Council approves balanced spending plan while examining $312 million in unfunded retirement obligations and the future sustainability of the city zoo
The Folsom City Council unanimously adopted the city’s $307.6 million operating and capital budget for fiscal year 2026-27 Tuesday night, following an extensive discussion on long-term pension and retiree healthcare liabilities, reserve levels, infrastructure funding needs and the future financial sustainability of the Folsom City Zoo Sanctuary.
The approved budget projects a general fund surplus of approximately $107,000 on $124.4 million in expenditures, with the fund balance remaining just above the council’s 20 percent reserve policy. The vote came after a public hearing and detailed presentations from the finance and parks and recreation departments.
The adopted budget includes $307.6 million in operating and capital spending across all city funds. General fund revenues are projected at approximately $124.5 million and are supported primarily by property taxes, sales taxes and other locally generated revenues. While the budget remains balanced, city officials noted that rising labor costs, pension obligations, infrastructure needs and inflationary pressures continue to present long-term challenges.
The budget leaves the city with an estimated general fund balance of approximately $25.7 million, maintaining compliance with the council’s long-standing policy requiring reserves equal to at least 20 percent of annual expenditures. Maintaining those reserves was repeatedly cited during budget discussions as an important safeguard against economic uncertainty and future financial obligations.
The budget follows several years of city efforts to control spending while preserving core services. Officials noted that staffing reductions, operational adjustments and continued monitoring of expenditures have helped stabilize the city’s financial outlook despite increasing costs and long-term liabilities.
Finance Director Stacy Tamagni delivered a detailed presentation on the city’s two largest long-term obligations: its CalPERS pension liability and its Other Post-Employment Benefits program for retiree health care, commonly known as OPEB. The discussion provided council members with a broader understanding of the financial commitments that will continue to affect future budgets long after the current fiscal year.
Tamagni explained that the city’s combined CalPERS unfunded liability stands at approximately $210 million. The safety plan carries a $106 million unfunded liability with a 64 percent funded ratio, while the miscellaneous plan has a $104 million unfunded liability at 67 percent funded. She attributed this not to missed city payments but to system-wide factors, including the adoption of enhanced pension formulas in the late 1990s when the system was considered overfunded, followed by major investment losses during the dot-com bust and the Great Recession.
Tamagni also detailed the city’s independent actions to control costs. In 2010, Folsom implemented a second, lower pension tier for employees, reducing formulas from 3 percent at 50 to 2 percent at 50 for public safety and from 2.7 percent at 55 to 2 percent at 55 for miscellaneous employees. These changes preceded the state-mandated Public Employees’ Pension Reform Act of 2013. Unfunded liability payments are projected to peak in fiscal year 2031 and be fully paid by 2044 if CalPERS investment assumptions are met.
The OPEB liability drew particular attention. The city closed its retiree health benefit to new hires on May 8, 2007. However, the unfunded liability remains at $102 million with only $13.6 million in a trust fund, a funded ratio of 10.7 percent. The city currently pays annual premiums for existing retirees while contributing $500,000 annually to the trust.
Combined, the city’s unfunded CalPERS and OPEB obligations total approximately $312 million, making them among the largest long-term financial commitments facing future city budgets. City officials emphasized that Folsom has consistently met all required payments and remains in compliance with state requirements, but council members expressed interest in exploring additional strategies to reduce those liabilities over time.
Councilmember Mike Kozlowski questioned the pace of OPEB contributions. Noting that the liability projections extend decades into the future, he said, “From 2040 on, all of our residents are going to be paying for services that they’re not receiving.”
He contrasted the more than $10 million the city pays annually toward CalPERS unfunded liabilities with the $500,000 annual OPEB trust contribution, asking, “Why are we not catching up more on the OPEB? Or should we be?”
City Manager Bryan Whitemyer acknowledged the concern and outlined a potential path forward. He suggested replicating the city’s emerging strategy for deferred maintenance by creating a dedicated funding mechanism for long-term liabilities and directing future year-end surpluses toward those obligations.
“We will get to that point where, if we look at the beginning of February and our expenditures from the current fiscal year, if we’re able to minimize those as much as possible and our revenues stay where we projected, we will have more than the $750,000 to talk about,” Whitemyer said.
The discussion also touched on deferred maintenance and long-term infrastructure needs throughout the city. Whitemyer said staff has increasingly focused on identifying sustainable funding sources for facility renewal and replacement projects rather than relying solely on one-time budget savings. He noted that future surpluses generated through operational efficiencies could potentially be directed toward both infrastructure needs and long-term liabilities.
Council member Sarah Aquino made a point regarding the assumptions underlying the CalPERS projections.
“Most people think that 6.8 percent is too rosy of a number,” she said, citing the City of Palo Alto’s decision to adopt a lower assumed investment return following its own actuarial review.
The lengthiest discussion of the evening centered on the Folsom City Zoo Sanctuary and its reliance on general fund support.
The zoo discussion occurred within a broader examination of city operations that rely heavily on general fund funding. Council members have directed staff to continue evaluating opportunities to increase cost recovery, update fees where appropriate and identify long-term sustainability strategies for programs receiving significant taxpayer subsidies.
Parks and Recreation staff presented a detailed analysis showing that much of the zoo’s budget growth over the past five years has been driven by approximately $700,000 in increased salary and benefit costs. Staff noted that a 2007 council policy classified the zoo as a general fund operation with no expectation of offsetting revenue, a policy staff intends to revisit as part of a broader sustainability review.
The department conducted a line-item examination of major budget categories including permanent salaries, temporary salaries, veterinary care, departmental expenses and animal food and supplements. Categories such as gift shop operations and concessions were not considered for reductions because they generate revenue. Building maintenance expenditures were also excluded from reduction discussions because staff said preserving and improving zoo infrastructure remains a priority.
Staff then examined the costs associated with several of the zoo’s highest-profile animals, often referred to during the discussion as “charismatic megafauna” because of their role in attracting visitors.
The zoo’s four bears — North American black bears Henry, Olive and Herbie, along with Eurasian brown bear Matilda — cost approximately $169,000 annually when accounting for staffing, veterinary care, food, supplies, building maintenance and other direct expenses. Staff noted the bear population had already been reduced from five animals to four in previous years.
The zoo’s two mountain lions, Echo and Cedar, cost approximately $72,000 annually. The mountain lion population has been reduced from five animals to two.
The zoo’s remaining draft horse, Gus, costs approximately $33,000 annually. The zoo previously housed three draft horses and has since reduced that number to one.
Together, those seven animals account for approximately $274,000 in annual expenses directly attributable to their care.
Staff noted that overhead expenses are not included in those figures because they are difficult to assign to individual animals. A more comprehensive cost analysis covering the zoo’s approximately 76 animals is planned during the coming year.
Despite ongoing budget concerns, zoo revenues continue to exceed expectations.
According to year-to-date figures presented to the council, ticket sales have reached approximately $686,000 compared with a budgeted $550,000. Total zoo revenue stands at approximately $1.23 million compared with a budget of $955,600.
Zoo Manager Jocelyn Smeltzer shared that a fee increase from $7 to $10 implemented in July 2024 did not negatively affect attendance since it was implemented.
“A lot of people just said, ‘We really appreciate the value that you bring, and we’re happy to do this,’” Spencer said.
Mayor Justin Raithel had questioned whether the ticket increase had affected attendance, noting that the budget figures appeared to show only modest revenue growth despite the larger increase in admission prices.
After staff explained that budget projections were intentionally conservative and presented updated year-to-date figures showing revenues significantly exceeding projections, Raithel acknowledged the stronger-than-expected performance.
“Okay. So that gives us there’s more and we’re not seeing the impact of the ticket sales yet,” Raithel said.
Smeltzer said admission is scheduled to increase to $12 in January 2027. She also highlighted more than $202,000 raised by Friends of the Folsom Zoo Sanctuary this year for a new veterinary building and noted that an economic development consultant is expected to present findings in September, including recommendations for additional revenue-generating opportunities and staffing support.
The proposed budget includes approximately $55,000 in reductions, including savings from internet services, veterinary expenses and part-time staffing. Spencer said the staffing reductions could limit future educational programming and volunteer support efforts, although volunteers currently contribute more than 14,000 hours annually — equivalent to approximately seven full-time positions.
Vice Mayor Rohrbough advocated for maintaining the zoo’s operating budget at the prior year’s adopted level of $2.575 million rather than approving additional expenditures.
“I was disappointed two weeks ago when I saw the gap widen,” Rohrbough said. “We can’t continue to go on like this with the gap that’s continuing.”
Councilmember Aquino also was not a fan of an immediate reduction, pointing to revenue figures that are significantly outperforming projections as of late.
Raithel later noted that the conversation was ultimately about the zoo’s long-term future rather than simply reducing costs in the current budget cycle.
“I do wanna add that this is our first goal of trying to identify what an option would be,” Raithel said. “Because I think this is of paramount importance to at least have a conversation about what are the costs of the zoo and what happens if we were to reduce services at the zoo.”
He cautioned against focusing solely on the zoo’s most popular animals when evaluating future options and said the city needs a more complete understanding of operational costs across the entire facility.
Kozlowski agreed that cost growth remains a concern but supported approving the budget as proposed.
“This year’s gotta be the last year of that kind of latitude,” he said. “Those trends have to continue, and we’ve gotta try and reduce that gap as we go.”
Rohrbough pointed out how salary growth, rather than animal care costs is the primary driver behind the zoo’s increasing expenses.
“When I look at the expenses in the budget, the proposed budget, if you look from 2021 to now, really, it’s not the cost of the animals that has really increased that much,” Leary said. “The vet bill has gone up around $70,000. Food has gone up around $10,000 or $20,000. So you’re looking at increased cost of $100,000 in the last six years versus the salaries, which has gone up $700,000. And that’s the problem.”
Two members of the public also addressed the council.
Peggy Platt, president of Friends of the Folsom Zoo Sanctuary, detailed numerous fundraising efforts supporting the facility, including business partnerships, grants and community projects. She said the organization has contributed more than $2.5 million to the zoo over the past two decades.
“The Friends of the Folsom Zoo is truly committed to supporting the zoo in multiple ways, improving our long-term sustainability and reducing reliance on the general fund,” Platt said.
Longtime Folsom resident and Parks and Recreation Commissioner Lynn LePage spoke on Tuesday. LePage urged the council to allow staff time to continue implementing improvements and developing long-term solutions.
“You need to give yourself some space and some time and let your wonderful team do their work,” LePage said. “The talent that has moved into this community will step up with you. Have a little faith in your people and in your community.”
Raithel said the discussion is ultimately about determining how the zoo can remain a valued community asset while reducing pressure on the city’s general fund.
“I know at least a couple members of the council have mentioned this is, what does the future of the zoo look like? And is it in the best interest of the community to have the city continue to operate the zoo?” Raithel said.
He emphasized that exploring alternative operating models does not mean eliminating the zoo, but rather examining ways to preserve and strengthen it while improving financial sustainability.
“Our goal is not to diminish the zoo,” Raithel said. “Our goal is to improve the zoo while reducing the burden on the general fund so that we can reinvest in public safety. We can save up for some of those deferred maintenance or even front fund some of those liabilities that we haven’t been able to do so yet.”
While the council ultimately approved the budget without modification, members made clear that discussions surrounding pension obligations, retiree health care liabilities, deferred maintenance and the future operating model of the Folsom City Zoo Sanctuary are far from settled.
Several council members indicated they expect additional policy discussions during the city’s mid-year budget review and again during next year’s budget cycle, particularly as staff develops recommendations for reducing long-term liabilities and narrowing the zoo’s reliance on general fund support.
The council voted unanimously to approve the resolution of adopting the fiscal year 2026-27 operating and capital budget as presented. The city will conduct its mid-year budget review in February, when updated revenue projections, expenditure trends and progress on zoo sustainability initiatives are expected to return for council consideration.
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