Net Position

Statement of Changes in Fiduciary Net Position

Year Ended December 31, 2024

Additions:

Employer Contributions $ 200,000 Benefit Contributions 10,173,877 Net investment income (loss) 251,304

Total additions 10,625,181 Deductions:

Benefit Payments 10,173,877 Total deductions 10,173,877

Change in net position restricted for OPEB 451,304

Net position restricted for OPEB, beginning of the period 2,163,588 Net position restricted for OPEB, end of period $ 2,614,892

See accompanying notes to financial statements.

City of Scranton Other Post-Employment Benefits

Statements of Changes in Fiduciary Net Position

Notes to the Financial Statements

Year Ended December 31, 2024

8 (Concluded)

(1) Organization and Nature of Activities

The City of Scranton (City) OPEB Trust (Trust) was established in December 2022 as a single-employer other post-employment benefits (OPEB) plan, for the purpose of accumulating and investing assets to fund certain post-retirement medical and life insurance for retirees of the City. The Trust is included as a fiduciary component unit in the City�s financial statements because of its financial relationship with the City.

The Trust�s initial Trustee, the City�s Business Administrator, has fiduciary responsibility for the investment of monies and administration of the Trust pursuant to the Trust Ordinance. Pursuant to section 5.2 of the Ordinance, the Trustee shall remain until the first transfer of OPEB assets, at which time the Business Administrator shall notify in writing the Board of Trustees and Plan administrator, and the Board of Trustees shall become Trustee.

The City provides provide medical coverage to eligible retirees and their dependents who meet specific criteria. Under the police, firemen, and clerical labor contracts, the City is responsible for providing health insurance to retirees and spouses for the remainder of their lives if the employee was hired or retired prior to December 31, 1993. Employees hired after December 31, 1993, are not eligible for these benefits. The City�s contribution for retiree health insurance is equal to the cost in effect in 1993 plus 75% of any increase above that cost. The retiree pays the other 25%.

Under the public works labor contract, the City will provide health insurance to retirees and spouses only from age 62 to 65. The City�s contribution is equal to the cost in effect in 1994 plus 75% of any increase above those costs. The retiree pays the other 25%.

(2) Summary of Significant Accounting Policies

(a) Basis of Presentation

The accompanying basic financial statements of the Trust are presented in conformity with the U.S. generally accepted accounting principles as prescribed by the Governmental Accounting Standards Board (GASB).

The Trust�s financial statements are presented in accordance with GASB Statement No. 74, Financial Reporting for Postemployment Benefit Plans Other Than Pension Plans. This statement requires, among other things, additional disclosures and descriptive information about classes of plan members, plan investments and significant assumptions used to measure the total OPEB liability.

The Trust has also implemented GASB Statement No. 85, Omnibus 2017. This statement addressed various topics, including requirements related to presenting payroll measures in required supplementary information related to OPEB plans.

Notes to the Financial Statements (Continued)

(b) Basis of Accounting

The financial statements of the Trust are presented as a fiduciary fund type. The economic resources measurement focus and the accrual basis of accounting are used in the preparation of the financial statements.

Employer contributions to the plan are recognized when due and the employer has made a formal commitment to provide the contributions. Benefits paid represents the gross up of amounts paid directly by the plan sponsor, the City, for retiree OPEB costs and the implicit rate subsidy associated with such costs. The implicit rate subsidy is the inherent subsidy of retiree healthcare costs by active employee healthcare costs when healthcare premiums paid by both actives and retirees are the same. Benefits paid are recognized when due and payable in accordance with the terms of the employer/sponsor�s plan.

(c) Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosure of contingent assets and liabilities, at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

(3) Cash and Cash Equivalents

Cash and cash equivalents consist of money market accounts or highly liquid investments with a maturity of three months or less. The custodial credit risk for deposits is the risk that, in the event of a bank failure, the Trust�s deposits may not be recovered. The Trust does not have a formal policy for custodial credit risk for deposits and the balance of $36,008 at December 31, 2024. The entire amount was exposed to custodial credit risks as uninsured and uncollateralized.

(4) Investments

The Trust�s investment policy and any changes to the policy are adopted by the Trustee of the Trust.

The current policy was approved in November 2023 and contains long-term asset allocation ranges.

The primary objective of the investment policy is to assure that assets will be available to pay postemployment benefits throughout the life of the Plan and to maintain or improve the market value of the fund relative to vested and accrued benefit liabilities. The objectives seek to preserve the actuarial soundness of the Plan by achieving a long-term return of at least the actuarial return rate and to prudently manage the inherent investment risks that are related to the achievement of this goal.

Long-term asset allocation ranges are developed based on several factors including, the long-term investment goals of the Trust; the Trustee�s tolerance for short-term losses; the Trust�s liquidity needs;

and any legal or regulatory requirements.

Custodial Credit Risk is the risk that the Trust will not be able to recover the value of its investments if the counterparty fails. The Trust�s mutual fund investments are not subject to custodial credit risk in accordance with GASB Statement No. 40, Deposit and Investment Risk Disclosures�an amendment of GASB Statement No. 3 as the investments are open-end mutual funds.

Credit risk is the risk that an issuer or other counterparty to an investment will not fulfill its obligations.

The Plans do not have a formal investment policy that addresses credit risk. The credit risk of a debt instrument as measured by a Nationally Recognized Statistical Rating Organization (NRSRO). All of the Trust�s mutual funds and ETFs are not rated.

Interest rate risk is the risk that changes in interest rates that will adversely affect the fair value of an investment or a deposit Interest rate risk is the risk that changes in interest rates will adversely affect the fair value of an investment or a deposit. The Plans do not have a formal investment policy that limits investment maturities as a means of managing its exposure to fair value losses arising from increasing interest rates. As of December 31, 2024, the Trust�s investment balance exposed to interest rate risk was as follows:

Investment Type No Maturity Less Than 1 Year 1-5 Years

Fixed Income Mutual Funds 773,482$ -$ -$

Fixed Income ETF 251,320 - -

Equity Mutual Funds 64,332 - -

International Equity ETF 371,304 - -

International Equity Mutual Funds 70,696 - -

US Equity ETF 991,895 - -

US Large CAP Value 31,736 - -

US Small CAP Growth 22,054 - -

Total OPEB Trust Fund 2,576,819$ -$ -$

Investment Maturities

Foreign Currency Risk is the risk that changes in exchange rates will adversely affect the fair value of an investment in a foreign financial institution. The Plan mitigates this risk by limiting its investments in funds with foreign exposure. The underlying assets of the Trust�s International Equity Mutual Funds and ETFs are invested in foreign assets that may be exposed to exchange rate changes.

Concentration Risk is the risk of loss attributed to the magnitude of the Plan�s investment in a single issuer. The following investments represent over 5% of total investments with a single investor as of December 31:

Investment %

SCHWAB STRATEGIC TR US 991,895$ 38.49%

BARID FDS INC CORE 267,839 10.39%

PRUDENTIAL INVT PORTF INC 228,735 8.88%

VANGUARD FTSE DEVELOPED 219,972 8.54%

iSHARES CORE U.S. AGG 200,583 7.78%

VANGUARD STAR FDS 151,322 5.87%

Total 2,060,346$

GAAP defines fair value as the price that would be received upon the sale of an asset or paid upon transfer of a liability in an orderly transaction between market participants at the measurement date and in the principal or most advantageous market for that asset or liability. GAAP specifies a hierarchy of inputs to valuation techniques, which categorizes inputs to fair-value measurement that reflect assumptions other market participants would use based upon market data obtained from independent sources (observable inputs). The following summarizes the fair-value hierarchy:

Level 1 Inputs � Unadjusted quoted market prices for identical assets and liabilities in an active market that an organization has the ability to access, Level 2 Inputs � Inputs other than the quoted prices in active markets that are observable either directly or indirectly, and

Level 3 Inputs � Inputs based on prices or valuation techniques that are both unobservable and significant to the overall fair-value measurements.

The following tables present the fair-value measurements of assets recognized in the accompanying statements of net position measured at fair-value on a recurring basis and the level within the fair-value hierarchy in which the fair-value measurements fall at December 31:

Investment Type Level 1 Level 2 Level 3 Fair Value

Fixed Income Mutual Funds 773,482$ -$ -$ 773,482$

Fixed Income ETF 251,320 - - 251,320

Equity Mutual Funds 64,332 - - 64,332

International Equity ETF 371,304 - - 371,304

International Equity Mutual Funds 70,696 - - 70,696

US Equity ETF 991,895 - - 991,895

US Large CAP Value 31,736 - - 31,736

US Small CAP Grow th 22,054 - - 22,054

Total OPEB Trust Fund 2,576,819$ -$ - 2,576,819$

Fair Value Measurements Using

(5) Other Postemployment Benefits

(a) Plan Description

The City of Scranton�s Retiree Health Care Plan (Plan) is a single-employer defined benefit postemployment health care plan that covers eligible retirees. The Plan, which is administered by the City, allows employees who retire and meet retirement eligibility requirements under one of the City�s retirement plans to continue medical, dental and vision coverages as a participant in the City�s plan.

Plan Membership: At January 1, 2023, the following employees were covered by the benefit terms:

Inactive plan members or beneficiaries currently receiving benefits 507 Inactive plan members entitled to but not yet receiving benefits - Active plan members 479

Total 986

Benefits Provided: The benefits provided and required retiree contributions vary by employment group and retirement date and are outlined in the Plan Provisions section of this report.

Contributions. A $204,592 contribution was made to the Trust. No benefits were paid out of the Trust during the fiscal year ending December 31, 2024.

(b) Investments

Investment Policy: The following asset allocations were provided as of December 31, 2024:

Asset Class Target Allocation (% )

US Equity 40.0%

International Equity 19.4%

Emerging Equity 0.0%

Core Fixed 39.2%

Cash 1.4%

Total 100.0%

Rate of Return: The money-weighted rate of return on investments for the year ended December 31, 2024 was 10.89%. The money-weighted rate of return expresses investment performance, net of investment expense, adjusted for the changing amounts invested.

(c) Net OPEB Liability of the City

The components of the net OPEB liability of the City at December 31, 2024, were as follows:

December 31, 2024

Total OPEB liability 148,319,972$

Plan fiduciary net position 2,614,892

Net OPEB liability 145,705,080$

Plan fiduciary net position as a percentage of the total OPEB liability 1.76%

Actuarial Assumptions. The total OPEB Liability was determined by an actuarial valuation as of January 1, 2023 using the following actuarial assumptions:

Inflation 2.44 percent

Salary increases 4.50 percent

Discount rate 5.00 percent

Healthcare cost trend rates (2023) Non-Medicare & Non-Uniformed: 8.54%, then 8.50%, then 7.90%, then 7.35%, then 6.75%, then 6.20%, then 5.60%, then 5.05%, then an ultimate of 4.75%.

Non-Medicare & Uniformed: 2.00%, then 8.50%, then 7.90%, then 7.35%, then 6.75%, then 6.20%, then 5.60%, then 5.05%, then an ultimate rate of 4.75%.

Medicare: 1.76%, then 7.50%, then 6.90%, then 6.50%, then 6.10%, then 5.70%, then 5.25%, then 4.85%, then an ultimate rat of 4.75%.

Mortality rates are based on PUBG-2010 and PUBS-2010 mortality tables projected 5 years past the valuation date using the mortality improvement scale MP-2021. We feel this assumption sufficiently accommodates future mortality improvements.

The long-term expected rate of return on OPEB plan investments was provided by PFM Asset Management LLC. The target allocation and best estimates of real rates of return for each major asset class are summarized in the following table. These rates of return have been reduced by inflation of 2.44%.

Long Term Expected Asset Class Real Rate of Return

US Equity 6.31%

International Equity 6.64%

Emerging Equity 8.56%

Core Fixed 2.60%

Cash 1.00%

Total

Discount Rate. The discount rate used to measure the Total OPEB Liability was the municipal bond rate of 5.00%. The expected rate of return on trust investments is 5.00%. This rate was used to discount projected benefit payments.

Notes to the Financial Statements (Continued)

December 31, 2024

Sensitivity of the Net OPEB Liability to Changes in the Discount Rate. The following presents the net OPEB liability of the City, as well as what the City�s net OPEB liability would be if it were calculated using a discount rate that is one percentage-point lower or one percentage-point higher than the current discount rate:

1% Decrease Current

Discount Rate 1% Increase

(4.00% ) (5.00% ) (6.00% )

Net OPEB Liability (asset) 160,026,345$ 145,705,080$ 133,379,915$

Sensitivity of the Net OPEB Liability to Changes in the Healthcare Cost Trend Rates. The following presents the net OPEB liability of the City, as well as what the City�s net OPEB liability would be if it were calculated using healthcare cost trend rates that are one percentage-point lower or one percentage-point higher than the current healthcare cost trend rates:

1% Decrease

Healthcare Cost Trend Rates 1% Increase

Net OPEB Liability (asset) 131,649,586$ 145,705,080$ 162,022,400$

Required Supplementary Information � Schedule of Changes in Net OPEB Liability and Related Ratios

2024 2023 2022

Total OPEB Liability

Total OPEB Liability - Beginning 148,818,129$ 157,157,517$ 195,437,896$

Service Cost 2,367,675 2,900,858 4,299,442 Interest 7,308,045 6,923,991 4,384,743 Change of Benefit Terms - (44,488) � Differences between expected and actual experience - 5,438,183 � Change of assumptions - (13,760,349) (37,190,448) Benefit payments (10,173,877) (9,797,583) (9,774,116) Net Change in total OPEB liability (498,157) (8,339,388) (38,280,379)

Total OPEB Liability - Ending 148,319,972 148,818,129 157,157,517

Plan Fiduciary Net Position

Plan fiduciary net position - beginning 2,163,588 - -

Contributions - employer (implicit + explicit) 200,000 2,000,000 - Net investment income (loss) 251,304 163,588 - Administrative expense - - - Net change in plan fiduciary net position 451,304 2,163,588 -

Plan fiduciary net position - ending 2,614,892 2,163,588 -

Net OPEB Liability 145,705,080$ 146,654,541$ 157,157,517$

Plan fiduciary net position as a percentage of the total OPEB liability 1.76% 1.45% 0.00%

Covered-employee payroll 38,777,363$ 37,107,524$ 34,912,230$

City's net OPEB liability as a percentage of covered employee payroll 375.75% 395.22% 450.15%

Data is being accumulated annually to present 10 years of the reported information.

Required Supplementary Information � Schedule of Employer Contributions � Last 10 Fiscal Years

Notes to Schedule

Also reflected as assumptions changes are updated health care costs and trend rates, as well as updated mortality rates.

See accompanying independent auditors ' report

Fiscal Year Ending December 31, 2024: 5.00% Fiscal Year Ending December 31, 2023: 5.00% Fiscal Year Ending December 31, 2022: 4.31%

Covered Employee Payroll was actual calendar year 2023 covered payroll provided by City personnel projected to calendar year 2024 using the salary scale.

Difference Between Expected and Actual Experience. Difference Between Expected and Actual Experience reflects the impact of changes to the census data from the prior valuation to the valuation as of January 1, 2023.

Changes of benefit terms. Changes of benefit terms reflect Fire and Police Arbitration Awards.

Changes of assumptions. Changes of assumptions and other inputs reflect the updated claims costs and health care trend rates, as well as the effects of changes in the discount rate each period. The following are the discount rates used in each period:

Data is being accumulated annually to present 10 years of reported information.

See accompanying independent auditors� report.

Required Supplementary Information � Schedule of Investment Returns

2024 2023 Annual money-weighted rate of return net of investment expense 10.89% 5.66%

Data is being accumulated annually to present 10 years of the reported information.

See accompanying independent auditors' report.

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INDEPENDENT AUDITORS� REPORT ON INTERNAL CONTROL OVER

FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS

BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED

IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS

Other Postemployment Benefits Trust Scranton, Pennsylvania

We have audited, in accordance with the auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States, the financial statements of the City of Scranton Other Post-Employment Benefits Trust, a fiduciary component unit of the City of Scranton as of and for the year ended December 31, 2024, and the related notes to the financial statements, which collectively comprise the Trust�s basic financial statements, and have issued our report thereon dated August 25, 2025.

Report on Internal Control Over Financial Reporting

In planning and performing our audit of the financial statements, we considered the Trust�s internal control over financial reporting (internal control) as a basis for designing audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the Trust�s internal control. Accordingly, we do not express an opinion on the effectiveness of the Trust's internal control.

A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the entity�s financial statements will not be prevented, or detected and corrected, on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance.

Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses or significant deficiencies may exist that were not identified.

Other Postemployment Benefits Trust

Report on Compliance and Other Matters

As part of obtaining reasonable assurance about whether the Trust�s financial statements are free from material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the financial statements. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards.

Purpose of This Report

The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the entity�s internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the entity�s internal control and compliance. Accordingly, this communication is not suitable for any other purpose.