Texas Parks and Wildlife Commission
Finance Committee Budget Workshop
July 17, 2008Commission Hearing Room
Texas Parks & Wildlife Department Headquarters Complex
4200 Smith School Road
Austin, TX 78744
BE IT REMEMBERED that heretofore on the 17th day of July 2008, there came to be heard matters under the regulatory authority of the Texas Parks and Wildlife Commission, in the Commission Hearing Room of Texas Parks and Wildlife Department Headquarters Complex, Austin, Travis County, Texas, beginning at 10:00a.m., to wit:
THE TEXAS PARKS AND WILDLIFE COMMISSION
- Peter M. Holt, San Antonio, Texas, Chairman
- Mark E. Bivins, Amarillo, Texas
- J. Robert Brown, El Paso, Texas
- Ralph H. Duggins, Fort Worth, Texas (Absent)
- Antonio Falcon, M.D., Rio Grande City, Texas
- T. Dan Friedkin, Houston, Texas (Absent)
- Karen J. Hixon, San Antonio, Texas (Absent)
- Margaret Martin, Boerne, Texas
- John D. Parker, Lufkin, Texas
THE TEXAS PARKS AND WILDLIFE DEPARTMENT
- Carter P. Smith, Executive Director
- Other personnel of the Texas Parks and Wildlife Department
JULY 17, 2008
CHAIRMAN HOLT: Good Morning, everybody. This meeting is called to order. Before proceeding with any business, I believe Mr. Smith has a statement to make.
MR. SMITH: Thank you, Chairman. Public notice of this meeting containing all items on the proposed agenda has been filed in the office of the 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 records of the meeting. Go ahead, Mr. Chairman.
CHAIRMAN HOLT: Sure, thank you, Mr. Smith. We will begin with the Finance Committee today. Commissioner Brown, please call your committee to order.
COMMISSIONER BROWN: This morning, Staff will provide information on their annual budget workshop and Item Number One is the Fiscal Year 2009 Operating and Capital Budget Overview and Legislative Appropriations Request. And, Mary Fields, you’re going to make the presentation?
MS. FIELDS: Yes, sir. Good Morning.
COMMISSIONER BROWN: Are you ready?
MS. FIELDS: I am ready. Are y’all ready?
CHAIRMAN HOLT: Somebody’s ready. Brown keeps looking at his watch and we haven’t even started yet. (laughing) He’s going fishing or something.
COMMISSIONER BROWN: Please take your time.
COMMISSIONER MARTIN: Don’t feel pressured.
CHAIRMAN HOLT: Yeah, no pressure.
MS. FIELDS: Well, we do have a lot of information to cover today. But, before I start I will say for the record, I am Mary Fields, the Chief Financial Officer, and I am here to present an overview of the 2009 Operating and Capital Budget.
Before we get started I want to introduce our new Budget Director, Mr. Lance Goodrum. Lance would you stand up for a second. Lance actually started with us June first and, he’s got a big job. He’s doing a great job so far. He’s put in a lot of time and effort and in recognizing him I also want to recognize the Budget staff. They just do a splendid job for us. We have a pretty complex budget, and I just want to thank them because all these numbers that we’ll be talking about today they have pulled together for us. And so, just want to thank all of them. And, also just to get started here, for the new commissioners…
CHAIRMAN HOLT: So, Mary, let me see, you gave Lance, what 30-45 days?
MS. FIELDS: Yeah, he jumped right in.
CHAIRMAN HOLT: Wow, Lance, you’re good. Forty-five days you pull this whole budget together.
MS. FIELDS: We started a little bit of it before he got on board, but he’s done a lot of work on the base rec and pulling these things…
CHAIRMAN HOLT: Great.
MS. FIELDS: Just for the new commissioners, I wanted to let y’all know that this workshop really is designed to get you familiar with the details of the operating budget. And, you know, we do want you to ask questions as we move along.
In August, we’ll go over the budget again, obviously, and in the Committee meeting on Wednesday, I’ll do another overview of this budget — it will be at a higher level than what we’re going to talk about today. And then, that Thursday, we’ll ask for your approval of the budget.
So, we’ll get started.
On the agenda today, I’m going to recap our process for preparing the operating budget. We’ll review the financing of the budget. I’ll provide some summaries or different cuts and slices of how we look at our budget, review the capital budget and recap our full-time equivalent, or FTEs, for the agency. We’ll review a few key riders that are in our appropriation pattern, and then I’ll wrap it up with an LAR update for ‘10 and ‘11.
So, for the most part, our process for preparing the operating budget is similar to prior years. So, I’m just going to touch on a few key points. We do use the appropriations received via the 80th legislature as our starting point. And, I’ll walk through the details of those appropriations a little later in the presentation.
With the appropriations that we receive, we were able to establish the operating budgets for ‘09 at, pretty close to, the ‘08 budget, so it’s about 100 percent. No one saw a reduction in ‘09 based on what they received in ‘08.
CHAIRMAN HOLT: And we didn’t get any, what’s the term, any directive from downtown relative to cuts or –
MS. FIELDS: There were some reductions over the biennium that I’ll talk about -
CHAIRMAN HOLT: Okay.
MS. FIELDS: — as we go through the appropriations bill and the discussions there, but the base budget between ‘08 and ‘09 there really weren’t any big changes -
CHAIRMAN HOLT: Okay.
MS. FIELDS: — between the two years.
CHAIRMAN HOLT: That’s right, that’d be going into the next round -
MS. FIELDS: Yeah, that’d be the next round. We’re in the second year of the biennium.
CHAIRMAN HOLT: You’re right, I’m sorry. Okay.
MS. FIELDS: So, ‘08’s pretty similar to ‘09.
CHAIRMAN HOLT: Right, good.
MS. FIELDS: As far as starting off.
COMMISSIONER BIVINS: What about next year?
CHAIRMAN HOLT: Yeah, that’s right.
MS. FIELDS: We’ll see. Hopefully we’ll be starting out with more next year. We’ll see what happens.
So, next we allocated the exceptional item amounts that were approved for the biennium to the appropriate division. And, then we do a balancing act with some of our funding for the support divisions. And, the divisions that support our agency include, Administrative Resources, Information Technology, Human Resources, Communications, Infrastructure, Legal and the Executive Office. The divisions that support our agency have to be appropriately balanced between the Fund 9 activities that support our resources and Law Enforcement and our Fund 64 activities that support State Parks.
This balancing is important for us because we’re required to use our hunting and fishing license revenue only on hunting and fishing activities. If we fail to do that, they can tell us that we put our Fund 9 dollars into diversion. So we look very closely at this and make sure that we balance the funding.
And, we have a methodology to do that. We apply a little bit different methodology to each division. The general split this time for ‘09, you know just based on the general funding for the agency, was 53 percent was for Fund 9 and 47 percent was Fund 64.
And in reviewing this method, last year we applied the method and our LBB analyst — we talked about this a little bit in some of the meetings for fiscal year ‘08 — our LBB analyst took a look at the methodology and she disagreed a little bit with how we applied some of the funding in the Infrastructure Division.
So this time around we got that square with her. And, this time we basically used that revised approach as we established the fund split between the divisions. So, I’m not anticipating any problems with how we split the funding up.
COMMISSIONER BIVINS: You said 53 and what?
MS. FIELDS: It was 53 and 47. So, 53 percent Fund 9 and 47 percent Fund 64. And, her concern, you know, we’re concerned about making sure we get the Fund 9 side of the house appropriate so we don’t get into diversion, Tina’s concern (with the LBB) was that we were utilizing exceptional item funds for state parks inappropriately to support administration. So, we had to make sure we squared that up this time around.
CHAIRMAN HOLT: I have to ask the question, specific dollars or it was a methodology issue she had?
MS. FIELDS: It was an application of the methodology. She disagreed with some of the projects and how we applied them in the Infrastructure Division. So we did go back and look at that again and we’ve applied, still the same methodology, but it was what projects we pulled in and how we applied it. So we’ve got that square with her.
CHAIRMAN HOLT: Okay, so I mean now we have agreement with LBB?
MS. FIELDS: Yes. Yes, we do.
CHAIRMAN HOLT: Okay.
MS. FIELDS: So there shouldn’t be any issues on it.
MR. SMITH: Mary, I want to make sure everybody understands the diversion issue. Just with new commissioners. Everybody understand that — with the Federal Funds?
CHAIRMAN HOLT: No, go ahead.
MR. SMITH: Well, you want to elaborate a little bit on that diversion issue and make sure everybody understands that?
MS. FIELDS: Sure. The US Fish and Wildlife Service provides us with sport fish and wildlife restoration funds. And they expect us to — those funds come through and they want us to spend not only those funds only on hunting and fishing and wildlife resource-type activities, but also our license revenues that come in are required to be spent only on hunting and fishing activities. If they come in — and they audit us on occasion, and we had an audit from them a couple of years ago — if they find that we have used those dollars elsewhere, like on parks for example, then they have the ability to actually say we’re in diversion and they can pull the entire grant fund from us. So, it’s not just a — a lot of federal funds you’ll see they may question a few costs, but they actually have the ability to pull all of the funds back from the agency. So, it’s something they take very seriously. They want those funds utilized on the proper purposes. So we do have that methodology just to show them that we’re utilizing those funds appropriately.
COMMISSIONER PARKER: What about smoky areas where a state park may be also utilized for a special hunting area?
MS. FIELDS: We really don’t count that. We have to keep them totally separate. So we just don’t even go there, to be honest with you. Because any shades of it, you know, it’s better to keep it as black and white as we can even though there are some shades of gray on occasion. So, we don’t try to incorporate any of that. We keep them totally separate.
COMMISSIONER BIVINS: Are we audited by National Fish & Wildlife?
MS. FIELDS: We are audited by — well the Region 2 Fish & Wildlife Service comes in and then there’s auditors with the Office of Management & Budget that come down and do audits with the feds.
MR. SMITH: And, Mary, what we’re talking about is upwards of $25 million in federal funds that could be at risk if we violated those diversion parameters. So, that’s why we wanted to just spend a moment on that and make sure everybody understands it. Because you’ll hear that diversion term quite a bit in terms of our justification for doing something or not doing something. So…
MS. FIELDS: And, moving into just the next step then, of our, of kinda recapping our process, is — as we’ve done basically in past years, the divisions are given an opportunity to request additional funds, we call them supplementals, for their budgets, if the funds come with their own appropriation authority. And funds that come with their own authority would be things like, federal funds, donations and appropriated receipts. And, just to give you an idea of that, like a federal fund, one of the federal fund supplementals, one of the larger ones that we added in this time, was the $2.7 million of federal funds for the Coastal Division for the oyster disaster relief program. So, they had some funds that were set aside from the hurricanes. You know, 2005 to work on Galveston Bay and Sabine Lake. So, you know that’s an idea of the supplemental that we will add in to the budget if it wasn’t already calculated in the base federal, we’ll add these types of things in.
And then appropriated receipts, things like that are like our emoluments from state-owned housing, would be an example of — or receipts that we earned from the gift shops. Those are appropriated receipts, things that we earn, that aren’t necessarily showing up in the bill pattern. So, we bring those in as supplementals to the budget.
CHAIRMAN HOLT: Wasn’t there something earned that went through this last round as we earned more money? Was it parks?
MR. SMITH: Parks, uh-huh, yep.
CHAIRMAN HOLT: Yeah. Okay, are you going to talk about that?
MS. FIELDS: Yes, I will. So, all of the supplementals that were requested by the divisions were reviewed by the budget staff and then they were approved by executives here and then we went ahead and added them into the budget.
And then, the last point about the process here is that we did budget capital items at 100 percent. And we do have the ability to grow those up to 125 percent, so as additional funds come in — you know, at midyear, we have the option to grow those capital items. But, at this point they’re at 100 percent.
So, let’s go in to how the budget was financed. We will start with the General Appropriations Act here. You’ll recall, I guess, just starting with the GA from the 80th session, the session was a little more complicated because we had several contingent bills. So we basically started with the dollar amount and then there was, as y’all know House Bill 12 relating to state parks, the data center consolidation, water resource management and the party boat bill, were bills that actually we had contingent funds that were attached to them. And all those bills did pass as y’all know last year. So, we did add funds in for those to get to our base.
COMMISSIONER PARKER: May I ask you a question here? HB 12 how are we treating that with the, I guess, I would have to ask where are we in getting our money?
MR. SMITH: You’re talking about the major capital repairs and — yeah, and the LBB…
MS. FIELDS: Well, we will — I will be talking a little bit more about that as we move into the presentation, Commissioner Parker, but, you know, the sporting goods sales tax dollars and all of that were in our base already.
The bond funds that were associated with House Bill 12, we do have the Prop 8, the $17 million of Prop 8 funds that we’re looking to be issued at the beginning of September and then there was $27.1 million for state park repairs.
COMMISSIONER PARKER: Are we on schedule?
MS. FIELDS: We’re scheduled. In fact, Steve Whiston is meeting with the Bond Review Board today. And I think they had some additional questions about the bonds. And then, you know, they’ll move forward hopefully with approval there and then we’ll look at issuing those bonds, I think in September. Now -
COMMISSIONER PARKER: The Review Board had questions or somebody else had questions?
MS. FIELDS: I just know that Steve Whiston told me that he was actually meeting with the members of the Bond Review Board today to answer questions. I don’t know specifically who was asking those questions.
And then, there was a $25 million dollar bond issue for the Battleship Texas and that is right now pending. Pending an independent engineering assessment.
CHAIRMAN HOLT: Good, good.
MS. FIELDS: And that report has been complete and I think we’ve prepared a report that we submitted to the Legislative Budget Board, so that they can review that. And then we’ll see where we go from there on the Battleship Bond.
So, that’s kinda where we’re at with House Bill 12.
Did I misspeak at all, Scott?
MR. BORUFF: I just heard you and came running in to lend you support.
MS. FIELDS: Okay, I don’t think I said anything wrong. We’ll see.
So that’s where we stand with that.
COMMISSIONER PARKER: Just asking.
MS. FIELDS: Yes, that’s fine. I’ve included in your binder, a copy of the appropriation bill pattern for our agency — it’s behind the tab entitled appropriations. That’s really just for your references. We do have 36 specific riders for our agency. That’s a pretty sizable amount for us to keep up with. I will be highlighting a few of those key riders later in the presentation.
And, finally in the Bill, they do put a cap on our FTEs. And, we are capped right now at 3100.1 — for actually this year and for fiscal year 2009.
COMMISSIONER BROWN: Where are we on FTEs, currently?
MS. FIELDS: We actually have geared up quite a bit this summer with state parks seasonals, so you know…
COMMISSIONER BROWN: So we may be approaching that…
MS. FIELDS: We’re gonna be below the cap this year. I think part of the reason for that is we did get a lot of additional FTEs in state parks and those jobs were posted but some of the jobs were actually filled from within, and so you know you still have another job to fill to bring in an FTE and parks has been doing a really good job at trying to get that dealt with and get us ramped up. But, we probably will — I know we won’t hit the cap this year. But, with the seasonal help coming in, you know, I don’t know if maybe some of those will stay on board as we move into 2009. I don’t know — I was looking to see if Walt was here — he may be able to speak better to that, but that’s kinda where we’re at.
MR. SMITH: Just so you know Commissioner, we track that almost on a daily basis. I mean it does fluctuate, pretty — not significantly, but it does fluctuate daily just as big and dispersed as we are, but Mary is right, I think the hope is that a lot of these seasonals that are coming in. Hopefully it’ll be sort of a testing ground and an opportunity to prove themselves and then we can hire them for full-time jobs after we’ve had a chance to get to know them, and they’ve had a chance to get to know the agency too, so. We’re guardedly optimistic about that.
COMMISSIONER BIVINS: Weren’t we kind of reaching a maximum in, I guess it would have been, would have been ‘07 — fiscal year ‘07? I seem to recall some sort of issue that we were maxed out on our FTEs, but is that….
MS. FIELDS: We’ve had a few years where we’ve gotten close to our FTE cap. Since I’ve been here, I’ve been here for five years now, and we’ve never exceeded the cap since I’ve been here.
CHAIRMAN HOLT: I think the issue was in parks.
COMMISSIONER BIVINS: Okay.
CHAIRMAN HOLT: Maybe that’s what you were thinking of. Remember, it’s allotted then, by the different agency — within the agency different divisions. Am I saying it right Mary?
Because, remember, we went to specifically request more FTEs for Parks.
MS. FIELDS: for Parks. That’s correct and there were 229 additional FTEs added in this biennium for State Parks.
COMMISSIONER BIVINS: That’s exactly right. That answers my question. Okay. Thank you.
MS. FIELDS: Sure.
MR. SMITH: And, I — Mary, do you want to say anything about that 3100 and that it’s sort of, you know, the LBB looks at that as an average across the 12 months?
MS. FIELDS: They do. Because we do have the seasonal activity with parks in the summer, we are — a lot of agencies just throughout the year, they can never exceed their cap. But, because we have the seasonals, they do allow us to — we do a quarterly report on our FTEs and we’re allowed to average that over the year. And, as long as our average does not exceed the cap, then we’re good. So right now, we’re well above 3100 FTEs, to be honest with you, but when you average that with the prior quarters, we’re still okay.
So, this was a good session for us, as y’all know. And the next four slides I’m going to go through are just gonna highlight the additional funds that we’ve added to the base.
The first two slides I’m going to review relate really to State Parks. And, they total over $78 million. The comparisons or growth that I’m showing here on this slide are really comparing the ‘09 budget back to the ‘07 budget which was before we got the exceptional item funding. So, when you look at salaries and operating in ‘07, it’s actually grown by $13.2 million in 2009. And then you can see the Park capital items have grown by $2.3 million, minor repairs have grown by $2.7 million.
The state parks support costs and audit recommendations that were applied in the other divisions — this is the 22 FTEs for infrastructure, the 14 additional auditors, there were 6 staff that went into the park revenue and visitation unit and a couple of FTEs in Information Technology — that totaled $2.7 million. But all of those things were really to support State Parks.
In Land Acquisition, we did receive $4.3 million this year to apply. And then, we’re carrying forward the unexpended balances from the sale of Eagle Mountain Lake State Park — and that was $9.3 million. We have, as I mentioned earlier, Commissioner Parker, we’ve got the $17 million that we’re adding for Prop 8 and the $27.1 million for State Park repairs and Prop 4.
CHAIRMAN HOLT: Can I stop you there just to kinda follow-up, John? Okay so let’s say we get approved today, then when do they sell those bonds?
MS. FIELDS: I believe they’re looking to issue those in September.
CHAIRMAN HOLT: In September…
MS. FIELDS: — is what the goal is -
CHAIRMAN HOLT: At that point, then you issue them, then you actually have money in the door, is that when we go to bid? I mean, Walt needs to speak to this, it’s just dragged out so long and I know it’s just the process, but….
When can we start going to bid and spending that money, I guess once we get it in the door?
MS. FIELDS: We need to get the bonds, I think, you know we need to have them issued and have the funds available to support any bid or any contract that we enter into. So, I believe they’re working now to you know pull those together.
MR. SMITH: Let’s get Scott just to talk about it because we do have a request for qualifications out right now. Scott, did you hear the question?
MR. MR. BORUFF: I heard the first part and I came running so I missed the second.
CHAIRMAN HOLT: Okay, sorry, so what I asked was — and it was not to put Mary on the spot — I was just, I started realizing — John had asked the questions about where we were with getting with the bond group. I understand they’re meeting today with Steve and hopefully they’ll say okay, she thinks maybe they’ll get sold in September, let’s just say they get sold in September and then you should have cash in, let’s say by October 1, or some date… at that point, what happens?
MR. BORUFF: Well, at that point, you go out for requests for proposals, which would be about a 30- or 45-day process for a firm to be able to offer up their –
CHAIRMAN HOLT: I understand that — are we ready for all of that?
MR. BORUFF: Yes, sir. Yes, sir.
CHAIRMAN HOLT: I assume we’ve had plenty of time to put all that together.
MR. BORUFF: Yes, sir, we’re ready to move quickly, absolutely. We’re prepared and ready to move out there. The hope would be that we would have the bonds issued, the proposals back in and be moving forward with the beginning of the design process prior to the legislative session. And, some expenditures might be made relative to the issuance of the design contracts. I don’t expect a big component of — now are we talking Battleship right now?
CHAIRMAN HOLT: Oh no, no, no, state parks. No I understand that Battleship’s hung up. No, I’m talking about the parks.
MR. BORUFF: Yes, sir.
CHAIRMAN HOLT: Proposition 8 and Proposition-
MR. BORUFF: Yes, what we’re doing with those is we’re bundling those into three large packages. You might know, historically, we’ve typically run 200 to 400 small projects at a time and that’s resulted in the $20 million-$22 million dollar expenditure curve. This time around, at your urging, Mr. Chairman and others, we’ve tried to develop a new model. We had 98 projects approved by the LBB this time, so we’d already done a little bit of bundling, obviously we didn’t go in with the 200-project package, but we’ve now taken those 98 projects and we’ve bundled them into relatively large 3 big projects and a handful of moderate-sized projects. There are some projects like those out in far West Texas, for example, where you don’t have a big group of vendors that are willing to go out there and do projects, where we will still have our force account crews that go out to some of those remote areas and do some projects. So, the three big projects, I believe will take up about 65 of the 90 projects, whether it will be 3 big projects that really encompass 65 or 70 of the big package. Then there will be a couple smaller packages out there and then there will be one or two individual projects. But, the bottom line is we expect it to be hopefully more expedient in terms of our expenditure, we’ll be able to get started quickly on all those projects and all those papers are prepared and ready to go once we get the approval from the Bond Review Board which we hope will happen (which has already happened for those) and we hope will happen for the Battleship today. So, yes, we will be moving forward quickly with those — we are prepared.
CHAIRMAN HOLT: Okay.
MR. SMITH: And, Scott, we’ve already sent out a request for qualifications to firms to start, you know, getting in position to be able to –
CHAIRMAN HOLT: Yeah –
MR. BORUFF: It’s really a three-part process to go through, Commissioners. The first is, we put out notification that we intend to do this set of issuances and that was done a couple-three months ago, two and a half months ago, I think. So, the construction community as a whole is notified — kinda “get ready” there’s something coming.
Then, as soon as we get the approval, we put out the RFPs. Once the RFPs are out there, we go through a selection process.
CHAIRMAN HOLT: Okay. We’ll go ahead.
COMMISSIONER PARKER: Mr. Chairman, the reason I asked the question and I’ll put this on the record too is because I wanted this great job of what our Infrastructure people and Scott has been doing on the record.
CHAIRMAN HOLT: No, I’m glad you brought it up. Absolutely.
COMMISSIONER PARKER: Because they have really been on top of this and there were some other mitigating circumstances that caused us a little grief, but they did a fine job of working through that, and I just wanted this great job to be on the record of what our people have been doing.
CHAIRMAN HOLT: Fine, fine. Oh no, I absolutely agree and so I was just trying to get the timing pinned down and that way we’re a little closer.
Battleship Texas — so you think that will be approved today.
MR. BORUFF: That’s right, sir.
MR. SMITH: No, no, no, no, no — Battleship Texas is not gonna be approved today.
CHAIRMAN HOLT: Okay. So we’ll talk about that when that starts happening. Okay, well good. Then hopefully your design — and I’m not trying to put you on the spot — so, then you do all of that — your hope is, I’ll say on the three bundles, that you get your bids back in, you okay them, and I understand that takes 60-90 days, whatever. You’re hoping then to get something started March/April — this is not to pin you down, just tell me what your best guess is because I understand you can’t, you know, control all that.
MR. BORUFF: I think the construction phase will –
CHAIRMAN HOLT: Yes-
MR. BORUFF: The construction process will phase in starting right after the first of the year to be honest with you, Mr. Chairman.
CHAIRMAN HOLT: Oh, okay, good.
MR. BORUFF: Just as an example, I want to make sure you understand this clearly — part of the bundling is putting together both large previously, what we would have called large and small construction projects — things like constructing a restroom — as well as things like constructing a visitor center, which are kind of the opposite ends of the spectrum. When we bundle those together, as we go through the contracting phase with the construction outfits that we’re working with, we’re going to work closely with them to make sure that the bathroom doesn’t take four years because the visitor center might. So, we obviously don’t want to delay the small pieces of the bundled packages, so that they all fall out at the same time — it wouldn’t be good for us, it wouldn’t be good for the customers, and it wouldn’t be a good use of state dollars and our limited resources.
So I think you’re going to see some of the sub-components, and that’s how I would describe them, of the bigger bundles start very quickly — toward the end of this year or early next year.
CHAIRMAN HOLT: Okay, okay — well that helps me then. Okay.
MR. BORUFF: Now, obviously as Mr. Parker can attest to, when you’re going through the design of a small bathroom — that can happen relatively quickly — when you’re going through the design of a multi-million dollar visitor center it takes some time longer. So, I think the practical roll-out of the projects are not going to be that dissimilar from what we’ve done historically, we’re just going to be able to leverage the private sector and some of the bigger firms that have expertise and can mobilize quickly to help us try to expend those funds quicker. But, we still hope to get the smaller sub-components done quickly and the larger ones may take longer to actually happen.
CHAIRMAN HOLT: Okay.
COMMISSIONER BROWN: So what you’re telling us is we’re not going to be towing the Battleship out to the Houston ship channel any time soon.
CHAIRMAN HOLT: Oh, no, we’re moving it to Galveston, you didn’t realize that?
CHAIRMAN HOLT: That’s the latest.
MR. BORUFF: I’m going to do what you gentlemen tell me to do.
CHAIRMAN HOLT: Hey, listen, I’ve already gotten hammered on the railroad- what do they call me, I’ve got a nickname? I can’t remember what it is — Crash Holt or something I’m not about to be Sinks-Holt, okay.
Abandon Ship Holt or something….
MR. BORUFF: We are over today for the Bond Review Board for the last look at the Battleship. It’s not the final step in the process, but it is an important step.
CHAIRMAN HOLT: Yeah, and on this one, we’re not even sure $25 million’s even gonna get close. I mean, I know our worries there, so we just have to deal with it.
MR. BORUFF: We believe in the Proceanic report that just came out suggested that if we do this expeditiously, the $25 million will do the trick. If it, obviously, if it drags out with escalating steel costs, who knows?
CHAIRMAN HOLT: Yeah, $25 million to do it and then to have it dry docked. I mean kinda what the plan was to get it out of the water to fix it.
MR. BORUFF: Yes, sir. There are three options on the table: yes, all of the options are to get it out of the water –
CHAIRMAN HOLT: We gotta get it out of the water –
MR. BORUFF: three of the options are: right where it sits, and one of the other options is to move it over a few feet.
MR. SMITH: But, Scott, I do want to be clear about a process. We’ve submitted the engineering study for the Battleship Texas to the LBB and so they’re reviewing that, not the Bond Review Board. I just want to be real clear about the Battleship is not going to the Bond Review Board, it’s in the hands of LBB. They’re taking a look at that study, the Proceanic — and so they’re strictly looking at –
CHAIRMAN HOLT: the study and … okay. Well, Battleship Texas’ going to be a while, my guess is. Thank you. Thank you, Mary, sorry to interrupt.
MS. FIELDS: Not a problem.
CHAIRMAN HOLT: Well, everybody, you all are aware — as the agency is, but you know, relative to what we worked with the legislature last time, and they were kind enough to help us get these kind of dollars, is then we have to be really, as a Commission, and Carter and I, and some of you also, have helped, you know, continuing to educate and continue to remind our legislators that this process does take this long. Because I’ve already gotten questions about it. “Well, how’s it looking out in the parks?” and I say, “well wait, we don’t have the money yet, okay, much less have gotten the projects started.” “Oh, how come?” You know, so we gotta continue…
COMMISSIONER BROWN: “Why are you dragging your feet?”
CHAIRMAN HOLT: Yeah, well I haven’t gotten that, but I think there’s a little bit of that in some of the questioning. And so we’re just going to have to be very conscious of how long it takes, understanding the processes, so I’m asking all of you to kind of keep your ears tuned into the process because you are going to get questions. “Well wait a minute, we gave you that money two years ago, how come the bathroom isn’t done?” at Garner State park or something, okay. And so you know we’re going to have to really as we go into this legislative session which, remember, starts in January-it’s not really very far away, really spend the time to educate going in and as we go through the session.
MR. BORUFF: And, just for clarity, I don’t want anybody to go away confused because of my statements here. The process we’re in right now, today, Mr. Whiston is over there as we speak, is to get the bonds issued for the major capital repairs for State Parks. And, assuming that happens, I heard the statement earlier, it might well be in September before the bonds are issued, there is some chance they might be issued late in August. I mean, at direction from leadership here, we are pressing forward as quickly as we can to get the bonds issued. So, we might have a bite at the apple prior to September the first. If we were successful, well that of course would result in an unspent balances number hitting the books that you may get questions about because it’s going to be a big number, and it’s going to hit late in August, and it will have to be UBed into September. So it’s going to fall out in the bookwork somewhere, somebody’s going to see that and go “how come your unexpended balances are so big?” So, just so that the Commission understands, the point is we’re moving forward as quickly as we can, we made a conscious decision to get these things issued and it “might”, if we’re successful in August, result in an unspent balances number that’s inflated-looking on some balance sheet somewhere.
MS. FIELDS: We’re actually showing it on the books right now as unexpended balances — because we did show it on the budget when the Prop 4 bonds were approved by the voters. We did go ahead, even though they weren’t issued, we acknowledged them on the budget. So –
CHAIRMAN HOLT: Is that the norm?
MS. FIELDS: We acknowledged them then. You can wait until they’re issued, but the clock is not going to start ticking on them until they’re actually issued. We have five years from that point in time to expend.
MR. BORUFF: And just so you know, we for the last four or five years have used commercial paper on these bonds. We used to just take all the bonds down at once and, of course, then you had the issue of the money was just sitting there, and the way we’re doing it now is similar to the private sector so we draw the bonds down as we use them.
CHAIRMAN HOLT: Okay.
MR. BORUFF: There’s an obvious financial advantage that I’m sure you’re all aware of.
CHAIRMAN HOLT: But do we control that? I thought –
COMMISSIONER BROWN: Yes, we can control that.
CHAIRMAN HOLT: You gotta go through requests through the bond board.
MR. BORUFF: We’ve already done that, though. We’ve been doing that for several years. This isn’t something new, I just wanted you to understand that the model changed about four years ago, I believe, so that we started using commercial paper because it was more advantageous to the agency and to the State of Texas.
CHAIRMAN HOLT: Okay, gotcha. Okay.
MR. SMITH: Scott, is it fair to add though, I think if Commissioners get questioned about the new investments in parks that, you know, they can certainly talk about all the staffing that’s going on and all the capital equipment that have been purchased on-site and all the minor repairs that are underway at parks. So, you know, there is a significant amount of funds that are being invested and have been utilized very actively and aggressively, it’s just been waiting on this one component. So, just want to make sure everybody has those talking points.
COMMISSIONER PARKER: You know, Carter, it might be advantageous to us for Scott to ask Steve Whiston — Steve Whiston printed up a marvelous timeline that we were using back in the late spring when this deadline came down and everybody said, “hey we gotta get this deal going or we’re going to be way into the next session of the legislature.” But, it might be a good idea to get each one of us that deadline that we did in fact make that first cut that is going to allow us to begin to sell those bonds, to begin to mark them up in late August.
MR. BORUFF: I’d be glad to forward that to you.
COMMISSIONER PARKER: Not all of them, but — and I can’t tell you which ones, but some of them or there’s a possibility that we can get some of them started in late August and then of course the rest of them will roll over in September which will make us look like, next year, that we didn’t sell all of them last year. I know that sounds a little confusing, but that’s the way it is.
MR. BORUFF: I’ll be glad to get the timeline out. If I might take 30 more seconds of your valuable time, folks. I think it’s important, we’ve — you know, we were obviously in difficult times with state parks, and we’re very appreciative of what the legislature did for us last session. And the fact is is that the cycle for issuing these bonds was a little bit protracted from what it normally has been, and it was a result of what were, really pretty reasonable expectations of the legislature for us to do some good due diligence up front.
And so, yes, the answer is we’re getting these bonds issued later than we would have historically, but we’re doing that in the wake of a significant cash infusion to the State Parks Division and there were some strings attached there which, in my humble opinion, were not all that unreasonable. They wanted to be sure we had a business plan. They wanted to be sure that we had an outside consultant that took a look at our operations and our business plan to make sure that it was an effective and reasonable way for us to spend the money.
And so we, with all respect and actually an acknowledgement of the importance of that, have done all the things the legislature asked us to do. And it just resulted in the bonds getting issued a little bit later. So we have continued at least from the staff level to go downtown and say thank you for that, we appreciate that, we understand the restrictions that were placed on us, and we’ve gotten them done and we’re looking forward to doing a good job with this money.
MR. SMITH: Well said.
CHAIRMAN HOLT: Yeah because we definitely want to keep this momentum going. This is the exciting part.
MR. BORUFF: This is the time I think, you know, have an upbeat year and show people what we’re doing with the money after having a couple years of folks like Walt having to go around the State and demonstrate what dire straits we were in.
CHAIRMAN HOLT: Right, I agree. Walt, we’re not going to do that anymore are we?
MR. DABNEY: Nope, nope.
MR. BORUFF: Not to say we don’t need more money, but…
CHAIRMAN HOLT: No, we need more money. No, we want to keep that momentum going, but the beauty of it is hopefully we can start showing as the legislature period to go through maybe some areas where we’ve broken some ground on some things. Whether even if it’s just a restroom, I mean.
COMMISSIONER BIVINS: something about pictures…
CHAIRMAN HOLT: Yeah, exactly, that’s my point.
MR. BORUFF: I’d be glad to answer any more questions.
CHAIRMAN HOLT: No appreciate it, Scott. And, Mary, sorry to interrupt your presentation, but you know, we might as well get this talked about. I mean we all know how much time we all spent — last legislature.
MS. FIELDS: Yes, it’s an important thing.
Well, I will go ahead, then, and move into the last couple of slides on the additions and these are for the other areas of the agency outside of state parks and they total $43 million.
The first one is $9.55 million that went to local parks and that was basically to bring them back to the level that they were at in previous years at $15.5 million. We did add another $7.4 million for the East Texas Fish Hatchery, so over the biennium there was a total of $12.3 million. Law Enforcement received about $850,000 to put 15 additional wardens in place for the border security and then another million for game warden operations. We did receive an additional $1.5 million to cover the gap between our costs to provide our data center services versus the price that we paid DIR for IBM to provide our services. We did add then just a couple of small amounts there — $178,000 for Senate Bill 3, Water Resources and $56,000 to implement the Party Boat Bill.
And then, the last item there is our rider 27 that allows us to as we collect additional revenue to bring that into the budget, and this go around we did go ahead and add $580,000 into the budget now basically to meet budget demand. And that demand really came about as a result of the compensation package that we put in place just recently for roughly 60 percent of our employees. And that was to compensate some of the lower-paid positions and also retain and recruit some of the positions that we have a lot of turnover, or issues trying to fill those positions. So, these funds kinda help fill that additional funding that was needed for those salary equity adjustments that we made.
As I move into the next slide, there are additional pay raises and these are state pay raises that were given by the legislature for all state employees, and so we had a two percent in 2008 and we got another two percent — or coming up here in 2009. And then the Schedule C raises are for our Law Enforcement. So, the total of all the salary increases that were put in place by the legislature is $5.7 million.
We do have proceeds from the sale of the Game Warden Academy of $3.7 million. We are not UB-ing those as land sale proceeds, we are going to UB them as part of the construction project that’s being put in place to construct the new academy.
And then finally, we have the coastal erosion $12.5 million for that project and we’ll be transferring that to the GLO (General Land Office).
CHAIRMAN HOLT: And, Mary, why don’t you explain UB just so people understand what you have to do from one fiscal year to the next and how that works.
MS. FIELDS: UB stands for unexpended balances. So, there are certain categories of appropriation that they do allow us to carry forward balances of funding. So, in this case, most of the time when we’re carrying forward it’s in the capital budget items of construction, land acquisition, actually all capital items you can move forward from one year to the next, within a biennium.
The legislature has to give you authority to move it from one biennium to the next. So these unexpended balances are basically funds we earned, like, we sold the Game Warden Academy this year, we’re not spending all those dollars this year, we’re gonna start spending them more next year so we’re just carrying them forward.
CHAIRMAN HOLT: Good. Does everybody understand that the reason — because remember Scott eluded to that if we sold those bonds in August but hadn’t spent all of that money then you’ll have to carry it over and we will get questioned about that. Because the legislature does not like unexpended dollars, particularly if they’ve been appropriated and you haven’t spent them in the year that you-that they thought you were going to spend them.
MS. FIELDS: That’s correct.
CHAIRMAN HOLT: It is primarily capital projects, but there’s going to be some frustration, I believe, in the legislature relative to, you know, these dollars, from their point of view, were appropriated to us, you know, when we go in January of ‘09, two years ago. I mean that’s the way they think — or a year and a half ago. And so, we’ll have to explain some of that because they will be in those line items. Go ahead, sorry.
MS. FIELDS: And one thing I will add to that, Chairman Holt, is they do-we do have five years to spend the dollars on construction projects. So, if you load them all in the first year, you are going to have unexpended balances that you can carry forward for a five-year period. So, some of that should be expected. But, people do get confused about it. If it’s all loaded up front and you’re carrying it forward, because you encumber it in the contracts so you have to show it, but you’re expending it over a period of time.
COMMISSIONER BROWN: We’re not the only agency that’s got it that way.
MS. FIELDS: No.
CHAIRMAN HOLT: Oh no, no.
COMMISSIONER PARKER: It’s something that every agency –
COMMISSIONER BROWN: Right.
COMMISSIONER PARKER: But, every agency also has to go down there and explain that.
CHAIRMAN HOLT: We’re not the only one. I’m not saying we’re being picked on, I’m just saying we will get questions about it. Absolutely.
COMMISSIONER FALCON: Mary, when a budget is presented to somebody in the legislature, are these things footnoted and highlighted to say, “even though it was appropriated two years ago, it was-the bonds weren’t sold until September of ‘08 and construction will start by first quarter of ’09.” Are they highlighted in anyway to explain why we have such large numbers there?
MS. FIELDS: They’re not really — I mean as far as what we’re able to present, I mean, there’s no special place to footnote these unexpended balances, but we do have the opportunity when we make our presentations to the various committees and during our hearing for our Legislative Appropriation Request and that sort of thing, we can discuss it then and tell them what we’re doing. But, typically, I’m not aware of any place where we can publicly footnote unexpended balances. But, we can explain it as we’re asked questions.
COMMISSIONER PARKER: And they will ask.
CHAIRMAN HOLT: Well, and you’ll have certain ones that understand and certain don’t — depends on their staff and how kinda up-to-speed they are, to be fair. I mean that’s just so there’s a certain leadership with individuals and their staffs who we spend a lot of time with to make sure they understand.
MS. FIELDS: Okay. And, that kinda wraps up the addition part. There were some reductions at this session, and I’ll just highlight those real quickly here.
As you’re all aware, we did transfer the 18 historic sites so, we did have a reduction of $2.9 million relating to those sites.
And, we’re no longer operating the railroad, so that $600,000 was basically in there if we were going to operate it as a static display. So that was reduced.
And Rider 27 on the Fund 64 side of the house, they did include $9 million of appropriation for revenues that we had not collected yet. And again, this go-around we’ve got some history with how many dollars we will collect of the $9 million so we did go ahead and budget roughly half of the $9 million up front. And, as we move into the year and do our finding of fact with the Comptroller and earn additional revenue, we’ll go ahead and budget the remaining portion of that $9 million whatever that amount might be. So that — it’s listed as a reduction because we did reduce the $9 million down to what we actually loaded in the budget.
And then finally there’s an administrative reduction. And this was the reduction that was applied against all — most state agencies, not all, I guess I should say most. And we were one of the agencies that had an administrative reduction. And that had originally shown up as an additional strategy and they ended up just rolling that into our bill pattern.
So, moving into — just basically I want to cross walk our budget from the General Appropriations Act to what our final budget amount is. And, I just looked at that and I caught a typo at the bottom I guess it should say 2009 Budget, so excuse that at the bottom of the slide there, it’s $402.9 million.
So we start with $251.5 million, all of those contingent bills that we talked about added $28.7 million, the salary increases were 5.7. Federal funds that we’ve added above the base are at $7.8 million. And as y’all know, we’ll continue to add to the budget, federal funds and grants as they are received throughout the year, so that amount will grow. And then, we talked about this UB, but this is the land acquisition component of that UB which is the $9.3 million. And then we’ve got the construction UB which is the remainder of that $76 million. And, I’ve got a breakout of that on a different slide.
Our benefits — and that is basically paid through Employees Retirement System — and then our benefit replacement pay totals $39 million. And then there were other adjustments of $6 million. And the lion’s share of that reduction relates to that Rider 27 we just talked about, the Fund 64 component of that. So that takes our budget to the $402.9.
This is just a view of our method of finance and in looking at this slide I think it’s important to note that we earned 42 percent of the funding for our budget. If you look at our Account 9, the Game Fish & Water Safety Fund, at 31 percent and then the Fund 64 our State Parks revenues at 11 percent — that’s the 42 that I’m talking about.
The remaining funding is coming from general revenue. They’re at 22 percent. The other general revenue-dedicated accounts are at four percent — the largest one there is the local parks fund. The other section includes appropriated receipts and other categories, but the largest part of that is $12 million of land sale proceeds. And that’s the $3.7 from the Academy and Eagle Mountain Lake.
Federal funds are at 15 percent and then wrapping it up with the bonds at 13 percent. And the bonds are — we’ve got basically, the Prop 4, the Prop 8 and then some Prop 8 bonds that were issued back in ‘06 that we’re UB-ing forward.
So that takes care of the financing of the budget, let’s move in to kinda looking into a few of the different types of summaries.
This first one here gives a broad –
COMMISSIONER FALCON: Mary, one second.
MS. FIELDS: Yes.
COMMISSIONER FALCON: In looking at ‘09 comparison to ‘08, in ‘08 we already had those funds on the books. Is that correct?
MS. FIELDS: We did, and I don’t know that we should have, to be honest with you. At the time when they were approved by the voters, I didn’t realize that we were gonna get hung up with the Rider 30 business plan. And I really expected them to be issued in ’08. So we did add them into the ‘08 budget. And then they possibly still could get, I guess, issued in ‘08 as Scott said, it could happen toward the end of this fiscal year.
COMMISSIONER FALCON: But, if we carried them over one year, and then we still haven’t spent them, how do we — what’s the mechanism that you don’t show that they’re carried in twice the amount. For example, if we carried over $50 million, from ‘07 to ‘08 and we still haven’t spent it, then wouldn’t that show that we now have $100 million that we haven’t spent?
MS. FIELDS: No.
CHAIRMAN HOLT: No, it’d be 50.
COMMISSIONER FALCON: How do you adjust for that then?
MS. FIELDS: Well-
COMMISSIONER FALCON: Because you never spent them -
MS. FIELDS: Well, you start each year, as I was showing just a minute ago, you start each year with your appropriation for the current year.
COMMISSIONER FALCON: Okay.
MS. FIELDS: And so those bonds weren’t shown — a portion of them were actually allocated to us in ‘09 and a portion of them were allocated in ‘08. So, like on the Prop 4 bonds, the $27 million part of it for State Parks repairs, the way they split that out in the bill pattern, they showed $2 million of it in ‘08 and $25 million of it in ‘09.
So, the point is the clock doesn’t really start ticking on the five years we have to expend the funds until bonds are issued. And once they’re issued — and I believe that’s correct, I mean so once they’re issued then we start that clock ticking. But we don’t double-count them because we’re starting each year kinda fresh. So we know we had them over there, so we’re not going to count them again in the current year.
CHAIRMAN HOLT: Yeah, Tony, just so you know the requirement is, and certainly we look backward, but you really do start slowly every year with a blank piece of paper and you build the budget from scratch.
COMMISSIONER FALCON: Okay.
CHAIRMAN HOLT: So the unexpended balances would just stay the same amount going over to the next year if you haven’t spent any of them.
COMMISSIONER FALCON: — the same amount. Okay, good.
MS. FIELDS: Let’s see, moving into this summary here. We’re looking at the budget by object of expense and I’ve include a percent of total to give you a sense, or a perspective, on the size of each category.
In looking at this, our salaries and benefits are at about 45 percent of our budget. And, this has typically been more like 50 to 60 percent of our budget, but because the capital category is so high, it’s kind of — when you’re doing this as a percent of total, it’s brought it down a little bit.
In looking at the operating component, I looked back at last year — we’ve grown that operating by just roughly about one percent, so there hasn’t been a lot of growth in the operating category.
And then, I’ll just mention that the capital budget and related debt services are at 27 percent of our budget as we move ahead.
The next two slides, actually, just highlight our budget by divisions. And, you’ll see the divisions’ budgets there in millions and, again, the percent of total. And this is really how the agency operates with our budgets. Each division has a detailed budget that they manage. So we give them this, and they go out and manage it, divide it out among their field offices and — as they deem appropriate.
I’m not going to cover all the numbers on this slide, but I will say, that the administrative divisions, if you add those all together, combined, they’re less than ten percent of our total budget. So, we continue to run pretty tight on our administration for an organization of this size.
And then I do want to mention, in your binder, there’s a Budget Summaries tab, and there are a couple of handouts in there. And Exhibit B, in there, I really like that summary because it shows a blend of the two different pieces we just talked about. It shows by division, by object of expense. So you get a better sense of where the money went and for what purpose in an operational capacity here at the agency.
CHAIRMAN HOLT: And, help me, just use an example — I’m on, looking at B — it says Coastal Fisheries, $9.2 million for salaries and others, and that’s salaries and benefits, I would assume primarily. So operating then would be what it takes to operate, of course, their vehicles all that kind of — but also the buildings that are assigned to them…
MS. FIELDS: It’s their utilities, rent… it’s all — it’s operational expenses — utilities, fuel, rent, consumable supplies, travel, you know, all those types of expenses are in operating.
CHAIRMAN HOLT: Gotcha. Okay.
MS. FIELDS: The benefits are actually shown in a separate category from salaries and others.
CHAIRMAN HOLT: Oh, I see that — I see them over there.
MS. FIELDS: And we typically do that, Chairman, because those benefits are really, they’re applied through the Employee Retirement System. They’re a part of our operating budget, but they really don’t show up in the appropriation bill for Parks & Wildlife.
CHAIRMAN HOLT: We’ve gone through—
MS. FIELDS: We show them separate.
COMMISSIONER BIVINS: Mary-
MS. FIELDS: Yes, sir.
COMMISSIONER BIVINS: What is the category called “department wide”?
MS. FIELDS: We’re gonna talk about “department wide”- I have a slide…
CHAIRMAN HOLT: That’s a big chunk o’ change, isn’t it?
MS. FIELDS: It is a big chunk o’ change, and I have a slide that follows this that will detail that out and we can talk about it.
CHAIRMAN HOLT: Don’t be asking those hard questions….
MS. FIELDS: Yeah, it is a big chunk of money and basically department wide supports a lot of our statewide operations, but we’ll talk about that in just a minute.
The only other thing I wanted to mention while we’re in this tab, here, the Budget Summaries, is the first exhibit, Exhibit A, is shown — we’ve got 28 Strategies, so I didn’t attempt to show, you know, all of our strategy budgets on slides, but this is how the legislature views us. When they view Parks & Wildlife, they don’t look at the Coastal Division or the Inland Division, they look at these strategies — the Wildlife Conservation and Hunting & Fishing Recreation — those types of activities, so just wanted to layout the budget in that way too because that’s how our legislators view us.
And then, at the bottom, there’s a method of finance component, and that’s basically that pie chart we just looked at. Those are the actual numbers for our method of financing for the agency.
And now, Commissioner Bivins, we move into — Department Wide. Basically, these are the components we’re looking at — $7.6 million of debt service and those are really — those are our revenue bonds — the Hatchery bonds and then the old revenue bonds that actually have been closed, but we still pay debt service on them.
The construction and capital items, those are primarily Fund 9 dollars that have not been distributed. We will actually do construction projects for Wildlife, Inland and Coastal, but we haven’t spread that out among the divisions yet, so it’s just in a holding pattern.
The remaining categories are payments to licensed agents. The $3 million is roughly what we pay Verizon for their services and our license system. State Office of Risk Management — that’s our workers compensation-type expenses that are charged to us.
And then there’s various Article 9 provisions, fleet, that ACP stands for (I was running out of room on the slide) that’s Airport Commerce Park. And, that’s our new rental — new lease that we have with some of our Austin staff that stay there.
And then, general budget is some of the funds that are being held — just for discretionary purposes, as needed as we move into the year.
We are still working on updating our new financial system and that’s the Oracle Project. And then, finally, Claims & Settlements — we do hold roughly $200,000 aside each year for claims. I usually talk with Ann Bright and see if we have any big, you know, claims or settlements that she’s aware of. That’s what we usually budget there. So, that is the Department-wide Budget. Are there any questions on that?
COMMISSIONER BROWN: On the Oracle Project?
MS. FIELDS: Yes.
COMMISSIONER BROWN: How’s that going? Is the process moving along?
MS. FIELDS: It’s moving — it is moving along. We are now looking to — you really can only bring the financial system up on a fiscal year. It’s best to bring it up at the beginning of a fiscal year. And we are not going to make it this fiscal year, but we will bring it up at the beginning of fiscal year 2010, so about a year from now we’ll bring it up.
CHAIRMAN HOLT: What do you mean “bring it up”? I’m sorry.
MS. FIELDS: I mean put it — actually put it in place.
CHAIRMAN HOLT: You mean for the financials or for the overall?
MS. FIELDS: For the financials. I’m talking about just the financial system. This is not the Parks system. This is just our financial system. What we call — it’s going to be called the Business Information System.
CHAIRMAN HOLT: Okay, okay.
MS. FIELDS: So, right now we use Oracle financials as our base and what we’re doing is a reimplementation of Oracle. So we’re updating and we’re basically getting the modules within the Oracle financial system to talk better and to support our agency better. So, we will bring that up on the fiscal year and we’re not ready to bring it up this fiscal year, but we will next fiscal year.
And it — actually components of it are in test mode now, so it’s moving along fairly well and should be really pretty much built and ready to go by the time the session starts and then we’ll have sufficient time to do training and that sort of thing before we actually bring the system up.
COMMISSIONER BROWN: Good.
CHAIRMAN HOLT: And, overall, and I’m asking- I went back to this “data center consolidation” because I kinda skipped over it. How is all that going? Now that’s a consolidation across statewide agencies.
MS. FIELDS: Yes it is.
CHAIRMAN HOLT: Of which, if I remember, we were operating -
MS. FIELDS: Well, we were …
CHAIRMAN HOLT: I won’t use the term “cheap” or “less expensive” — more efficiently, than others and we actually got some money from the legislature to offset that? Is that -
MS. FIELDS: Yes, sir we did.
CHAIRMAN HOLT: because our costs actually were going to go up. Am I saying that correctly — help me if I’m saying anything incorrectly?
MS. FIELDS: No, you are correct. Our costs for the data center consolidation are at $2.7 million per year. They had to give us $1.5 million for us to pay the $2.7. We were operating at a much smaller amount when we were doing it on our own.
CHAIRMAN HOLT: Right, okay.
MS. FIELDS: The idea is, over time, there will be some economy of scale.
CHAIRMAN HOLT: Right, because all agencies are going on one –
MS. FIELDS: It’s all on one and some of the larger agencies, larger agencies than us, actually had savings, but there were a few agencies where it was a cost. But, overall throughout the State it’s supposed to be a savings for the entire state.
CHAIRMAN HOLT: How’s it doing operationally? I don’t know if I should ask you or somebody else? I mean, help us, where are we?
MS. FIELDS: George Rios would probably be a more appropriate person to respond to it, but I guess what I can say about it is — we are continuing to work with DIR and IBM on our costs. We will have an exceptional — when we talk about exceptional items here in a little while for LAR, we do have — we will have a line item to, again, true-up our expenses for data center consolidation expenses because we have to pay that contract.
CHAIRMAN HOLT: Right.
MS. FIELDS: But, there are some additional costs that haven’t been appropriated to us yet. And so…
CHAIRMAN HOLT: Are these costs that nobody was aware of? What happened? I mean, help me. I know I shouldn’t be putting you on the spot. I know we do with George, but…
MS. FIELDS: I just know that some of the costs have been higher than what was originally anticipated when the budgets were established.
CHAIRMAN HOLT: Okay.
MS. FIELDS: And, I mean, there’s a difference between if you’re adding more databases, if you’re making a growth within the agency, a conscious decision to grow, then, you know, the agency should pay for it, but if it’s just additional costs for the same services, then, you know that should be covered I think, you know, by the State. They are having all the state agencies, though, ask for these additional funds as an exceptional item.
CHAIRMAN HOLT: So people — so we’re not the only one in the boat...
MS. FIELDS: So we’re all in the same boat again.
CHAIRMAN HOLT: Everybody’s running into the same issues.
MS. FIELDS: Yes. All in the same boat again.
CHAIRMAN HOLT: Okay, okay.
MS. FIELDS: And so we are looking at additional costs there. Once again, and honestly I don’t have numbers on that yet, but I have been working with George, and, Carter, I know you….
MR. SMITH: I’ll — let me jump in a little bit. I mean, to be honest, it’s been a little tumultuous as they’ve rolled it out in terms of the quality of customer service and then also the billing for the services that we’re having to pay for. I mean they are three to four and, not too long ago, we were six months behind schedule, so I think we’re struggling with being able to forecast the future costs of this model. And, that’s a frustration that I think a lot of agencies share. Now, DIR has been working with us, they’ll meet with us every time we have an issue with respect to their services, but to be fair, I think, you know there going to have some time before they’re able to work out what are fairly significant kinks in the system right now.
CHAIRMAN HOLT: So it’ll be on-going for a while.
MR. SMITH: Yeah, exactly.
CHAIRMAN HOLT: And there wasn’t a set amount of dollars, so we do have to pay somebody, the State — ourselves, whoever, we’re going to have to pay for these additional costs. So this will be a request going into legislature, as you say, probably from all agencies at some level.
MS. FIELDS: There are several, yes. There are several agencies — and we were trying really to get DIR to carry that ball for the additional costs part of that -
CHAIRMAN HOLT: Right, right.
MS. FIELDS: — that we weren’t really responsible for because of growth, but we weren’t successful in making that happen.
CHAIRMAN HOLT: But do we benchmark — well, so we are talking to other agencies –
MS. FIELDS: Absolutely.
CHAIRMAN HOLT: and they’re indicating to us they’re having the same kinds of issues.
MR. SMITH: There is…
CHAIRMAN HOLT: Financial and operational?
MR. SMITH: Yes, there is — and to DIR’s credit, they have established a formal leadership council of executives from all of the 27 participating agencies and so we get together periodically to talk about these issues and to benchmark where we’ve been -
CHAIRMAN HOLT: Good, good.
MR. SMITH: And where they are now with respect to different metrics for customer satisfaction and quality of service and improvements on billing and things like that. And so, there’s a lot of information sharing there.
CHAIRMAN HOLT: Gotcha.
MS. FIELDS: They also have — I attended a CFO meeting. I mean they are really good about pulling meetings together at Carter’s level, for CFOs that are dealing with LAR issues, and then for the information resource managers like George. So, they’re all getting together and they do — they are working on it. It’s just a huge process.
CHAIRMAN HOLT: So they’re gathering data, we know what the point is — by the time the legislature shows up in January this shouldn’t be a surprise.
MS. FIELDS: No, sir.
CHAIRMAN HOLT: I’m talking about the people certainly that — at the different staff levels, okay, okay.
COMMISSIONER PARKER: And, will this include escalating costs, such as fuel and other items?
MR. SMITH: Well, I don’t think there’s really any fuel costs built into this. This is simply paying for, you know, managing all of our data. You know, storing that data, managing it, providing customer service…
COMMISSIONER PARKER: As a separate item…
CHAIRMAN HOLT: You talking about a budget overall?
COMMISSIONER PARKER: We need to talk about…
MS. FIELDS: When we get to — Commissioner, I’m going to be covering — as soon as we’re done with the budget, I’m going to cover the Legislative Appropriation Requests.
CHAIRMAN HOLT: That’s where it’ll be…
MS. FIELDS: And we’re going to cover those exceptional items. And there are a couple of items that do relate to the increasing operational costs like fuel and utilities. But, I have a list of those here a little bit later in the presentation. We’ll review those together. Okay?
COMMISSIONER PARKER: Great. At my age, I can remember when Game Wardens had $35 a month for gas.
CHAIRMAN HOLT: That won’t even pay for one truckload now, will it — one fill-up?
COMMISSIONER PARKER: Not even close — I remember when Mr. Temple would call and see if I could round up a little more gas money for the Game Wardens…
CHAIRMAN HOLT: — for the Game Wardens. Yeah, things have changed that’s for sure.
MS. FIELDS: Okay, I’ll go ahead and move into the capital budget here. And, this slide I basically provided an overview of our capital budget by category. And the first column you’re looking at there is basically the base amounts that were included in the appropriation bill for capital.
The Rider 20 column — this rider basically allows us to grow our capital items for federal or others funds that are designated for a specific capital purpose. So, we have a couple of issues — there’s a fire truck, I think, that was federal funds that was designated so we’re able to add some capital authority there and some other items.
And then, the unexpended balances are basically the balances we’re bringing forward from 2008. And, so then you’ve got the total capital budget there at $101.1 million.
In moving into just looking at our Full-time Equivalents or FTEs, just a quick look here, basically the gold text on the slide shows our cap — our FTE cap amount, we talked about this a little earlier. So it’s at 3100.1 — it’s the same as it was in ’08.
We do budget above the cap and you can see in the white there that we budgeted a couple more FTEs in ’09 than we did in ’08. And, the reason we budget above the cap is we don’t keep all of our positions filled, you know, throughout the year, so having some additional positions allows us to post jobs and continue to move ahead and try get to that cap level, so we budget above it. And we’ll watch that closely as the year progresses, particularly now that we’re in the second year of all the new FTEs that we have — we’ll watch that and make sure we don’t exceed it overall.
And then just looking at the FTEs funded by division, here in the next couple of slides — it’s — when you look at them on the second slide here, it’s not surprising that parks, you know, is almost 40 percent of our FTEs. Law Enforcement is coming in at close to 20 percent of our FTEs. If you combine the resource divisions, you’re looking at about one third of our FTEs and then wrapping it up there’s about 12 percent that’s left that’s basically the administrative-type divisions and Communications.
So, that’s kind of a quick look at the FTEs.
Next, I want to cover some of the key riders and we do have several of them. I’m not going to talk about each and every one of these, but I do want to talk about them generally.
I’m starting off here by listing the audit-related riders. And, as Scott said earlier, when we received the additional appropriations for the biennium, we did receive several directives on how the money could be spent as well as expectations that we dealt with some of the audit recommendations that were out there. So, there were expectations that we would perform studies and do quarterly and annual reports, and that sort of thing, submitting them to the oversight agencies.
And, in 2008, we really completed several of the plans and studies. We have submitted several reports. I think there’s a couple of studies still outstanding for 2009 that we need to submit. And, you know, basically, each one of these riders are really lengthy and they have several requirements. And, again, I’m not going to cover all the details, but I will say the actual text of the riders is in that Appropriation, you know, bill that we talked about earlier, so if you’re just curious and want to read, you know, a paragraph “this long”, you can take a look at each of them in the back.
The next slide highlights some of the other key riders for the agency. Rider 19 allows us to carry-forward those unexpended balances from the sale of the Academy. And it directs us to use those proceeds on the new Academy, which of course, we’re doing.
Rider 20, I just talked about relating to the capital budget allows us to grow those items — for federal and local, those types of funds, if it is specified for it, with the exception of land acquisition, on that rider.
Rider 22 appropriates all balances and revenues from the sale of our lands, TPWD lands, to us. Again, it specifies the proceeds of the Academy. It also says that the estimated $2.1 million of proceeds from other land sales be used only to acquire adjacent tracks, in-holdings and for improvements or repairs at state parks.
Rider 23 requires us to implement recommendations provided from the LBB during a review they did last year.
Rider 24 requires us to collect usage statistics such as the number of hours of operation on all of our major equipment and report that to the LBB and the Governor’s Office no later than October 1st of the year for the preceding fiscal year.
And then that Rider 34, really, we implemented that in ’08, that was the $16.7 million of grants for specific parks — local parks.
Finally, there were a few key Article 9 riders that include details on the additional appropriations. We’ve really touched on all of these as we’ve walked through the presentation. So I’m not going to go into anymore detail there. That’s just the actual sections of the Bill that allowed us to do those things.
And that concludes my presentation for the budget portion. If there aren’t any further questions on that- or if there are, let’s cover them here…otherwise we’ll move into the ’10 and ’11 legislative appropriation request update.
CHAIRMAN HOLT: Any questions on the budget side?
MS. FIELDS: Okay.
CHAIRMAN HOLT: Okay. Thank you for that part.
MS. FIELDS: On this update today, I just want to remind you of a few ground rules for building the LAR. And then, we’re going to cover the exceptional items list — Commissioner Parker, you were alluding to earlier and then talk a little bit about the ten percent reductions that we’ll be putting on a schedule within the LAR this time.
So, basically, the base line request for fiscal years ‘10 and ‘11 is based on our projected expenses for 2008 and our 2009 budget. So that establishes our base budget. And we are held to that and this time we’ll be held to 100 percent of the base.
Any amounts that we need above that base, we have to request as exceptional items. And we’ve got a list of items that we’re looking at.
CHAIRMAN HOLT: Would you mind explaining in the past how we’ve actually been requested, all agencies, to be below, at times, the base? You know, where you have to start actually … go ahead.
MS. FIELDS: Yes, in — what they’ve done this time that is different is in the past two sessions — last session they established our base and then they said we want you to submit your request for the next two years at 90 percent of your base. So they basically gave us a cut.
CHAIRMAN HOLT: Yeah, to start with. That’s where you had to start with.
MS. FIELDS: to start with… and then most agencies what they did is they did some type of an “across the board” reduction and then the first item in their exceptional item list was to restore the 10 percent that we just took out of our request. And in the biennium before that, it was a five percent reduction. So, they’ve, you know, been looking at reductions every time.
What they did differently this time is they did go ahead and fund us at the 100 percent, but they still want to see a schedule of, you know, “if you were going to cut by ten percent, what would you cut?” And that’s what this schedule –
CHAIRMAN HOLT: Oh, that’s that supplemental — Ah okay, now I understand.
MS. FIELDS: And that’s that third bullet here. So, we will have a schedule of a 10 percent reduction and they did tell us to really target specific programs. They didn’t want to see an “across the board” reduction.
CHAIRMAN HOLT: Okay.
MS. FIELDS: And they said you know, if agencies do that, their LBB analyst has the ability to look at it and say, “do it again”. So, they don’t …
CHAIRMAN HOLT: Okay.
Brown: So you might as well do it right –
MS. FIELDS: You might as well do it right the first time. So, we are — I’ve got a slide that gives you kind of an idea of what the 10 percent reduction is going to look like. And we are looking at some programs right now, but we’re kinda still framing that out, so I’m not really going to talk about any specific programs that we’re looking at putting on the schedule.
But, I will — I’ll just go ahead and jump ahead to it and just show you kinda, since we’re talking about it. And, I wanted to say that these amounts are estimated. We do our base reconciliation and the Legislative Budget Board has to review that and kind of bless it for us and once they approve it, then we really know what our base is. They haven’t actually given us that approval yet. So, what I’m looking at is kinda what we provided to them, but it hasn’t been approved.
So, we’re looking at a ten percent reduction of our amounts and it’s basically general revenue, dedicated any GR-related accounts. So, we’re looking at an annual amount here for our GR-dedicated accounts which is our Fund 9, 64, you know, the local parks, those sorts of funds. We’re looking at a $16.3 million annual reduction. And for just pure GR Fund 1, we’re looking at $7.2 million for an annual estimated amount here, of $23.5 million.
And I suspect that actually these totals could go down a little bit. If she pulls some of the amounts — if the LBB pulls some of the amounts out of our base rec that will obviously take our total down, the 10 percent will be less. So, this is, if anything, it may be a high amount. It is an estimate and that’s an annual estimate. We are looking at some programs to put on the schedule.
I’m going to back up now to exceptional items.
COMMISSIONER FALCON: Mary, can I ask a question?
MS. FIELDS: Yes.
COMMISSIONER FALCON: On this ten percent reduction, are those prioritized or is it just a 10 percent as a block or say a ten percent, but it would have to five percent or seven percent — is there a priority to them?
MS. FIELDS: I believe there is a priority. You lay them out, you know, in priority order on the schedule. And then they’ll review it and, you know, basically if they see something they want to take out, they’ll take it out before the LBB puts their base bill out for the legislature. Because we do our requests and then the Legislative Budget Board builds the bill that actually starts out the legislative process.
CHAIRMAN HOLT: From all of these.
MS. FIELDS: From all of these, they’ll gather up all of our requests and they’ll look at this schedule and if they decide they like one of the programs we put on the list, they’ll cut it out. And, so then we’ll deal with that when we move into the session.
So, let’s talk a little bit about the exceptional items. I haven’t included dollar amounts on this because we’re really still roughing out the details of these exceptional items.
The first one here is the compensation package for the agency. And, we talked a little about that earlier. This exceptional item is designed to compensate the remaining positions that do still need an equity adjustment. And then it will also deal with some of the compression issues that occur. If you have certain positions that you move up, sometimes they’ll bump up against another position that maybe wasn’t on the equity list, but you would have an issue between your positions that you’d have to deal with. And then also, basically activating a merit program for the agency. So that’s kind of what the first exceptional item is.
The second one is to continue our capital repair program for all of our TPWD facilities.
The third item is for land acquisition and development to improve access to the outdoors as we’ve laid out in our Land and Water Conservation Plan.
The fourth item is to deal with our increased operational costs. Such as the fuel and utility expenses that we were talking about. And to enhance or add some programs for the — the first one is for Fund 9, and number five will be the Fund 64 part of those exceptional items.
The sixth item is to support our information technology initiatives and to deal with those increasing data center consolidation costs that we talked about just a little bit earlier.
And, finally, the seventh item is to increase park visitation and licenses sold through marketing efforts and to outreach to our under-served demographics that are primarily in our urban areas.
So, those are the items. Are there any questions or comments from the Commission on that because between now and the next meeting we will –
CHAIRMAN HOLT: By the 20th you will have already submitted it –
MS. FIELDS: We will pull these out. Yeah. It’s due on the 20th, so that Wednesday when we meet, the LAR is due, so if there are any comments on these items even if you don’t have one maybe right now, please feel free to contact me or Carter or Gene. As we rough these out.
COMMISSIONER BROWN: I’m assuming we don’t want to go in with 50 exceptional items.
MS. FIELDS: That’s correct. I really encourage — we had a couple of sessions ago we had 17 — and it was just too –
CHAIRMAN HOLT: They don’t like it –
MS. FIELDS: it was just too many. I mean you can’t keep — when you get downtown and you’re talking to the legislators and you’re in these hearings you don’t usually have a lot of time to present and you just can’t cover 17 of them — you can’t hold their attention, so usually you end up talking about the top five or top seven. Last time we ran with seven and we were pretty successful.
I think we got almost every one of them. So, it’s just a strategic thing, there’s no limit. I mean, you can ask for 50 if you want, but the idea is whether you can cover and get attention.
CHAIRMAN HOLT: No, I think you’re right, Mary. We’ve learned our lessons. The other issue too is on that supplemental schedule, we gotta be real careful on that. So, I think that — I asked Carter about that and he indicated that Gene and Scott are kinda gonna get a first look at that and decide because, of course, depending on dollars actually come in and whether we’re, you know, surplus level — what level of surplus, those kinds of things, we’ve got to be real careful, I don’t want to use the term-used against us, but that they don’t focus on some of these things and then if they do — that we make sure those things were things that we could live with being cut ten percent.
So I think we need to be real careful about that supplemental schedule. If you’ll go back a couple of slides on it. So we’ve got two different issues.
COMMISSIONER FALCON: Mary, can you simplify this again for me again? The exceptional items are for what and the priority order is for the purpose of what? Can you simplify this slide for me and tell me — explain it to me again?
MS. FIELDS: Okay. What we do — we have a base amount of money that we call our base line request and that’s based on our ’08 and our ’09 appropriation budget, basically. So, we lay that out to them and then they approve that for ’10 and ’11. And, basically 100 percent of what we got in ’08 and ’09, they’re going to allow us to budget in ’10 and ’11. So, but what they’re saying is we’re going to allow you when you do your request to do 100 percent, but we want you to still, if you were gonna take some reductions, tell us where you would take them and put them on this schedule over here. And give us that at ten percent. And so those items we will lay out and those are reductions we’ll put in priority and we’ll lay that out on the schedule. The base, you know, just every state agency has — there’s a limited amount in the state. So, every state agency gets a set amount. And they tell us — we submit, you know, our base request, they look at that and the Legislative Budget Board says, “yep, you’re right, that’s it”, or “here’s what your base is”. You can’t grow that. We can’t just say, okay we had $400 million over the biennium we’re gonna ask for $450 million and put that in the request. They want us to show that separately. And, then they discuss that during the hearings and in the session, you know, you’ll talk with legislators, they’ll have the Senate Finance Committee and the House Appropriation Committee and we’ll say, you know, “we got our base request, thank you very much, we have these additional needs here, and we need funding for them”. And, we don’t have dollar amounts tied to these yet, but we will have a dollar amount. So, I’m just going to make this up — say the equity package is $10 million, okay. So we’ll say, we want our first priority for this agency is salary equity. We want that before we get capital repair, before we ask for — and that’s why I’m saying, this is what the staff has pulled together as the priority, but we need the Commission’s support on that, you know, if you agree with the priority, because we’ll need your help as we’re dealing with the legislators, you know, in carrying these items to try to get us some additional funding above the base.
So these are the items we’re proposing and, again, there aren’t dollar amounts there yet, but… Does that help?
COMMISSIONER FALCON: Yes. Yeah, that helps enormously. Now, in terms of trying to go to somebody in the House or the Senate saying, we need more money, are you all looking at priorities in terms of trying to squeeze something out by listing them this way? For example, I would think that if I had to go to my representative or my senator, I’d — in dealing with land acquisition, I might want to put that at the bottom, but at the same time it would be much easier for me to go to one of my partners and say, “hey, call this senator and tell her we need more money to buy more land at the state park”. I could put more pressure as that was further down the list versus the other way around. Do you understand what I’m saying?
MS. FIELDS: Yes, and I can speak to this and, of course, Chairman, you can as well as far as Commissioners’ roles, but I think we are required, you know, by the rules to layout, kinda what our priority is for an agency, but these are all a priority for us. And we haven’t, you know, we’ve got seven. So, they’re all — it’s a manageable number that we can talk about.
COMMISSIONER FALCON: (simultaneous talk as Fields talks) So you can work around and change one from three to five.
MS. FIELDS: You can carry — you know, if you’re dealing with a certain legislator that you know would be supportive of one of these, that would be the one you’d probably want to talk about and then highlight the others. But, as an agency, we have to put them in a priority order. But, so, you know, so…
CHAIRMAN HOLT: That’s a requirement. But, you’re making a good point, and you also, as you know, would find certain legislators are interested in certain things. Some of them could care less maybe about salary equity, but land acquisition for a park that’s in their district, you know, they’re very interested in. And then you try to get all these people working together so that you can get all of these passed, or as many of them as we can, and that’s what we learned in this last session, one — you don’t ask for too many, you know, just ‘cause it does confuse everybody and then everybody kinda gets, “well I like number six and I like number 12” and all of a sudden you can’t get them together on three or four of them. And, so I think this is a start, so I think what Mary’s asking is between now and August 20th when we have to submit — I think it’s August 20th, isn’t it? Please, if you have any today or between now and then, please get it back to somebody. Okay? Whether it’s Mary or Carter and I think Scott, and of course, Gene will be working on it too because once you put these in writing and turn them in, you know, at some level they become reality in the sense of the focus of LBB and then passed on to the various committees we’ll have to work with.
COMMISSIONER FALCON: Perfect, thank you.
MS. FIELDS: You’re welcome. And -
CHAIRMAN HOLT: Can I just say this, I do appreciate everybody coming. This, I think, is the most commissioners I’ve seen certainly, since I’ve been on this Commission coming to this particular July meeting. I really appreciate you all coming because it makes a lot of difference.
You know, I’ve asked all of you and certainly part of my job I think is to — as we go in to January is to ask you to help make sure we’re educated — well, even between now and January, but then after January, is as we put out these kinds of things this is more and more what the staffs of these various committees will rely on then their elected officials will rely on the staffs telling them this makes sense or doesn’t make sense and here’s why and part of our job then will be also to educate and then of course carry and advocate once January comes. That’s how I think — so I’m going to try to be better about asking you all to be involved in creating initiatives.
So, one, I want to thank you all for being here today and then secondly, between now and August 20th don’t hesitate to give somebody — Carter, Mary, Gene or Scott relative to these items, okay on these exceptional items and then any input you may want to have on that number three — supplemental schedule going back on- you can you go back, Mary –
MS. FIELDS: Oh, yes, sir…here?
CHAIRMAN HOLT: No, no, sorry, the actual verbiage, there you go. The third bullet point, supplemental schedule applies ten percent reduction. Because we are going to have to be very careful about making sure that — and Scott and Gene are going to start working on this — or already have probably, that whatever we do submit, admittedly they’re calling it supplemental, which means it will be “attached to”, but that doesn’t mean particularly, if let’s say all of a sudden Susan Combs and group say, well we thought we were going to have $10 billion surplus but we’re only going to have six (you know, I don’t know what the numbers are, and I don’t think anybody does at this point) all of a sudden then, this schedule may be used okay, more and more? So we’re going to have to be very careful about what we put on this schedule. So any ideas you have on that too….
COMMISSIONER BIVINS: I think you can assume it’ll be used regardless.
CHAIRMAN HOLT: I’m sorry?
COMMISSIONER BIVINS: I think you need to assume that it’s gonna be used regardless.
CHAIRMAN HOLT: I think — good point, maybe that’s the best way to say it. Assume it is going to be used so we’re going to have to be very careful that it — we could live with ten percent cuts and whatever we put on that.
So, I think we have two issues: What do we want as our priorities, okay (which is those exceptional items) on the next slide and then going back what’s going to be on this schedule. Those are the two things. And I’d ask all of you to please really seriously think about those. And if you have any questions don’t hesitate to call either.
MS. FIELDS: And if I could just add, respectfully here, -
CHAIRMAN HOLT: Sure…
MS. FIELDS: We — while — It’s actually due on the 20th, so we have -
CHAIRMAN HOLT: No, I know, you’re right. Good point.
CHAIRMAN HOLT: So you’d like feedback not on the 19th, right?
(simultaneous comments and laughter)
MS. FIELDS: — if he provides feedback that late, your feedback may not get incorporated.
CHAIRMAN HOLT: Good, good point, Mary.
MS. FIELDS: So, I would say, think about these items and really get in touch with us by the end of the month.
CHAIRMAN HOLT: Good point, good point.
MS. FIELDS: I mean, if there’s anything you really would like to see changed. If you could provide that to us by the end of the month, we would still have time to incorporate your suggestions into the actual document. Because, it’s “that thick”. I mean it’s a big, big deal.
CHAIRMAN HOLT: Yeah — and it is the document though that is used. And it is worked from then on, so I mean once it’s submitted it’s — you don’t get to go take it back. So, it’s a very — it ends up being the document then that gets used and worked from all the way through the legislature — all the way ‘til next June of ‘09 or whenever the legislature is up.
COMMISSIONER FALCON: The other thing I was going to — ‘cause this really is very critical in that we be prepared before we start to meet here. It would help me enormously if I could have a short statement on why number was number one.
MS. FIELDS: Okay.
COMMISSIONER FALCON: A short executive summary (three or four sentences). And why number two is number two and that would give me a much better understanding of why you all are thinking the way that you’re thinking. And so if somebody asked, I would at least have-
CHAIRMAN HOLT: Good point.
MR. SMITH: Absolutely.
COMMISSIONER FALCON: — some background.
MR. SMITH: Absolutely. And we can certainly do that. We can provide a small kinda synopsis for each one of these items and what all they encompass, you know, why we’re approaching it the way we are and why we feel it’s our, you know, foremost priority, our second most priority, etc, etc. So we absolutely can do that for you.
CHAIRMAN HOLT: That’s a good report and will you get that to all the Commissioners? That’s a good idea.
MR. SMITH: Absolutely. That’s a very good idea.
MS. FIELDS: That wraps up the actual PowerPoint presentation. There are a couple of things I do want to mention though before I actually close out my part of the Commission meeting.
I do want to mention we had a really good meeting yesterday with the Legislative Budget Board. There was some concern, as y’all are aware, in 2008 and ‘09 when we got all this exceptional money — exceptional item funding — that they did approve for us for this session — they funded a lot of it with balances that we had sitting — fund balances sitting in some of our accounts. Well, we spent quite a bit of that in ’08 and ’09 and when I started looking — and staff are looking into ’10 and ’11 we’re running out of balances to support the base budget. And I was pretty concerned about that and when we talked with them yesterday, they told us that we could actually — any balances that were short, you know of funding that base — we can apply as a transfer of sporting goods sales tax.
So, we will be — our method of finance — you will see shift for ’10 and ’11 more so toward sporting goods sales tax than from our Fund 64 balances or the balances that we had remaining in 467.
COMMISSIONER BROWN: What would that amount potentially be? In other words, what are we talking about here?
MS. FIELDS: We’re talking about several million in balances.
MS. FIELDS: and we’ve looked at the balances themselves and it’s an estimate of $30 to $40 million, if we took the balances to zero, and of course we don’t want to do that, we need to — because we’re a revenue-generating agency we need to have some fund balance in there, you know, to support our peaks and valleys with expenses versus revenues coming in. So, we’re going to be doing some analysis on what would be an appropriate amount to hold in our fund balances and then versus, you know, what we would be short to fund. And, I really — you know, these are very rough cuts, it’s gonna be somewhere at $30-$50 million over the biennium. I know that’s a huge swing, but we’re really looking at it right now.
CHAIRMAN HOLT: The sporting goods tax is creating a $100 million plus a year.
CHAIRMAN HOLT: A year, not biennium, a year. But this is interesting comments. Now -
MS. FIELDS: Very interesting.
CHAIRMAN HOLT: Yeah, because that has not been what we’ve been told in the past. So you probably saw my reaction.
COMMISSIONER PARKER: Can we get that in writing?
CHAIRMAN HOLT: I’m sorry?
COMMISSIONER PARKER: Can we get that in writing?
CHAIRMAN HOLT: Well, the LBB — if they’re telling it — now remember that it has to be appropriated, so I mean you got — what they’re saying is now we can then state that that’s where we’re planning on getting these dollars relative to our presentation to the LBB.
And then what they’ll then take to the Senate Finance Committee and the House Appropriation. Now, of course, then it has to be appropriated and those kinds of things, but — see before you kinda had this cap, and they said you couldn’t use it and then, you know you had to find it elsewhere — wherever that may be. We had balances before, but I know Gene had warned me a couple years ago he was worried about there was only an amount of time before those balances were going to be gone.
COMMISSIONER BIVINS: What was the appropriation cap last session?
MS. FIELDS: For sporting good sales tax? 32.
CHAIRMAN HOLT: They upped it quite, pretty dramatically, if I remember. What had it been the previous biennium? Do you remember?
MS. FIELDS: Well, it capped at $32 million before.
COMMISSIONER BIVINS: Well it’s been 32 before -
MS. FIELDS: but they added -
MR. SMITH: …but they hadn’t been appropriated
MS. FIELDS: — but they added more sporting goods sales tax in this biennium.
CHAIRMAN HOLT: Yeah, we got more than we had been getting.
MS. FIELDS: We did get more than we had before.
CHAIRMAN HOLT: Yeah — confusing. The “cap” can be whatever they let say, then they appropriate accordingly, now remember, they’re taking in “this much”.
COMMISSIONER BIVINS: Exactly and so…
CHAIRMAN HOLT: They capped it “here” but we wouldn’t even get the cap, we used to get 20 out of the 32, I can’t remember the numbers.
MS. FIELDS: We had taken it down to about $20 million in the years that we were reducing. Yeah, we had taken it from the 32 down to roughly 20.
COMMISSIONER BIVINS: But then with this new dialogue from the LBB is that eluding to the case that we may get closer to the 32? We may get above the 32?
MS. FIELDS: We’re above –
CHAIRMAN HOLT: Theoretically, yes. Legislature has the right to do whatever they want to do, yeah.
MS. FIELDS: We’re above it now and I don’t have…
CHAIRMAN HOLT: We’ve never been encouraged to do this before.
COMMISSIONER BIVINS: I know — this is kind of exciting.
MR. McCARTY: Gene McCarty, Deputy Executive Director for Administration. Really, this is the first step of implementing HB 12 — which really, HB12 lifted the cap. However, what they did in — while they did lift the cap in HB 12, they went ahead and appropriated fund balances out of these other accounts before they actually appropriated any additional sporting goods sales tax. Okay, so those fund balances are now gone and they’re telling us, okay we’re into the second phase of this process of implementing HB 12 which is in ’10 and ’11, we will begin to replace those fund balances with additional sporting goods sales tax.
COMMISSIONER BIVINS: Okay, so then, in effect, there’s no net gain.
MR. McCARTY: There’s no net gain to our budget, it’s a method of finance which is really a net gain because we were burning balances that were not going to sustain us for very long.
CHAIRMAN HOLT: Right. So the worry was, that you know if, we couldn’t get this process continued, then, yeah, you’d have to take a cut. They’d say, the argument would be there’s no money.
COMMISSIONER BIVINS: Right, right.
CHAIRMAN HOLT: Help me on, and I know it’s kind of an aside, but maybe Gene you can let me ask it, I think we got everybody appointed to that sporting goods tax committee.
MR. McCARTY: Yes, sir.
CHAIRMAN HOLT: From both sides or from the three groups — speakers, lieutenant governor and governor. Have they met? Is it — where is it?
MR. McCARTY: They have not met, but that was, I think the good sign from what we saw yesterday. Is that — that they’re kinda waiting for us to turn in our LAR.
CHAIRMAN HOLT: Ah, and work backwards, maybe.
MR. McCARTY: And they’re going to work backwards on it. Which is good — at least we’re working. At least we’re –
CHAIRMAN HOLT: No, that’s right. Well, okay. I guess I can understand it from their point. Okay. Gotcha.
MS. FIELDS: Okay.
CHAIRMAN HOLT: So after August 20th, we may have a committee meeting then of that group.
MR. McCARTY: Yes, sir.
CHAIRMAN HOLT: Maybe some time in September/October going in to the legislature.
MR. McCARTY: Yes, sir.
COMMISSIONER BROWN: Any other items.
MS. FIELDS: I just want to mention one other quick thing. You will notice in the back of your binder there is a Strategic Plan — a copy of our Strategic Plan, the Natural Agenda — which is the Plan that we actually ended up submitting, so that’s just your copy. We thought we would put that in your binder to take home with you.
And that does conclude my presentation.
CHAIRMAN HOLT: Yeah, but now this was- you submitted this, this year, but it actually is a continuum of what we’ve been using since –
MS. FIELDS: It covers — we do it every two years you do a strategic plan that covers five years. So it kinda picks up some of the old and picks up some new, so this Strategic Plan covers 2009-2013.
CHAIRMAN HOLT: Yeah, so that’s what I’m saying, but it’s a rolling-type of strategic plan.
MS. FIELDS: Yes, sir, it is. So, next session, you know, in two more years, we’ll do one that’ll start from ‘11 and go through ‘15.
CHAIRMAN HOLT: Right, okay.
MR. SMITH: And I, you know, Mary, I just want to encourage everybody to take a look at it. Julie Horsley, on Mary’s team, did an exceptional job putting that together. It’s excellent.
CHAIRMAN HOLT: Yeah, it really is.
MR. SMITH: A really good assemblation of what we’re doing at the agency and what we’re looking at visa vie priorities ahead. So, if you have a chance, please do take a look at that.
COMMISSIONER BROWN: Mary, you did a great job.
MS. FIELDS: Thank you.
COMMISSIONER BROWN: Appreciate your hard work on this.
MS. FIELDS: Thank you.
CHAIRMAN HOLT: Is this the exciting times now, Mary, as we go forward and fight through the legislature.
MS. FIELDS: Woo hoo.
CHAIRMAN HOLT: I’ll tell you what, I admire you all doing it every two years, not just two years, it’s on-going, but then every two years you really got to ramp up.
CHAIRMAN HOLT: Do you just like put everything aside for about six months?
MS. FIELDS: We’re pretty, you know, running pretty, pretty hard right now.
CHAIRMAN HOLT: I know, I know.
MS. FIELDS: My team back here, I mentioned the team behind me…. Lance, and the Budget team and myself — we’re all putting in a lot of time on it.
CHAIRMAN HOLT: I know you are and I appreciate it.
MS. FIELDS: Yeah, to get ramped up and ready for the upcoming session. Appreciate your comments.
CHAIRMAN HOLT: Yeah, Mary, thanks. And, Lance, thank you for taking it on, you know, the day you showed up, I guess.
COMMISSIONER BROWN: Mr. Chairman, I think this concludes our presentation.
(The meeting adjourned at 11:50am.)
Transcribed by: Amy Donaldson, Program Specialist, Administrative Resources, TPWD