Texas Parks and Wildlife Commission
Finance Committee Meeting
Nov. 17, 1999
Commission Hearing RoomTexas Parks & Wildlife Department Headquarters Complex
4200 Smith School Road
Austin, TX 78744
1 8 BE IT REMEMBERED that heretofore on 9 the 17th day of November 1999, there came on 10 to be heard matters under the regulatory 11 authority of the Parks and Wildlife Commission 12 of Texas, in the commission hearing room of 13 the Texas Parks and Wildlife Headquarters 14 complex, Austin, Travis County, Texas, 15 beginning at 10:25 a.m. to wit: 16 APPEARANCES: 17 THE PARKS AND WILDLIFE COMMISSION: 18 FINANCE COMMITTEE: CHAIR: Ernest Angelo, Jr. 19 Lee M. Bass (absent) Dick Heath (absent) 20 John Avila, Jr. Carol E. Dinkins 21 Alvin L. Henry (absent) Katharine Armstrong Idsal 22 Nolan Ryan Mark E. Watson, Jr. 23 24 THE PARKS AND WILDLIFE DEPARTMENT: 25 Andrew H. Sansom, Executive Director . 2 1 NOVEMBER 17, 1999 2 MORNING SESSION: 10:25 a.m. 3 * * * * * 4 FINANCE COMMITTEE 5 * * * * * 6 COMMISSIONER ANGELO: The first 7 item will be to approve the committee minutes 8 from the previous meeting. Do we have a 9 motion to that effect? 10 COMMISSIONER DINKINS: So move. 11 COMMISSIONER AVILA: Second. 12 COMMISSIONER ANGELO: All in favor 13 please say aye. 14 (Motion passed unanimously.) 15 AGENDA ITEM NO. 1: BRIEFING - CHAIRMAN'S 16 CHARGES. 17 AGENDA ITEM NO. 2: BRIEFING - FINANCIAL 18 OVERVIEW. 19 COMMISSIONER ANGELO: We have an 20 official briefing overview by Jayna Burgdorf. 21 MS. BURGDORF: Good morning. This 22 is the financial review. We have three 23 sections of the presentation this morning for 24 you. One is the standard updated financial 25 information for major accounts primarily . 3 1 geared towards the revenue. We have a special 2 update on the Super Combo and Big Time Texas 3 Hunt sales. And actually, Lydia Saldaña is 4 going to join me and recap the marketing 5 efforts. And the operating budget status will 6 be a final slide that I will show you as it 7 relates to our expenditures. 8 Account 64, State Parks: September 9 through October, the revenue is up 22 percent 10 to 2.6 million, and that is a $664,000 11 increase. It is in large part due to the poor 12 year that we had during this same time frame 13 last year. If y'all will remember, some of 14 our parks were closed due to flooding, and 15 just overall, the weather has been much more 16 positive lately. Garner, for example, is up 17 $55,000 compared to prior year alone. 18 We, at this time, have only collected 16 19 percent of the revenue estimate. So we are 20 not recommending any changes at this time. 21 It's very early in the fiscal year to do that. 22 This is the income statement of sorts for 23 Parks and Wildlife as far as Account 64 goes. 24 We start with our cash balance as of September 25 1 at $12 million. We add in our expected . 4 1 revenue of entrance and use fees, sporting 2 goods sales tax allocation, and other, which 3 is primarily our TCP sales, which is the Texas 4 Conservation Passport, annual pass of sorts, 5 and some of the magazine revenue associated 6 with the State Park Account. 7 We subtract out our expenditures which 8 include operations, which is the operating 9 budget associated with Account 64, and also 10 the employee benefits and the grants related 11 to Account 64. Under Capital and Other, that 12 primarily represents your bond payment at $4 13 million, $1 million for donations and other 14 dedications, and $2.5 million for capital. 15 Prior year obligations represent the 16 accounts payable and encumbrances from the 17 previous fiscal year through September 30th. 18 The last item there is the biennial 19 allocation. Basically that's an effort to 20 address the legislature's request that Parks 21 and Wildlife use all available cash resources. 22 And so our -- what used to be our estimated 23 revenue allocation in any one time revenue 24 increases are now being applied on a biennial 25 basis. And so this is really $2 million that . 5 1 we're holding to cover our appropriation for 2 next fiscal year. 3 That leaves us with an ending available 4 balance of a million. This is in large part 5 due to the change in policy, again to maximize 6 our available cash. This year we have a 7 policy that says all your obligations from the 8 previous fiscal year as it relates to your 9 budget, your operating budget. Again capital, 10 we have approval to spend capital over five 11 years, but the operating budget, our policy is 12 now that it must be paid or encumbered one 13 month after the fiscal year or it will affect 14 the current year's budget. And that allows us 15 to much more quickly capture what those 16 obligations are and what money is really freed 17 up that was not spent in the previous years. 18 COMMISSIONER ANGELO: Jayna, how is 19 that different from what you've done before? 20 MS. BURGDORF: Well, before your 21 prior year obligations -- right. We are 22 basically finding out much sooner what our 23 obligations are, and at the same time, having 24 some savings. In the past, we would carry the 25 remaining budget from the previous year under . 6 1 prior year obligations, and we would 2 potentially carry that all the way out through 3 January. So now we know at a much quicker 4 date what that lapse was. 5 Account 9, Game, Fish and Water Safety, 6 your two primary fee driven revenue sources 7 are boat registration and titling license 8 sales. Boat registration is up over prior 9 year. Again, a reminder that boat 10 registrations are valid for two years, and so 11 when we look at our projects we actually take 12 into account, yes, this year's increase over 13 prior year, but also the previous year's. We 14 have only collected 14 percent of our original 15 estimate. And so we are not recommending any 16 change at this time. 17 Okay. License sales, a very positive 18 report. It's up almost $2.3 million through 19 November 10th. The primary drivers are the 20 Super Combo and Big Time Texas Hunts. I put 21 some of the other statistics up there, 22 although they are not the primary drivers. 23 Non-resident hunting is up. And because 24 that's a $250 license, 8,000 -- an 8,000 item 25 increase can mean a significant amount of . 7 1 money. But the fishing license sales and the 2 saltwater stamps sales are also up 3 significantly, and those are real drivers. 4 They reflect the quality of the fishing for 5 the red drum and spotted sea trout and the 6 good weather that we've been having. 7 The other thing I will mention, the 8 numbers there on Big Time Texas Hunts are 9 slightly different than what Lydia is going to 10 show you. What those numbers are, and it's 11 only off by a thousand, but this is what we 12 collected this year for sales. There were 13 some customers last year who did not make the 14 deadline, and so their purchases are actually 15 automatically, they may not know it, but 16 they're rolled into this drawing. So her 17 numbers will reflect the total drawing. 18 License sales are up, but one of the 19 reasons we are not requesting a revenue 20 adjustment is because the increases in the 21 fishing license and the saltwater stamp may in 22 actuality just represent early sales. At this 23 point, we have -- we don't necessarily know 24 that those are people buying licenses that 25 wouldn't have otherwise. They may just be . 8 1 purchasing them early because of the good 2 weather. 3 And the financial statement: September 4 12 cash balance of $32 million. License sales 5 at 61 million. Boat fees at $14 million. 6 Your federal funds at $34 million, which 7 include the Sport Fish and Wildlife 8 Restoration grants, boating access and EPA 9 grants. 10 Other: At $13 million, which includes 11 interest earnings, fines, magazine revenue, 12 mineral leases, just lots of miscellaneous 13 revenues. Less the expenditures, again the 14 operations are both the operating budget, the 15 employee benefits and in any grants that flow 16 through Account 9. 17 Capital and Other represents a capital 18 budget of $9 million and dedications such as 19 stamps at $3.5 million. 20 Prior year obligations at $24 million. 21 And again, the biennial allocation at $5. The 22 ERA for Account 9 was significantly higher 23 than Account 64 because of the volume of 24 revenue, which leaves us with an ending 25 available balance of $4 million. . 9 1 And if -- are there any questions on that 2 section because I'll move into the Super 3 Combo? 4 COMMISSIONER DINKINS: I would like 5 to ask about the Texas Horned Lizard license 6 sales. 7 MS. BURGDORF: Well, we can -- I 8 think that will fit right in if you have that 9 information. Do you want to come up? 10 COMMISSIONER DINKINS: I saw an 11 article on the cover of the Houston Chronicle 12 within the last week or so, and I thought that 13 since they'd announced it, maybe you had 14 gotten enough orders to go ahead and -- 15 MS. SALDAÑA: Not quite yet. We're 16 just under a thousand now. That hit at the 17 Houston Chronicle resulted in our phones 18 literally ringing off the hook. We got 19 hundreds of phone calls based on that. 20 COMMISSIONER DINKINS: I saw the 21 applications at the door, too. 22 MS. SALDAÑA: We can certainly do 23 that. 24 MS. BURGDORF: Real briefly let me 25 show you some historical numbers. The initial . 10 1 survey of combination holders back in 1996, 2 they told us that half of them would purchase 3 a license, and that was about 500,000 4 combination holders that year. They basically 5 said that half of them would purchase a Super 6 Combo with all the stamps for $49. And what 7 we've seen through marketing efforts, word of 8 mouth, education of retailers is that that 9 number has grown, and now as of this year we 10 have surpassed that expectation, that 11 $250,000 -- or excuse me -- 250,000 licenses, 12 and that's because of the targeted marketing. 13 And just to note as of this time last year, we 14 had sold 94 percent of Super Combos. So that 15 number may grow a little, but in general 16 that's what we expect will be our Super Combo 17 sales for this year. 18 And I'm going to go ahead and turn it 19 over to Lydia. 20 MS. SALDAÑA: I'm Lydia Saldaña, 21 Director of Communications. And I'm going to 22 go into some detail about the marketing 23 efforts for both the Super Combo program, as 24 well as the Big Time Texas Hunts program. It 25 has been or is the largest scale direct . 11 1 marketing effort that we've ever done, at 2 least since I've been here, and for the most 3 part have been successful. 4 The results that we have garnered and 5 what we did our marketing strategies for both 6 were based on the research that we did this 7 last year. And one of the things that we 8 found out is that doing a renewal reminder for 9 Super Combo definitely had a positive impact. 10 Now, what we did this year was we developed a 11 newsletter. We didn't actually test a 12 newsletter, but we ended up producing a 13 newsletter called the Hook and Bullet that we 14 direct mailed to all 244,000 Super Combo 15 customers. It was mailed with a personnel 16 letter, as well, and it reminded our Super 17 Combo customers to renew their license. It 18 was also a communication piece to our core 19 customers. And we got some very, very 20 positive feedback on that. 21 We also tested mailing a letter to our 22 Combo customers that have zero stamps and one 23 stamp to find out if it would be an effective 24 strategy next year to do a direct mail to 25 them, and we certainly found that it was. The . 12 1 letter encouraged them to upgrade. And we 2 mailed 50,000 of those letters out today as a 3 test -- or this year as a test. 4 Now, what we found was that those 5 customers that did get the letter did upgrade 6 at a higher rate than those who didn't. 7 Specifically those who had no stamps, they 8 converted at a 4.5 percent higher rate than 9 those who did not get the letter, and 7.2 10 percent less for those with one stamp. Based 11 on that -- and it doesn't seem like much. 12 Those percentages don't seem like much, but 13 with a product that costs $49, it certainly 14 adds up quick. What this suggests for us next 15 year is that we have the potential to generate 16 an additional $100,000 by doing a direct mail 17 effort to all of our current combination 18 customers that either have no stamp or one 19 stamp and convert them up. So that's 20 certainly what we're going to be recommending 21 that we do next year. 22 Another note about in this newsletter. 23 We did -- the research projects were separate. 24 I mean, we were testing, and what the research 25 that we did that resulted in our strategy for . 13 1 the Big Time Texas Hunts was actually for 2 Texas Grand Slam. That's what we were doing 3 research on. And then we also researched 4 separately the Super Combo customers. What we 5 found was that they were the same target. So 6 what we ended up doing instead of doing two 7 separate mailings, we combined the mailing, we 8 saved postage costs, and with that mailing 9 cost savings, we ended up producing the 10 newsletter. So I think it was a calculated 11 risk, but I think it has paid off. 12 Now, specifically with the Big Time -- 13 oh, a little bit more information about the 14 Super Combo newsletter. We got very, very 15 positive feedback from our customers. Our 16 customers like to get information from us. We 17 did a little survey for them, and I was 18 surprised at the number of responses that we 19 got, so was our research staff who had to 20 input all the information. We got over 1,000 21 mailed back surveys, lots of e-mailed 22 responses, and we're still tabulating that 23 information. But again, an overwhelming, 24 positive response, about 95 percent had very, 25 very positive things to say about the . 14 1 communication effort. And overall, the kind 2 of comments we got was that our customers want 3 more information about, you know, what, when 4 and where information about hunting and 5 fishing. So we'll be looking at doing that 6 again next year. 7 COMMISSIONER RYAN: Lydia, what did 8 the newsletter cost us? 9 MS. SALDAÑA: Darcy Hamburg, 10 Marketing Director, is here with us. Do you 11 have -- 12 MS. HAMBURG: $13,000 (inaudible). 13 MS. SALDAÑA: Darcy, why don't you 14 come up here. This is Darcy Hamburg, 15 Marketing Director. 16 MS. HAMBURG: The newsletter 17 itself, the newsletter was a $13,000 cost, and 18 then we included that in the mailing to the 19 customers. 20 COMMISSIONER RYAN: How many of 21 those did we produce? 22 MS. HAMBURG: We produced 250,000 23 newsletters. 24 COMMISSIONER ANGELO: So this was a 25 financially profitable even if those people . 15 1 didn't continue to be Super Combo buyers next 2 year. 3 MS. SALDAÑA: Oh, absolutely. Very 4 much. 5 COMMISSIONER ANGELO: Very solid 6 profit. 7 MS. HAMBURG: Very much so. 8 MS. SALDAÑA: I think you -- I 9 mean, if you look at that -- that $13,000 10 expense, I think that's certainly worth 11 communicating to -- 12 COMMISSIONER ANGELO: You got to 13 add the postage to that. 14 MS. SALDAÑA: Right. Right. And 15 again, we have this piggybacking in the Big 16 Time Texas Hunt mailing to save that postage 17 cost. 18 MS. HAMBURG: So we didn't even 19 have postage cost. 20 MR. SANSOM: We also mailed the 21 newsletter to all of our lifetime license 22 holders, as well, with a personal letter as a 23 kind of a relationship issue. 24 MS. BURGDORF: Super Combo revenue 25 is up $1.3 million. And the combination is . 16 1 down half a million, if that gives you an 2 idea. 3 MS. SALDAÑA: Okay. Going through 4 the Big Time Texas Hunts results for this 5 year, what I'm going to do in this portion of 6 the presentation is go through what our 7 marketing strategy was, historical sales 8 comparisons, and we're comparing to Texas 9 Grand Slam sales, and also the direct mail 10 results. 11 Our initial strategy here was to develop 12 an umbrella brand for the sales that we were 13 offering this year. Certainly the Texas Grand 14 Slam, the previous products for the Grand Slam 15 and the Texas Exotic Safari, and we also 16 developed new products this year. And that 17 was the White-tail Bonanza, the Waterfowl 18 adventure and the Big Time Texas Bird Hunt. 19 So we were packaging all of these hunts under 20 one umbrella brand of the Big Time Texas 21 Hunts. Certainly the strategy in doing that 22 was obviously to broaden the appeal of the 23 program, make it more attractive to more 24 hunters, increase the number of winners, 25 maximize the cost effectiveness of the . 17 1 marketing effort, because again, what had been 2 happening were individual sale pieces, and we 3 developed one sales piece that encompassed all 4 the products. And certainly that improved 5 customer convenience in terms of ordering and 6 just finding out about the hunts. 7 We mailed to all of our 1999 Grand Slam 8 customers. That was 11,000 from the previous 9 year. We mailed to all 244,000 Super Combo 10 customers from last year. We also, this year, 11 tested direct mail to lifetime license holders 12 and non-residents to see if we could expand 13 our reach next year. 14 We mail a personal letter with a flyer 15 and a postage-paid return envelope. We tested 16 both postage-paid envelopes and those that 17 were not postage paid and found that we got a 18 better return obviously with postage-paid 19 envelopes, and that the increase of more 20 revenue more than offset the amount of money 21 that that cost. And we also, what we did here 22 was we mailed an initial letter in August 23 prior to the Super Combo sales going on sale. 24 And then we followed up with a reminder 25 letter. We literally were frantically . 18 1 entering all of the entrances that came in 2 after the deadline, and some of these results 3 we were tweaking this morning. So a lot of 4 stuff was coming in very, very rapidly toward 5 the end. 6 Here's the historical data. In 1996 we 7 sold 6,829 Texas Grand Slams. In 1997 that 8 figure went up 49 percent to 10,177. Last 9 year it jumped 117 percent, and 65 percent of 10 that increase was due to the direct mail test. 11 This year the results were 71,297. As Jayna 12 mentioned, that includes some of the last year 13 entrances -- entries that didn't make it. So 14 that's 223 percent increase. 15 In terms of the response rate, we found 16 certainly that our previous Grand Slam buyers 17 were our best customers. They had a 40.7 18 percent response rate. 19 Super Combo customers had a 5.3 percent 20 response rate. Our lifetime customer had a 21 2.5 percent response rate. We think that's 22 going to go up next year because we only did 23 one mailing to the lifetime license holders 24 and that was in October. We'll do the same 25 thing with the lifetime license holders next . 19 1 year of doing a double mailing. And we feel 2 very confident that that number will go up. 3 And the non-resident, I think that's the 4 most surprising number in here that that 5 return was so high. We did have an issue with 6 our mail house this year. And we had some 7 actual letters that did not go out. So we're 8 working through some of those issues. That 9 number will likely go up next year simply 10 because about 12,000 letters did not make it 11 out. And then late entries represent about 12 1100. So again, the direct mail total was 13 63,000. 14 And then all the others, those are folks 15 that bought either, you know, at the -- 16 through point of sale or perhaps at Expo, that 17 totaled 7400. 18 So the grand total was 71,297. 19 Some interesting findings. What we did 20 find again was that the direct mail is 90 21 percent of the sales as compared to 65 percent 22 last year. So the vast majority of our sales 23 for this program came through direct mail. 24 COMMISSIONER ANGELO: Do you have a 25 feeling what the direct costs of that . 20 1 marketing effort would be compared to -- 2 MS. SALDAÑA: Yeah. And that will 3 be the very last slide. We also found that 4 the addition of new hunts -- we were a little 5 concerned with adding hunts, that they might 6 somehow cannibalize sales, but that did not 7 happen. It didn't increase the response rate, 8 but it did increase the number of chances 9 purchased. Last year the average buyer bought 10 two chances. This year they bought four. So 11 clearly having a, you know, broader menu of 12 hunts to choose from resulted in additional 13 sales. 14 Texas Grand Slam was the most popular 15 package, counting for 34 percent of all 16 chances sold. The Texas White-tail Bonanza 17 came in a very strong second with 28 percent 18 of the sales. The Texas Exotic Safari had 17 19 percent. The Big Time Bird Hunt, 14 percent. 20 And the Waterfowl adventure had 7 percent of 21 the sales. 22 Here is, I guess, the money slide here. 23 The gross revenue, again, was 712,970. In 24 terms of out-of-pocket costs, the direct mail 25 cost 178,100. That included the production of . 21 1 the piece and the postage. The hunt cost 2 totaled about 70,500. All these costs have 3 not been actualized some of them are 4 estimates. So these will be tweaked a little 5 bit as we go through the process of doing the 6 purchases of the hunts -- or Wildlife does the 7 purchases of the hunts. 8 An additional 20,000 in other costs that 9 included, for example, hiring temporaries to 10 input all the information. It also included, 11 for example, the cost of producing a piece for 12 the public hunt guide. 13 But our total out-of-pocket expenses were 14 $268,600, for a net revenue total of $444,370. 15 Now Bob Cook always asks me, what about staff 16 costs. So we estimate marketing and wildlife 17 staff costs at about $25,000. 18 But overall, we certainly feel like this 19 has been a successful program. We have a lot 20 of analysis of the results to do. We're going 21 to be further refining these numbers. We'll 22 be analyzing the purchase behavior by customer 23 type to see who purchased what and at what 24 rate they purchased. And we will certainly be 25 determining the return on investment for each . 22 1 individual hunt package to make sure that each 2 hunt we're offering is profitable in and of 3 itself. We'll continue to tweak and improve. 4 And we're still verifying the names of the 5 hunters. We'll be making the announcement 6 tomorrow of who won what. 7 Any questions? 8 MR. SANSOM: Members, I think it's 9 important to look at this. I mean, it's 10 obviously very exciting that it is producing 11 revenue. It's also a major opportunity to 12 provide the opportunity in a state where 13 average citizens do not have these kinds of 14 opportunities. So if you imagine the 15 situation which occurs in most of the western 16 state where people draw for virtually all 17 hunting opportunity, what we've done here with 18 the blessed support of private landowners is 19 to allow us to provide hunting opportunities 20 to average citizens on places where they 21 otherwise would not be allowed to hunt. So 22 it's an opportunity issue as well as a revenue 23 issue. 24 COMMISSIONER WATSON: Now, do you 25 have to have a hunting license to buy a . 23 1 chance? 2 MS. SALDAÑA: Well, in order to -- 3 you don't to have to buy a license -- in order 4 to take the hunt, but you don't have to buy a 5 license to purchase a chance. But again -- 6 COMMISSIONER WATSON: Why not? 7 MS. HAMBURG: I think you have to 8 (inaudible). 9 COMMISSIONER ANGELO: Especially 10 those out of state. 11 COMMISSIONER WATSON: I don't think 12 you ought to be able to buy a chance unless 13 you have a hunting license. 14 MS. SALDAÑA: Well, remember, we 15 are mailing to our Super Combo customers. I 16 mean, that's our primary target are those 17 folks who are our license holders, but -- 18 MS. HAMBURG: Is Herb here? 19 MS. BURGDORF: I don't think that 20 we logistically -- I think is the problem. 21 Because, as Lydia says, most of the Big Time 22 Texas hunt purchases respond by mail. Most 23 licenses are sold through the system. And so 24 what we'd end up doing is basically doing a 25 lot of rejection through the mail, sending . 24 1 their checks back, depositing their checks, 2 issuing them refunds. If we went in -- when 3 we go ahead and the temporary staff she was 4 talking about actually entered those chances 5 and determined that individual has not 6 purchased a license, I think we'd end up 7 really driving up our costs. I don't know 8 that the revenue that we'd gain from requiring 9 a license would necessarily offset those 10 costs. 11 MS. HAMBURG: We can look into how 12 many (inaudible) license if you'd like. We 13 could do a run and see. It may be that all of 14 them do. We could certainly look into that. 15 COMMISSIONER WATSON: You know, I 16 think it's something we ought to at least 17 monitor the percentage of people that don't 18 have licenses that buy the chances. 19 MS. BURGDORF: It would be 20 interesting to know how many don't. 21 COMMISSIONER IDSAL: If you win a 22 chance with or without a license ahead of 23 time, are you allowed to give that chance to a 24 relative or a child or a -- 25 MS. SALDAÑA: Is Herb here? Herb . 25 1 might be better to answer the details, or Bob. 2 MR. KOTHMANN: You can gave it to 3 an immediate family member or you can give it 4 to a youth under 17. 5 COMMISSIONER IDSAL: Okay. 6 COMMISSIONER ANGELO: Any other 7 questions, comments? Thank you-all. 8 MS. BURGDORF: I have one more 9 slide. I'm sorry. We talk a lot about 10 revenue. This is a status slide -- 11 MR. SANSOM: You could also give 12 it to the executive director. 13 MS. BURGDORF: The operating budget 14 status: As of the end of fiscal 99, $6.6 15 million or 4 percent of the operating budget 16 was lapsed. And where we stand this year with 17 regards to the operating budget, $163 million 18 remaining, or 84 percent, and 16 percent of 19 the fiscal year has elapsed. So we are really 20 right on target with where we would expect our 21 expenditures to be. Again, salaries are a 22 major driver in our operating budget, and so 23 it really does track on a monthly basis the 24 payroll. And that is the end of the 25 presentation. . 26 1 COMMISSIONER ANGELO: Any 2 questions? I should have commented in the 3 beginning that I'm presiding in the absence of 4 Finance Committee Chairman Dick Heath who is 5 unable to be here today but will be in for the 6 meeting tomorrow. 7 AGENDA ITEM NO. 3: ACTION - ARTWORK APPROVAL. 8 COMMISSIONER ANGELO: The next item 9 on our agenda is the approval of artwork. 10 Frances Stiles is going to make that 11 presentation, I believe. 12 MS. BURGDORF: Buba Wood is also 13 here from Collectors Covey. 14 COMMISSIONER ANGELO: I was going 15 to recognize him. Buba, why don't you come up 16 and sit with the ladies. Buba Wood is the 17 gentleman that's really the driving force and 18 I guess you'd say the father of this whole 19 program, and we appreciate very much your 20 efforts on behalf of (inaudible) programs. It 21 wouldn't be here without you. 22 MR. WOOD: That might be good for 23 all of us. 24 MS. STILES: Good morning. My name 25 is Francis Stiles. I'm with the . 27 1 Administrative Resources Division. And I'm 2 here to introduce the agenda item for the 3 artwork approval. Now, we have the artwork 4 being set up here for you to review. 5 Under the terms of the contract with 6 Collectors Covey for the artwork, design and 7 marketing of the departmental prints program, 8 the Commission approves the artwork each year 9 for the waterfowl, nongame, turkey and 10 saltwater stamps. The artwork for these 11 stamps is combined into a collector's edition 12 consisting of eight stamps and offered to the 13 general public by Parks and Wildlife. 14 Additionally, Collectors Covey offers the 15 print reproductions through their established 16 marketing network. And Parks and Wildlife 17 receives a portion from the sale of each 18 print. 19 This year for the waterfowl stamp, we 20 have the Hooded Mergansers, by Sherrie Russell 21 Meline. The nongame stamp features the 22 Scissor-tailed Flycatcher by Ken Carlson. The 23 turkey stamp features the Rio Grande Turkey by 24 Eddie LeRoy. And the saltwater stamp features 25 the Speckled Trout by Herb Booth. . 28 1 MR. WOOD: What can I say? I'm 2 brought to tears by the beauty of it all. 3 COMMISSIONER WATSON: Where can we 4 find grass like that right now? 5 MR. WOOD: Not in Clay County, let 6 me assure you, or anyplace else that I -- 7 anyplace south of San Antonio, I guess. 8 MR. WOOD: Sherrie Russell -- 9 you-all might be interested, Sherrie Russell 10 Meline is a California artist, the first woman 11 we've ever used in the duck stamp program. 12 She's won, I think, the California contest 13 twice, which is frankly a nonevent, but it is 14 a contest that lots of prominent artist enter. 15 She was 6th this year in the federal duck 16 stamp contest, which might be interesting for 17 you-all to know that this year the mottled 18 duck, the Texas mottled duck was selected. I 19 think the only reason they used it, they have 20 this system where they're trying to get all 21 the species eventually on the federal duck 22 stamp. And obviously the scoters and the 23 Texas mottled ducks have been -- there haven't 24 been too many entries. And they've had no 25 chance when they're entered against mallards . 29 1 and pintails and wood ducks and the more, you 2 know, colorful species. So they have this 3 system now that I don't totally understand, 4 but this year you could only enter a Texas 5 mottled duck or a scoter. Well, you know, 6 that's an ugly duckling contest to some 7 extent. But the guy that won it, it was a 8 22-year-old kid that no one had ever even 9 heard of, won with a mottled duck. 10 And Sherrie entered a mottled duck, too, 11 because if we could have -- once I found out 12 that she had reference and was capable of 13 painting a mottled duck, which most of the 14 national duck stamp artists don't even have a 15 clue what they look like, I didn't want to use 16 that because she had entered a federal, and at 17 the time she was painting ours, I would be 18 afraid, boy, it would be our luck, you know, 19 we have a mottled duck and, hell, she wins the 20 federal duck stamp contest with a mottled 21 duck, which she didn't. 22 Anyway, we're really excited to have her. 23 I think that's really a neat design of a -- 24 really one of my favorite of the duck stamp 25 design we've ever had. Unfortunately, I don't . 30 1 think it's going to impact sales much one way 2 or the other, but we know good art won't hurt 3 us and bad art can hurt us. So we're tickled 4 to death to have her. 5 Of course, Herb Booth, everyone in Texas 6 I'm sure knows Herb Booth and his art, did a 7 Texas duck stamp for us in 1986 and has done a 8 couple of saltwater stamps. 9 The problem art is always the nongame art 10 because, as you can see -- did you pass out to 11 them our little -- last year we sold 119 12 nongame stamps. Well, needless to say, the 13 artists are not jumping up when they get a 14 call to get to do the Texas nongame stamp. So 15 what the last several years I have done is 16 just when I see a neat looking piece of 17 nongame art -- actually if you lifted up that 18 painting, the matting on that painting, 19 there's another scissortail underneath that. 20 You know, it's actually two scissortails in 21 this painting, but in the duck stamp print 22 format, it wouldn't crop. It's a vertical 23 rather than a horizontal. 24 But it's usually pretty easy once the 25 artist has already painted the art, he doesn't . 31 1 have to go out and paint a very unprofitable 2 painting. You know, they're more than happy 3 for us to use the artwork, and that's really 4 how, you know, to have an artists of Ken 5 Carlson's stature do the nongame stamp is -- 6 you know, is actually a real coup, but that 7 also won't result in any more sales. But it's 8 a beautiful piece of art. 9 MR. SANSOM: May I ask perhaps a 10 question to be directed to Lydia as well, 11 whether or not the kind of direct mail efforts 12 you've seen on the previous presentation could 13 boost those sales. 14 MR. WOOD: You know, at the risk of 15 just being negative -- I mean, you know, I've 16 always felt like the department has a lot 17 bigger fish to fry than just the Texas duck 18 stamp program or the nongame or the saltwater. 19 You know, we're leaving a little exposure on 20 the table, but I really don't think that 21 people who like to hunt necessarily translate 22 into people who like to collect duck stamp 23 prints. I mean, surely there's some 24 crossover, but it's just not that simple. I 25 mean, it would be wonderful if we had those . 32 1 images in some way in the mailing. And I 2 think the department really has over the years 3 left a lot of real neat exposure on the table. 4 I don't think it would result in any more 5 print sales. Most of these prints now are 6 bought by people on matching number basis 7 through our dealer network. And you know, if 8 you haven't bought the 1998 Texas duck stamp, 9 why in the world would you all of a sudden 10 were to buy the 1999 one, unless it happened 11 to be your favorite duck. And you know, we 12 probably have 50 sales a year that are 13 individual sales of just -- but now it's just 14 people keeping their collection in tact. They 15 look forward to getting the -- you know, a new 16 species of duck to put in their collection, 17 just look forward to getting it. You know, 18 we'd be tickled to death to try anything in 19 the world short of spending considerable 20 amount of money to get more sales, but I 21 really don't think it would be -- 22 COMMISSIONER ANGELO: How do we 23 compare with other states? 24 MR. WOOD: Oh, there's just no 25 comparison. I mean, we -- the Texas Parks and . 33 1 Wildlife Department, I wouldn't say they've 2 gotten more money than all the other states 3 combined, but there's really not even a second 4 place. I mean, we -- the department has 5 gotten so much more money and we sell so many 6 more prints. You know, we also happen to be 7 lucky enough to be Texans, and there are 18 or 8 20 million of us, and 80 percent of the ducks 9 in central flyway winter in Texas. I mean, it 10 isn't like we don't have lots -- you know, at 11 the time, the first Texas duck stamp was 12 published, it was the largest limited edition 13 print ever published of any kind, including 14 the federal duck stamp prints. I mean, you 15 know, it was just our timing was great, the 16 Commission, you know, stood behind our effort 17 to try to make it a national program rather 18 than a resident artist only program. 19 For y'all's information, there's only 20 been one Texas artist win a duck stamp contest 21 of any kind on a nationwide basis. So all 22 that tells is even as many great artists as 23 Texas has, a lot of them don't participate in 24 duck stamp contests. And now that the money 25 is not what it used to be, you know, on the . 34 1 federal level, very little. There were only 2 269 entries in the federal duck stamp program 3 this year. In year's past there has been as 4 many as 2000, to show you the sales -- the 5 sales in the federal duck stamp print are 6 going down just like our sales are. But, you 7 know, still the bottom line in 1998, we paid 8 y'all royalty of $130,000, and that's -- beats 9 some other things we've done, I'll tell you 10 for sure. 11 And frankly, it's a big part of our 12 identity. I mean, we take probably a lot more 13 pride in the Texas duck stamp that we're 14 really entitled to, but it's really our 15 identity. And I think if you ever quit it or 16 I think then you'd find out how many people 17 really did like it or liked the idea of it. 18 And certainly going to automated licenses, you 19 know, also tied a pretty good knot in our 20 tail, but, you know, there were certainly 21 bigger fish to fry in that agenda, too, you 22 know, and we understand. Don't like it, but 23 we understand. 24 COMMISSIONER AVILA: We advertise 25 these in the magazine, don't we? . 35 1 MR. WOOD: I wish you hadn't 2 brought that up. We used to, and -- 3 COMMISSIONER AVILA: Why. 4 MR. WOOD: Why? Because it was a 5 great place to advertise. I mean, over a 6 period of a very brief period of time, the 7 magazine doubled their advertising rates just 8 boom, boom, boom, you know, from like $1800 a 9 page to over $5,000 a page. And at one point 10 in time, in one of my more eloquent moments I 11 convinced Andy that -- you know, which also 12 wasn't a bad decision. It just put us out of 13 the game that the department, because they get 14 $28 a print, which is considerably more than 15 we get, that there might be some logic to 16 giving us a page ad in the spring issue to 17 showcase the duck stamp prints. And we did 18 that for a couple of years. 19 But in fiscal hard times of the magazine, 20 we don't get that free ad anymore. And that's 21 all right, but you know, that's why we don't. 22 Because it's just now at this point, you know, 23 it's going -- it's $5,000 out of our revenue 24 that the department is getting a heck of a lot 25 more out of than we are. And I have no really . 36 1 ax to grind with the department for not giving 2 us the ad. But Andy, is that not a pretty 3 fair -- David Baxter took my ad is what 4 happened. 5 COMMISSIONER AVILA: I think we're 6 going to negotiate this right here on the 7 spot. 8 MR. WOOD: Let me tell you, when I 9 leave here, I'm going to go see Susan Ebert, 10 is where I'm going from here. 11 COMMISSIONER AVILA: I think we 12 need -- and we don't need to seriously 13 negotiate, but do the math on that. If it 14 drives sales, then it's just like the mail out 15 we just did. Let's see what -- 16 MR. WOOD: But -- 17 MR. SANSOM: It would be an 18 accounting issue for us. 19 MR. WOOD: Well, sure. You know, 20 the deal -- I think the accounting issue was 21 and rightfully so, the department got the -- 22 the department got the income and the magazine 23 had to fade the $5,000 loss of revenue. And 24 you know, all of us -- shame on David for not 25 liking that arrangement was my attitude. . 37 1 COMMISSIONER AVILA: Well, then I 2 think you sell (inaudible), whoever would sell 3 more of the -- if you look on this handout you 4 passed around -- the nongame. I mean, these 5 birders, they'll collect those, surely, the 6 birding community. 7 MR. WOOD: I want to use this line 8 at least one more time. 9 COMMISSIONER AVILA: Okay. Careful 10 my sister-in-law is a birder. 11 MR. WOOD: I understand. But a 12 couple of years ago someone brought this up in 13 this same conversation we're having now, and I 14 made the statement that the nongame stamp and 15 print program gives new meaning to 16 nonconsumptive user. You know, the nongame 17 people just feel like because they don't hunt 18 them, because they -- I mean, who am I to say? 19 I'm from Wichita Falls. That they don't -- 20 they don't have the responsibility that we 21 hunters and fishermen, you know, embrace to 22 help pay the resource and develop the habitat 23 and stuff, and the birders just don't feel 24 that responsibility. 25 COMMISSIONER AVILA: Just put a . 38 1 little guy at the bottom of the picture with a 2 rifle like that. 3 MR. WOOD: I would be more than 4 happy -- and I say that with the Audoban 5 Society and DeDe Armentrout and the people 6 that were involved when we first did the 7 nongame program. They could not have been 8 more helpful. They tried their best, it just 9 didn't work. 10 MR. SANSOM: Would it -- one of the 11 things that I keyed on, though, in your 12 comments about the nongame is I would presume 13 that of the fairly small amount of -- I mean 14 not fairly -- substantially small amount of 15 prints that you sold that virtually all those 16 would be in that collecting category, people 17 that -- 18 MR. WOOD: No. I would say without 19 knowing, 80 percent of those people are duck 20 stamp people that like those images, too. 21 MR. SANSOM: I see. 22 MR. WOOD: You know, when we first 23 did the nongame program, I went to the 24 National Audoban Society and tried to convince 25 them if they would promote this on a national . 39 1 basis, knowing that we had the best duck stamp 2 program, the best dealership network program, 3 lots of factors that had nothing to do with 4 the National Audoban Society, that we had this 5 chance to make this a huge deal on a 6 nationwide basis, and then they could take the 7 Texas results and take it nationwide to every 8 other state and create the same nongame stamp 9 and print programs. They weren't remotely 10 interested in that concept. It was really 11 shocking to me that they, ah, who cares, you 12 know. Even though at the time, I think the 13 nongame budget was $48,000 in the state of 14 Texas. In the first year we paid $125,000. 15 No, I think that's what we lost on the damn 16 thing. We paid a lot of money into the 17 nongame program. Nongame program should be 18 the Martin F. Wood Nongame Program, because we 19 didn't do -- we were a lot more confident in 20 our bid than we should have been. 21 COMMISSIONER AVILA: There will be 22 no more questions. 23 COMMISSIONER ANGELO: A sore 24 subject. 25 MR. WOOD: Anyway, it certainly . 40 1 gave me religion. 2 COMMISSIONER ANGELO: That was a 3 good question, John. 4 MR. WOOD: It was. It was a good 5 question. That's a great question. And if it 6 ends up getting us a continuing ad in the 7 Parks and Wildlife magazine, it's the best 8 question of all. 9 Anyway, it's a real pleasure working with 10 y'all, and the staff is really -- has always 11 been incredibly supportive of what we're 12 doing. 13 COMMISSIONER ANGELO: We thank you 14 for your efforts on it, too, for sure. Any 15 other questions or comments? Thank y'all. 16 MR. WOOD: Thanks. 17 MS. STILES: This is eligible for 18 the consent agenda. 19 COMMISSIONER ANGELO: We do need a 20 motion. Thank you for reminding me. 21 COMMISSIONER RYAN: I'll make a 22 motion. 23 COMMISSIONER ANGELO: We have a 24 motion. Do we have a second? 25 COMMISSIONER WATSON: Second. . 41 1 COMMISSIONER ANGELO: For the 2 consent agenda. 3 COMMISSIONER RYAN: Right. For the 4 consent agenda. 5 COMMISSIONER ANGELO: All in favor 6 please say aye. Motion carried. Thank you. 7 (Motion passed unanimously.) 8 AGENDA ITEM NO. 4: ACTION - IMPLEMENTATION OF 9 HOUSE BILL 1581 - STATE PARK FEE POLICY. 10 COMMISSIONER ANGELO: Okay. We 11 have implementation of HB 1581 regarding state 12 park fee policies. Kevin. 13 MR. GOOD: Good morning. My name 14 is Ken Good, and I'm a program administrator 15 in the state parks division. I've got a brief 16 housecleaning type item for you today that was 17 required by an action of the 76th Legislature. 18 The item is the implementation of House 19 Bill 1581 which amends §11.028 of the Parks 20 and Wildlife Code. §11.028 in general 21 authorizes volunteer activity on behalf of the 22 department. Of particular note is Subsection 23 C which authorizes the executive director to 24 waive fees for volunteers. 25 Director Sansom has delegated this . 42 1 authority down to the park manager level as 2 part of our existing fee policy. It's 3 important to note that managers are not 4 required to waive fees for volunteers, but can 5 waive the loss of revenue against potential 6 benefit gained by work performed. And I think 7 it's also notable to understand that last year 8 we did gain over 17,000 hours of youth service 9 from volunteer workers. 10 House Bill 1581, and I do have copies of 11 this available if you would like, adds a 12 Subsection E which directs the Commission to 13 authorize park managers to waive fees for 14 volunteer youth groups, and then goes on to 15 define exactly what groups they're talking 16 about. This addition will not really have any 17 real effect as it just restates our current 18 policy. This fact was communicated to the 19 Bill sponsor. We did, however, express our 20 concern to the sponsor that this could be 21 interpreted as requiring managers to waive 22 fees for youth groups, and he did agree that 23 our policy of performing a cost benefit 24 analysis was reasonable and should be 25 continued. . 43 1 Nevertheless, the Bill did pass and does 2 require your approval on the motion you see. 3 And then I would further ask that this be put 4 on the consent agenda for tomorrow's meeting 5 assuming there's no comment or opposition to 6 this action. 7 COMMISSIONER ANGELO: To reiterate, 8 this is just putting into rules what's been 9 the long-standing policy of the Commission. 10 Is that right? 11 MR. GOOD: That is correct. 12 COMMISSIONER ANGELO: Do we have a 13 motion? 14 COMMISSIONER IDSAL: So moved. 15 COMMISSIONER DINKINS: Second. 16 COMMISSIONER ANGELO: Seconded. 17 All in favor say aye. Anyone opposed? Your 18 motion is adopted and it will be on the 19 consent agenda. 20 (Motion passed unanimously.) 21 MR. GOOD: Thank you. 22 COMMISSIONER ANGELO: Thank you. 23 AGENDA ITEM NO. 5: BRIEFING - TEXAS OUTDOOR 24 CONNECTION LICENSE POINT OF SALE SYSTEM. 25 COMMISSIONER ANGELO: Next item on . 44 1 the committee agenda is a briefing on the 2 Texas Outdoor Connection, License Point of 3 Sale System by Jayna Burgdorf. 4 MS. BURGDORF: This briefing, as 5 Commissioner Angelo stated, presents the 6 current and future issues that we'll be 7 addressing for our automated licensing system, 8 which we refer to as the Texas Outdoor 9 Connection. It's currently a partnership 10 between Transactive and Texas Parks and 11 Wildlife, which is a subsidiary of -- 12 Transactive is a subsidiary of GTECH. We 13 started the system with a pilot in December of 14 '95. With lots of work, we went on-line for 15 the entire '97 license year. We have over 16 3000 locations and almost 3800 terminals 17 across the state of Texas. The contract with 18 Transactive is for five years and does include 19 an option to renew. 20 Last year we had almost 3.2 million 21 transactions. And we do pay Transactive on a 22 transaction basis. So we also include such 23 things as settlement reports, those are called 24 transactions. Those only represent sales. So 25 from year to year, we pay 3.2 million to 3.4 . 45 1 million for the cost of this contract. This 2 year we've already sold 1.8 million items. 3 That's 58 percent. Because some of those 4 items are Super Combo, you notice that our 5 revenue was at 61 percent. So, a slight 6 difference there between the number of items 7 and the revenue in terms of total expectations 8 for the year. 9 Depending on what you purchase, whether 10 you answer HIP questions or how smoothly the 11 sale goes, it can take between three and ten 12 minutes on-line and five to 12 minutes 13 off-line. The contract with Transactive also 14 provides for a 1-800 number, and last year we 15 had over 15,000 calls. 16 You have seen this slide before, just 17 want to reiterate that license sales are 18 basically a quarter of the revenue for this 19 entire agency. And the spike in '97 20 represents the one-time increase in revenue 21 from the change in our collection myth as a 22 result of going on-line with this system. 23 Transactive operates a system within four 24 primary functional areas. They have the call 25 center, field service and supplies, which is . 46 1 basically the people who go out and repair the 2 machines and deliver the supplies to our 3 retailers. We have reconciliation unit, and 4 they handle the electronic fund transfers and 5 any differences in the retailer's financial 6 reports versus what Transactive says that they 7 owe. And then there is the actual operation 8 of the system, including software changes 9 which occur on an annual basis as a result of 10 our rule changes. 11 Unfortunately, this license year we did 12 experience some problems, especially during 13 and preceding Labor Day weekend, which is our 14 peak weekend for the entire year. Reliability 15 and response times are obviously very critical 16 issues for our merchants. And so that's one 17 of our key issues that we'll be bringing up in 18 the study which I'm about to tell you about. 19 Right now our collections are at 79 20 percent, instead of the 91 percent we had 21 collected by this time last year. And in 22 other words, what has happened is when the 23 sales go off-line, it causes -- and those 24 sales are eventually then downloaded when the 25 system can get through, it often causes those . 47 1 sales to be out of sync with what the main 2 database server says. This results in a 3 reconciliation issue, and until those are 4 worked, at this point on a manual basis, they 5 don't collect the money. They don't sweep it. 6 So that's -- the collections are an issue for 7 us, although the number continues to steadily 8 improve and there are efforts underway at 9 Transactive right now to increase this number. 10 As a matter of fact, by tomorrow, I may have 11 updated collections information that could be 12 even better than the 79 percent. 13 The maximum number of machines are in 14 use. We're at a total number of terminals 15 allowed under the contract. And so we have a 16 waiting list for our merchants. Now the 17 waiting list isn't large, it's 20, 30 18 merchants, but that is an issue for us. 19 Again, the contract was written five years 20 ago. And the current contract expires August 21 31, 2001, and Transactive has notified us that 22 they do not intend to renew the contract. 23 So the future of the Texas Outdoor 24 Connection is the issue at hand. We have 25 contracted with Spectrum Maximus -- they are a . 48 1 consulting group, a national consulting group, 2 but Spectrum actually is located here in 3 Austin -- for an analysis of alternative 4 study. 5 The objectives of the study are to review 6 the current system, assess the feature options 7 based on these key factors and develop 8 alternatives and recommend short and long-term 9 strategies. I would like you to know that our 10 steering committee consists of Allan 11 McConnell. He's the director of store 12 operations for Academy. Academy is our second 13 largest retailer based on volume of sales. 14 And he is -- he agrees with the objectives of 15 the system and has met with our consultants 16 already. 17 The study process will include focus 18 group meetings with key stake holders, 19 basically customers, our licensed customers, 20 and then our customers who are our retailers. 21 We have both kind of direct and indirect 22 customers. It will include a review of other 23 state systems. There are 16 other states that 24 either have a system or are in the process of 25 implementing one. Once again, Academy is . 49 1 going to be very helpful, I think, in that. 2 They have stores located in Louisiana and 3 Tennessee who are just bringing on systems 4 now. And so they have managers who have 5 direct experience with both Texas and these 6 new states so that they can really give us 7 some interesting feedback. Include, of 8 course, interviews with Parks and Wildlife and 9 Transactive staff, and surveys to both sets of 10 customers, again, our licensed buyers and our 11 retailers. 12 The consultants will identify 13 alternatives, including service delivery 14 options, and let me explain what I mean by 15 that. This could range from another turnkey 16 contract with a different vendor. EDS does 17 Michigan's system, for example. LIS is doing 18 the system in Louisiana. So there are other 19 players out there in the marketplace, to some 20 combination of outsourcing and in-house. 21 There are potentially some options of taking 22 pieces of the system in-house. 23 They will also provide cost estimates, 24 transition plans and time frames, high-level 25 project work plans and recommendations for . 50 1 request for proposal. They won't write any 2 RFPs, but they will give us some key elements 3 that should be included in any kind of 4 request. With the two most viable 5 alternatives, Spectrum will provide a more 6 detailed cost benefit analysis and a risk 7 assessment. 8 They will also examine all the system 9 components. And obviously, it's a complicated 10 system, and so there's lots of pieces and lots 11 of places where things can be improved. 12 They will examine everything including 13 Internet sales. Again, the current contract, 14 which was written back in 1995, did not 15 envision the level of e-commerce that we 16 experience today and our customers have come 17 to expect. So that's something else we want 18 to make sure is addressed in any new system we 19 put in place. 20 There are some policy issues that we want 21 to explore. Again, just some examples: 22 Service options, right now the contract calls 23 for a four hour response time, and that's a 24 very expensive issue in that you have people 25 going out in Houston and perhaps driving for . 51 1 hours to get to the retailer, wherever they 2 may be located, to service that machine. 3 Transactive has actually been helpful in 4 suggesting just some policy changes that might 5 save money, even though I think they realize 6 that that won't necessarily affect them at 7 this point. And one of those options is 8 having a vendor overnight a machine. In other 9 words, they would be down but they still have 10 the 1-800 option where an individual can call 11 from their phone, but to have them overnight 12 the machine and then send the other one back 13 for repairs at a central location. Another 14 example is every time licenses are voided, 15 Transactive actually matches up -- they have 16 the retailer send in the little yellow copy 17 and match that up against the database to make 18 sure that individual really purchased a 19 license. There are ways to automate that or 20 do some kind of sampling technique that would 21 eliminate or reducing the need for the size of 22 reconciliation staff that they have. 23 Another issue that we didn't anticipate, 24 one of the biggest complaints we had with our 25 previous system is that the retailers had to . 52 1 post a bond in order to get the licenses 2 because these were all prenumbered and they 3 had a value. With this system and the 4 electronic funds transfer, we were able to 5 allow retailers to not have to post a bond 6 when they get the terminal. The terminals 7 don't always find their way back to 8 Transactive when the business either goes out 9 of business, decides they don't want to sell 10 licenses anymore, or is somehow damaged. And 11 so we have 200 machines out there that 12 Transactive is in the process of rounding up. 13 In other words, we have 200 machines that 14 didn't get the most current download, and so 15 there isn't an incentive in terms of a deposit 16 or anything like that to get that machine 17 back. So that's something we have to look at. 18 There's other business processes and rules, 19 but I wanted to give y'all a flavor of what 20 we're talking about here. 21 Possible implementation scenarios: This 22 kind of goes hand in hand with the service 23 delivery options. We could reassign the 24 existing contract and negotiate future system 25 enhancements in exchange for an extension of . 53 1 that contract. That is a possibility. We 2 could partially outsource this, or again, we 3 could totally replace the system. 4 Key upcoming dates: The study should be 5 complete in January. In February, and 6 hopefully early March, we'll do analysis and 7 prepare some RFPs. I'm assuming that there 8 will be some written work that perhaps goes 9 back and forth between us so that y'all have a 10 more recent update than April, but we will be 11 prepared to make a presentation to you in 12 April, as well as to the status. 13 MR. SANSOM: Members, this is a big 14 deal, real big deal. I met with chairman of 15 GTECH recently and expressed to him my desire 16 that this be an orderly transition, that it 17 not sort of resemble the sale of a house in 18 which, you know, if you're going to sell your 19 house, you kind of put off painting a bedroom, 20 that we really need to keep that level of 21 service up. We've negotiated with them pretty 22 hard on the problems that have cropped up this 23 year, and in fact, I think we're still 24 withholding some funds. 25 But it would be our desire to try to . 54 1 cause this transaction to happen more quickly 2 than their two-year contract so -- that and 3 they're amenable to that, so -- but this is a 4 big deal. 5 COMMISSIONER RYAN: How many years 6 do they have left on the contract. 7 MR. SANSOM: Two years. 8 MS. BURGDORF: Two years. 9 MR. SANSOM: Well, two years from 10 September 1. 11 MS. BURGDORF: From the start of 12 this license year. 13 COMMISSIONER RYAN: So a little 14 less than two years. 15 COMMISSIONER IDSAL: And you say 16 they're willing to shorten the contract. 17 MR. SANSOM: If we can -- that's 18 right. I mean, they're -- they just basically 19 have made a business decision that this is not 20 something they want to do, and so -- 21 MS. BURGDORF: Transactive 22 basically runs our license point of sale 23 system and the electronic benefits transfer 24 systems for Illinois and Texas, and they are 25 winding out of those businesses as well. . 55 1 COMMISSIONER RYAN: Jayna, what's 2 the value of those machines they are missing? 3 MS. BURGDORF: I think the value is 4 probably around -- well, at this point, these 5 are five-year-old machines, too. So 6 depreciated, they're probably worth, you know, 7 $500, $250. Initially they're probably worth 8 a thousand or two. 9 COMMISSIONER RYAN: What are we 10 doing now for people that are coming on 11 wanting machines to start selling licenses? 12 MS. BURGDORF: Well, there's a 13 waiting list, and we're actively working with 14 Transactive on getting some of these other 15 machines back. If it's a -- some people are 16 just kind of putting their names on the list. 17 Like, two of those people are potentially 18 Internet providers, which the way the contract 19 is structured right now, I don't believe that 20 they would make any money. I think they would 21 seriously lose money because they'd be selling 22 over the Internet and still having to go 23 through the whole fulfillment process, and 24 their only revenue would be 5 percent from 25 Transactive, a 5 percent commission. I think . 56 1 if someone -- if an existing retailer has 2 another store that they are opening, they have 3 been given priority in that list. 4 COMMISSIONER RYAN: But what you're 5 saying is if somebody wants to start selling 6 licenses, right now we're not able to allow 7 them to do that? 8 MS. BURGDORF: That's correct. In 9 general, that's correct. 10 COMMISSIONER RYAN: How long has 11 that been going on? 12 MS. BURGDORF: I'd say that's a 13 fairly recent phenomena probably within the 14 last six months. 15 COMMISSIONER IDSAL: Are you also 16 saying that if we could get some of these 17 machines back that they could then be given to 18 the people that are -- 19 MS. BURGDORF: Yes. Absolutely. 20 And Transactive is in the process of doing 21 that right now. 22 COMMISSIONER RYAN: What do you 23 think the solution to that is? They wouldn't 24 have to put up a deposit to receive a machine 25 now? . 57 1 MS. BURGDORF: Right. Even if it 2 was $50 or a hundred dollars, or if -- even if 3 we were talking about people perhaps who 4 hadn't done business with us, we could even 5 have some criteria that didn't necessarily 6 cover everyone because we have some retailers 7 obviously who have done business with us for 8 years, and we've never had an issue. And so 9 you don't want to all of a sudden put a 10 disadvantage or a burden on them. But an 11 option would be on some new retailers or those 12 who have multiple machines or we've had 13 problems with in the past, that we have some 14 kind of a deposit so they have an incentive to 15 take better care of the machine. 16 Transactive has told me before that -- 17 and I don't know if it's in Illinois or where 18 it is, but -- or maybe it's the lottery, but 19 they own -- retailers are required to purchase 20 some of these machines. And they said the 21 difference in the care that is taken -- it's 22 not the same, but you understand VeriFone has 23 a large corner on the market of these types of 24 electronic terminals at stores. And the 25 difference in the quality machines and how . 58 1 long they last and how well they're taken care 2 of based on the ownership is an issue. 3 COMMISSIONER RYAN: So within two 4 years, we're going to have to come up with a 5 new vendor, and also, they're going to have to 6 design another machine. 7 MS. BURGDORF: There is a 8 possibility that we could continue with this. 9 And again, it would involve either another 10 vendor or Parks and Wildlife purchasing the 11 system from Transactive. We could continue 12 with this system. Obviously we'd want some 13 modifications because we don't think things 14 are going perfectly right now. 15 MR. SANSOM: There could be some 16 formulations that are different than the one 17 we have now. We could take part of the system 18 in-house and contract part of it out. We 19 could find another contractor, like GTECH 20 would take it all. But that's what this 21 process is designed to do. And I -- and we'll 22 be keeping you up to date at every single 23 meeting. 24 I would also like to compliment Jayna 25 here in that she has skillfully added the . 59 1 retailers into this whole process from day 2 one. She has got a major retailer, you know, 3 basically on the procurement committee to 4 select the contractor. We've got an advisory 5 committee made up of everybody from a bait 6 stand owner to Wal-Mart, you know, that will 7 be involved in this process. So they'll be 8 intimately involved in making these decisions 9 and recommendation to you-all. 10 MS. BURGDORF: And they are very 11 vocal. 12 MR. SANSOM: Kind of like Buba. 13 COMMISSIONER ANGELO: Any other 14 comments or questions? Is that all Jayna? 15 MS. BURGDORF: That's all. 16 COMMISSIONER ANGELO: Thank you. 17 AGENDA ITEM NO. 6: ACTION - PERSONNEL 18 MATTERS. 19 COMMISSIONER ANGELO: Okay. The 20 last item on our agenda is a personnel matter 21 and it revolves from the last session of the 22 legislature, House Bill 1. It's the General 23 Appropriations Act authorizing salaries for 24 executive directors of various departments in 25 the state, one of which is our executive . 60 1 director of the Texas Parks and Wildlife, any 2 increase in salary for the executive director 3 must be approved by the Commission in an open 4 meeting. And certainly based on the 5 performance and expertise and commitment of 6 our executive director, it's very much in 7 line, but ask for a motion to present this to 8 the full Commission tomorrow. 9 COMMISSIONER WATSON: I so move. 10 COMMISSIONER (inaudible): Second. 11 COMMISSIONER ANGELO: Any 12 discussion? All in favor please say aye. 13 Opposed? 14 (Motion passed unanimously.) 15 Any other business before this committee? 16 Madam Chairman, it's all yours. 17 18 * * * * * 19 FINANCE COMMITTEE ADJOURNED 20 * * * * * 21 22 23 24 25 . 61 1 REPORTER'S CERTIFICATE 2 3 COUNTY OF TRAVIS X 4 THE STATE OF TEXAS X 5 I, Rachelle Latino, certified shorthand 6 reporter for the State of Texas, do hereby 7 certify that the above and foregoing 60 pages 8 constitutes a full, true and correct 9 transcript of the minutes of the Texas Parks 10 and Wildlife Commission on November 17, 1999, 11 in the commission hearing room of the Texas 12 Parks and Wildlife Headquarters Complex, 13 Travis County, Texas. 14 I further certify that a stenographic 15 record was made by me at the time of the 16 public meeting and said stenographic notes 17 were thereafter reduced to computerized 18 transcription under my direction and control. 19 Witness my hand this, the 10th day of 20 January 2000. 21 22 23 Rachelle Latino Certified Shorthand Reporter 24 State of Texas Certificate No. 6771 25 Expires: 12-31-01