Texas Parks and Wildlife Commission
Jan. 23, 2008Commission Hearing Room
Texas Parks & Wildlife Department Headquarters Complex
4200 Smith School Road
Austin, TX 78744
BE IT REMEMBERED, that heretofore on the 23rd day of January, 2008, there came to be heard matters under the regulatory authority of the Texas Parks and Wildlife Commission in the Commission Hearing Room of the Texas Parks and Wildlife Department Headquarters Complex, to wit:
THE TEXAS PARKS AND WILDLIFE COMMISSION:
- J. Robert Brown, El Paso, Texas, Committee Chairman
- Peter M. Holt, San Antonio, Texas, Chairman
- Mark E. Bivins, Amarillo, Texas
- Antonio Falcon, MD, Rio Grande City, Texas
- T. Dan Friedkin, Houston, Texas
- Karen J. Hixon, San Antonio, Texas
- Margaret Martin, Boerne, Texas
- Philip Montgomery, Dallas, Texas
- John D. Parker, Lufkin, Texas
THE TEXAS PARKS AND WILDLIFE DEPARTMENT:
- Robert L. Cook, Executive Director, and other personnel of the Texas Parks and Wildlife Department
P R O C E E D I N G S
COMMISSIONER HOLT: Good morning everybody and Happy New Year. This is our first meeting of 2008. This meeting is called to order. Before proceeding with any business, I believe Mr. Cook has a statement to make.
MR. COOK: Thank you, Mr. Chairman. A public notice of this meeting, containing all items on the proposed agenda has been filed in the Office of Secretary of State, as required by Chapter 551, Government Code, referred to as the Open Meetings Act.
I would like for this fact to be noted in the official record of the meeting. And also, Mr. Chairman, before we proceed, I think while we've got everybody here, I would like to mention that the Commission meeting which is usually held in April just because of the calendar shift and all that stuff has been changed to the last week of March this year.
This information is posted on the website, but I wanted to bring it to everyone's attention so that we can start getting the word out now: that our next Commission meeting will be March 26th-27th.
MR. COOK: Yes. Thank you, sir.
COMMISSIONER HOLT: Yes, you should have that. Yes. Thank you, Bob.
I'd also like to, since we have a pretty good group here today, introduce Carter Smith.
Carter, if you would stand up for a moment. And Carter is going to be the new executive director of Texas Parks and Wildlife, starting next Monday. Isn't that correct?
MR. SMITH: Yes, the 29th.
COMMISSIONER HOLT: Yes, congratulations.
MR. SMITH: Thank you.
COMMISSIONER HOLT: And we're proud to have Carter coming aboard, and he's going to sit in today and tomorrow and watch how all this goes. We're good, we're smooth; Bob keeps us on track. Bob and Carole actually, right, Carole?
And anyway, and then Carter will be starting next week. So, glad you're here. I have asked Commissioner Brown to take over as chair of the Finance Committee, and Commissioner Brown, Robert, will you please call your committee to order. Do you want this little dealie?
COMMISSIONER BROWN: I'd like to have that power.
COMMISSIONER HOLT: There you go. Get a feel for it. I think we need a bigger one, actually.
COMMISSIONER BROWN: I'd like to call the Finance Committee to order. The first order of business is the approval of the previous committee meeting minutes, which have already been distributed. Is there a motion for approval?
COMMISSIONER FRIEDKIN: So move.
COMMISSIONER HIXON: Second.
COMMISSIONER BROWN: We've got a motion by Commissioner Friedkin and a second by Commissioner Hixon. All those in favor, say aye.
(A chorus of ayes.)
COMMISSIONER FRIEDKIN: Any opposed?
COMMISSIONER FRIEDKIN: Hearing none, the motion carries.
Next item of business is the Committee Item Number 1, which is Land and Water Plan Update. Mr. Cook?
MR. COOK: Thank you, Mr. Chairman. Our internal audit shop is staffed with 16 new auditors, and they are conducting audits around the state in our state parks.
They have completed nine audits that are currently being reviewed, and the reports are expected to be sent to the State Parks management towards the end of this month.
The field work on eight additional audits has just been completed, and those are lined up to be reviewed and another 11 audits are starting this week.
These audits are a good tool to let us know how we are ‑‑ you know, what our status is as far as complying with the recommendations of the State Auditor's Report and our new fiscal policies. The director, our director of internal audit, Dennis O'Neal recently retired and we are currently in the process of selecting a new director for our internal audit group.
On another item, all members have been selected for the Sunset Advisory Commission, and they have begun the Sunset process. Some of our folks went down and sat in on just ‑‑ kind of an introductory meeting about ten days ago. The Texas Parks and Wildlife Department is scheduled for the second tier of reviews; they have a number of state agencies that are being reviewed this go-around and we are in the, what's called the second tier, which I will say I think is probably a good thing.
We've met our primary staff that we'll be working with; we've worked with them before. They are good folks, we know them, they know us, so I anticipate that that will go well.
And the second tier of reviews is expected to start their, come out and do their introductory thing, start their field work about mid-May. So we are lined up to go with that Sunset report. Thank you, sir.
COMMISSIONER BROWN: Thank you, Mr. Cook. The ‑‑ Committee Item Number 2 is the Implementation of Recommendations by the State Auditor's Office of State Parks Financial Processes, and Scott Boruff is going to make the presentation.
MR. BORUFF: Thank you, Mr. Chairman, Commissioners. For the record, my name is Scott Boruff, Deputy Executive Director, Operations, here today to give you our update on how we're implementing our State Auditor's recommendations that were asked of us in the last session at the end of the last session.
I've got this new little machine here today; I've been instructed on how to use it, let's see if I can remember, here you go. As a little bit of history since we've got a few new Commissioners I'm going to spend a little bit more time on this than I will probably in future meetings. Back in the late '05 budget cycle we made some cuts to operations in state parks where we reduced operations at 52 state parks around the state. We reduced staff by 70-plus folks out there in the field, and that came really on the heels of some budget cuts historically in Fund 64, which is the fund that supports state parks.
The agency however in those budget cuts in previous bienniums did not really cut the budget of state parks; we cut the budgets of the support divisions, including infrastructure and communications and administrative resources, to try to insulate the field operations from the cuts as much as possible.
So the real phenomena that hurt us in late '05 was that escalating costs were not being kept up with; the budget really in state parks was relatively flat. If you look at the historical picture back to about '04, you see a flat budget but you see costs climbing dramatically, which then resulted in ultimately the cuts to state park operations in late '05.
We went back to the Legislature in '07 and asked for some financial help there, and we were very appreciative of the Legislature's response. They ultimately gave us some additional funding to the tune of about $7.2 million a year for additional staff; about $5.7 million a year in additional operating funds; $4 million a year in minor repair; $3 or $4 million a year in equipment.
So it was very helpful to put us back on track; we have re-opened the majority, a huge majority of the parks that were partially closed; we did not, by the way, close any parks completely. We limited hours, we cut back the number of days and those kinds of things to try to make a minimum impact on our constituents out there.
Prior to the State Auditor's office coming in to look at us, we had already done internal audits which did identify some of the problems that we were experiencing in state parks, primarily as the result of not having enough staff to do what we needed to do. But we took those seriously, and in 2006 and 2007 the SAO folks decided they were going to do this audit, they came in, in March 2007 ‑‑ or completed their study in March; they came in, in actually December, January and February and issued the report in March which resulted in findings that amounted to 48 significant recommendations.
There were also a series of riders that were related to the audit, and so we internally decided to roll those riders into our response; so what we have is actually about 52 issues that we were dealing with, 48 that were specifically in the SAO recommendations and another four riders which related to those recommendations.
Those 52 or so, or 48 or 52 depending on how you want to look at it, recommendations were classified into four broad categories. I will tell you that we are making and have made very substantial progress on all of those recommendations. We have submitted all of our reports, there's a number of reporting requirements, quarterly reports and annual reports, that require us to report progress against what we're doing. Those reports have all been turned in on time and in fact the last quarterly report, which was due the end of December, we turned ‑‑ December 31st, we turned in on December 15th, so we're getting a little bit ahead of the curve now and able to get these responses in ahead of time.
We have met several times with the SAO and LBB staff, most recently about eight or ten days ago to review progress and to look at their satisfaction with our reports, and our processes. And I will say in general they are satisfied with where we're heading; they have made a couple recommendations which we are taking seriously and continue to work closely with the LBB staff and the SAO staff to get on down the road with this.
We are on schedule to complete all 48 of the major recommendations on time. And we do track these hours very closely, and to date, we have had over 40,000 man-hours of staff time invested in resolving these recommendations.
COMMISSIONER HOLT: Scott, how does this tie into the Sunset? So I ‑‑
MR. BORUFF: Well, the Sunset ‑‑ it's, there is a relationship. I'm sure as we go through the Sunset process, the Sunset Committee will be looking at our compliance with recommendations both from this audit and from previous audits which we have always taken seriously, and always have done I think a good job of responding to so I suspect they will look at that. I don't anticipate any problems there, but they I'm sure will take a look at it.
As I've said earlier there were four broad categories of recommendations, the first was to improve the accuracy of park visitation reporting and maximized state park revenue. We knew in fact in our earlier internal audits we had identified counting visitors as a problem for our State Parks Division. We had a lot of antiquated equipment; we had equipment that varied from site to site, and you'll hear some of the specifics about that as I move on, but this was an issue that related to park revenues and are very important to us, and very important to SAO and the Legislature for us to take a look at.
I reported at our last meeting a whole suite of successes that we had there, I'm not going to re-articulate those, certainly would be glad to re-send that presentation if you are interested. Since then, though, we've continued to make progress against those recommendations; we've implemented new visitation procedures, and these are procedures that have been vetted through our Administrative Resources Division with Mary Fields and her staff, we appreciate that help and support.
Kim Luedeke in that new shop that was created in Administrative Resources, as you will recall and her ten or eleven staff have been very instrumental in working hand in hand with the State Parks Division to try to put together these processes in a way that's acceptable to the State Auditor and the Legislative Budget Board.
For example, we've installed standardized traffic counters; just so you'll know, we're counting visitation in state parks during normal operating hours with an actual counter; we're taking a head count. There's not going to be much question about how many people come into the parks while we're open any more.
One of the issues though was how we're going to estimate visitation that comes in after hours. And one of the problems we had before is that we had a dozen or more different kinds of car counters. We had different procedures at every park about how to use the car counters, so we simply have gone back in and established procedures that every park uses, and they use the same kind of equipment so we're doing the same thing park to park to park, which gives us some credible numbers. It also makes it easier when staff are going to move from park to park to know what the procedures are, and not get clumsy in implementing the procedures, because the procedures are homogenous across the different parks.
We're conducting regular surveys of our visitors in the parks. And visitation I think is going to be pretty dramatically improved; our ability to estimate visitation will be dramatically improved in the wake of these new processes.
COMMISSIONER HOLT: What do you mean, regular survey stuff, do you mean ‑‑
MR. BORUFF: Well, we have folks that are going in after hours and surveying the folks that come into the park. One of the issues you always have in a park, for example, somebody may just drive in at night and drive through the loop and drive out.
COMMISSIONER HOLT: Right.
MR. BORUFF: So we're actually going into the park after hours on a random but a statistical basis and looking at who actually lands in the park, basically; who is actually there, and making sure that those people have paid, either through somebody coming around the next morning to collect fees from them or in some cases where they pay through some other mechanism.
So it's just a way to go in and validate the visitation procedures through survey activities. Standardized discount fees and waivers were a big issue before; we had many parks doing many different things in terms of discounts. We do think it's appropriate to have reasonable discounts for children, for example and youth groups that are coming into the parks. We do sometimes waive those fees, either in total or partially.
But we didn't have a systematic way of applying those discounts across the systems. We now do that. I believe the discounts can be either 20, 50 or 100 percent discounts. There's a limited number of discounts, is my point, and they're applied consistently, and they're overseen and approved through the chain of command at the park, and they come back to the AR Division so that they can validate whether those are being done appropriately.
So these standardized processes including fees, including the way we count visitors, have been very important for us to be able to get a handle on these financial controls.
COMMISSIONER BROWN: What's the determining factor there? Is it ‑‑ there's a Boy Scout troop that qualifies, or I mean ‑‑
MR. BORUFF: There are parameters —
COMMISSIONER BROWN: — how do you apply that?
MR. BORUFF: We have some standard policies in place, and I could ask Mr. Dabney to come up or I could get you that information.
COMMISSIONER BROWN: He can just send it ‑‑
MR. BORUFF: All right, we will forward you that information. There are some standardized processes that the local staff have to go through, and they have to also get approval from their chain of command, it's not just kind of willy-nilly, anybody gives any discount they want.
COMMISSIONER BROWN: Right, right.
MR. COOK: Let me just ‑‑ I think one of the things that's important, Commissioner, is that now when they give a discount there must be a record of who it was and why it was ‑‑
MR. BORUFF: Yes, correct.
MR. COOK: — and so that we can develop some of those parameters around, you know ‑‑ because I think the park manager has to have some discretion ‑‑
MR. COOK: — you know? And so we're trying to meet the requirements of the report and yet still serve our customers as they need to be served.
MR. BORUFF: Now, I don't want to imply that we didn't have processes in place before; I think Mr. Cook's comments are very valid. A lot of what we got criticism for is that we had poor documentation of the processes that we had. So making the processes homogenous across the system, and good documentation were probably the two key elements, along with revising some processes that need to be revised.
Last but not least, accomplishment in ‑‑ under Section 1 was, we are actively conducting analyses of potential revenue-generating opportunities, and those vary, everything from the kinds of things you rent out in a park to when you're open, when you staff the front gates and those kinds of things. But there are active analyses going on to try to look at potential new revenue sources for the parks.
The second major category of recommendations were to improve the effectiveness of management and operation of state parks. Once again I'm going to go over the new accomplishments, not the ones that had already been accomplished. We're providing enhanced monthly budget analysis; there are two new positions in the state park budget which help parks provide budget analysis and historical research relative to budget utilization.
We work closely with the Administrative Resources Division on a monthly basis to look at how close we're coming to projected revenues and those kinds of things. Probably one of our biggest remaining work packages if you will from the SAO recommendations is the analysis and review and ultimate implementation of a zero-based budget model. We're well down the road there; there are several different deliverables which ultimately culminate in the process being completed.
We have gone out and looked nationwide at industry standard zero-based budget models, and just for your edification the bottom line is there, we're actually looking at every working unit in the state park. How many times a day the bathrooms have to be cleaned, how many minutes it takes to clean it, how much equipment it takes to do that, the same thing with lawns, how often do you have to mow them, what kind of equipment do you have to have, how many hours or minutes a day does that take.
So we're going work unit by work unit, park by park and identifying what it takes to take care of that park. That's what the zero-based budget is. And we've got a model out there that's been used by other states, most recently the state of Oregon, for example, has used this same model to identify the needs for the state park.
And I'll tell you in a minute how this relates to some of the other riders which I think are going to be important as we roll into the next session.
The third major category of recommendations was to improve the consistency of cost-estimating processes, ensure proper prioritization of capital improvement repair needs. You may recall that we came to the Commission back in August with a list of prioritization criteria for major capital projects.
I will articulate again the fact that the Texas Parks and Wildlife Department has a long and successful track record in implementing capital projects; we have for the last decade been able to sustain about a $20 to $22 million a year expenditure rate. There is good evidence that we are effective and efficient in expending those dollars. There's also some misunderstanding about the timing, about how those projects get delivered; it's not something that happens as quickly as in the private sector.
It is important, I think, to say though that we do have a track record of being successful at expending those dollars; we have never had a problem spending our dollars in capital projects.
Having said that, there were recommendations about establishing criteria; obviously the Legislature as well as ourselves are very interested in making sure that the parks are not only accessible to the people of Texas, but safe and effective for their purposes for recreation.
Some of the major accomplishments we've accomplished in the last period of time since I reported to you before, we have gone out and done extensive training both with the state parks staff and the infrastructure staff on this new prioritization model that we're using, how do you prioritize projects.
One thing I want to take a moment here because it's going to be important that the Commission understands this, is that we have several categories of prioritization that you approved back in August. One is health and safety; one is regulatory issues; another is what we call business continuity, which is our effort to make sure we don't see a decrease in revenues, and when possible, try to increase revenues.
There is some confusion about the health and safety criteria. It is not an emergency when ‑‑ those criteria are used for projects that we are planning. We don't plan for emergencies; emergencies happen. We deal with them immediately. So some people take that health and safety criteria to mean something as imminent, somebody's going to get hurt, there's some kind of situation which puts our customers in danger, and that's a misperception.
What health and safety is tagged to is the potential down the road for a project, if it goes unaddressed, to ultimately become an emergency and to ultimately create some health risk to the public, it is not imminent. If it's imminent, it's classified as emergency. We take care of it immediately. We close the facilities; we get to work on it with emergency funds.
This process that I'm describing to you is for planning out into the future about how to spend the funds. But so just as you move down the road, be aware if you get some feedback that, why ‑‑ we have gotten this feedback recently. Why would you do a business continuity project before you would do a health and safety project?
Well, the answer is some health and safety projects are not going to be a problem for five or seven years; they're just there because we know under industry standards that a roof has to be replaced every 20 years; and so four, five, seven years out we start thinking about that. How are we going to do that five years out?
It doesn't mean the roof's going to fall down in the next five years. In the meantime we're trying to balance the Legislature and our own interests in increasing revenue. So there may be another project that if we went out and did quickly we could increase revenues, we would still deal with that health and safety issue later.
We are required under the ‑‑ some of the riders to submit a variance report on our capital construction projects so that when a project comes in at 10 percent higher or lower than it was projected, we report that. And we are required to do that on a regular basis; we have since the last Commission meeting submitted three of those variance reports, which have been accepted by the LBB and the SAO, so we are on target with our reporting.
Last and probably most importantly, after all of us including the Legislature and our oversight organizations, the fourth category which is to address the financial control weaknesses in state park operations; in fact I've already described a lot of those activities in the context of the other recommendations, but we have some new accomplishments ‑‑
I'm sorry, lagging behind on ‑‑ there we go. We have some additional accomplishments in this final category which are important. We have implemented a comprehensive fiscal control policy and procedures to guide the state park staff; I'm going to talk a little bit more about that. We are in the process of moving towards an automated system that will reduce some of the workload on the staff, but right now these are manual processes. As Mr. Cook reported in the beginning of this committee meeting, under the Land and Water updates, we ‑‑ one of the requirements was for us to hire 16 new auditors for the parks.
We have done so; those folks, 14 of them at least are field-based. The other two are here in Austin I believe, helping coordinate. They have completed quite a few initial audits; the early audits as you might expect found some technical problems with our completing some of the financial control processes. We've immediately taken those back to the field staff and planned additional training; we believe the second wave will show significant improvement, and we can ‑‑ we will continue to address those things as we move down the road.
We have a long-term training plan for park management which had already actually been implemented prior to the SAO recommendations, but we continue to move down that road with managing park operations. I think we've had a couple hundred staff go through that process already, a very intensive week-long or two-week-long, in some cases, training process.
The audit program is moving forward rapidly. We do intend to go back to key parks and re-audit again if we find some issues in a park that causes concern; and I will say that we haven't seen any trends. That's one of the things we look for in these early audits. Do we see some trend that indicates some significant problem.
Really has been not so much trends but just a whole hodgepodge of different kind of technical issues which you might expect with a brand-new system with a manual out there, filling out the forms correctly, making sure you fill out the right form.
We are particularly sensitive to any attitude issues we run into, which we have not run into many. If we got folks out there that don't want to do what they need to do, we are dealing with that directly and immediately; that's not happened except in extremely rare cases. For the most part, the park staff have been very cooperative in understanding the importance of this financial control exercise.
We are providing quarterly revisions to the site-specific revenue goals. I mentioned that a little bit earlier. Working closely with Mary Fields' staff and Administrative Resources, we're trying to, on a quarterly basis, come back and determine how close we are at guessing what our revenues will be, and at looking at those additional revenue sources that I've described earlier, to see if there are ways that we can enhance revenues appropriately.
We are required under Rider 23 to monitor health and safety capital repairs weekly, which we are doing; it's a big workload for both the infrastructure and park staff. I think this was partly in somewhat the confusion between what health and safety and emergency is but we are on a regular basis, those projects which we identify as health and safety, we're monitoring those every week to make sure that they haven't become an emergency, and if they do, we take the response which I described earlier.
We are also required, and this is redundant but I wanted to let you know that both in the recommendations and in Rider 27 we were required to provide quarterly adjustments to our revenue projections. That is being done.
And we have, and this is redundant, we have sent in our last quarterly report two weeks ahead of time. So we're ‑‑ like I said, I think we're getting ahead of the curve a little bit there. We've submitted the three 10 percent variance reports, probably the second or the first largest work package remaining are Riders 30 and 31, and these are riders which direct us to hire a private vendor to look at the impact of expenditures of capital dollars. So the idea is, let's go out there and figure out, is there any additional revenue opportunity when you spend capital dollars to fix up state parks.
We don't think there's going to be a dramatic revenue increase, we are certainly open. This is a private vendor who's working independently. They work closely with us, but they're doing the study independently. What we believe we will see and what we're hearing at least initially is that the report will probably suggest what you logically would assume, which is fixing up existing infrastructure, and it usually doesn't mean a whole lot of new revenues. It just means you're not going to go in the tank with your old revenues because your facilities aren't falling apart.
There may be though in some cases where you've got to ‑‑ an opportunity to do something new or to build some new infrastructure; there may be some revenue opportunities which we are serious about trying to identify and squeeze out as best we can.
That particular report is due the end of March, March 31st, we're on target, we do believe the delivery will happen on time and that report will go to the LBB and SAO March 31st. In fact, those vendors, I believe, are going to be downtown next week to brief our oversight committees and our major groups downtown as to what they're doing and make sure they're involved all along the way.
The Rider 31 which is related to Rider 30 and is being done by the way by the same vendor, asked us to submit a work plan and to identify what a high quality park system would look like. We have submitted the work plan as required to SAO and LBB, we ‑‑ the final deliverable which is this report that comes from the vendor is due October 31st. And it will identify what they believe a high quality state park system is and what it would take to get there, both in terms of expenditures and in terms of acquisitions and those kinds of things. This will be basically a study that says, if you really want a high quality state park, you're going to need to do this, this and this, and here's what it will cost you.
COMMISSIONER HOLT: Have you hired that vendor?
MR. BORUFF: Yes, sir. They're on board.
COMMISSIONER HOLT: And they've done this kind of work ‑‑
MR. BORUFF: Yes, sir.
COMMISSIONER HOLT: — elsewhere around the country, or ‑‑
MR. BORUFF: They've got a good reputation, we spent a lot of time looking around the country. It's a group called Pros Consulting that's done this for several other states. They have a high credibility; we got good recommendations from other state oversight agencies, other state legislative bodies and those kind of things. So this is a group that's done this and knows what they're doing.
COMMISSIONER PARKER: Pros, P-R-O-S?
MR. BORUFF: P-R-O-S.
COMMISSIONER HOLT: And you'll have, I assume, they'll work with you closely; there's a lot of input that they receive from you? And ‑‑
MR. BORUFF: Absolutely. In fact, they are out in the field right now, Mr. Chairman, they are working closely with the state parks staff, we meet with them here at headquarters with the senior executive staff, oh, once every month or so. But we're in close contact, but we're also sensitive to the fact that this is an independent study ‑‑
COMMISSIONER HOLT: Right.
MR. BORUFF: — we're not trying to drive the conclusion; we're just trying to be cooperative about information.
COMMISSIONER HOLT: Mr. Parker?
COMMISSIONER PARKER: I really appreciate getting this information. I know it's important. Coming out of the construction business, I realize there are other items dealing with our state parks that we addressed here in the last Legislature, and the Legislature was kind enough to go along with practically everything we sent down there to them.
But with regard to the repairs that are very, very necessary in the ‑‑ in our state park system and they are repairs that we took to the Legislature in gaining their favor, can you give me a little report, give the Commission a little report is ‑‑ what's coming up out of the ground, if you understand what I'm talking about.
MR. BORUFF: Well, I think I do, Commissioner, let me give it a shot.
COMMISSIONER PARKER: Okay.
MR. BORUFF: And you can let me know if I'm not going where you want me to.
COMMISSIONER PARKER: Okay.
MR. BORUFF: The bottom line is, when the Legislature first gave us this money, and appropriated the money to us, they asked for some of these riders to be completed before the money was actually given to us to spend.
Riders 30 and 31 were key examples of that. They basically said, as soon as these studies are done where we get some indication of how the expenditures are going to affect revenues, and how a quality state park would look, then we will allow you to start spending that money.
And they actually set a date for us to have that done, by the end of September. When we went out to the private sector and said, we need this study done, the feedback we got from the private sector was, the timing did not work. They could not get the study done by September.
So we went back ‑‑
COMMISSIONER PARKER: We basically gave them ‑‑ we went out within 90 days of the end of the Legislature and started ‑‑
MR. BORUFF: We went out sooner than that, actually ‑‑
COMMISSIONER HOLT: Well, I was going to say, Scott, why don't you walk people through when the Legislature ended, and then they wanted that report actually done and back by September, which was 90 days.
MR. BORUFF: Yes, sir. That's correct. And the vendor community said that was impossible, and we were very appreciative of the fact that LBB and SAO heard that message, we went back to them and asked for an extension based on the feedback we got from the private sector, which said that March 31st was the earliest they could accomplish it, and the LBB and the SAO concurred with our request for the waiver to give us until March 31st so the private sector could have time.
So that's kind of how that timing happened. Now, the reality is, once that report goes in at the end of March, we still ‑‑ and assuming it's approved and accepted by the LBB and the SAO, which we're assuming because we in good faith are moving forward, we then have to still go through several other steps within the state structure to get the money and start doing projects with it.
We have to go to the Texas Public Finance Authority; and they don't meet every month, they have a ‑‑ they meet several time a year much as this body does. Once the TPFA approves it, we have to go before the Bond Review Board which doesn't meet every month; it has a, you know, a periodic schedule.
And so the fact is, we don't expect to get the cash to start these capital construction projects until around September 1st, this next September 1st, which means by the time you go out for design, which takes 30 to 90 days under the state process to get a design ‑‑
COMMISSIONER HOLT: Let me ‑‑ you might remind everybody, you can't go out for a design until you have the money ‑‑
MR. BORUFF: Yes, that's correct.
COMMISSIONER HOLT: I've had to go through all this, so ‑‑ John has too ‑‑ I think that's what John's trying to point out, I assume ‑‑
MR. BORUFF: The point is, it's not as quick a process ‑‑
COMMISSIONER HOLT: I think ‑‑
COMMISSIONER PARKER: I just want it on the record. I don't want somebody coming back to us ‑‑
COMMISSIONER HOLT: — well, legitimately ‑‑
MR. BORUFF: — at seven months, oh ‑‑ let me see ‑‑
COMMISSIONER HOLT: I'm just asking Scott to kind of clarify the way the system works ‑‑
COMMISSIONER PARKER: — and say, You haven't done anything.
COMMISSIONER HOLT: Exactly.
COMMISSIONER PARKER: That's exactly the reason ‑‑
COMMISSIONER HOLT: So just to clarify how it works is the way the law reads, the stats read, or the regs read ‑‑
MR. BORUFF: Under the current legislation and existing state rules, I mean, we have to first of all meet the rider requirements which we intend to do in March. We then have to go through the state process of getting in front of the Texas Public Finance Authority and the Bond Review Board.
Once the money is issued to us, the bonds are issued and the money has come back to the agency, we can then begin to start the process of selecting a design vendor, which typically under state regulatory issue, competitive, is you have to go out to bid, you have to get RFPs and those kind of things; it could take up to 90 days.
Then the design process typically takes anywhere from six months to nine months, sometimes even a year depending on the size and complexity of the project. So before you're in construction it will probably be towards the end of the next session. And that's when the money really gets spent, is when you get into construction.
Typically the design phase takes about 15 percent of your dollars; the other 85 percent get expended late in the curve for construction for obvious reasons, when you start putting the bricks and mortar on the ground.
COMMISSIONER PARKER: Now then, let me ask you another question. Is there a good possibility that we're going to be going back to the Legislature and asking them, We've got this, this, this, this, this ‑‑ that we didn't get done two years ago, now we're asking you to assist us in doing this, this, this and this?
MR. BORUFF: I guess that's up to you, ladies and gentlemen, to tell us what you want us to.
COMMISSIONER PARKER: Well ‑‑
MR. BORUFF: The bottom line is, I will say ‑‑
COMMISSIONER HOLT: Scott's being nice ‑‑ that's the reality of it.
MR. BORUFF: Well, let me put it this way. Historically the agency has, in the eight years I've been here, gone to the Legislature in every session, and asked for and by and large has been successful at acquiring new funding, even in the light of the reality of the expenditure curve we have. So we've gone back every session and said, we need more money. The fact is, we've identified $400 million of backlog.
We received some $67 million in this last session; so there's still a big gap there to meet our needs; there's still a $300-plus million gap. My recommendation to the Commission and Mr. Smith this next session is going to be we go back and ask for more money, and I don't feel hesitant because we will spend the $67 million, and we will spend it right.
We have a history of spending money historically. The fact that it rolls over from year to year, yes it aggravates certain folks because it looks like we're not spending it as fast as they want. But the fact is, we have a track record of spending money, we did it when we got $70 million the first year I was here. It took us four or five years to spend those dollars. But we're done. The old dollars are expended, and that's the good news, is we go into the next session, the only dollars left on the table are going to be the dollars we got in this last session. All those previous bond issues, we are now speaking, are going to be completely expended and encumbered.
So I don't think we should be shy about going and asking for more money. I think we've been effective at spending these dollars. I think given the constraints we have under the state system we've been pretty quick about it. We've been effective, we've been cautious to get the right kinds of things done under the right time frame.
COMMISSIONER PARKER: Well, we all know that Steve, Walt and you and the entire department is doing a great job. But I just wanted to get it out to where everybody could know about it, what the ‑‑ what we're going to be faced with come January 3rd of '09.
MR. BORUFF: That's probably true. And I guess my wrap-up comment is probably the same thing past Commissions have experienced each time they've gone back to the Legislature.
COMMISSIONER HOLT: That we know legislators tend to turn over for various reasons, and so sometimes you have to ‑‑ it's a reeducation process.
MR. BORUFF: It's complex, there's no doubt. It's not a simple system.
COMMISSIONER HOLT: Right. And I think one of our goals this year, in other words before the legislative session starts in January '09 is to spend some time with everybody from the Governor's office, Lieutenant Governor's office, Speaker of the House, on down to key committees, committee heads, you know, say it the right way ‑‑ making sure they understand that before we walk in January '09, asking for the next two years' out.
So that's going to be one of my goals, Carter Smith's goals, as we go forward, is make sure that we do that. Scott's already doing that; Gene's already doing that, on an ongoing basis. And so I think that's going to be a key part of my job, particularly driving that.
MR. BORUFF: I'll try to wrap up quickly here, folks, and I promise in the future unless directed otherwise I'll keep these much briefer than this, because I think we're nearing completion to be honest with you.
But one of the things that's probably just as important to us is, the recommendations that fell out of the SAO Report and the associated riders is the agency's ongoing effort to try to automate a system that will attract the kind of financial control issues that we're now having to do manually. Those manual controls eat up a ton of time for the State Parks Division out in the field. They also require a lot of times when Mary Fields' staff in terms of monitoring and auditing those activities as they flow back into the agency.
We have gone out and requested from the private sector some requests for proposals to put together an automated package that would do many of those financial controls for us, as well as our reservation system, which we already have and works pretty well, but we need an integrated system.
We ‑‑ within the last month received seven different proposals to our request. Gene McCarty, Mary Fields, George Rios and Walt Dabney as a team, with their staffs, have been reviewing those requests. I think we have narrowed that down to two or three vendors that we believe could perform, going through some more due diligence to look at their financial capability, their technical capability and their ability to meet the operational needs of the state parks.
We hope to next month select a vendor who would then move down the road with those three prime divisions, AR, Administrative Resources, Information Technology and State Parks, to put together this automated system. Our goal is to have that system in place prior to the session, November or December at the end of this year. We believe that's possible, but it's aggressive.
So we're not making any promises, but we wanted you to know we are pushing as hard as possible to have that process, that system in place either prior to or very early in the session. And once again I think George Rios would be nervous at me making that promise, but I think we are potentially going to try to get there. I didn't misquote you there, did I?
Last but not least, I just wanted to summarize the three major remaining work tasks. The first is of course the completion of a zero-based budget exercise which I described as due in October 31st so we would be working on that on an ongoing basis until into the next fiscal year.
And then the completion of the Rider 30 and 31 studies by the private vendor. The first one is the one that triggers our capital money, which we hope to have happen shortly after March 31st, when that report is turned in.
The second is this definition of a high-quality park, and I think that will be interesting as we go into the session and maybe think about asking for new money. The money that we received the last time around basically bailed us out and allowed us to reopen the parks and get those parks back into minimal operating condition; it did not give us enough money to make those high quality state parks, and I assume that was the rationale between this particular ‑‑ about this particular rider. What would it take, in addition to make this a real high quality park system.
So it will be interesting to see what those two studies ‑‑ fall out of those two studies.
And then last but not least and really probably the most important for us operationally is this automated system that would allow us to start being more efficient in the way we use our human resources to track financial controls in the State Parks Division.
With that, I would welcome any questions and I would be glad to answer ‑‑
COMMISSIONER BROWN: Scott, I'd like to say that you and your team have done an outstanding job in this whole process. And you're to be complimented on the work you've done.
MR. BORUFF: I appreciate that.
COMMISSIONER BROWN: Any questions ‑‑
COMMISSIONER HOLT: On the new system, when you say new, you're talking about new to us, now. You're not necessarily going out and trying to invent a whole new system for state parks ‑‑
MR. BORUFF: Those are my ‑‑
COMMISSIONER HOLT: — you're going to look at, across the nation what others have done, benchmarks, et cetera.
MR. BORUFF: We have looked across the nation. And surprisingly, there's not much out there. I mean, all of the other states are either in the same boat we are in, or they're in the water. They're worse off than we are. There is not a canned ‑‑
MR. COOK: I believe even the National Park System ‑‑
MR. BORUFF: Even the National Park System does not have an integrated system. Now, I'm not going to pretend to be the technical folks here, but what I'm hearing, I believe, is that there are some packages out there that would provide a basic platform; but we then may be able to tweak a little bit to get what we need to, and I'm ‑‑ there, again, you can sense my lack of technical expertise, but I say, tweak, I'm sure ‑‑ there's a better word for it.
But bottom line is, we're not going to start from scratch I don't believe, but I do think we're going to need to customize something that we want ‑‑
MR. COOK: I think it's safe to say Mary's folks and the various ones, George's folks working on this, basically went to every state and said, "What have you got?"
COMMISSIONER HOLT: Good. Okay. Well, that's what I asked.
MR. COOK: And I can tell you that right now, there's a bunch of states out there waiting for us to develop.
COMMISSIONER HOLT: Yes ‑‑ I figured that, yes ‑‑
COMMISSIONER BIVINS: We'll charge for that?
COMMISSIONER HOLT: — yes, I was just going to say, right.
MR. COOK: For a price, we can.
COMMISSIONER HOLT: Yes, right. We'll become a consultant. Right?
MR. COOK: Yes.
MR. BORUFF: I would like to comment on Mr. Brown's compliment for ‑‑ it's not my team, this is a team that's really a cross-divisional team at this agency and I'm proud of the fact that we're all part of that. I mean, this was something that you couldn't have done in State Parks alone, nor could you have done it with Administrative Resources alone. Or Information Technology.
Hundreds of people have been involved in this. Each one of those recommendations had a specific team assigned to it. Senior staff meets many times a week to work out issues and resolve this. We put together an internal SAO audit team; Brent Leisure needs to be commended for his work on that; he's a state parks regional director who's been the major interface between the State Parks Division and the Administrative and IT divisions.
Larry Sieck's, a project management technologist that's made the paperwork flow on this thing pretty effectively, very effectively. Jeannie Munoz, who we pulled from another division to get kind of a new set of eyes on this, came out of the Wildlife Division and has helped extremely much in terms of, you know, giving us some new ideas.
Sometimes you've been in the business so long you don't catch things; so I really think it's a broad team effort, and I would congratulate all that team.
COMMISSIONER HIXON: Can I just ask this question of a high quality park system which you say your vendors are ‑‑ if it worked with other states, I mean, and they're obviously very quantifiable things through that. But is there a paradigm out there? I mean, is there one somewhere in the country that everybody says, "This is what we're striving for"?
MR. BORUFF: Well, I'll probably bounce that one to Walt. I will tell you that we have heard things, for example, like Arkansas, the state of Arkansas which came up with a way to fund parks through a sales tax, has actually made some very dramatic improvements and there's a lot of talk going on around the country about the way their state parks have really gone from substandard to being top of the line. Those are the kinds of things I think that you hear out there. There are some examples of states where funding has been answered, where the parks are looking in a lot better shape than they did before.
This group, Pros Consulting, and there's an associated architectural firm that works with them, Heck ‑‑ Fisher Heck out of San Antonio, are out there looking at other states and trying to identify a comparable ‑‑ high quality system out there.
COMMISSIONER BROWN: Any other questions?
COMMISSIONER BROWN: Thank you for your presentation.
Next item is Committee Item Number 3, Financial Overview. Mary Fields will make the presentation.
MS. FIELDS: Good morning, Commissioners. For the record, I'm Mary Fields, Chief Financial Officer and I'm here to provide the financial overview.
The focus of our presentation today will be to provide a year-end revenue and budget status for Fiscal Year 2007, we'll close that one out, and provide a revenue and budget status for the first quarter of Fiscal Year 2008.
So let's start off with 2007. When comparing the state park gross receipts through August 2007 at $35.62 million, we're up 4.9 percent, or $1.67 million over last year's collections.
There were two primary drivers for the annual increase, and those were basically an increase in the facility fees, and also an increase in activities and concessions.
COMMISSIONER HOLT: So we raised fees? You said facilities fees.
MS. FIELDS: The facilities fees really there were a few parks that were primary drivers on facilities. Indian Lodge brought in a good portion of that increase; there were multiple parks, but that one was one of them, and it actually was the good driver for the activities and concessions as well. And the Texas State Railroad was another key one there. But there were several parks. Those were some of the primary ones.
COMMISSIONER HOLT: Texas State Railroad, you all let go of that.
MS. FIELDS: Actually did have ‑‑
COMMISSIONER HOLT: It was a big contributor.
COMMISSIONER PARKER: We gave it away.
MS. FIELDS: — for revenues, we compared to the prior year, yes. Believe it or not, yes.
COMMISSIONER HOLT: I couldn't resist.
COMMISSIONER PARKER: I couldn't either.
COMMISSIONER HOLT: Yes, right.
MS. FIELDS: Our ‑‑ moving on to our boat revenue, as of August 31st we were at $21.6 million, this is up by 6.1 percent, or $1.24 million compared to the same period last year.
Here all of the categories of revenue were up, with registrations and sales tax really being the primary contributors. We continue to transfer 15 percent of the registration and titling fees to Fund 64, and that totaled $2.8 million for the year.
Our license sales revenues were also up. As of the end of the year, most of these things are no surprise, we had these conversations pretty much all through the last fiscal year. But at $88.1 million we were up $2.2 million in revenues as compared to last year, or 2.6 percent. And again, all categories of revenue were higher than the previous year.
In looking at the number of licenses sold, correlate somewhat with the revenues at $2.73 million we were up 1.7 percent as of the end of August when compared to the prior year. And you can see the categories kind of summed up on the slides.
When comparing our 2007 revenue collections to the annual revenue estimates, we exceeded our estimated revenue in all of the categories. We collected just over 100 percent of our Fund 9 Game, Fish and Water Safety Funds, 121.6 percent in our State Park funds, and let me talk about this one just a little bit.
That increase was mostly attributed to the land sale proceeds from Eagle Mountain Lake, that $9.2 to $9.3 million. And also, there were gas royalties from that property that contributed to that increase.
The Local Park Fund, at 129.3 percent there, the increases there were really attributed to interest earnings, primarily. And then the Other category was at 144.9 percent, and this category actually is comprised of multiple funds. There were a couple of funds that really exceeded their estimates, so they were drivers for that percentage.
In looking at the budget, our overall budget decreased by $49.6 million since I reported last June, or as of the end of June. Our adjusted budget is at $297.1 million. Budget adjustments were made ‑‑ these are summarized for July and August, and then year-end closing adjustments are summarized here. I'm not going to review all of these, I'll just hit a couple of the highlights.
The unexpended balances of $40.8 million, most of that will be carried forward, and about $34 million of it is related to construction. The rest of it is federal funds and donations. The miscellaneous adjustments of that $15.6 million, there's about $13 million of that, of additional federal funds that are under review and we'll be moving those, the majority of those forward into 2008 as well.
So when we compare to that adjusted budget and look at kind of how we did as far as expending the funds, we ended up with only 1.3 percent of the budget remaining. So we closed out the year fairly well. It's about as close as you can get without going over.
COMMISSIONER HOLT: Yes. Congratulations, yes.
MS. FIELDS: Moving ahead here, with 2008, I do want to just mention here I have revised this state park receipts slide just a little bit to get us comparable. I'm showing only continued operations. So we're not looking at the revenue from the 18 historic sites that were transferred to the Historical Commission, and the Texas State Railroad which we just talked about. So, those revenues are out here so that we can kind of look at apples to apples.
So when you look here, we're at $8.27 million as of the end of November, and that's up $6.3 percent or about $489,000 over last year. And again, really all the categories exceed the prior year. Activities and concessions is just slightly below, but ‑‑
COMMISSIONER HOLT: So this would be, three months, September, October, November?
MS. FIELDS: Yes.
COMMISSIONER HOLT: Okay.
MS. FIELDS: That's activity through then.
COMMISSIONER HOLT: But I mean, it's just the ‑‑ yes, three months. First quarter.
MS. FIELDS: First quarter.
COMMISSIONER HOLT: Of the fiscal year. Okay.
MS. FIELDS: And I will mention, if you did add in the remaining revenue there it would only take, for 2008 on the state parks receipts, it would only increase it by about $80,000. So that's what's been collected at those historic sites during this period of time that will be transferred to the Historical Commission.
COMMISSIONER HOLT: So that transferred as of January 1?
MS. FIELDS: It will be transferred as of February 1.
COMMISSIONER HOLT: February 1.
MS. FIELDS: Yes, sir.
COMMISSIONER HOLT: Okay.
MS. FIELDS: The boat revenue here, as of November 30th is at $3.4 million. Again this is up by 4.4 percent or $142,000 compared to last year at this same time.
The registration revenue is just down slightly; the revenue for titles issued and the sales tax revenues are up. Again on that transfer, that 15 percent transfer, we're at about $429,000 based on the revenues through November.
More good news here with the license sales revenue, that's also up as of the end of November, at $60.7 million; we're up $1.7 million in revenues, or 2.9 percent. All categories of revenue are higher than the previous year, the only category that's not is resident hunting. That's down by about 2.6 percent. It appears to be offset by combo sales, which are up about 2.5 percent, so I would guess there's just a change in the license purchaser's preference.
And reviewing the number of licenses sold at $1.88 million, we're up 5.8 percent as of the end of November. I'm not going to read the categories though you can kind of see how they're looking, and ‑‑ on the side, I will comment on the fishing; that's looking real good, and a lot of that's related to the freshwater at this point.
When comparing our 2008 revenue collections, and comparing those to the annual revenue estimates, we are doing well, which is no surprise, you know, after we've just discussed growth in all of the major revenue sources. With 25 percent of the year elapsed, we've collected 45.2 percent of Game, Fish and Water, 23.4 of state park funds, 36 percent of the Local Park Fund and the other categories at 93.1. Here again there's multiple funds, the Artificial Reef Fund is doing real well, and also the capital account.
And looking at our budgets, our overall budget, since we talked about that this summer, has increased by $18.8 million, taking our budget to $424.6 million. Budget adjustments made during the months of September, October, and November are summarized on the slide. Here you can see some of the unexpended balances from 2007 coming in; you'll see more of those as the year progresses.
You can also see grants of $5.2 million are being added. And again I spoke to you all about that this summer; as they're approved, we will add them into the budget. There was one large grant there for endangered species, but there's multiple that are being pulled in.
And we've received a couple of significant donations. One for artificial reef, and another one to go toward the construction of the Game Warden Academy. In reviewing our budget versus expense, we have 79.8 percent of the budget remaining, with 25 percent of the fiscal year elapsed. The operational categories, salaries and operating and equipment are really basically on track. You'll see the grants and capital catch up as the year progresses.
And that concludes my presentation, I'll be glad to answer any questions.
COMMISSIONER FRIEDKIN: Mary, a quick question on, I can't remember, on total licenses sold, does that reflect from Fiscal Year '08, from '07 ‑‑ does that reflect a re-categorization of some of the license types? Or did we do anything with that last year?
MS. FIELDS: We did not ‑‑
COMMISSIONER FRIEDKIN: Are we backing out ‑‑
MS. FIELDS: — make any big changes to our license types between '07 and '08.
COMMISSIONER FRIEDKIN: Okay.
MS. FIELDS: The license years. It was '06 to '07 that there were changes.
MS. FIELDS: Yes.
MR. COOK: If I could point out, just to make a comment too, Mary touched on grants. And Commissioner Martin and ‑‑ every time we get an opportunity, let me just put it this way. Every time we get an opportunity, in working with, whether it's the Feds or any organization out there that provides grants, our people, our staff field staff and division directors take advantage of those opportunities to participate in the grant programs that are out there.
This recent tour of Homeland Security issues along the border, you know, I don't think we'd let those Feds get away without it costing about a million bucks; so we'll ‑‑ Pete and his folks have done a really good job through the years of working ‑‑ and you'll see some additional numbers, additional reports on that. But that's an area that we're working really hard these days, and it's out there. And it's just a matter of knowing them, them knowing us and what we're doing; how we would spend their money, how we utilize their money to accomplish what's important to them and what fits in our operations. So we're working that pretty hard.
COMMISSIONER BROWN: Any other questions?
COMMISSIONER BROWN: Thank you, Mary.
MR. COOK: I would also like to point out, Mr. Chairman, at each of your places to kind of go along with Mary's report of FY '07, our little annual report is prepared each year, prepared by our Communication Division, Lydia and her shop, you know it's a 26-page snapshot of, you know, what happens at Parks and Wildlife in FY '07. And I can't pick this one up without ‑‑ personally without looking at the picture down here on the center bottom, the fellow in the boat that appears to be fishing ‑‑ he's actually perusing Mother Neff State Park ‑‑
COMMISSIONER HOLT: I was looking at that. I see it's under water.
MR. COOK: — about 15 feet under water.
MR. COOK: And also, none of us ‑‑ none of you, none of us will remember FY '07 without remembering in the upper right corner the loss of two of our game wardens, Ty Patterson and Justin Hurst.
So in this little report there's some really pretty pictures of really handsome people and all that stuff, you know, followed by pictures of us, but ‑‑
COMMISSIONER HOLT: Yes, all right.
MR. COOK: — it's a good snapshot of the agency and some of the issues that we were dealing with, legislative process, funding process and where we are. So I hope you'll take a chance and get an opportunity to look at that. We appreciate Lydia and her shop putting this together. All the DD's participate in the process. So take a look at that when you get a chance.
COMMISSIONER BROWN: Thank you, Bob.
Committee Item Number 4 is Electronic License Sales. Gene McCarty will make the presentation.
MR. McCARTY: Mr. Chairman, Commissioners.
For the record my name is Gene McCarty; I'm deputy executive director for administration. The item before you is a briefing item on the Department's hunting and fishing license sales system.
Just to let you know right up front, I'm kind of a front guy here, I ‑‑ there was a lot of other people that know a whole lot more about this than I do. One of them is the gentleman with me, Tom Newton. He's our license sales system manager; and I also have George Rios, our information technology division director, available to answer any questions about technology, because that's going way over my head.
MR. COOK: Gene, let me point out, Tom is the ‑‑ Oh, I don't know, three or four times a year I will forward you the little graphs and charts of our sales statuses; I usually refer you to the one chart because that's the only one ‑‑ or graph, because that's the only one I can really understand. Tom is the gentleman that assembles all that information for us, and done a great job with that, and I appreciate his help on that. Very, very useful for those of us tracking that information.
MR. McCARTY: The Department's license sales system dates back to 1900, and at that time utilized paper licenses and permits issued by hand. This system was in place up until 1997. In 1997, the manual paper license system utilized approximately 3,200 sales outlets, which included sales agents such as sporting goods stores, convenience stores and Parks and Wildlife Department offices.
As you might expect, there were numerous problems with this system, such as cash flow, accountability, and timely data reporting. If ‑‑ there was really now way to audit the system; the system worked with 3,200 different agents out there, every one of them with a book, with a carbon copy; they were bonded agents, but the timeliness of them reporting the data and submitting the money to us was a significant problem for us right up until '97.
In '97, the Department initiated its first automated point of sale system. This system was developed and managed by Transactive, and was a major improvement over the old manual system. But it still had a number of shortcomings; the transaction, the speed on the system was very slow, the system was not very stable; we had a number of outages from time to time, and again we had reporting problems.
The cash flow was better and the cash remittance was better. In 1997, we were utilizing about 3,000 different sales agents, again including sporting goods stores, convenience stores, Parks and Wildlife offices.
In 2002, we converted to a much more sophisticated point of sale system. Sometimes you'll hear this system referred to as the Hypercom System. It was developed and managed by Worldcom, Worldcom-MCI and then ultimately MCI, as they went through different iterations of that corporation.
This system had numerous operational improvements, such as real time reporting, improved accounting functions, agent administration, and customer database administration. And in ‑‑ 2002, we were utilizing approximately 2,400 different sales sites.
In 2004, we brought up the internet component of our system. This system utilized the internet website as a sales agent. And the Department fulfills the sale of the license by mailing out the license to the buyer within ‑‑ usually within 24 hours.
Today, this ‑‑ the internet site accounts for approximately 2 percent of all of our sales. And I say that in that that's kind of a double-edged sword. There's a huge opportunity for growth in the internet area, but when you think about the internet as a single sales agent, it is our single largest sales agent in the state. The next largest is a Super Wal-Mart in the Fort Worth-Dallas area, in terms of an individual sale site.
In 2007 the old point of sale system was replaced by a web-based, "thin client" system that utilizes a central server, and data center, that communicates over the internet, with multiple client computers, "thin clients" as we call them.
This system is much ‑‑ a very big improvement over the old Hypercom system, it's much more robust in terms of available memory than the old point of sale system, and it enables the agency to push out a lot more information and to utilize the license sale system in a lot of different ways. It provides a lot of flexibility for application and function, and the other thing is, this system is significantly faster than the old system.
The old Hypercom system was averaging about 6 minutes per transaction; this system if they are hooked up to high speed internet is about 3 minutes, and the real limitation is the person who's operating it; it's not the system.
We are currently under contract with Verizon to operate this and manage this system until 2013; licenses are sold through this system with state parks, law enforcement offices, wildlife management areas and retail outlets; and the internet, and from a 1-800 phone system.
In 2007 we sold approximately 2.8 million recreational hunting and fishing ‑‑ or 2.1 million recreational hunting and fishing licenses, and a total of 2.8 million total license sales, that generated about $88.1 million in net revenue for the Department.
We believe that the current system really provides a very convenient service for our customers. Licenses are sold at over 1,600 physical locations; we provide sale at Wal-Mart, at ‑‑ our two largest sales agents are Wal-Mart and Academy; Wal-Mart has about 334 stores, which accounts for about 43 percent of total sales. Academy has 69 locations, for about 20 percent. You can see Academy, on a store-by-store basis, really outsells Wal-Mart.
All Academy's are on high speed DSL, and that ‑‑ this last year became a real selling point for them. I mean, they really marketed the idea, if you don't want to stand in line to get your license, come to Academy, 'cause we're fast.
Wal-Mart picked up on that and they quickly converted their top 50 stores to DSL; the rest of their stores are mostly on dial-up, a little slower and they do have some backup at the sales counter.
In addition to all of those locations, we still have the 1-800 system, that is just a call-in; we'll issue a license, we'll issue you a confirmation number; you can hunt anything or fish anything that doesn't need a tag, right then immediately using that confirmation number.
We will try to get your tags and your license mailed out within 24 hours. And in ‑‑ the same thing with the internet sale system.
COMMISSIONER HOLT: Do we operate those, or does Verizon operate those?
MR. McCARTY: We operate the 1-800; the internet sales goes through a portal; you get to it through our website; but it connects directly to Verizon.
COMMISSIONER FRIEDKIN: Is business hours on the 1-800, refresh my memory on that. What are the ‑‑
MR. McCARTY: They're really standard working hours. They're 9:00 to 6:00, Monday through Friday. We would like to expand that ‑‑
COMMISSIONER FRIEDKIN: For weekends at least ‑‑
MR. McCARTY: — yes, through the weekends; but we have some problems with FTE caps and other sort of things that ‑‑ imposed by the Legislature, to be able to put people to operate it.
COMMISSIONER HOLT: The internet's 24/7 I think.
MR. McCARTY: The internet is 24/7. So you do have ‑‑ an opportunity 24/7 to get it through the internet or, you know, many of the Super Wal-Marts are open 24 hours a day.
COMMISSIONER FALCON: Gene, is there a cost to us, with these different entities? And if there is, how much of a cost is it?
MR. McCARTY: Well, we paid about $3 million in commission to ‑‑ this last year to Verizon for operating the system. Basically it's a transaction fee. And in that we also pay 5 percent to each one of the vendors, 5 percent of the value of the sale to each one of our license agents. That ended up being about $3.7 million last year.
So to operate the system, say it's an $88 million dollar system, we're paying about $6 million in operational costs to agents, and to transaction fees to the ‑‑
MR. COOK: That's a good question, Commissioner. We looked at ‑‑ I can see some of the pain on some of the faces of staff here as I mention this, but we looked at building this system ourselves and operating it ourselves, owning the system. And quite frankly, you know, we could have done it. It would ‑‑ we would have had to allocate significant additional resources, spending ‑‑ quite frankly spending ahead of what we had available, additional staff.
And we came to the conclusion after a lengthy study and amount of work inside and outside the agency that we were better off going with a vendor like Verizon, and a similar issue, the reason I take a moment on this, we're dealing with a similar set of issues in the state park accounting and reservation system.
We could build the system ourselves; we could own the system. But there's a huge cost up front that the state park system will in fact basically probably do the same thing; it will ‑‑ there will be a piece cost associated with it in some form or fashion. And that gives you, in addition to the expertise that those people bring who are in that business and do that all the time, it gives you the ability to go back ‑‑ this system here, we make tweaks and revisions in this system almost every year. And that's an important thing to be able to do, to be able to go in and say, "Well, no, we don't want it to do that anymore; we want it to do something different."
And again, dealing with state government sometimes it's just more effective to work it through a contractor like Verizon, even though the cost, like we say, in dealing with these vendors the cost is $6 to $7 million a year out of the $88 million system.
COMMISSIONER FALCON: And my second question is, once you go in to buy a license, I didn't know that they were automated, this is new to me; but once you're in there, can you go to other websites where we have other things that Parks and Wildlife may sell, like licenses and things like that? Is there a way to connect to other areas, where we can increase our revenue?
MR. McCARTY: Well, I'll let that go to George.
MR. RIOS: Yes. No, it doesn't connect Verizon ‑‑
COMMISSIONER FALCON: It's just that one specific thing?
MR. McCARTY: All right. Let me ‑‑ I know this is very difficult to see but I really wanted you to kind of take a look at ‑‑ you can probably see it on the back screen better than either one of these side screens; it kind of gives you a perspective of how available license sales are, or at least the license sales system is.
Each one of those dots represents a different license sales agent, whether it be a corporate chain, a retail agent, or a Parks and Wildlife office. And you see the state's pretty well covered, and certainly we're well covered within the major metropolitan areas.
To better give you a perspective of how the sales are spread out, as I said 88 percent of our sales come from our retail sales agents. Our law enforcement offices are about 5 percent, 4.75 percent. Texas Parks and Wildlife headquarters, then that's a number of different sales venues within the agency, it's our front ‑‑ what we call the front counter, which used to be right outside the door here. We've now moved it over to D Building, and in a couple of other ‑‑ clerks, is about 3 percent. And then as I said, the internet is 2 percent. The Call Center is about 1 percent. Parks are about a half a percent and wildlife management areas about a tenth of a percent.
We've had lots of discussion over the past in the license system as to what other states are doing. I wanted to give you kind of an idea of what some of the states that are somewhat comparable to Texas are doing in terms of the way they're selling licenses. So we picked California, Florida, Michigan, New York, North Carolina and Pennsylvania.
If you'll see the system providers, there are basically three system providers out there; ALS, which is still on the Hypercom, the old Hypercom system that we were on; in-house, there are a couple of states that have developed in-house, principally Michigan and North Carolina. And then ‑‑ in Texas and New York it's currently working with Verizon, and we're both on a thin client application, web-based application which is probably the higher end of the applications.
North Carolina is on the thin client application but they're maintaining that system themselves. If you'll also notice that they're only looking at about $1.2 million total license sales, as opposed to Texas Parks and Wildlife being up there around $2.8.
Interestingly enough, out in California which we would think would be the technology capital, they don't even use an internet application. Parks and Wildlife does have an internet, we have the Call Center, and we do have ‑‑ and we ‑‑ but we do utilize paper tags.
COMMISSIONER HOLT: Before we leave this ‑‑
MR. McCARTY: Yes, sir.
COMMISSIONER HOLT: — the one that jumps out, Pennsylvania, 4 and a half million relative to item volume. Are they selling other things, did they not do a combo? I mean, what ‑‑
MR. McCARTY: I think ‑‑
COMMISSIONER HOLT: — do they buy multiple licenses ‑‑
MR. McCARTY: — they count everything they have as an individual unit, and they don't do combos, and so forth.
COMMISSIONER HOLT: Okay.
COMMISSIONER FRIEDKIN: Have we looked at Michigan's system, and ‑‑ obviously developed in-house, I'm just curious as a benchmark opportunity to see how it functions, and ‑‑
MR. McCARTY: We didn't look at Michigan's system. We did send staff to North Carolina and studied North Carolina's systems extensively, and that ‑‑ and we utilized ‑‑ to some extent we utilized the information there when we were developing our in-house application proposal.
And of course it ‑‑ in either case, you know, the in-house application was going to cost several million dollars in terms of just getting up to speed in terms of the software application, and then the acquisition of the hardware for each one of the sales. In the case where we went with Verizon, they ‑‑ and one of the reasons we did a fairly long contract time is just from the standpoint of, they bought all of the thin clients; they paid for all of the hardware up front; and they've got the major capital investment, not the agency.
COMMISSIONER BIVINS: What did North Carolina use in lieu of paper tags?
MR. McCARTY: I'm not ‑‑ let me ‑‑
MR. NEWTON: They've got a ‑‑ excuse me; they've got a scorecard system that they ‑‑ I think you can download it or you can ‑‑ be received in the mail with your license, or you can at the time that you get your license. And it's a ‑‑ it's ‑‑ as I understand it, I haven't actually seen it, but it's a punch card; and then they have like 24 hours to call in the kill. They have to punch what it is, and record what it is, and then ‑‑ call it in, over a 1-800 number.
MR. McCARTY: Yes, sir.
COMMISSIONER MONTGOMERY: Which states have gone paperless, and what's the ‑‑ what are the law enforcement issues that have surfaced as they live with paperless systems?
MR. McCARTY: To our knowledge, none of them have gone paperless.
MR. COOK: Probably Missouri might be the closest to paperless, but they still different pieces of paper you have to have for different things. This thing that Tom mentioned of, you make a kill and you ‑‑ say of an animal that has to be registered, like a deer, let's say; then you have a number right there at a certain time frame that you have to call in; and once that's called in, then that harvest, that harvest is assigned a code number, whatever that a warden ‑‑ when a warden checks you, you've got that code number you're all okay.
There's some angst, I'll just tell you. We've sat in ‑‑ all of us have sat in the various Southeastern and Midwest Association meetings with their biological staff or with their law enforcement staff. None of them are perfectly happy, you know? There's always some give and take.
If you give up a tagging system, there's got to be some mechanism. And so we're ‑‑ we continue to look and certainly would welcome any suggestions, and they're not hesitant to try systems that make it simpler.
COMMISSIONER MONTGOMERY: I was just wonder whether we ought to try pilot, a [inaudible]. Experiment with it; see if there's some experimentation with some of these systems, and some of the pros and cons, and see whether ‑‑ I assume there's a pretty substantial saving ‑‑
COMMISSIONER FRIEDKIN: You can get away from the paper.
COMMISSIONER PARKER: Bob, how ‑‑ do the states handle it that have a daily bag limit of deer?
MR. COOK: Well, Louisiana just sort of keeps hunting, you know?
COMMISSIONER HOLT: That's good. That's like East Texas. John ‑‑
MR. COOK: Mr. Parker, the one that I can think of, and I quite frankly, Clayton Wolf or somebody maybe in the audience that can answer it better, but I know that South Carolina, some of the far Southeastern states used to have daily bag limits; you know, one a day, that type of thing.
COMMISSIONER HOLT: Right.
MR. COOK: And I think what they had in ‑‑ maybe the ones that still have a multiple bag of some kind, they have a written record, a sheet ‑‑ a place on the back of your license to log in the harvest. I believe that's probably the most common way that's done. You know, it's ‑‑ again, most of them have gone away from that. But there's still a couple out there. I think North ‑‑ I think South Carolina still has the ‑‑
COMMISSIONER PARKER: Maybe Mississippi.
MR. COOK: Maybe. Maybe.
COMMISSIONER FALCON: Gene, I'd like to visit this internet situation again. Do we go out and ‑‑ how do we advise the public that you can purchase a license over the internet. Are we doing any ‑‑
MR. McCARTY: We are doing some marketing, but that is certainly one of the key things that we're looking at in the future, is increasing our marketing effort on the internet; trying to drive as many people to the internet as we possibly can.
The other component of the internet that we've got to look at is, there is a convenience fee. And so we're trying to minimize that convenience fee, or looking at trying to minimize that convenience fee as much as we can; it's a $5 convenience fee, to try to entice more use of the internet. But we will be looking at a much more aggressive marketing plan in the future.
COMMISSIONER FALCON: And are we doing anything to specifically target the youth of our communities to purchase licenses on the internet? Since that would be the bigger user of it, or that is the bigger user of the internet. Are we doing anything along those lines?
MR. McCARTY: Not that I know of. No, sir.
MR. COOK: You know, we've looked at ‑‑ the internet thing is one that's kind of hard to read, and George or Gene maybe will help me here, but I believe the states that have been in internet sales the longest and have campaigned it the most, I think ‑‑ please somebody help me out here, but I think about 11 to 12 percent of their sales through the internet is about as high as they're getting. Maybe 15 ‑‑ George, do you recall?
MR. RIOS: That sounds about right ‑‑
MR. COOK: Yes. Somewhere in that range of ones that have really campaigned it, that have really tried to push it. Push it that way. Our ‑‑
COMMISSIONER FALCON: Has it been an overall increase, or are they just taking away from purchasing ‑‑
MR. COOK: No, I think it's just a replacement ‑‑ purchase, yes. Not an increase.
COMMISSIONER HOLT: So you're taking away, then, from your vendors.
MR. COOK: Yes, sir.
COMMISSIONER HOLT: Wal-Marts, Academy's ‑‑
MR. COOK: Yes, sir.
COMMISSIONER HOLT: — they'll look at it as a competition ‑‑
MR. COOK: Right. That's right.
COMMISSIONER FRIEDKIN: As a clarification, when you got to Texas License Connection, that will ‑‑ you can get into the TPW website from that? Or ‑‑
MR. McCARTY: You can get into that from the TPWD website.
COMMISSIONER FRIEDKIN: Right, okay.
MR. McCARTY: Yes.
COMMISSIONER FRIEDKIN: But not the independent point of sale internet system.
MR. McCARTY: That's correct.
COMMISSIONER FRIEDKIN: All right.
MR. McCARTY: Correct.
MR. COOK: And to your point about the competition, you'll notice we've gone from ‑‑ we've basically cut the number of agents we have had over time from 1997 to now, almost in half. And a lot of that has to do with changes in the way we approach it. When they were on paper, it didn't cost them anything. It now costs them a ‑‑ you know, a DSL line, some equipment rental costs, things like that. So we're really ‑‑ we've really ‑‑ those people who are selling licenses now want to sell licenses, because they've got to pay, because there's something out of their pocket going into it.
COMMISSIONER HOLT: Right. Well, and it helps attract people to their store.
COMMISSIONER FRIEDKIN: We also, Gene, had some discussion, I think about a year ago about attrition and how, you know, when we lose people, how do we get them back into the system and facilitate it for them so they can purchase their license and be reminded, and that's a little bit about what you're talking about in terms of expanding the internet channel; or some mailer or something that can ‑‑
MR. McCARTY: Right.
COMMISSIONER FRIEDKIN: — have you developed that and ‑‑ going to other segments, like ‑‑
MR. McCARTY: Lydia, Communications Division, Inland Division are working with a grant from Recreational Boating, the Boating and Fishing Foundation, to do some questionnaires and to do some marketing survey work out there to see if we can address that churn issue, in freshwater and saltwater fishing. But that is a ‑‑
COMMISSIONER FRIEDKIN: Okay.
MR. McCARTY: — that is a very valid point.
COMMISSIONER FRIEDKIN: Something we're looking at?
MR. McCARTY: Yes.
COMMISSIONER FRIEDKIN: Pretty actively?
MR. McCARTY: Yes. Lastly, I think we've touched on all these issues, but currently ‑‑ I mean, the discussion we've had to table, you recognize that the current tagging requirements is probably the biggest limiting factor in terms of moving forward with other technologies. As long as we have a need to produce a secure, non-reproducible tag that must be affixed to an animal, and that is used as a bag limit control mechanism, then, you know, we're pretty well set with where we are.
And that's one of the key issues that we're looking at, that's one of the key issues that Wildlife is looking at, one of the key issues that law enforcement is looking at, in terms of moving forward in use of technology.
As I said, we're looking at increasing our focus on marketing, to migrate people to ‑‑ customers to the internet. Just from a convenience perspective, but we've got to address a couple issues there with the convenience fee being one of them.
And we're investigating the use of interactive voice response. As we talked about, that's the call-in kind of call-in tag system. And then you know ultimately we'd like to be able to look at migrating off the paper system to a smart card system, which is a ‑‑ basically a little computer chip in a card that knows everything about you. And that's pretty far future kind of stuff.
So that's kind of a briefing on the past, present and future of the current license system and what we're looking at.
COMMISSIONER PARKER: What kind of options have you looked at, with regard to physical licenses?
MR. McCARTY: In terms of physical licenses, what do you mean there?
COMMISSIONER PARKER: You mentioned that you've been looking at several different items regarding tags, and ‑‑
MR. McCARTY: Oh. I'm not ‑‑ that's Wildlife and Law Enforcement are doing some work there; I'm not sure where they are in terms of how they want to address those issues.
COMMISSIONER BROWN: Thank you, Gene. Any other questions?
COMMISSIONER BROWN: Thank you. Committee Items Number 5 and 6 have been combined into one item, License Fee Increases and Conservation Funding. And we've got Scott Boruff and Larry McKinney are going to present.
MR. BORUFF: Mr. Chairman, Commissioners, once again for the record my name is Scott Boruff, Deputy Executive Director of Operations. I'm just up here to introduce this item. I'm pleased to say this is another cross-divisional effort that we've put together in the agency.
A little bit of background for the new Commissioners once again. Fund 9, as opposed to Fund 64, which you've heard about this morning in the SAO briefing, Fund 64 funds primarily state parks and some of the support divisions partially.
Fund 9 funds primarily the natural resource side of the agency, and also some of the support divisions. And just as a bit of background so you understand what I'm talking about, Wildlife ‑‑ both the Fisheries Divisions and Law Enforcement are funded exclusively through Fund 9. Some of the support divisions, and I'll use Human Resources as an example, support both Fund 9 and Fund 64; they do human resources for both the state parks and the natural resource side of the agency. So human resources, communications, administrative resources and infrastructure get some Fund 9 funding.
As you heard in the last Commission meeting, we are trying to be proactive in looking at the financial issues that Fund 9 faces, both now and in the future. We do not want to get into the same situation we got into with state parks where we had a ‑‑ serious issues that required cutbacks in programs, services and staff.
At that end, per your direction in the last meeting, Dr. McKinney has been the leader of this cross-divisional effort to bring you some information today about where we are in Fund 9, what some of the financial issues facing the Fund 9 are, and what some of the primary issues are going to be as we move forward into the future. Doc.
DR. McKINNEY: Mr. Chairman, members of the Commission, for the record, I'm Dr. Larry McKinney, I'm the director of Coastal Fisheries, and in this context I'm eligible for full retirement no matter what you all might decide.
COMMISSIONER HOLT: And that's why you got this job?
DR. McKINNEY: Yes. That's exactly right. Let me get started, and I have ‑‑ I'll just start with a one-slide summary of ‑‑ as Scott said in our last meeting, we're basically talking about what we're facing here, and a couple of things. One, there are obviously some serious challenges we're going to have to deal with, and one I've characterized, ecosystem management being ‑‑ the types of things we're going to have to deal with in the future to be successful in managing fish and wildlife are much broader than we ever had before.
It's simply not setting a bag and size limits, and seasons. We can't do that anymore. We have to be able to influence a lot of other things that we don't regulate at all. So we ‑‑ and we're working on those areas, be it water, habitat or those type of issues, and that obviously is complex in dealing with it.
Of course we have a change in demographics. Our whole state is changing and growing and we have to be able to respond to that, so those are a couple of things that we talked about last time, that we're ‑‑ that is driving us to taking a look at our resources and our revenues and how we do these types of things, to say nothing about what we're going to speak about today, some of those ‑‑ factors about inflation and salaries and all of that, that are driving us.
So what we set as our team as a goal, to ‑‑ what we're trying to achieve here, we put this ‑‑ and in terms of the goal basically saying too if we wanted to ensure funding necessary to maintain conservation successes and expand the efforts to meet increasingly complex conservation challenges while enhancing opportunities for our constituents to access fish and wildlife resources; that's what we're trying to do here.
And as we began to go through this we really came up with ‑‑ and this is not what you would expect, we identified four areas of needs that we needed ‑‑ we would have to address to ‑‑ in order to meet that goal. One of course is adequate operational funding; we have to have the ability to give our people the equipment, the tools to do their job in an efficient and safe manner; that's very straightforward.
Competitive salaries; clearly if we want to have the best people available to us to do this job, we have to be able to compete with other agencies in particular. Sustainable fund balances, this is an area in which we'll spend a little bit of time, it's a little more difficult to talk about here but basically it's those balances of which will support us through good times and bad and how we work in that direction.
And of course if we're going to look at these new demographics and supporting folks, we got to look at new and expanded programs, how do we deal with that? So my briefing this morning will be predicated on looking at each of these four areas and giving you an idea of our analysis, what we've come up with, as to what we would need in order to accomplish ‑‑ in each of these areas.
First of all let's talk about adequate operational funding. And these are the budget categories of salaries, basic operations, buying gas and that type of thing, and capital equipment. The cars, the boats, the motors, all those things that we need to accomplish our mission.
And I'll put up here just basically a hypothetical distribution of how we budget these things. It's different for each of our divisions, because some divisions have more land, or ‑‑ infrastructure they have to support, so it varies but one of the things that we watch very closely in each budget year, and Mr. Cook makes sure of this that we don't get into what we call this salary treatment. It's very easy for us to move more and more money into salaries because there's more demand there, and cut back on that operational cost to the point where they can't do their job.
And so we watch that very closely to make sure that we can do so. You just had this discussion earlier, for example, about going to the internet type of thing, and there certainly is a lot of convenience there. But under the conditions we have now, when you ‑‑ when we drive people to the internet, that means someone here in this building is going to have to get that internet sale, print out a license, put postage on it and mail it out. So there's operational costs to anything that we do, that we have to account for in our jobs.
This is clearly an important area that we've got to keep up with. Now for us, and Fund 9 operational budget for this year is about $31.4 million. That's what it costs us to operate day to day. And when we look back at how those expenses have increased over the years, going back to the last fee increase in 2004, basically our analyses show that our operational expenses increased by about 26 and a half percent over that period of time, which is a rate of 6.6 per year, and if you take a look ‑‑ and we've done the analysis on those kind of fixed costs, to see where they come from and they're no surprise; when you look at, field expenses have increased 68 percent; electricity 32 percent; and so on. So there's clearly been a number of increases that we've had to deal with in the operational expense.
Inflation over that period of time has been 2.7 percent per year, so basically what that tells us is that every year, we lose about $850,000 in purchasing ability. And that ‑‑ disappears in inflation; we lose that, and lost it every year. So in this period of time since the last fee increase we've lost about $4.2 million of purchase power that we had to make up by either not doing something or from other areas.
So that's clearly an ongoing issue, as we all deal with ‑‑ no matter what business it is, or in our own homes, we have to deal with that inflation issue. And typically, in our agency we've not done that. We will ‑‑ we would put a fee increase in and we would eat that cost until it becomes necessary for us to do it again. And so that's ‑‑ an issue I guess we talked about last time, at the last Commission meeting about how can we deal with that particular issue. Clearly, that need is something we have to address every year.
Salaries and that category ‑‑ we're going to spend a little bit more time on this one, it's so important to us. You know, any time you ask any of our division directors what's our most important asset in the division, and the response is going to be, Well, it's the people that we have. That ‑‑ you'd expect that in almost any operation, but in ‑‑ at Parks and Wildlife it is really that in spades if you will.
We have people in our agency that have made this a career that could have made more money other places but have bought into what we're trying to do here; they are into our mission. You see it every Thursday, that you come here with the service awards and retirement awards and what these folks have done and how long they've been with us. So they're a tremendous asset, and we get far more out of them than perhaps we should expect, but they do. Whatever the job is, they do it no matter what. So they're an important resource to us, and clearly we need to replenish that resource because eventually we all retire and someone has to come in behind us.
And we want those people to come in behind us and stay with us and do the job that you all expect. The problem is that right now we are not competitive with other state agencies, or other agencies of our type across the country. And that was part of this analysis we're going through. Just a quick step back for a second.
Our employees in Parks and Wildlife on the Fund 9 side are ‑‑ operate under three different schedules. You're a part of one of three different fee schedules. Schedule A, B or C: the Schedule C is law enforcement; game warden. And Schedule C salaries are comparable ‑‑ are set to all of the law enforcement across the state, primarily DPS. So there is an automatic means there to where we can at least keep our game wardens competitive across the state.
Now, it doesn't say they can compete with counties or cities or those type of things but at least we can do that. So that's been a ‑‑ been helpful. But in the other two categories, the Schedule A, which is administrative support, our technicians, budgeteers, those types of things, and then Schedule B which is biologists, lawyers, attorneys, hydrologists, all those types of things fit into those two categories.
That's not the case, they're not tied to anything and so they're subject to whatever happens with the Legislature. And the Legislature has, you know, responded and tried to help there to deal with inflation. But if we take a look at where we are, and you can see the Legislature has tried to address the issue, and as I said in Schedule C, we've been very successful in trying to keep our wardens competitive, but it has not been the case in the As and Bs; and that's what we have to deal with.
So looking at the analysis, I've picked out our technicians. We have ‑‑ and that's a large group of our Schedule A folks, our technicians are divided in Techs I, II, III and IV, and basically that's ‑‑ a Tech I is kind of an introductory level and as you move up in experience and skills, you can move or go into these higher ‑‑ levels.
And you can see here that for the Tech I and II in particular it's pretty dramatic; that within the ‑‑ those folks with up to two years of experience in 2007 we lost almost 40 to 50 percent of those. Half those folks stayed with us for a little while, gained some experience and then moved on because the opportunities were just too great. Once they'd been with us for a while of course they ‑‑ we tend to hang on to them, which is helpful, but another way of looking at it, if you just combine all of the technicians together, just ‑‑ regardless of whether I, II, III or IV, just all technicians last year of the 45 and ‑‑ that had two years' or less experience, that turnover rate was 40 percent. A little more experience, it's 15 percent and on down.
So you can see where the impact is, and when we do ‑‑ I'll come to that in a second. Another look at it, just look at the agency altogether. Again, when we have ‑‑ our folks come in, they'll pick up a year or so experience, and there's a tendency for them to look ‑‑ can look elsewhere. And so our turnover rate is somewhere between 25 and 30 percent there. And of course that reduces, drops down a little bit as we go on and hold onto them for few years.
Overall, our turnover rate in all categories is about 14 percent. TCEQ which is the next closest natural resource agency to us in size is 12 percent, and all natural resource agencies it's about 12; so we're a little bit higher on that end.
So that gives ‑‑ just gives an indication of kind of where we are salary-wise, and competitive-wise. And it hits ‑‑ it makes the point that our ‑‑ re-emphasize the point of where we are on our scale.
In each of the salary categories within the schedules, no matter what you are, Tech I or Tech II, that salary range is divided into four quarters or quartiles. And basically what happens is, you bring a person in on that first quartile when they're new, and then over the year as time, they accumulate experience and so forth you can, through merit increases and others, move them along that scale. That's typically what happens. You move people along to that scale, and get them rewards for good performance and those types of things.
Our budget situation has been so that we haven't been able to do that; and it shows here, that ‑‑ and when you compare our Fund 9 division, which is the light green, to the blue the rest of the statewide you can see that most of our staff is stuck in that fourth quartile; we just have not been able to move them along. And that's where we begin ‑‑ that's where we lose competitive, when people stay with us for a little while, if they haven't got the opportunity to move forward, they're going to start looking, you know, in other places and then we're not competitive.
So if the goal is, we at least want to be competitive with other state agencies of our type, what would it take? And basically that means we need to shift those positions over in those quartiles and move people along that scale so we're at least at the same level with other state agencies.
If we're going to do that, it would cost us about $7 million a year, in increased salaries to do that. If ‑‑
MR. COOK: Just for Fund 9?
DR. McKINNEY: Just for Fund 9. We did an analysis for the agency on the whole and that's about $11 million. So it's not ‑‑ this is our biggest expense, and of course this is an important area to us, but it's a serious issue that we have to look at.
So if we were to do that, we would become competitive with other state agencies, at least in that level. The next question being is, well, how does that put us ‑‑ what does that put us in regard to other agencies across the country right now? And basically we did a little analysis there and it's difficult to do; you have to make some assumptions, but I pulled out some categories of budgets at least ‑‑ positions I'm familiar with, and when I look at that across the states, if we did match these other state agencies, right now we're in the lower third ‑‑ we're below half, we're in the lower third and quarter of agencies across the country.
If we were going to make those adjustments, that as you can see by the chart here would move us up above those averages; in fact I think in most cases it would move us into the upper third to a quarter as far as paying salaries for those other agencies, and that would make us very competitive, and that's you know obviously where we would like to be.
So it seems to me that we can address those salary issues in this manner if that's what we wanted to do. So that's what it would take. Okay?
COMMISSIONER BROWN: Let me just understand, on the salary. What other state agencies are we taking the 50 percent quartile or ‑‑ is this the upper end of agencies ‑‑ how did we ‑‑ arrive at this?
DR. McKINNEY: On this chart for example?
COMMISSIONER BROWN: Right.
DR. McKINNEY: That chart just basically takes the distribution of salaries across all the state agencies, which is available, and just lays them on this graph with where those people fall in all of those areas. But on an average that's the difference. Am I answering your question?
DR. McKINNEY: Then we took our salaries, and where they fell underneath those quartiles and laid them on top of it. Am I getting at what you're saying is ‑‑
COMMISSIONER BROWN: Well, I mean you know there's probably a high end and a median and low end of all these various agencies. And so we have all that information I guess.
DR. McKINNEY: And that's all wrote in there ‑‑
COMMISSIONER BROWN: Because there's always going to be someone that's higher ‑‑
DR. McKINNEY: Oh, and you always expect that ‑‑
COMMISSIONER BROWN: Yes.
DR. McKINNEY: — right and of course as you move from the first to the second to third or fourth quartile you're going to go down ‑‑
COMMISSIONER BROWN: Yes.
DR. McKINNEY: ‑‑ that's what you'd expect ‑‑
COMMISSIONER BROWN: Right.
DR. McKINNEY: — if you compare people to that ‑‑ but unfortunately our comparison here is that we don't ‑‑ we're not able to move our people along at the rate of other state agencies, as they can ‑‑ primarily because they can go back in, and ask for additional appropriation and revenue. Ours is all based on these ‑‑
COMMISSIONER BROWN: Right.
DR. McKINNEY: — and that's the only way we can do ours, and we don't have them, we don't have it.
COMMISSIONER BROWN: Right.
DR. McKINNEY: They're not appropriated to this, then we can't.
COMMISSIONER BIVINS: Larry, on this adjustment number on the bottom, is that what the $7 million is subject to?
DR. McKINNEY: That $7 million?
COMMISSIONER BIVINS: Yes.
DR. McKINNEY: Yes, sir. If we were going to shift so that that green and blue bar looks approximately the same all the way across, that we just reflect that that's what it would cost us to do.
COMMISSIONER FALCON: And is that $7 million ‑‑ I'm sorry. That $7 million, now is this $7 million per year but is it $7 million to get caught up, not $7 million per year every year after that, is it?
DR. McKINNEY: Well, yes sir. Once you get the $7 million you have to hold it. You can't cut them back. I mean, it's not $7 plus $7 plus $7, but it is $7 ‑‑
COMMISSIONER FALCON: So to get the green bar up to the blue bar would cost us $7 million ‑‑
DR. McKINNEY: It should.
COMMISSIONER FALCON: — all right. But $7 million is also, what is it almost 15 percent or more of the total budget for Fund 9 ‑‑ I think you said Fund 9 was $31 million?
DR. McKINNEY: No, that's ‑‑
DR. McKINNEY: — just operational.
COMMISSIONER FALCON: Oh, that's just operational.
DR. McKINNEY: That's just operational.
COMMISSIONER FALCON: Okay. What is the total amount of Fund 9?
DR. McKINNEY: Mary? It's 100 ‑‑
MS. FIELDS: [indiscernible]
DR. McKINNEY: Just one moment. I'll get it exactly for you here.
COMMISSIONER FALCON: And so it would cost $7 million to get caught up but it would also cost $7 million to maintain?
DR. McKINNEY: Every year. Because once you raise those salaries, you need to hold them there, so it's going to cost that ‑‑
COMMISSIONER PARKER: It's not a one-shot deal.
MR. BORUFF: Some of you are not including inflation in future years.
MS. FIELDS: In looking, just to keep this comparable, he's got the $31.4 in operating, $70 ‑‑ about $71 million in salaries ‑‑
COMMISSIONER FALCON: Okay.
MS. FIELDS: — and the total budget with capital and all of that kind of stuff is at $124.5.
COMMISSIONER FALCON: Okay.
MR. BORUFF: Two important points, there, though Commissioner I believe. The first is, it's a $7 million a year effort to get salaries comparable with other agencies and it assumes no inflation or any other adjustment, so it's a flat assumption.
COMMISSIONER MARTIN: I just wanted to ask, how do the other agencies stay with its appropriations ‑‑
DR. McKINNEY: Well, right. Ours is driven by license, license amount what you got appropriated to us and so they can go in ‑‑ go back and do ‑‑ ask for additional appropriated money, monies from general revenue, in order to do that at that point.
COMMISSIONER HOLT: What we're told a lot of times is, during the last few sessions, well, you know, raise it yourself. So of course that's why we're here today talking about fee increases ‑‑
DR. McKINNEY: If we want to do merit raises, and that's ‑‑ I appreciate that's really the bottom line, again they say, Well, raise your license fees and we'll give it to you.
COMMISSIONER HOLT: Then we raise the license fees and then they raise hell. Okay? You know ‑‑
COMMISSIONER HOLT: — that's why chairmen only stick around about two years. We're out of here. One license fee increase.
COMMISSIONER MARTIN: And executive directors, you know ‑‑
COMMISSIONER HOLT: Yes. Well, they pass the buck to the Chairman.
MR. COOK: Let me mention one other thing here, that's a factor. That every time we sit down and do budgets, you know, when the division directors from year to year and as we go into our legislative appropriations request, which you folks will have to do this summer, you know, one of the issues here ‑‑ okay you got $70-some-odd million in salaries in this group of divisions, these Fund 9 divisions.
Well, you could do some salary adjustments with that $70 million by reducing your number of FTEs. By reducing your number of employees. Or by taking money from operations and putting it there. And so we try to balance ‑‑ those are issues that when we ‑‑ when you sit down with the directors this summer and start talking about, Okay, what are we going to look for, for '09,
'10 and, you know, future years, those are the kind of issues that you're going to be dealt, you know, dealing with.
Same thing in Parks. You know, if you have money available through fees or through appropriations, there's always that balancing act of, do I want to put a higher percentage ‑‑ Doc mentioned that earlier in the ‑‑ do I want to put a higher percentage into salaries and take away from operating? Do I not want to do improvements to our fish hatcheries, and plow that money into salaries?
So it's a real balancing act that we try to stay reasonable with. And again, this presentation is, we're trying to stay ahead of that curve. Involve you, let you participate in this process, whatever direction we go.
So it's a real ‑‑ you're thinking here about three to five years ahead; you know, at any point in time hopefully.
COMMISSIONER HIXON: When was the last pay increase?
DR. McKINNEY: In '04. About 17 percent. The third entity that plays into this too as Commissioner Martin was talking about, is sustainable fund balances. And this is really the thing that has grabbed our attention of looking at it, and you were talking about how do we meet increases in salaries without raising fees, that we've had a number of salary increases that the Legislature has ‑‑ we appreciate, granting. But without the fee increases, we have had to go into these balances to meet those salary demands. So what means, those balances have been declining.
And clearly one of the things that we need to do and it just makes good business practice is, you need to have, particularly if you're working on biennial budgets, you need to have a particular balance to work against to account for hurricanes or droughts or unexpected increases, or ‑‑ and the cost of those types of things.
And looking at that, it makes some sense that we would set as a target about 10 percent of our overall Fund 9 budgets about $100, $110 million, so a 10 percent balance, keeping that would seem to make sense and to help us address these issues, and certainly would help keep us from going negative, because that's the issue that ‑‑ you all are, we all are going to have to deal with, about 2010 and 2011 if we don't address these issues then we'll have some very difficult budget decisions to make. We will be making significant cuts.
This is the issue that Parks faced some years ago. What we're fortunate now is, we have some opportunity, as Mr. Cook said, to address this now when we have some options. There will not be those options four or five ‑‑ three to five years from now when we have to make those decisions.
So looking at that, what would it take, and it looks like something in the range of $5 to $8 million in additional revenues a year, would maintain those fund balances at about that $10 million level, and allow us to use them in that way.
MR. BORUFF: There's one other important dynamic for the new Commissioners relative to these fund balances, and that is, under our sports fish and wildlife restoration programs, those programs are reimbursement programs where we have to step out and spend those dollars first, and then apply for reimbursement through the Feds. And so you need some kind of balance as to ensure the cash flow issue there doesn't catch you in a shortage.
DR. McKINNEY: Good point.
COMMISSIONER FALCON: Larry?
DR. McKINNEY: Yes?
COMMISSIONER FALCON: Do any of the other state agencies maintain a fund balances for emergencies like this?
DR. McKINNEY: They certainly do. There's not ‑‑ TCEQ for example has a similar issue because they're fee-based too, so really the issues are fee-based issues. When you're appropriated, when you deal with general revenues, you have a different way of ‑‑ you just basically go back to the Legislature and say, We either can do these or not.
But if you're fee-based like we are and we have to raise our own revenues, then there's a dynamic there that puts a little extra burden on us, so you know, that type of thing when you have to raise your own money, and the fees ‑‑ people can buy them or not depending on economic situations or floods or droughts.
So it's a little bit different, beyond me to tell you, I'm sure Mary or someone else could give you a little more detail. But we are different than other agencies because of that.
COMMISSIONER FALCON: Have we ever tried to go to the Legislature and say, Look, in case we need to mobilize game wardens, like for the hurricane this past year, to go to them for emergency funding? Have we ever tried to do that, and say, Look, we want the capability to be able to tap into other resources, if there is an emergency. Have we ever gone before the Legislature ‑‑
MR. BORUFF: Retrospectively; not proactively. And you know, we ‑‑ there is I think a state fund for emergencies that we would have some opportunity to try to access. I think these are more for just normal business function issues, as much as emergencies. And that is, there are a lot of reimbursement issues in Fund 9. I really think that's as important as anything.
The big pieces of money that we're out there expending that has to be reimbursed to us later, that we have to spend those funds up front. So those are not emergencies, those are normal business practices that require a cash flow ‑‑ or a balance to ensure the cash flow doesn't go negative somewhere in the process.
COMMISSIONER PARKER: And you know, it's tough to budget for an emergency. I mean, you can have a contingency, but you can't budget for an emergency. And especially in our business, we know ahead of time how many biologists it's going to take to operate a certain wildlife management area. We know how many biologists it's going to take to operate our coastal operations; we know ahead of time. We know ahead of time how many game wardens it's going to take.
But especially on the biological side and our other service side, we know ahead of time how many it's going to take. And you know, if we don't ‑‑ if the money doesn't come in then it's going to be tough to meet that budget that we ‑‑
MR. COOK: I don't ‑‑ Commissioner, I think your question ‑‑ I've never seen the Legislature appropriate what we would call contingency funding, for us. I've not seen that. But if we have resources like our Prop 8 funding that's available for repairs, you know, you have some flexibility from the Legislature to use those funds for repairs to structures and facilities.
But you don't necessarily have a source to go back to if you have to pull 100 of your staff off, send them into an emergency situation. There is where we go to FEMA, or some of the federal organizations like that for reimbursement on equipment and on staffing. And we've done well there. And we're still struggling with it some, but those resources are available.
DR. McKINNEY: The other complicating fact on this in trying to look at these balances, and you'll get your chart here, which is split into the green, the blue and the red, is our restricted, various restricted funds, and the blue, for example, Stamp Funds and things like that.
Those are not available for actions like you're talking about like that. A big part of those, for example, is in Mr. Durocher's fish hatchery, about $15 million each. These are Stamp Funds, can only be used for very specific purposes, not for normal day-to-day operations.
And the green fund is similar to that; it's an example would be, if we sold land, that land ‑‑ that money would have to be used to purchase other land. So those are restricted. The only thing we have available to do that is that ten ‑‑ that red bit there. Unfortunately that sometimes gets lost in the Legislature. They work on a much bigger scale than we do, and they just see these big balances out there and they say, What is your problem, because you can see you have there ‑‑ you look there in 2007, you got a $50 million balance there.
Well, in reality it's about $12 that we could use for any of these types of things. But that makes it a little more difficult as well ‑‑
The final category is looking at new and expanded programs, and clearly there's lots of things we all would like to do and our constituents would like us to do, and we went through kind of an analysis process. But the one thing that came across with all of our divisions is the issue of access. We ‑‑ access is just such a high-priority need. When you have a situation where you have over 84,000 applicants for 5,000 hunting positions on public land, boat ramps are backed up where you can't even park on them, and ‑‑ I would say from my ‑‑ in my division in Coastal Fisheries for years I didn't necessarily ‑‑ it wasn't an issue for us, because we got the coastline and the beaches and all of that type of thing.
But I'm sure all of you have been on the coast recently, and that coastline is filling up with houses and condos. And the fishing piers or the old ‑‑ private boat ramps, that boat ramp may be worth $2 or $3 million as a condo versus a boat ramp. They're all disappearing.
So access is just ‑‑ will be our big issue. Water, we talked about from an ecosystem level, water, water, water. And that is there, but from this side of it, access is a huge issue that we've got to address, and it's ‑‑ it costs a lot of money. A boat ramp to expand or to renovate, we're talking a half to a million and a half dollars, type of thing.
These are big-ticket items and there are no more ‑‑ land in Texas. It's what we got. And so this is something that we really need to look at.
River access, we talked about paddling trails, the huge demand that's just exploded on those type of things so people ‑‑ clearly they want a lot of ‑‑ I don't think, we can't get them to our fish and wildlife resources unless we can get them access. So this is the area that we really want to expand on here, to provide that opportunity to get at those resources.
And in order to do that, we have to look at, as we talked about with all these things, how do we ‑‑ fund those type of things? And that's ‑‑ we've had this discussion before, but it's worth emphasizing again that one of the areas is that we really need to take a look at developing new sources of funding to allow those folks that are benefitting from the monies that our hunters and fishers, our anglers have expended now to provide access and opportunities, we need to let a lot of other people help us provide that as well. And if we want to do something new, we have a whole group of new folks, new people that we haven't talked to; how do we tap into that area?
And we spend a lot of time and are continuing to do so, to look at other states. You talked about that this morning. There are models and things that are being tried around the country that we want to tap into and look at and see if we can use them as well.
But a lot of that will take legislative support, and change, and so we have to work with our legislative leaders and our constituents to do so.
So basically the objective would be to address these needs before they become critical and we fail in meeting the goal that we started with. And as we talked about earlier, we have some times now where our options are open to us. But we don't want to wait too long.
And in doing so, there's really two questions to ask. What's the best strategy to proceed from this point, and what's the time frame within which we must act. And I want to try to answer that second question first, because that's the one that's most straightforward is that time frame.
And that's something we've been thinking a lot about. If we're sitting here at this Commission meeting here in January, you all could ‑‑ we could propose a fee increase, for example, right now and then it could be enacted over the spring, or whatever we ‑‑ in that order. But in reality, until we go to the legislative session, go through the legislative session and the Legislature would agree to that and appropriate it to us, that's not going to occur until May '09, and it couldn't even be enacted probably until September '09. That's about 18 months. And then revenue being real life, we're talking two years.
So the reality is that we have a window of time here from now until the end of the session to make a decision on what the best strategy for addressing these needs and from the staff perspective in looking at it, I mean, clearly we need to have our constituent support; we need to have that legislative support. We have a lot of work to do. We got to make our case as well as possible and look at all of those options.
So although we ‑‑ you know, there's a tendency to say, Let's ‑‑ up front and try to raise the money as quickly as we can, the reality is we have some time, and we need to do it right; we don't ‑‑ we can't afford to miss it. So that's where we are from the staff perspective, trying to ‑‑ would like to have that discussion input from you all, and guidance in how can we, what's the best way to approach ‑‑ what's the strategy that works best to meet all these needs so we can continue to do those things that we've been so successful in doing and meet all those new challenges we've been talking about.
So that's ‑‑ at this point, that's kind of where we are in the presentation. Certainly would entertain questions or comments or ‑‑
COMMISSIONER BROWN: Are you going to begin to scope the needs in funding alternatives with our constituents, are we going to start that process? And assuming, once we get the input from our constituents to Commissioner's Holt's point, we need to go to the Legislature and begin to start explaining this process and what our strategies are, and what ‑‑ what's involved there.
DR. McKINNEY: Yes, sir. And that's what we're here for, to talk with you all and ‑‑
COMMISSIONER BROWN: Before the ‑‑
DR. McKINNEY: — seek guidance.
COMMISSIONER BROWN: — session actually starts.
COMMISSIONER HOLT: Well, is that issue going back to one of his slides where he's got $4.1 million Wildlife Watchers, and maybe you think about it, we sell about 2.8 million licenses of various types, hunting, fishing, combos, et cetera. Growth is not very strong, hasn't been over the last few years. We're going to have to expand, okay, where we collect our fees from. Because these are people participating in essentially the same types of activities, outdoors, conservation oriented, but you could argue, not paying for it. Okay?
And so I'm expanding or expounding a little bit, I think that's going to be one of the key things we do also is go to these various constituencies, kayakers, canoers, birdwatchers, whatever it may be, and their associations, Audubon ‑‑ whatever it may be.
That's already started. Scott, please jump in there or anybody else, as we start talking to them and asking them to start thinking about participating. As you could imagine, some are willing to talk and others are not going to talk at all.
But that's ‑‑ we're going to have to get there. Now, whether we get there this round, totally inclusive I can't imagine we will. But we got to get it started. You can't keep asking the fisherman and the hunter to pay for everything in conservation. And this is going on, on a national basis. Karen, I think you are probably well aware of and involved in it, and others around the table too, is that this is where we're going to have to go. You know, we can't keep just raising the fishing license fee, or the hunting license fee, or the combo fee.
So certainly that's going to be a big part of what we do also, as we are, then, once again working with our legislators, asking their help and direction as we go forward.
COMMISSIONER BROWN: Help them understand what our funding needs are, and ‑‑
COMMISSIONER HOLT: Funding needs are, and where we're going to have to go that is not traditional. Okay? Let's face it, I mean, Texas Parks and Wildlife and most conservation in this country has been on the backs of the fishermen and hunters. I mean, I don't think there's any doubt about it from a funding point of view.
MR. BORUFF: Mr. Chairman, I think we're looking for direction from the Commission as to where to go next. I do believe the staff consensus is it would be wise to spend the next several months talking with those constituents you just described, visiting with our legislators and the folks that support us downtown, and then coming back to the Commission later this year with some specific recommendations.
That's ‑‑ we believe that's one of the options that's the most palatable and would give us the opportunity to seek out that feedback we just talked about.
DR. McKINNEY: Clearly you want to go into the legislative session with the support of the legislative leadership, with our constituents behind us, and a strategy that they all believe is appropriate and supportable. That's the end target. How we get there is ‑‑ we all have roles in that that we need to play.
COMMISSIONER FRIEDKIN: And with our input.
DR. McKINNEY: Absolutely. That ‑‑
COMMISSIONER FRIEDKIN: That gives us ‑‑
COMMISSIONER BIVINS: Mr. Chairman, what is ‑‑ or, may I ask Commissioner Montgomery, do we have a fee on our paddling trails? Have we ever thought about that?
COMMISSIONER MONTGOMERY: We've been talking about it. I mean, you and I have gone over it [inaudible].
VOICE: — a license fee quote, saying [inaudible].
COMMISSIONER FALCON: Mr. Chairman?
COMMISSIONER HOLT: Yes.
COMMISSIONER FALCON: Can you explain to me the federal excise tax and the loop on how we get money from that.
DR. McKINNEY: It's a three to one match, in both ‑‑ there's a sport fish restoration and wildlife restoration, a fund, federal fund which comes from the sale of sporting goods. That tax is allocated to states according to a formula of the numbers of hunters and anglers you have in those states. And clearly Texas, we always get the maximum because we're one of the largest states.
So for every state dollar we spend, we can be reimbursed up to $3 to that maximum amount, and we get that maximum amount. But we have to expend those dollars, all of those dollars. That's what Scott was talking about. We have to expend $100 in order to get the $75 back; it's a reimbursement type of situation.
VOICE: It's a federal excise tax.
MR. COOK: There's ‑‑ particularly two different funds, Dingell-Johnson and Pittman-Robertson. When any rifle, any firearm is sold there is an 11 percent tax, Pittman-Robertson tax. All ammunition that is sold, reloading equipment that is sold, there's an 11 percent tax on that, federal tax, that goes into U.S. Fish and Wildlife Service and is appropriated back to the states on a reimbursement basis, based on the number of hunters, hunter days, you know, those kinds of things.
Texas is number one in what we receive. I think the combined PR/DJ, Dingell-Johnson and fisheries selling ‑‑ fishing equipment, lures, rods, reels, all of those kinds of things, people pay a federal excise tax.
It comes back to the states for fish and wildlife conservation. And I believe our combined reimbursement estimated this year is around $25, $26 million to Texas. So it's truly a user, a constituent, you know, participating in and conserving those resources, managing those resources, and it's very directive.
The Feds ‑‑ quite frankly and justifiably so, are very protective of how that money is spent. We can't spend it on certain things at Parks and Wildlife. We can only spend it on fish and wildlife ‑‑ approved fish and wildlife restoration projects, conservation projects. So there's a ‑‑ some strings attached to it but it is truly a constituent-user paid program ‑‑
DR. McKINNEY: And there is ‑‑
MR. COOK: — and then combine that with our revenues from our hunting and fishing licenses, to fund these agencies that we're talking about; these divisions that we're talking about.
COMMISSIONER FALCON: Now, do they also determine what is taxed? Is it only ammunition and rifles?
COMMISSIONER HOLT: — a federal excise tax ‑‑
MR. BORUFF: And within the last three months we've been in conversations with the senior, most senior leadership at U.S. Fish and Wildlife, they've started an initiative to try to create a new taxing bill that would tax other wildlife users. For example, maybe binoculars would be taxed, and that money might come back to the state, similar to PR and DJ. It's just something in the initial stages of discussion, it's not going to happen quick because it's a federal project.
But this discussion is going on at the federal level, the same discussion we're having here. How are you going to get other users for ‑‑ the outdoors to pay a fair share of conservation efforts out there.
COMMISSIONER MONTGOMERY: What percentage of sporting goods tax are we taking now?
MR. BORUFF: Well, there's an estimated ‑‑
COMMISSIONER MONTGOMERY: I would like to ask us to look at the possibilities, discuss the possibility of dedicating some percentage of that tax. That would index with inflation, and here it's a broad-based tax that does tie user benefit to user fee, which was the original theory behind it.
MR. BORUFF: Well, right now that's a Fund 64 ‑‑ I'm not saying we couldn't go have the discussion, but that sporting goods sales taxes was ‑‑ the argument was, it was intended to fund state parks activities, recreational activities, and state parks.
Mr. Cook said, at least from the Feds' perspective, you got to be careful how you mix those two activities. In fact, you can't really do that or you're going to lose that federal funding. So ‑‑
COMMISSIONER MONTGOMERY: I understand. But what I was thinking, though, it we're only using a small percentage, we are also funding other recreational activities, particularly out [indiscernible]. It's a logical ‑‑ it's a legitimate argument to me, that it should fund both things.
COMMISSIONER FRIEDKIN: Potentially stay in the same fund, but just incremental channels ‑‑
COMMISSIONER MONTGOMERY: In ‑‑ yes. In philosophy it breaks up very quickly when you start yelling politics. I'm not ‑‑ I'm saying we ought to look at it.
COMMISSIONER HOLT: Well, the last Legislature did ask that the Commission ‑‑ we put together a subcommittee, I don't know what terms ‑‑ the right term, to study the sporting goods tax. What's in it; for example we were laughing about, whether pogo sticks are in there but canoes are not. Okay?
This maybe gets to you, that that may end up ‑‑ if we ever get that group put together, which hasn't happened yet to my knowledge ‑‑ we're supposed to have that together, and report back to the Legislature by January '09, is that you may be able to broaden its scope eventually. I don't think this round, but the next round. And see where those dollars ‑‑ because we know those dollars are being collected but have not been used in the state parks, not at the full level.
MR. COOK: I think a real important distinction here is that tax on sporting goods in Texas is a sales tax ‑‑
COMMISSIONER HOLT: Yes, good point.
MR. COOK: — it's on everything. Federal excise tax is specific to firearms, ammunition; it's put on there in 1939. It's ‑‑ those programs have been in for 60, 70 years now. Specific to those identified items, those specifically identified items only pay ‑‑ those are the only things you pay that 11 percent tax on.
Whereas the state tax in Texas is a sales tax. It's on everything.
COMMISSIONER HOLT: So there are types of taxes.
COMMISSIONER HOLT: Oh, of course. You mean, the way it's set up?
COMMISSIONER HOLT: Oh, yes, and it is raising, gosh I don't know, a hundred-plus million dollars a year? Am I saying that correctly, or is it a biennium? I can't remember. I think it's a year. So there's a lot of dollars there that right now have been not appropriated to parks or anything else that has to do with conservation. So you could broaden the scope, there's no doubt about it. And eventually my guess is that discussion will get started; maybe even with this committee that's trying to be put together at this point.
I mean, the Lieutenant Governor is supposed to nominate some people, the Speaker of the House, and the Governor.
COMMISSIONER BROWN: Has the Speaker nominated on the House side? Have they made any nominations on that?
COMMISSIONER HOLT: Yes, the speaker ‑‑
COMMISSIONER HOLT: The Speaker's side, but not the Lieutenant Governor's side.
COMMISSIONER BROWN: Okay. So the Senate side, we don't have ‑‑ okay.
COMMISSIONER FALCON: One last question regarding this. On some of the federal laws you can get exemptions. I know that you can on the healthcare side. Can there be a ‑‑ can we request an exemption on items regarding the ‑‑ which tax, the federal level? I'm sorry ‑‑ or has that ever been looked at? To see if other items could be added within our state as an exception from federal law?
MR. COOK: I honestly don't recall — I'm sure it has, there's been every kind of angle looked at through time. Yes, Mike Berger was involved directly in the program in D.C. Can Mike ‑‑
MR. BERGER: Well, there ‑‑ when this thing started it was sporting arms and ammunition. And over time things had been added; I mean, handguns were added. They were not in it originally. So there was a handgun tax. Archery equipment's been added over years, to increase that tax. And then there was the foreign imports, that got added and a tax collected on them so our manufacturers wouldn't be at a competitive disadvantage.
So there are things that have been added. I think the same thing, Dingell-Johnson started just with fishing equipment, but then you got Wallop-Breaux in there, which put motor boat fuel tax and other items on there that was available for fishing, and how the money is split up, I mean, there's a lot of rules to that.
But yes. There's the ability to expand things, but as Bob said, I think you have to be careful what you ask for expanding to, and it has to be, I think, pertinent to the purpose for which the funds would be used.
And I think where they're going now is trying to find a new source of revenue that would fund basically non-game and those kinds of outdoor activities. We tried that back in the 1970s, and it's been tried through the Teaming with Wildlife process for a number of years, and it's a slow, slow process.
We are getting money from ‑‑ through the Teaming with Wildlife process, called State Wildlife Grants to the tune of our share is about $3 million a year. But I mean, that's just a small portion of what the need is. But ‑‑ that has to be funded annually, so it's never certain but it's funded annually out of the general U.S. appropriations.
Whereas if this was a dedicated fund like PR and DJ, it would be better. But the manufacturers as I recall, I mean, all the conservation groups who are users would support these additional taxes. But when you go to the manufacturer generally they say, they have a number of reasons. "Well, our film is used for sporting events and family portraits, and so don't tax our film." And, "Our binoculars are used for sporting events and other things, so don't ‑‑ it's not just wildlife."
And it makes it hard to ‑‑ and nobody wants no new taxes, either, so ‑‑
COMMISSIONER HOLT: And actually the news may have a hard time playing it. But no ‑‑ you're making a good point. I mean ‑‑
DR. McKINNEY: To kind of ‑‑ I appreciate everybody's questions. I want to kind of summarize a couple things here. One is, from ‑‑ in this recommendation from our task force looking at it, and we had started out with the idea of going at a fee increase as soon as this spring.
But after we looked at that issue, our recommendation back was ‑‑ let's pull back on that for a second. When we look, for example, for either what happened in '04 when we went through that fee increase, we passed a fee increase in the same kind of process. When it came ‑‑ and when it came time to the time for the Legislature to appropriate that, the economic situation was not good, similar to what we're talking about now.
The changes in the Legislature's membership and leadership there, and what happened was, that money wasn't appropriated to us. Yet our users paid for those fees, and continued to pay. But they expected those programs that we couldn't afford to pay.
That's not the model we wanted to use. And in this case, we really have issues we got to deal with ‑‑ we do need to deal with these now. We cannot afford that. We are going to have to look at fee increases as part of this model. I mean, in all honesty our licenses are still a bargain. You get a tremendous amount for it; it's ‑‑ but this needs to be a part of that mix. So we have a window of opportunity here for us to sit down with those constituents and the legislative leadership, and build that support, and look at the various options we can look at and move forward with a comprehensive package, that can really deal with this.
We've got that option to do, and it certainly is the ‑‑ I think the best thing for us to do ‑‑
COMMISSIONER BROWN: And that's the direction you're going to go ‑‑
DR. McKINNEY: Well, we're seeking your guidance on that, and ‑‑ what I'm seeking Chairman, and ‑‑
DR. McKINNEY: — we all have a role in that. Our new executive director, you all, and the staff. And we've got some opportunities which the new organization of conservation groups that have come together to help Parks, but they're there. And certainly the legislative leadership, we're in contact with them. So ‑‑ the elements are all there. We just have to put them together in way that makes sense, and is ‑‑ and works for us.
COMMISSIONER BROWN: I think we're asking you to go forward with that plan ‑‑
DR. McKINNEY: Good, very good.
COMMISSIONER BROWN: Any other questions?
COMMISSIONER HOLT: I want to thank Larry. Scott too, but Dr. McKinney's really done a lot of work on this, and it's a complex issue, that just at first it's the detail, the wading through the numbers and then the complexity of then how do we go forward, and I think it's going to take some real work.
As we all think through this, when I ask the Commission to think about it, and bring all your resources to the table; and one of the reasons I'm just bringing that up is, there's some real frustration out there with the hunters and fishermen, as they carry more and more of the load and yet don't feel they are getting the return for the bucks they're putting in it.
It's still a very fair price relative to the license ‑‑ I don't disagree with that. But I think if it ‑‑ not think, I know we're going to have to expand or broaden where we get those dollars. Okay? And that's going to take some work, that I think what we want to focus on as we go into January of '09 is starting that process. And as he said, I think a lot of the conservation groups are ready to move forward, but now we've got to work through everything from legislators and manufacturers to everybody else's agenda. And that's going to be a big part of what we are going to try to do. And I've asked Larry and Scott and others to start looking at it from that point of view.
COMMISSIONER BROWN: Very good.
COMMISSIONER HOLT: Thank you all.
DR. McKINNEY: Thank you.
MR. COOK: Thank you, Doc. Good job.
COMMISSIONER FRIEDKIN: Committee Item Number 7, Advisory Committee Rules, and we're asking permission to publish. Ann Bright is going to make the presentation.
MS. BRIGHT: Good morning, Commissioners. For the record, I'm Ann Bright, general counsel and this one actually should be fairly simple. The Parks and Wildlife Code authorizes the Commission Chairman to appoint advisory committees.
Also, Chapter 2110 of the Government Code says that if an agency has advisory committees it has to follow certain requirements. One of them is adoption of rules. There has to be an annual evaluation of the advisory committee, the presiding officer of the committee selected by the members, there's a limit of 24 members and there's a four-year life to each advisory committee unless it's extended by rule.
Back in 2005, the Commission adopted rules regarding advisory committees that was ‑‑ is the result of a deadline that was actually set in the Government Code. Among the committees that were created were three that we're going to be talking about today. The Game Bird Advisory Committee, the Texas Quail Council and the Operation Game Thief Committee.
In looking at this a little bit more carefully I think we've determined that the Operation Game Thief Committee is probably not really truly an advisory committee. That's created by statute; they manage the Operation Game Thief Fund, and make death benefit payments and reward payments.
Therefore we're recommending that we repeal that. We also have some other rules specifically regarding the operation of the Operation Game Thief Committee.
Also, for accuracy, we're recommending that we replace the Gamebird Advisory Board with a Migratory Game Bird Advisory Committee, and replace the Texas Quail Council with the Upland Game Bird Advisory Committee.
We recommend that the proposed changes be published in the Texas Register and we would come back to you in March to request adoption. I'd be happy to answer any questions.
COMMISSIONER BIVINS: On the ‑‑ well, let's see, Texas Quail Council for example, are the members of that council going to have the opportunity to serve on the Upland Game Bird Advisory Committee, or ‑‑ how is that going to be handled?
MS. BRIGHT: That's going to be up to the Chairman.
COMMISSIONER HOLT: I already heard about some things, and actually I'm going to go back into this. To answer your question, yes. Most were, but not all. Okay?
COMMISSIONER BIVINS: Right.
COMMISSIONER HOLT: But ‑‑ and I've got some conversations going on now, and in fact Scott and I are going to visit sometime in the next couple of days, relative to that; particularly the quail situation, which obviously is a hot button for a lot of people throughout the state.
And it being folded up in Upland Game Bird Advisory Committee I think is still the right thing to do. You can see what we've tried to do here is, to create a Migratory, and then an Upland Game; and that seems to me to make sense.
But I think that we have some, maybe a standing subcommittee under Upland Game focused straight on ‑‑ directly on quail. So that's a discussion I'm in now, I've got some constituents obviously that are very interested in quail to say the least, and some of them were on the Quail Council or the Quail Technical — what was the other one called ‑‑ Technical Committee, that have called me. And with legitimate worries and issues, and I think ‑‑ so I'm still visiting that particular one.
Does that help answer your question, Mark?
COMMISSIONER BIVINS: Right. There was some Panhandle representation on the Quail Council also, and they were concerned.
COMMISSIONER HOLT: Yes, so fair enough; from there, and South Texas also got it ‑‑
COMMISSIONER BIVINS: Right.
COMMISSIONER HOLT: — yes.
COMMISSIONER BIVINS: I mean, as you say it's a statewide concern.
COMMISSIONER HOLT: Very much so, and certainly turkeys ‑‑ or the other one, but I don't hear as much on the turkey side, I think because we've done a lot of good work, and people are seeing that increase again, as far as throughout more counties; whereas the quail is still where a lot of people think we have a real chance to stop the degradation of both habitat and the bird itself, and a lot of people really have a great interest in it.
So I think I want to keep tapping into that somehow. So maybe we'll make a standing subcommittee under Upland, or do something like that. A long-winded answer, but anyway.
COMMISSIONER BIVINS: Sure.
COMMISSIONER PARKER: To just mimic what Mark is saying, I have personally, as I don't know about the rest of the Commission but I have been ‑‑ I've had many, many phone calls about this rearrangement. You know, we had the ‑‑ Texas Quail Council that had always ‑‑ you know, they did a remarkable job. And underneath that, as ‑‑ under the umbrella, we had the Technical Committee.
And that Technical Committee was comprised of 24 of the brightest minds with regard to quail that are in the state of Texas, including a lot of our staff biologists, as well as out of the A&M System, the Caesar Kleberg Wildlife Research Institute, the West Texas group, was well-represented on that Technical Committee, and I want to tell you, there are a lot of people really upset over this realignment.
They realize, they are quite aware of the successes that had been made during the past years of that operation, and then to shrink that into a ‑‑ Upland Game Bird Advisory Committee of 24 people, and obviously you're going to have to leave out some of those minds, and do away with, totally do away with the Technical Committee, which is leaving out the brightest, educated minds.
I think we really need to be careful before we ‑‑ go forward with this thing. Because you know, I've received a lot of phone calls and a lot of people are unhappy about it.
COMMISSIONER BROWN: I think what we're doing though is just asking to publish this in the Texas Register and then we'll seek a lot of public comment on the whole issue. So that's what we're trying to do.
COMMISSIONER HOLT: Which I certainly am going to encourage and ask you, John, everybody to encourage their constituents to do that. And I very much have an open mind on this. The one issue, just so you'll be aware that I do have an issue with, if we go to a subcommittee or standing committee or whatever we end up deciding, is that it got too large; that was an issue.
And so I want to make sure that we have a very focused group. My guess would be, maybe a good way to go would be some kind of balance between landowners, habitat focus and some scientists and expertise. But it got too big; it got unwieldy, and it tended to come meander around a lot these last couple of years.
So I'm trying to get this thing in a more focused position, and maybe we do that, and we just find the right way to ‑‑ well, not maybe. We will do that, we got to find the right way to do that. So, I'm in complete agreement with everybody on this.
COMMISSIONER BROWN: All good points. Are there any further questions for Ann?
COMMISSIONER BROWN: If not, I will authorize staff to publish this item in the Texas Register for the required public comment period.
The next item is Item Number 8, Internet Sales of Big-Time Texas Hunts, for permission ‑‑ we're asking permission to publish. And it's Darcy Bontempo.
MS. BONTEMPO: Good morning, Commissioners. For the record, my name is Darcy Bontempo. I'm the marketing director for the Department, and I'm here before you this morning to seek permission to publish two proposed rule amendments to Big Time Texas Hunts.
And actually regarding internet sales, which I think dovetails quite nicely into some of the discussion that happened during Deputy Director Gene McCarty's presentation. First, I'd like to give a little bit of background. There are a number of new Commissioners. So just briefly, Big Time Texas Hunts has been a successful revenue-generating program for the Department for almost ten years.
It actually was launched in '96 and it has been generating significant revenue for the last almost ten years. The program itself gives hunters an opportunity to buy a $10 entry to win one of seven premium hunt packages. Last year the program resulted in more than $798,000 in gross revenue, with about 20,000 hunters participating, each buying about an average of four entries.
And the revenue generated from this program goes to fund a number of things; wildlife research, habitat management, and also public hunting opportunities.
Again, I'm here before you today regarding the ‑‑ to seek permission, as you know it's required by Parks and Wildlife Code 11.0271 for the Commission ‑‑ is required to set any fees for participation and that's why I'm here this morning.
And specifically I'm seeking permission to publish the following proposed rule amendments in the Texas Register. First, I'm seeking permission to authorize the sale of entries for the Big Time Texas Hunts at $9, if they're purchased online. So that's about a 10 percent discount to the $10 entry price that has been charged, and will continue to be charged, at the other purchase methods, which are direct mail, or over the phone, or at a retailer.
In addition, I am seeking permission to authorize the collection of a convenience fee, a $5 convenience fee that was mentioned earlier; that's consistent with what is charged when people go online and just to be clear, what that means is, it's for shopping trip visit online. So if you go and you buy in this case I think I mentioned four entries is the average number of entries, with this price promotion, they would buy four entries at $9, plus a $5 convenience fee for all of those items, no matter ‑‑ they could also buy their hunting license at the same time, and they would be charged just $5 once, for that shopping trip. So I just want to make sure that's clear.
And again that is consistent with what we're charging for other license fees online. The reason we're seeking this is, we think there will be some benefits. First off, with this price promotion, we think we're going to attract more participants at that price point. And that's going to obviously result in greater sales.
This type of promotion, we ‑‑ is a, gives us an opportunity to actually go online and do for the first time some real pushes on hunting-related websites with a call to action actually linking to purchase. And in fact what's been so successful about Big Time Texas Hunts is when we moved in '98 to direct mail, which gave people the option to purchase at that time; and that was a direct-response vehicle. And so this online ‑‑ promotion is similarly a direct-response vehicle, and so we believe that it's going to result in also greater out of state sales, as well as giving us an opportunity to reach some hunters we haven't been able to reach in the past, in a cost-effective way.
And additionally, it's a maturing program, so it will give us a news peg, which is always looked for when you have maturing programs. It's a ‑‑ some news.
Further, as came up in the discussions in the presentation regarding license sales, it gives us an opportunity to increase some overall awareness of online purchase option. We're just beginning to feel comfortable with aggressively marketing online purchasing, now that we feel secure that we've got a system that is stable. And so this is a ‑‑ kind of a strategy, if you will, to do that.
It's not the primary reason why we're doing it, but this is another benefit. Right now, about 9 percent of all Big Time Texas Hunt Sales are sold online. And that compares to about 2 percent as you heard earlier for other licenses here for Parks and Wildlife. But that is below other states that have automated systems which they average about 5 percent. Retail sales in general average about 5 percent. Obviously it varies depending on the type of product, computers and software is up at 40 percent, but you know, we think there's room to grow, and so this is ‑‑ it gives us another opportunity to do that.
And it gives us an opportunity, if we're doing business online with customers we are going to be able to hopefully market to them online, and that is an extremely cost-effective way to market. When you look at what we're spending for printing and postage costs, and how those continue to escalate, this gives us an opportunity to develop an online relationship, a marketing relationship with these customers, and we're going to be looking at, if this is approved, encouraging our online customers who buy Big Time Texas entries to ‑‑ for email reminders so we can capture their email and basically market to them next year, rather than mail them.
So that's another opportunity that this would afford us. So with your permission we would post these two proposed rule changes on the Texas Public Register, and then pending, you know, comments, we would then seek to adopt both of those in the March Commission meeting, and of course pending approval if that was approved, we would also include those changes in the 2009 Outdoor Annual.
And that concludes my presentation, and I'd be very happy to answer any questions.
COMMISSIONER BIVINS: Do you have a targeted growth rate on your internet percentages?
MS. BONTEMPO: Well, I think we'd like to get in line with the other states as I mentioned, so I think, you know, I mean, I'd like to see us get up to 5 percent in the next year or two.
COMMISSIONER BIVINS: Right.
COMMISSIONER BROWN: And we're currently at what, 2 percent?
MS. BONTEMPO: Two percent overall. As I mentioned, again the lottery, Big Time Texas Hunts is a lottery product, so it's a higher ‑‑ it has 9 percent. But we could be doing better in that regard as well. And I think that it's a very convenient method for a lot of our customers, and this gives us an opportunity to let them know that there is ‑‑ you know, we do have that purchase option available to them should they choose to do that.
COMMISSIONER HOLT: Darcy ‑‑ and maybe Scott and Mike too, one of the things I was just talking to Bob about was, you've got roughly 20,000 entries ‑‑ am I saying that correctly?
MS. BONTEMPO: Yes, sir.
COMMISSIONER HOLT: Seven ‑‑
MS. BONTEMPO: Well, 20,000 participants; 80,000 roughly ‑‑
COMMISSIONER HOLT: No, that's right. Actually 20,000 participants ‑‑
MS. BONTEMPO: Yes, sir.
COMMISSIONER HOLT: — so that is ‑‑ 20,000 participants for seven hunts.
MS. BONTEMPO: Yes, sir.
COMMISSIONER HOLT: What I'd like to look into, and can we expand the hunts?
MS. BONTEMPO: Well, we actually are looking into possibly expanding the hunts ‑‑
COMMISSIONER HOLT: Good.
MS. BONTEMPO: — I mean, there is a question, and we always look at cannibalization; we look at the fact that there's a shared wallet issue; and you know, there's a certain amount of money that is going to be spent, and as you ‑‑ and you just have to look at the increased cost. As you offer more hunts, you will incur more costs. And so you have to be sure that you're actually going to grow the overall contribution from those hunters. And that's always something that we look at very carefully.
But we are looking at ‑‑ I don't know if Mike wants to speak to this at all, or ‑‑ regarding the, we're looking at the possibility ‑‑ it's a little premature maybe but we're looking at the possibility of some ‑‑ a new hunt that might actually bring more sales than an existing hunt.
So maybe replacing some hunts that we think might have more revenue possibilities.
MR. BERGER: Well, we are looking at new ways to ‑‑ new hunt possibilities out there. I would say in the past as to what Darcy was talking about, that when this program started we had a ‑‑ the Whitetail Bonanza, which started as ten-buck hunts that would be drawn, and the first year of that was, oh, it was outstanding, we just got lots of interest for those ten hunts, and I ‑‑ as I recall we said, This is so good, let's offer 20 hunts.
And so we went on the line and bought 20 hunts, to raffle, and we got the same number of entries. So all right, we doubled our expenses and didn't increase our income. So we went back to ten, and we've been carrying it that way.
So what Darcy's talking about with cannibalism is right ‑‑
MS. BONTEMPO: I'm glad you brought that up.
MR. BERGER: — I mean, we don't know if there's a threshold that people are buying, what is it, four, about, on average?
MS. BONTEMPO: Yes.
MR. BERGER: Four entries per individual, and whether they ‑‑ with a new hunt whether it would go to 4.2 or 4.5 or not, we don't know, and I guess we won't know until we really put something out there and try it out.
COMMISSIONER HOLT: Yes, and maybe as you said a different mix or ‑‑
MS. BONTEMPO: Exactly.
COMMISSIONER HOLT: — different types of hunts, or all the above.
MS. BONTEMPO: Yes, looking at ‑‑
COMMISSIONER HOLT: Maybe if you mix them up every third year or something too. But also a number I'd like to think about tying this into just expanding the opportunities for people to be able to hunt, to our public, and I've got to believe longer-term as we encourage that, then maybe you know, it may lull for a while and then it picks up; I'm like you, I'm not an expert anyway but I'd certainly like to balance the dollars we're trying to create, and I'm saying net dollars not just gross dollars.
MS. BONTEMPO: Right.
MR. BERGER: Right.
COMMISSIONER HOLT: With more hunting opportunities for the public.
MS. BONTEMPO: Exactly, and the money ‑‑ I was going to say, the money we've raised does go to buy public hunting opportunities. We're trying to keep this ‑‑ that's a challenge, is to make sure the first issue, is this a revenue-generating program?
And so as long as we can be effective at really choosing ‑‑ and I agree with you, looking at some new hunts and creating some news, making sure that the different kinds of hunters have products, if you will, that appeal to them ‑‑ I think that that's going to be the best way to generate revenue that then can be used to add to public hunting opportunities ‑‑
COMMISSIONER HOLT: And speaking of that, I mean, for example has the 20,000 been flat for a while, has it been growing from some number over the last four or five years?
MS. BONTEMPO: It's been pretty flat for quite a while; I would want to say five or six years, it's been pretty flat. And it is a matured product, and you see that with a lottery in general, I mean that ‑‑ so ‑‑
MR. BERGER: We went out a couple of years ago and ‑‑ in trying to expand this market, and looked at buying ‑‑ so we did buy some magazine advertising and I guess some higher and lower-end hunting magazines, outdoor magazines to see what we got in; and as I recall, it wasn't worth the investment to do that ‑‑
MS. BONTEMPO: Right.
MR. BERGER: — out of state, or try to ‑‑
COMMISSIONER HOLT: I wonder if surveys would maybe ‑‑
MS. BONTEMPO: And we didn't have online ‑‑
COMMISSIONER HOLT: — help, or something in some of your people that are applying.
MS. BONTEMPO: I think ‑‑
COMMISSIONER HOLT: I'm just trying to think of ideas of how we ‑‑
MR. BERGER: Right.
MS. BONTEMPO: I think that the online advertising that we're going to be looking at doing this year is ‑‑ because we now are, like I said, are going to be ‑‑ are comfortable looking at some kind of online, aggressively marketing online, especially if we decide and it's agreed to do a price promotion. That's going to be a real opportunity.
I know that Colorado, with their elk hunt, has about 60 percent of their entries coming from out of state. I mean it just ‑‑ so there's some opportunities for us to drive direct response online, and I'm real interested in trying to build that; I think it offers a great opportunity for us.
MR. BERGER: And I think the quality is what helps drive it. It's not the quantity so much as the quality ‑‑
COMMISSIONER HOLT: Well, and I don't disagree with that. And I think then somehow we got to figure out how to reach out to that constituency to find out what they want, going forward, a la retail thought-processes, and how we keep this thing fresh.
MR. BERGER: Right.
MS. BONTEMPO: And we certainly can look at ‑‑ to your point, incorporating working with Wildlife, whatever, to incorporate some questions where it's possible that we can add to existing surveys, not a whole 'nother ‑‑ a new effort, but something where we can maybe look into that ‑‑
COMMISSIONER HOLT: Right. So we'll make ‑‑ create a hook for somebody that hasn't done it before ‑‑
MR. BERGER: Right.
COMMISSIONER FALCON: Have you all looked at a fishing equivalent to this?
MS. BONTEMPO: Yes, sir, we have. And that was many years ago, and the challenge there, and we worked closely with coastal and inland fisheries, and both Larry McKinney and Phil Durocher, and the issue there is that it's a less expensive prize to win. No matter what you put in there, we've picked the best lodge, and we, you know, put the best package together, but it's ‑‑ it just doesn't have the appeal.
We looked at a $5; we looked at a $10. We just could not raise enough money to justify the direct mail costs that were required to try to generate response. So ‑‑ now, who knows, down the road, with email, with online marketing we might look at it again if the costs of fulfilling it come down, particularly in terms of the marketing area, there may be an opportunity for us to look at that again. But it was cost prohibitive before.
Is that ‑‑ anything you want to add?
COMMISSIONER BROWN: Any further discussion or questions?
COMMISSIONER BROWN: If no further questions or discussion, I will authorize staff to publish this item in the Texas Register for the required public comment period.
Committee Item Number 9 ‑‑
COMMISSIONER HOLT: Thank you, Darcy.
COMMISSIONER BROWN: — Rule Amendments Mandated by Legislative House Bill 12. Tim Hogsett.
MR. HOGSETT: Good morning. Mr. Chairman, members of the Commission, I'm Tim Hogsett in Recreation Grants Branch in the State Parks Division. We're returning this morning from the November permission to publish that you gave us, with today and tomorrow seeking your final approval of new and changed grant rules.
The programs that we have reviewed through this process include the ones up on the screen: Outdoor-Indoor, Community Outdoor Outreach, Regional Park Grants, Small Community Grants, the newly created Urban Park Grant Program that I'll talk about in some detail later. And we also took a look at the two federally funded opportunities that we have, boating access and trail grants.
The process began immediately after the last legislative session closed; that's the primary reason that we need to make new rules is we can increase funding, and change is based on legislation. We did a staff retreat, we did a statewide survey, we then held five public hearings around the state, over 200 people attended ‑‑ registered attendance at those public hearings.
For the Urban Park Grant program, newly established by the Legislature, we held a summit meeting of the leadership of the 13 eligible applicants under that program. Basically those are the cities and counties of population of 500,000 or more. So we felt like it was important to bring them to the table and establishing new rules and new scoring systems for those programs, to get their direct input.
You then gave us permission to publish and we published the draft rules that we've created for all of these programs in the Texas Register in December, and we've received only four comments, and I'll give you a little detail about those at the end.
The reason for these changes are, increased appropriations, and the fact that House Bill 12 amends Chapter 24 of the Parks and Wildlife Code to partition our grant assistance into two different accounts; the traditional Texas Recreation and Parks account will now be available for communities of populations of 500,000 and less; and then the new Urban Park Grant program is created, it's technically called the Large Municipality Account. That will be 40 percent of the available sporting goods tax revenues for grants available to the 13 largest communities in the state, Austin, Dallas, Fort Worth, Houston, San Antonio and El Paso ‑‑ the county governments in which those reside, for a total of 12, plus Hidalgo County in the Rio Grande Valley which is the McAllen area.
Again that's a set-aside of 60 percent going into the smaller communities in the state of 500,000 or less, that they compete among themselves for and only among themselves for; and 40 percent going into this Urban Park account that the 13 largest communities compete only among themselves for.
We looked at, in all of these programs, the priority-ranking systems that we use. In the case of the Urban Park grant program we were obviously required to create new priority-ranking system proposals, and we also looked at our administrative rules and practices.
Going through program by program I'll try to be brief on these; the major administrative changes that we're talking about making and requesting your permission to make, in the Outdoor Recreation Grant Program, the traditional program that's part of that 60 percent money available for the smaller communities of the state, we're proposing, due to increased funding available, to go back to two annual award cycles, with January 31 and July 31st being the two annual application deadlines.
And we're proposing to increase the maximum amount of the grants that we would award from $400,000 and 50 percent match to a $500,000 match. That would bring us back in line to where we were in 2002 and 2003, before the two successive legislative sessions where our appropriations authority was reduced.
COMMISSIONER MONTGOMERY: Can I ask something?
MR. HOGSETT: Yes, sir.
COMMISSIONER MONTGOMERY: I think it's in the Outdoor Recreation Grant section that I should ask this question; if it's not point me on to other areas.
MR. HOGSETT: Okay.
COMMISSIONER MONTGOMERY: Here where you're talking about your scoring changes, you're talking about scoring for the TPWD Land and Water Conservation Plan. Personally, to the extent that the rest of the Commission agrees, it seems to me that what we want to do, that part of the Land and Water Plan is create sustainable activities which encourage conservation. We've got recreational sports, boating, nature tourism and other things where you create revenue streams for communities and get them to sponsor activity, which is ongoing and doesn't require continuing governmental funding, but does then encourage conservation by creating value and resource. Is that the theory or can that be the theory? Can we tighten that down so that's the real driving theory behind that, as opposed to just [indiscernible]?
MR. HOGSETT: We are adding that criteria, really in sort of a test mode at this point, to all of the scoring systems. And it's not a lot of points at this point; we're proposing a couple of points for them to address in a narrative fashion, in their application. How they feel that the activity or the project that they're going to do specifically relates to the Land and Water Plan.
And that's both from a perspective of the natural resource and conservation piece of the plan, but also a very big portion of that plan speaks directly to the need for assistance, state assistance going to local governments for outdoor recreation and indoor recreation opportunity.
I think we'll see how ‑‑ what kind of responses we get from that, and maybe with your guidance in future, increase the priority for that.
COMMISSIONER MONTGOMERY: Yes. Given the mission of the agency, and again I don't know the legislative intent nor the public comment nor the criteria, so I'm speaking in a bit of a vacuum here, but personal preference would be to heavily weight that activity to the extent it promotes sustainable conservation and outdoor recreational use is consistent with the Land and Water Plan, I'd like to [indiscernible]. I mean, it's ‑‑ that's the mission of the agency and creates an active ongoing constituency. That's what it's all about.
MR. HOGSETT: That's ‑‑ I understand, and that's the spirit in which we're doing this. It's also the spirit in which we're doing some increases in things like the fourth item here on this list, increasing the number of points related to environmentally responsible projects, things like green construction, habitat restoration, things that are going to be natural resource, conservation kinds of things.
MR. COOK: I don't believe there's been any resistance to us taking that path from the Legislature. There's been support for that, so I don't ‑‑ I think we're okay there. To put more emphasis there, Commissioner.
MR. HOGSETT: Even under the old system, the projects for example that you'll look at tomorrow in the Outdoor Recreation Projects, usually the more conservation ‑‑ land acquisition for example and the more conservation-oriented projects have tended to rise to the top in the scoring system. But we in our public hearings in particular made a pretty big deal out of that we are a part of Parks and Wildlife, and the ‑‑ you know, our mission is more than just providing outdoor and indoor recreation opportunities at the local level, but that we make sure that the conservation and natural resource issues are addressed.
COMMISSIONER MONTGOMERY: Just to rule out that specifically for me would be sustainable use, by people that create revenue streams and economic bases ‑‑
MR. HOGSETT: Okay.
COMMISSIONER MONTGOMERY: — in these communities ‑‑
MR. HOGSETT: Okay. And that's ‑‑ we don't have anything that directly ties to that I don't think in the scoring system, but I think that's the direction, in general.
Other things that we're proposing to change or tweak a bit in this Outdoor Recreation Grant Scoring System, decreased points related to the budget that's proposed in the area of, traditionally we've said we'd put more emphasis on projects that ask for more money for actual parks and recreation facilities, ballfields as opposed to restrooms, for example.
What we were told pretty consistently in our public hearings was, that yes, we understand that emphasis and we want you to continue to reward that, but we'd like you to back off a little bit on that because you still have to have those other infrastructure items, to do an effective park facility.
So we're going to decrease slightly, recommend decreasing slightly that percentage and the award based on ‑‑ of additional points based on the percentage of that budget.
We were asked to increase the priority of renovation projects. Just as the state park system has aging infrastructure, most of the Parks and Recreation municipal systems have aging infrastructure, and not that they've not been responsible with their use of their money, but simply don't have the local ability always to update that, so we've been asked to allow that renovation projects be more competitive.
And finally, we're proposing to have a 5-point negative score based on sponsors that aren't in compliance with previously funded projects. We go out and do periodic post-completion inspections of every park that we've ever funded, that's several thousand parks around the state, and as we find problems, lack of maintenance or conversion of part of the park land for other purposes, as we find issues with them, we work through those with them, but we feel like that that ought to in some manner count against you if you're asking for a new park grant. And so we're ‑‑ and we got a lot of support for this in the public hearings, that we penalize folks in terms of the negative score if they're not taking care of existing facilities.
Indoor Recreation Grant changes, basically we're proposing to go back to where we were in terms of funding ceiling. Again to the benchmark of when we were receiving full appropriations authority from the Legislature in 2003, from $400,000 to $750,000 and 50 percent match for those kinds of projects.
The Indoor Recreation Grant scoring changes are ‑‑ actually are identical to the Outdoor; just different kind of facility.
Small Community Grant Program are grants of 50 percent matching grants to communities of 50,000 population or less; they're up to ‑‑ I'm sorry, 20,000 population or less. They're currently up to $50,000 grants; we are proposing to increase that match ceiling to $75,000. That program has been very, very popular with small communities.
The scoring system for that program, we're proposing to increase slightly the number of points to very, very small communities, communities of 2,500 or less to make them more competitive in this subset program. We're proposing to delete the diversity recreation scoring criteria. Basically that was giving points for the more kinds of opportunities that you ask for in your project, the more points you got.
What we heard from the small communities was, that really limits us from being able to do a single-purpose ‑‑ maybe just a ballfield, or just a playground or something like that. Again, showing up the award points, additional points for environmentally responsible activities. The link to the Land and Water Plan, and then the negative scoring criteria based on non-compliance.
Community Outdoor Outreach Grants are non-match-required grants of up to $30,000 for activities and programs related to getting underserved populations into the outdoors. Specifically we target youth, and minority, handicapped and other kinds of groups that traditionally may not have had the opportunity to participate in outdoor recreation activities. And we try to focus those folks towards our facilities where we can.
The increase in award is ‑‑ would be contingent upon, this is a little quirk in the Legislative Appropriations Act that was passed for us. There is a specific rider, that tells us how much we are supposed to spend on an annual basis for the Community Outdoor Outreach grant program.
And why that continues to exist I'm not sure. But it does, and it was not ‑‑ as increased funding came back from sporting goods sales tax, the amount of that rider was not adjusted accordingly. This benchmark of $480,000 annually that we had available for that program in the last biennium was not adjusted to where it would have been in light of the overall adjustment at about $1,250,000 annually. I hope that makes sense.
So we have asked ‑‑ the agency has made a request of the Legislative Budget Board to correct what we think was an oversight in that process. If they see that favorably, then we would like to increase the award ceiling on these kinds of grants, back to where it was again when we suspended ‑‑ when the program took funding cuts subsequent to 2003.
The only scoring change that we're recommending for that program is, adding points for projects that relate to environmentally, conservation groups, service projects. Projects like AmeriCorps would do, or like a Boy Scout troop might do.
The Recreation Trails Federal Grant Program, we're just suggesting a tweaking of an application deadline for staff purposes. That program also requires a set-aside of 30 percent of these federal funds for motorized ‑‑ and the rest for non-motorized. We're suggesting for the non-motorized kinds of trails, traditional walking, hiking trails, that we increase the award ceilings for those from $100,000 to $200,000. And that was based on customer input.
Boating access, we're simply suggesting a change in the annual application deadline.
The Urban Park Grant Program, the 40 percent that was carved out for the communities of $500,000 or more. The scoring criteria that we're proposing to you are in three significant areas, the first being land acquisition. We would propose that land acquisition projects be given priority which involve significant natural areas; which involve green corridors, providing connectivity to existing protected areas; projects that acquire land for small pocket parks within communities; acquisition of land for intensive use recreation facilities would receive priority; future conservation and recreation purposes land that would essentially be bought now while it's available with the idea that in the future it would be available for needed conservation or development purposes.
Expansion of existing parks. And then finally the acquisition, in areas of high population, high-density population park facilities. Facility development priorities, we're proposing neighborhood parks be a priority; nature centers; parks and conservation areas of regional significance where there are partnerships involved; projects that involve development with green construction and sustainability; facility ‑‑ development of sports facilities; outdoor aquatic education and recreation facilities, pools, et cetera. Restoration of existing infrastructure, and then at a priority, projects that involve both wildlife and other habitat restoration.
Other issues in the scoring system, public and public-private cooperation in terms of the match. The more of the match that came from outside sources other than from these large communities' treasuries. Priority to projects that meet needs of underserved populations. Priority to a sponsor that has a local parks and recreation master plan in place.
Priority to projects that reduce the threat to a piece of property that might not be publicly available should that community not act in buying land while it's available, or through threat of development or expansion of non-park infrastructure.
Giving priority to again projects meeting the goals and narrating towards how they're meeting the goals of the Land and Water Plan. And then adding ‑‑ we've got a unique opportunity, we think, here in that we've got a strong urban biology program in the Wildlife Division, and that we've got representatives of those in each of the areas of these urban communities.
Giving some additional credit for consultations from a planning standpoint of what these parks are going to look like, with our urban biology staff, and starting that at an early point, when the idea, the genesis of the project begins, and then giving them some priority points for having done that.
Indoor urban park grants, priority for development of nature centers, green construction, multipurpose traditional kinds of indoor recreation facilities, and then restoration of existing facilities.
And then the other issues in this criteria are identical to those in the Urban Outdoor Program.
We did receive four comments, as part of the Texas Register process. I won't take much time with these but want to get them on the record. One comment related to how difficult our legalese, the language of the rules were to understand; unfortunately that's sort of the nature of the beast, and posting in the Texas Register it is a very technical process.
We received ‑‑ a couple of consultants said that they were concerned about our scoring criteria for master plans giving priority in most of the systems that we have for projects related to a locally adopted parks and recreation master plan. We're going to attempt to clarify how we do that, based on these comments.
The rest of the comments were really mainly just asking for clarification of what we meant in specific areas. And we're going to endeavor to make sure that we ‑‑ as we do the final posting of these, clarify those points.
Really was no opposition as a result of any of the Texas Register postings that we got. With that, we'll be asking you tomorrow to hopefully adopt this resolution, and I'd be glad to answer questions.
COMMISSIONER MONTGOMERY: [indiscernible] here are these everything's in an indoor and outreach programs. Excuse me ‑‑ indoor, maybe with outreach, I don't know — I would like for the Commission to increase the boating [phonetic] as we discussed of those variables; we didn't quite close the loop on that ‑‑
MR. HOGSETT: Okay. Would you want us to do that now?
COMMISSIONER MONTGOMERY: Please.
MR. HOGSETT: Okay. Do you have a suggestion? Again, the ‑‑ Land and Water Plan, what we were testing was the idea of a couple of points. And ‑‑
COMMISSIONER MONTGOMERY: Are you suggesting for points? Or — objective?
MR. HOGSETT: Well, objective is understood; I think I would need to ask if you would want us to change the proposal that's been out there for public comment in terms of how many points we would award for that.
COMMISSIONER MONTGOMERY: I'd have to look at it with you and ‑‑ I have a feeling a policy level might be a limitation level, and that ‑‑
COMMISSIONER FRIEDKIN: In terms of the weighting, how does that ‑‑ how impactful is that now?
MR. HOGSETT: Two points would be a tiebreaker kind of a situation, I would think, as ‑‑ more than anything. I don't think that it would be significant enough to be a make or break.
And we're talking about just that link to the Land and Water Plan. There are significant numbers of other points in the scoring system, that are related to conservation kinds of issues.
COMMISSIONER MONTGOMERY: I'm really asking about those which create ongoing activity, to create activities for those communities that help create constituencies for conservation, as opposed to just good things that are conservation or green construction, other things that are relatively passive [indiscernible] active activity consistent with the Land and Water Plan.
MR. HOGSETT: I guess I need your help understanding how that would work. What that would be.
COMMISSIONER MONTGOMERY: Well, I'm specifically thinking, our nature tourism activities, our paddle trails, our biking programs, the equestrian program, the other programs that we're promoting to create more recreation. Birding, the broad area of nature tourism, which gets people out there and creates constituencies, and economic constituencies in those communities for those activities, conservation constituencies if you will.
MR. HOGSETT: How would we tie that to a quantifiable score? I'm not sure.
COMMISSIONER MONTGOMERY: Well, I think the same way you do any of them, which is that they do things to help promote those activities. They get points.
COMMISSIONER FRIEDKIN: Higher weighting, is what you ‑‑
COMMISSIONER MONTGOMERY: Higher weighting, yes, yes. COMMISSIONER FRIEDKIN: And they currently are ‑‑
MR. HOGSETT: Okay.
MR. HOGSETT: I guess then the vehicle for me to do that is this Land and Water Plan criteria.
COMMISSIONER MONTGOMERY: Right. We're going consistent with the Land and Water Plan ‑‑
COMMISSIONER FRIEDKIN: Goal 1 and 2, specifically ‑‑
COMMISSIONER FRIEDKIN: — the first two goals, I think.
COMMISSIONER MONTGOMERY: Yes. Those are all in the [indiscernible]. Those programs are rolling out pursuant to Land and Water program.
MR. HOGSETT: We can craft some language that expands on the language ‑‑ limited language that we've got now, which was just asking them to narrate how they felt their project met the goals of the Land and Water Plan. And I'd be glad to do that. That will be something of a significant change in what's been out there, and what's been out in the public participation process. So I'll need to talk with ‑‑ I guess folks in Legal and determine what our obligations there are.
Then the other thing I would need guidance on I guess is the relative weighting of what you would want to do.
MR. COOK: We'll see if ‑‑ let's see if between now and tomorrow we can come up with ‑‑ and what Tim's getting at here, if we change the weighting of this significantly, he may need to go back out to the public. And let's see if we can come up with some wording and some emphasis here between now and tomorrow that works. If not, well, we'll see what our other options are.
COMMISSIONER FRIEDKIN: I'd also suggest that rather than specific program reference at this point we just ‑‑ we, Goal 1 and Goal 2 I think are the two goals that are consistent ‑‑
COMMISSIONER HOLT: To link. Yes, to link.
COMMISSIONER FRIEDKIN: — specificity, but not ‑‑
COMMISSIONER HOLT: But maybe within the ‑‑
COMMISSIONER FRIEDKIN: — specific programs.
COMMISSIONER HOLT: — narration, when you're asking for when they apply is that there's some specific focus on that.
COMMISSIONER HOLT: That's what gets the interaction and creates more involvement.
COMMISSIONER BROWN: Bob, are we still in place on the agenda for tomorrow?
MR. COOK: I would, and then if we get there we're fine, if we don't ‑‑
COMMISSIONER MONTGOMERY: Okay ‑‑
COMMISSIONER BROWN: — well, we ‑‑ pull it.
MR. HOGSETT: We're really up against a time crunch, honestly, though. Because ‑‑
COMMISSIONER MONTGOMERY: We need ‑‑
MR. HOGSETT: — we're going to be needing to take applications for these new systems immediately subsequent to adoption, for the next round, and ‑‑ we're talking in terms of the urban program. For example, we were doing an April 30th potential deadline for applications. I don't think this is that big of a thing; I guess the guidance that I'm going to need is the relative weighting.
I think you know, two points is not much. Maybe a range of five or ten would be significant.
COMMISSIONER BROWN: Okay. Any further discussion?
COMMISSIONER MONTGOMERY: No, but I think something that perhaps moves it from just being a nice thing to something that's really a priority ‑‑ I'd be happy to look at it. I don't want to presume to design the program for you or for the Commission but I'd be happy to look at it for you give you my comments.
COMMISSIONER HOLT: Phil, will you work with Tim and between now and tomorrow, let's try to craft something; work with Ann Bright or whoever else you need to ‑‑
MR. HOGSETT: Sure.
COMMISSIONER MONTGOMERY: — yes.
COMMISSIONER BROWN: If there are no further questions or discussion I will place this item on the Thursday Commission Meeting agenda for public comment and action.
Thank you, Tim.
MR. HOGSETT: Thank you.
COMMISSIONER BROWN: Is there any other business being brought before this Committee, Mr. Cook?
MR. COOK: No, sir.
COMMISSIONER BROWN: Thank you. I'm going to pass the gavel to the Chairman Bivins of the Conservation Committee.
COMMISSIONER HOLT: May I say something here, and Mark can help me on this. I think what we want to do is, get your committee going, do 1 and 2 ‑‑ am I saying that correctly? And then we'll recess to executive ‑‑
(Whereupon, at 12:15 p.m. the meeting of the Finance Committee was concluded.)
C E R T I F I C A T E
MEETING OF: Texas Parks and Wildlife Commission
LOCATION: Austin, Texas
DATE: January 23, 2008
I do hereby certify that the foregoing pages, numbers 1 through 153, inclusive, are the true, accurate, and complete transcript prepared from the verbal recording made by electronic recording by Penny Bynum before the Texas Parks and Wildlife Commission.
On the Record Reporting, Inc.
3307 Northland, Suite 315
Austin, Texas 78731