Texas Parks and Wildlife Commission
Finance Committee

Nov. 7, 2007

Commission Hearing Room
Texas Parks & Wildlife Department Headquarters Complex
4200 Smith School Road
Austin, TX 78744

BE IT REMEMBERED, that heretofore on the 7th day of November, 2007, there came to be heard matters under the regulatory authority of the Texas Parks and Wildlife Commission in the Commission Hearing Room of the Texas Parks and Wildlife Department Headquarters Complex, to wit:





COMMISSIONER HOLT: Good morning, everybody. The meeting is called to order. Before proceeding with any business, I believe Mr. Cook has a statement to make.

MR. COOK: Thank you, Mr. Chairman. A public notice of this meeting containing all items on the proposed agenda has been filed in the office of Secretary of State as required by Chapter 551 Government Code, referred to as the Open Meetings Act. I would like for this fact to be noted in the official record of the meeting.

Thank you, sir.

COMMISSIONER HOLT: Thank you, Mr. Cook. I will now call and start right away with the Finance Committee. I will call it to order. The first order of business is the approval of previous committee meeting minutes, which have already been distributed. Is there a motion for approval?



COMMISSIONER HOLT: Okay, Bivins and Brown. All in favor?

(A chorus of ayes.)

COMMISSIONER HOLT: Okay. Any opposed?

(No response.)

COMMISSIONER HOLT: Thank you all. I appreciate that. Hearing none, motion carries.

Committee Item Number 1, Land and Water Plan Update, Mr. Cook.

MR. COOK: Thank you, Mr. Chairman. Our Finance staff are preparing the fiscal year 2007 Annual Financial Report that is due to the Comptroller's Office by November 20th. In other words, that's how we ended up in FY '07. The Budget staff are preparing the fiscal year 2008 operating budget to be submitted to the Legislative Budget Board and the Governor's Office by December 3rd. Both reports are on schedule to be submitted to the oversight agencies by their deadlines.

We continue to spend a considerable amount of time throughout the agency on our SAO work and the fiscal recommendations related to the state audit. Mr. Boruff will be providing you with a detailed report on that shortly.

I'm pleased to report that we have had a good start on our revenues this year; although we're really not far enough into the year to do a whole lot of reporting on it. Our hunting and fishing license sales ‑‑ and I have sent several of the graphs to you to keep you posted on how that's going ‑‑ our hunting and fishing license sales for 2008 are running at $49.3 million as of the end of October. That's a 4 percent increase from prior year's sales. Last year, as you will recall, was better than the year before that. The two primary contributors to this increase are freshwater fishing and super combo license sales.

We have not received a consolidated park revenue report for October yet, but we opened the fiscal year well with state park fees at $2.7 million at the end of September, which is a 7 percent increase over the prior year's. Mary Fields, again, will keep us updated on this, on our financial situation, and our progress there, and will present a financial overview to the Commission at our January meeting. By then, we'll have enough numbers that you can kind of hang your hat on.

I'm also pleased to report, Mr. Chairman, that in the elections yesterday ‑‑ and I'm sure you've all heard this, it's something that we've worked very hard on to be sure people understood what was in Proposition 4 ‑‑ Proposition 4, along with all the other propositions I understand, passed. Proposition 4 passed at a percentage of 58 percent to 42 percent. Just in a nutshell, that included $52 million for Texas Parks and Wildlife Department, $25 million in the Battleship and $27 million in our State Park Repair Program. So we are pleased with that. Now, we just have to get all the hoops jumped through and the process moving in order to put those dollars to work. Thank you, sir.

COMMISSIONER HOLT: Thank you, Bob. You might tell a little bit about those dollars when they're actually appropriated though.

MR. COOK: I think Scott will fill you in on the exact dates there, but the bottom line is it's quite a process that you've got to go through with LBB, with the Public Finance group, and it could take several months. We'll provide you good detail on that shortly.


Any questions for Bob on any of that? I think we'll be discussing quite a bit of it as we go through the next few minutes.

(No response.)

COMMISSIONER HOLT: Committee Item Number 2, Proposed Stamp and Print Artwork Program.

Ms. Frances Stiles and Mr. Mark Wood, would you please make the presentation? Thank you.

MS. STILES: Good morning. My name is Frances Stiles. I'm with the Administrative Resource Division. Each year, according to the contract with our print program, Mr. Wood comes to us and brings us the artwork for review. We have five pieces of artwork. This artwork is reviewed by you and approved or disapproved. Then, we take this and make it into the collector's stamp and offer that for sale to our hunting and fishing population. A portion of the sale from the print from Mr. Wood comes back to us from royalties. This year, we have the following, and I'm going to let Mr. Wood introduce the artwork that we have here.

MR. WOOD: The migratory bird stamp is done by Jim Hautman. He's a Minnesota artist who has won the federal duck stamp three times. I think this is the third time that he's done our Texas Duck Stamp Program. Interestingly, at least to me it is, he has two other brothers. Collectively, they have won eight federal duck stamp prints in the last 16 or 17 years. You know, in fact, one of his brothers won the federal duck stamp this year.

The non-game stamp is by Bruce Miller, a Minnesota artist who has also won the federal duck stamp several years ago, of a blue heron. The pheasant is the subject matter we chose for the upland stamp. That is done by Jim Hautman's brother, Bob, who has won the federal duck stamp twice. The freshwater stamp is a striper by Don Ray, who has at least a couple of times previously done our saltwater stamp. Of course, the saltwater stamp is done by Texas artist Herb Booth, who I think this is his third entry.

I'd be glad to try to answer questions.

COMMISSIONER HOLT: Well, Bubba, you always do a good job, but now how many are Texas artists? We just have the one?

MR. WOOD: We have the one this year.

COMMISSIONER HOLT: Okay. Do you try to put emphasis on Texas artists? Have you in the past? I can't remember.

MR. WOOD: Well, yes, sure. In fact, sometime, several years ago, I was amazed at how many Texas artists. I can't remember the number, but certainly a number of artists that I'm more than comfortable with. The fact of the matter is duck stamp art and collecting of it is really an autograph contest. A very poor painting by David Maas, if he was capable of doing a poor painting, would sell better than the greatest painting ever painted by me because the dealers and the collectors are comfortable with a name, John B. Calling, the Hautmans, Larry Hayden, who did our first stamp. By the way, Larry Hayden died about a year ago and that is the first Texas artist that has passed away. He did the first Texas duck stamp and he did about the 12th Texas duck stamp, but he passed away about a little over a year ago. I didn't report that last year and I was remiss in not including that because he was a great artist.

COMMISSIONER HOLT: I didn't realize that.

MR. WOOD: He certainly started that program. The first Texas duck stamp, at the time, was the largest selling limited edition print ever published. It was larger than any federal duck stamp print. Of course, it spawned another 20 states to have a duck stamp print program, not having 22 million crazy Texans that wanted to support the program, and not having 80 percent of the ducks in the central flyway, the state of Kansas just thought they'd have a duck stamp print. Most of those states don't even produce prints anymore.

COMMISSIONER HOLT: It just didn't work for them.

MR. WOOD: It just didn't work for them. Really, in a lot of the states, the state doesn't get a royalty. So there's just no incentive for them. The contest is a bunch of hassle because you've got one winner and ‑‑

COMMISSIONER HOLT: Everybody else is mad.

MR. WOOD: ‑‑ everybody else is mad. That's exactly right. Anyway, that's sort of the background on it.

Interestingly enough, to my knowledge ‑‑ and I think I'm still correct about this ‑‑ there has been one Texas artist win a duck stamp contest. People think this is a win here. This is not a ‑‑ the secret to the Texas Duck Stamp Program is that back in 1981, the Commission gave the high bidder, luckily us, the ability to pick who we wanted and the subject matter that we wanted on the duck stamp contest. That's the real key. You know, that and the 22 million, or 26 million, crazy Texans is what makes the Texas Duck Stamp Program so successful. We have a, albeit not a very ongoing success with the program the way it used to be, but the duck stamp business is one of attrition and we've held onto more business than any other state by a bunch. Certainly, the state of Texas has made more money, I don't know how much, over the course of the years in royalties. It's been a great deal for us and I hope you guys think it has been a great deal for you. It's not as great as it was. You looking at these numbers, still it's a significant amount of money.

COMMISSIONER HOLT: Oh, yes, absolutely. Any questions for Bubba?

(No response.)

COMMISSIONER HOLT: Frances, one thing, can we look at that history and get something to the Commission about dollars we have raised over the years? I think it would be interesting.

MR. WOOD: You know, I would say something, and I know I've said this before ‑‑ I've certainly said it in private before ‑‑ Parks and Wildlife does lots of great things. The one thing it doesn't do, although it seems to be doing better, is taking full advantage of tooting their own horn.


MR. WOOD: This Duck Stamp Program is absolutely second to none.


MR. WOOD: Not necessarily because of us, but it really is the blue chip of the deal. To use those images more and more in your publications and stuff ‑‑ you own the copyright to them ‑‑ it's just crazy not to promote that.


MR. WOOD: Lydia, in fact, showed me a piece that was sent out to all the combo license holders that featured the duck stamp on the back. To my knowledge, I don't know that that's ever been done before, but at least it's a start.

COMMISSIONER HOLT: Yes, I would agree with you.

MR. WOOD: You know, once we made this not required to put on the license, once the Commission made this not required to license ‑‑ and I think that was back in 1995 or 19 something, when we went to automated licenses ‑‑ that pretty well, that would have driven the stake in the heart of any other duck stamp program except the Texas Duck Stamp Program. It certainly has made the stamps less collectible because they're really not required to hunt. You know, that's sort of the key to all this, that, hey, this has got to be put on your license. It has really hurt sales, you know. I'm sure the benefits far outweigh that minor problem.

COMMISSIONER HOLT: Yes. On a sale, our customers do like that.

MR. WOOD: I'm sure. What I need is for the state to pass a law where every art buyer in the State of Texas has to come in my store one day a year, you know.


MR. WOOD: You know, I hear these dealers complaining about that, the inconvenience of it all. Please pass the law.


MR. WOOD: Oh, absolutely. You have to give 10 percent to the state, you know, or whatever. Please pass a law where every art buyer in the country has to come into my store.

COMMISSIONER HOLT: We'll work on that.

MR. WOOD: Good, thank you.

COMMISSIONER BROWN: Is that a motion?


MR. WOOD: Exactly.

COMMISSIONER HOLT: Frances, any other comments?

MS. STILES: No, sir. This will be provided to you tomorrow for approval on electronic format.

COMMISSIONER HOLT: Any other discussion or questions for Bubba or Frances?

(No response.)

COMMISSIONER HOLT: Okay. I'll place this item on the Thursday Commission meeting agenda for public comment and action. Thank you both.

MR. WOOD: Thank you.

MR. COOK: Mr. Chairman, I'd just like to comment, to thank Mr. Wood. He has been a friend to Parks and Wildlife, as you know, for a long, long time and worked with staff. It's a pleasure to work with him once you kind of get past that bashfulness that he has.

Thank you, Bubba.

COMMISSIONER HOLT: Committee Item 3, Implementation of Recommendations by the State Auditor's Office, Audit of State Parks' Financial Processes, status update, Mr. Scott Boruff, please.

MR. BORUFF: Thank you, Mr. Chairman. For the record, my name is Scott Boruff, Deputy Executive Director of Operations, Texas Parks and Wildlife. Particularly for the benefit of the new commissioners, who have not been involved in this process, I'm going to take a little bit longer today to report a little on the history of the SAO process, as well as our progress toward implementing the recommendations. I will try to make it fairly brief.

To start out with, as most of you are aware, prior to the last session we had identified some funding issues in state parks and were trying to move forward to remedy those funding issues. The State Parks Division had come forward to us in years prior and had identified some issues within their division relative to financial controls and management and other issues. Some of those were related to the funding shortfalls. If you look back over several bienniums in the state parks, what you would see is a relatively static revenue stream and at the same time pretty dramatically increasing operational costs out there. That really was the genesis of the problem, the fact that revenues were not going up proportionate to the number of expenses that were occurring within the State Parks Division.

Ultimately, in both 2003 and then really in 2005, it became fairly critical. In 2003, we RIF'd in state terminology, we released 19 positions in state parks. We cut that many staff. And then, even more critically in 2005, as the trend continued, as expenses went up, gasoline ‑‑ obviously you're all aware of the increase in costs there and others ‑‑ we were forced in 2005 to release another 73 staff from the State Parks Division. So we were closing in on 100 folks who were cut from a work force of about 1,000 or 1,100. So about one-tenth of the work force was cut.

It also precipitated the need to partially close 52 of our state parks, roughly half, not quite half, but close to half, and partially. We did make an effort to not completely close any park. So all parks remained open to some extent, but we reduced hours in many parks. We stopped being open Tuesdays, Wednesdays, and Thursdays in some of those parks. We had some locations around the state, like Lake Somerville, where you had two units on one lake and we would close one unit and leave the other unit open. So pretty dramatic cuts in operations and cuts in staff occurred starting in 2003 and really they came to a head in 2005, which then prompted our move to go to the legislature in 2007 and ask for increased funding to try to remedy some of those problems.

As background, the Internal Audit group here at Texas Parks and Wildlife had done an internal audit in October 2006, which really reflected many of the recommendations which were ultimately identified then subsequently by the State Auditor's Office in their report that they did later. So many of the issues were apparent to the agency prior to the audit. We appreciated the audit. We took it seriously. It did endorse the fact that what we knew was real and they did help us identify some new problems. This report this morning is going to talk to you about the resolution of those problems.

I'm sorry. I'm running ahead of myself. In December '06 through February '06, the State Auditor's Office sent 16 folks out here to conduct a formal audit of the State Parks Division and the associated support functions. For the new commissioners, I might remind you that Fund 64, which is the State Park Fund, for state parks and wildlife is not only used to fund the State Park Division but also it is used to fund some of the support divisions, particularly the Infrastructure Division, Communications, AR ‑‑ Administrative Resources, and Information Technology. Those groups do work for state parks partially, so part of their funding comes from Fund 64, and they were looked at also in this audit. Any Fund 64 dollars were looked at.

The objectives were to determine whether the budget projections for state parks and the upcoming budget at that point, which was the '06-'07 budget, were reasonable and supported, and to examine the deferred maintenance issues that were facing the parks, because, as you may well know, along with the RIFs and the partial closures, we had a building backlog of major, critical repairs that were going unaddressed.

In March 2007, the auditors issued their report. The report had four major categories, which I'll go into in just a moment. Around the same time or shortly thereafter, at the close of the legislature, there were several riders that basically reflected some of the recommendations. Mr. Cook asked us to put together a team, along with the chairman, and Mr. Cook asked us to move forward aggressively in addressing all the recommendations and the related SAO riders.

The agency took some pretty dramatic action. We created, in the Administrative Resource Division, a State Parks Revenue branch, an entirely new branch. We staffed it with some of our best and brightest. I think there are seven or eight FTEs in that branch, which are accountants and statisticians. Their sole objective in life is to make sure that we're tracking and appropriately reporting on our revenues in state parks, as well as helping us look at new revenue opportunities.

We created a suite of teams. I believe it was 25, it might have been 26 teams, that broke out to look at the specific recommendations and to go beyond that. I think that's important. We took this so seriously that we didn't just go back and do a point-by-point report on what they had asked us; we looked at the bigger picture. We tried to take a holistic perspective and we tried to put this thing together in a business manner that makes sense and would be critical downtown as we move into the next session.

We had the first report due on July 1st of this year. It was a pre-progress report. We submitted it three days early. We got positive feedback from the Auditor's Office about that response and our intended response to the recommendations. The second report went in on August 31st. It was submitted on time. At this point, we're on a quarterly reporting basis. Our next report is due at the end of December. We have planned, at this point, to begin to submit those reports early. We kind of caught up and got past the curve.

There were 48 recommendations totally spread across the four categories. Thirty-six of the recommendations have been completed. The question comes to me occasionally ‑‑ does that mean we're three-quarters of the way through? If you do the simple math, the answer is ‑‑ that's hard to answer, probably not. Some of the recommendations, as I said, were well known to us. We had already been working on the solutions and it didn't take a whole lot of work to complete them. Some of the recommendations are going to require a significant work load and won't be completed for another year or year and a half. To kind of weigh the relative value of the recommendations is not an exercise we undertook, but for purposes of reporting, we have finished 36 of the 48 recommendations. We still have some important work to do and we're proud of the work that has been done. I'll go over some of that in a minute.

We will complete the 48 recommendations and the associated 118 deliverables. We went in and used a professional project management model to identify specific deliverables for each of the recommendations. We track those on a weekly basis. We have weekly team meetings. We have put together an SAO response team, which reviews all responses and coordinates them, puts them together in a way that's palatable and makes sense. So it doesn't look like the report was written by 35 different folks.

As of the time we put this slide show together, we could document in excess of 20,000 hours that we've booked against these recommendations and their solutions. So this is an agency-wide project. It particularly includes State Parks, the Infrastructure Division, Administrative Resources, and Information Technology. I applaud their efforts to get this done and take it seriously.

There were four major areas. The first area was to improve the accuracy of park visitation reporting and maximize state park revenue. Clearly the intent here was to make sure we count our visitors, and we could tie revenues to visitation, and that we should be looking for ways to increase the revenues to try to support the State Parks System.

I'm not going to necessarily go over each one of these. You have the package. We'd be glad to specifically talk to you offline if you wish about real detail. Suffice it to say that under visitation this is something that we struggled with for a long time. There's been a lot of work put into here. We have standardized our visitation data collection procedures. We have ordered consistent hardware. For example, we had many different kinds of car counters that are used to count after hours visitation in parks. When your car rolls over the counter, it counts cars and then you use a formula to extrapolate how many folks are coming in after hours. We went out and purchased machines that are consistent so that each park has the same machine and uses the same kind of technology. It makes it much more reliable and valid than using 12 different kinds of counters.

We actually now are going through a head count at each park. So when you come into the park, rather than using a formula, which we used to use to guesstimate, during hours where we have staff available, we're actually counting the number of folks that come in. There are policies and procedures that have been developed that are homogeneous across all the parks. Rather than having multiple different systems, we have one system that each park uses now. So the data is much more reliable.

We have developed state-park-specific, site-specific, visitation plans. We have gone through extensive efforts to train the staff in how to implement the plans, how to do the consistent head counts, how to report the information back to the Administrative Resources Division and those kinds of things.

We've gone out, at the request of SAO ‑‑ one of the recommendations was to conduct some web-based customer preference surveys. What do the customers want out there? We have completed those. We have contracted with a reputable survey group that has come in, and made some recommendations to us about hours and kinds of things that the visitors want to see in the parks, and we are in the process of evaluating how to implement the recommendations.

The last bullet you see here is an important one. This was not a recommendation of the SAO. They did not come in and say, "Develop a site-specific strategic business plan for each park." This is one of the things where we decided this would make good sense for the agency. Any organization ought to have a good business strategic plan. So we've gone out in each park and we've developed a site-specific strategic business plan for that park, which encapsulates many of the things that we have talked about here this morning.

By the way, this picture is representative of some of the intensive training; 239 of the state parks staff have gone through the fiscal control management training processes that we've implemented, as well as the management components. Walt and his staff had put together, prior to the SAO report, a managing park operations, a training program in which they have put several hundred of their staff through management and operations training. So we've been pretty serious about this.

The second big category was to improve the effectiveness of the management operations of state parks. We have put together, once again, a homogeneous, one model for implementing budget-monitoring procedures and protocols. Before, we had a hodge-podge. You might find five or six different models out there across the parks system. It made it hard for us to pull data together. The second one is a lot of words for saying, we've figured out how we're going to analyze when and how to reduce services if it's ever necessary again in the future. To make some good business decisions, you don't want to impact your revenue, if you can help it, when you're going to have to have partial closures and those types of things.

We have embedded in all individual performance plans of the state park staff, and the management staff, individual performance plans that require them to comply to fiscal management controls, management controls, and operational controls. We have implemented the Land Transaction Policy that was required. Specifically, the Land Transaction Policy required that we notify the Governor's Office six months in advance if there's going to be a full closure or transfer of a state park. It also required what we already had in place. A couple of years ago we put in place a requirement to come to you folks on two different occasions. As we move forward with any land sales or transactions, they go through two Commission meetings so there is plenty of opportunity for the public to have opportunity to give feedback before those sales and transfers are consummated. So we've got that in writing, in the policy at this point.

The third big area was to improve the consistency of cost-estimating processes to ensure proper prioritization of capital improvement and repair needs. This had to do specifically with our Infrastructure Division and how we are going to spend the capital money that the legislature gave us. Mr. Whiston and I will talk a bit more later about some of the specifics of how that's going to happen. Related to the SAO though, we do have some major accomplishments here. We had a capital project justification methodology. We went back and enhanced that policy, revised it, and came up with some pretty specific justification methodologies. I won't try to go into the detail here, but I'd certainly be willing to do that later if you're interested.

Probably the most important, you folks will remember that at the last Commission meeting, we came to you with this third bullet here which we were required to develop a weighted project priority system using approved criteria. By approved, I mean approved by the Commission. And so, we came up with these four criteria that you see in front of you. Obviously, health and safety is of paramount importance to us and our customers. Regulatory compliance is the second priority. Business continuity, that's a fancy way for saying we're going to do this right in terms of tracking our money and our expenditures. We're going to use approved business and accounting practices. Last, and certainly not least, are our mission support. We're going to continue to support our mission as we spend these dollars to try to provide opportunities to recreation and conservation within the system.

The final category is by far the most important. Specifically, it has asked us to address the financial control weaknesses in state parks. Probably the most comprehensive thing that we did there is to develop a State Parks' Fiscal Control Plan. This is a plan that requires a lot of filling out of paperwork, a lot of oversight internally, so that multiple people sign off on financial transactions, reporting back to the Administrative Resources Division and in particular the new financial branch within Administrative Resources so that there is oversight from another division here with expertise in financial management. We put together an administrative handbook that has been disseminated and all staff have been trained on in terms of these administrative and fiscal responsibilities, and a new fee collection handbook. I'll go over some of these here in a minute.

Most importantly, we have implemented a comprehensive fiscal control policy and have trained, as I said, I believe 329 staff. This training was put on by the Administrative Resources Division with support from State Parks, where we actually went out into the field in four different sessions and had a week-long ‑‑ or was it two days ‑‑

MR. COOK: It was more days.

MR. BORUFF: ‑‑ a week-long training session, where these folks were intensively trained on how to use these financial control processes. They are labor intensive and I'm going to talk about that in a minute. We do have a plan to try to reduce that labor intensive work as we move into the future, but right now we are pleased with the fiscal control.

What feedback we have received has been positive about its effect. We are taking it seriously. We run into those few staff who have some opposition to it, but we are dealing with that quickly and making sure that this is part of the culture in the field to get this done correctly. Each site now has its own approved ‑‑ and when I say approved, by the ‑‑ Administrative Resources Division and their staff have approved each of the site's fiscal control plans that ensures adequate oversight of our finances in the parks.

We've gone back and looked at the way we do concession revenue reporting. Once again, one of the problems we had there was that it's a little bit different from site to site, but now it's not. The same forms are used so that we collect the data quickly, and it's much more reliable. Each site now has a revenue goal for 2008. This is very important. This is one of the things that the legislature asked us to look at, increasing revenues. Mary Fields and her team have been very helpful in trying to help us figure out how we could look at increasing revenue. So each site now has a revenue goal for 2008 that is written into the performance plans of managers.

I will say, as an aside, that we tried to be reasonable about these goals. Oftentimes, revenues in state parks are not necessarily driven by the staff there. They're driven sometimes by the weather, for example. You know, if the weather is bad on a big weekend, there's not much the staff can do to get people to come out there. So we tried to take those things into consideration and use a practical approach for projecting potential revenue goals in the park. If the park doesn't make them in any given year, they're required, for example, to report on why, what happened, and what was the cause. At least then there's some ability to analyze whether it was because of weather or because of some other performance issue.

We've also completed the assessment of state park staff's business and financial management skills. This is the report that we asked Mr. Bingham and the Human Resources Division to perform. Basically, they did a survey of all the state parks staff. Not surprisingly, what they found is that state park staff are typically not trained in business and financial management. On the other hand, I think the survey identified that there was a lot of sensitivity to the business and financial issues. There was a lot of willingness for training. And so, we are in the process right now of putting together training programs for the key staff in the field that will enhance their business and financial skills along with the existing recreational and customer service skills that most of them have.

There are a handful of riders. Rider 23 asked us to develop a standard definition for health and safety repair needs, which we have done. It's based on a formula which I will not try to articulate here. It's fairly complex, but it really does take into consideration, when we say health and safety, I want to make it perfectly clear, we do not operate facilities that pose a health and safety danger to our customers. If that is the case, we close the facility, we stop operations, and we immediately begin repairs.

What health and safety to us means is we're looking forward. We're looking at the future. If there is some potential in the near future for something to create a health and safety issue, it floats to the top immediately. We don't want to get into a position where we have to close a facility because there's something dangerous out there. We are required by the rider to do weekly monitoring of those kind of issues. We have a system now that does that. We have a facilities management system that we've had for several years. We've added a component to that. If you're in the field and you see something that could become an imminent danger, it gets addressed immediately.

This rider also required us to redirect about $100,000 and three FTEs for central administration's park budgets support. That's been accomplished. It asked us to develop an annual State Parks Performance Report, which we have done. We will be reporting annually.

This rider is also responsible for us moving staff out of state parks into appropriate positions. There were a few financial type staff that were moved to Mary Field's shop in Administrative Resources. I believe there were three or so folks that were moved into Information Technology, that were IT professionals, that were in State Parks. So it asked us if we thought it was reasonable to realign those people with the divisions that they belonged in. That has been accomplished early on.

For many years, we've been doing a local market analysis where we go out to each state park site and we look within a certain radius. We look at folks that do the same kind of stuff as us. KOA Campgrounds is a good example. We're very sensitive to the economic issues in the community. We know state parks are a big economic engine, but we don't want to cut the feet out from the local market. And so, we try to be careful about that. We don't go out and sell our services a lot cheaper than the local KOA because then we would be hurting the local entrepreneur. Likewise, we don't go out and set our price too high because we don't want to drive everybody to the competition. So the bottom line is, we try to bring balance to that. We were asked to go back and re-look at that, and we did. We've done some tweaking, but we will continue to do those annual analyses to try to be good neighbors to the folks we're working with in the communities.

Rider 24 requires that state parks collect usage statistics. In other words ‑‑ hours and mileage and uses on all major equipment, and report the findings annually. One of the things that the new commissioners may not be aware of is we were experts at duct tape utilization over the last few years. A lot of our stuff was taped together. Really, it was quite an embarrassment to us and to the state. And so, one of the things that the legislature asked us to do is to start looking at how we use equipment, making every effort we can to use the new dollars to get rid of that old stuff and get new equipment in the parks. So we are now tracking our usage of major equipment within the parks and we'll be reporting that utilization to the legislature on an annual basis.

Rider 27 asked us to implement annual revenue projection procedures. We've worked with Administrative Resources, obviously kind of the driver on this particular rider, and submit a plan that establishes revenue goals at each park. We've talked a little bit about this already. I'm not going to spend a lot of time there. We have transmitted, as required under this rider, our Revenue Enhancement Plan to the Legislative Budget Board and to the Governor's Office. Once again, that plan is directed at trying to help us figure out new ways to generate revenue to support state parks.

Rider 29 requires that we implement the recommendations of the SAO report, as I've reported we have done and will continue to do this on time. It also required us to hire 16 internal auditors to be placed in the field, primarily to help us audit these ongoing recommendations that we're implementing. That has been accomplished thanks to Dennis O'Neal, who is the Director of Internal Audit. Sixteen auditors have been employed. They are in place in the field and audits began this week at, I believe, eight sites. Is that correct? Is Dennis out there? I think I'm speaking correctly. So audits are underway. These are audits to make sure that these financial control policies and procedures that we have implemented are working. And so, we will have a very aggressive process over the next year to make sure that what we've done works. We're working very closely with the Legislative Budget Board. I might add that Ms. Tina Beck, our Legislative Budget Board analyst, is in the audience and we appreciate the work that you have done with us, in helping us get this on the right track. So we will be aggressively auditing each of the parks as we go forward to make sure they're doing what we think they're doing.

COMMISSIONER HOLT: I'm sorry to interrupt.

MR. BORUFF: Yes, sir?

COMMISSIONER HOLT: Is that strictly fiscal audits or are you doing any operational audits as part of that? Walk me through that a little bit. I tend to lose track of that.

MR. BORUFF: It's a full blown audit. The primary focus would be on financial controls and financial mechanisms, but there will be management components to the audit as well.

COMMISSIONER HOLT: When do you expect kind of a first draft back? I mean, walk me through kind of first reports and second reports.

MR. BORUFF: I believe that the audits will take a couple of weeks at each park.

MR. LEISURE: Do you want me to answer that?

MR. BORUFF: Yes, Brent, would you? Brent Leisure is the Regional Director of State Parks, who I have drafted to be one of the leaders of the State Park Audit Response Team. He has been very intimately involved in the development of all these recommendations, Brent Leisure.

COMMISSIONER HOLT: Is this an appropriate time because it's kind of been in my brain?

MR. BORUFF: Yes, sure. Brent knows the details much better than I do.


MR. LEISURE: A little bit, yes. The audits, as Scott mentioned, began actually last week.

COMMISSIONER HOLT: Will you give your name?

MR. LEISURE: Yes, Brent Leisure. I'm the Regional Director for Region 5 State Parks, currently assigned here in Austin to help coordinate our response to the State Audit Report. The audits that are taking place in the parks are occurring in each region. As Scott said, Dennis O'Neal, our Audit Director, has hired 16 auditors. Those audits take about a week to occur. Then they take about an additional week to two weeks to further analyze the data that they've collected, and go over the results, and prepare a report. Those reports would go to management, and then management would have an opportunity to respond to the findings of the audit. We are very hopeful. We are confident that the staff in the field are taking these very seriously. The training that has occurred has helped to prepare us, I think, to be successful in the audits.


MR. LEISURE: The audits themselves, as conducted by Internal Audit, have to do with the financial processes at the parks. The business practices, some of the performance issues, and other things that you might typically find in a performance audit, are more generally done by the regional director, and the regional staffs, and the park staffs themselves. Park superintendents have a very specific and defined role in weekly compliance checks, with fiscal controls. We're auditing those processes as well. And so, the internal auditors are specifically looking at fiscal control, but we do consider all the other performance areas in management.

COMMISSIONER HOLT: It needs to be definite integration amongst that.

MR. LEISURE: Absolutely.

COMMISSIONER HOLT: That's part of what came out of this last round with the legislature, is maybe the lack of integration between the performance relative to, or how we were measuring performance in the parks of our park superintendents and others, and the fiscal control, they've got to be tied together.

MR. LEISURE: That's exactly right. You know, we've integrated many of those, not just the financial controls, but the other management aspects of the performance in a park into the park manager's and the regional director's performance plans.


MR. LEISURE: So it's incorporated in that way as well.

MR. BORUFF: I think it goes even beyond that, Mr. Chairman. I know when Mr. Cook and I first discussed how we were going to organize the response, one of the things we decided right off is that it needed to be not executive staff in Austin that were organizing the response. We needed to bring in the leadership from state parks in the field. We needed to work with the leadership in Administrative Resources. So as you can tell, I mean, I think every regional director ‑‑ and for the new commissioners, there are eight regions in state parks ‑‑ eight regional directors, great folks ‑‑ every one of those folks has been pulled into service here, as have many of the park managers and park superintendents. So this has been something that we understood the importance of pushing the recognition and acceptance down into the culture and we thought the best way to do that was to bring the people from the field here to help us develop and come up with the solutions.

So I think we've been pretty successful there. I think as you go out into the parks, and out into the field, you would hear folks saying this is important, this is something we have to do. I won't pretend that it's going to be easy on the state parks' staff. Right now, it's a manual process that takes a lot of time and a lot of paperwork. We have a plan to solve that and I'll talk about that next.

COMMISSIONER HOLT: Any questions? This might be a good time, and I would ask the commissioners as this goes on now over this next year or so, and we head into January '09, the new legislative period, that we kind of all get up to speed on this, because this certainly was a major focus of the legislators, certainly the Senate Finance and the House, both sides. There's going to be a lot of focus on the state audit and how we handle it, most importantly, how we implement them and learn from it. So I would ask all of you to get involved at whatever level you are comfortable with. We're going to need that good knowledge because I think at the end of the day we're going to get a lot of questions on this starting in January '09.



COMMISSIONER FALCON: When everything is said and done, and you implement all the recommendations, what is the expected fiscal impact that you're anticipating.

MR. BORUFF: In terms of increased revenue for state parks?

COMMISSIONER FALCON: Yes, that's what this is basically about.

MR. BORUFF: Well, yes, sir, I guess I'd preface my answer by saying first of all that we believe, from an operations perspective, there may be, and hopefully there will be, some increased revenue opportunities, particularly in areas where for example we have a hotel, like Indian Lodge out in Fort Davis. If you fix up that hotel, and add rooms, and make that thing more amenable to folks, it may generate some more revenue. However, I will say that much of what we want to do with the money is maintain the system we've got. And so, I think it's important to weigh that balance.

A lot of the problem is that under the existing circumstances, up until this year when we got this money, our restrooms were falling apart, we had ceilings that leaked, we had roofs that were falling in on people, screen shelters didn't have screens on them. So we do believe there will be some revenue impact, but it may not be as large as some folks would hope. I don't have the number off the top of my head.

Mary, do you remember what we projected in increased revenues?

MS. FIELDS: Well, we have projected about a 3-1/2 percent increase in this fiscal year from the prior fiscal year. Some of that, I think, can be attributed to improved fiscal controls. We've also improved some of the discounting processes and that sort of thing that I believe will bring in some additional revenue, but we don't have an exact dollar amount related to that specifically yet.

MR. BORUFF: I would be cautious to predict a number at this point. I really think it's important for us now to focus on expending this money wisely, making sure that we have a credible process to demonstrate how we're spending the money, making sure that the folks trust the fact that we are not wasting what we've got, and then we will see what the outcome of that is. Now, some folks would argue that we'd have increased revenues. Other folks would argue that it's just going to help us maintain the revenues we've got rather than experiencing some drop-off because the conditions are going downhill.

COMMISSIONER HOLT: Commissioner Parker?

COMMISSIONER PARKER: Mr. Chairman, I want all the Commission to remember my friend Tony's question because when we get into the Infrastructure Committee, we're going for a bull's-eye ‑‑


COMMISSIONER PARKER: ‑‑ answering that question.


COMMISSIONER PARKER: The problem does not lie with Texas Parks and Wildlife. That's all I'll say now.

COMMISSIONER HOLT: We'll be awaiting, with baited breath ‑‑

COMMISSIONER PARKER: With baited breath, absolutely, and pocketbooks, absolutely, yes, sir.

COMMISSIONER HOLT: Commissioner Brown?

COMMISSIONER BROWN: One of the areas that I think we were criticized on was on the revenue side as far as who we were charging to go into the parks and we were waiving certain fees for certain people.


COMMISSIONER BROWN: How are we going to, in this new plan, how do we ‑‑ and understanding that there probably has to be some flexibility on the director of each park to allow for boy scouts or whoever to come in ‑‑

MR. BORUFF: Yes, sir.

COMMISSIONER BROWN: ‑‑ but are we going to have set guidelines throughout the system to guide them in making those decisions?

MR. BORUFF: Yes, sir. That's exactly what we did, Commissioner Brown. I think the problem, and everybody concurred once we took a look at it, is that we gave too much discretion to the park managers. They were all over the place. The fact is that they need to have some discretion. There are groups, boy scout groups, and church groups, and school groups, that come out that we need to be able to discount fees for, but we need to be able to monitor and track those. I really believe the SAO's compliant, and I'm talking SAO specifically, was not so much that we discount; it was that we couldn't track what we discounted and how we discounted it. And so, we've come up with a model that gives each park, and every park, the same option. That is, I believe it's three different options, discounted 25 percent, 50 percent, or 100 percent. The key piece to that is not just what they can do and that it's consistent across parks, it's the way they document it. So we have a very tight documentation system now so that those discounts are well documented. They come back into us on a regular basis. We compile a report of them. So that the next time around ‑‑ because that was part of the problem. When the SAO said this, or the legislature said this, how much are you discounting, we didn't really know. That was shame on us. We need to know. So we will know in the future.

COMMISSIONER HOLT: Yes, consistency was the big issue ‑‑

MR. BORUFF: Yes, sir, and documentation.

COMMISSIONER HOLT: ‑‑ and then, the follow-up documentation.

MR. BORUFF: That is correct.

COMMISSIONER FRIEDKIN: And I think, as important as that question is, that's obviously the end goal from this, but understanding our revenue base, and understanding our expenses and our efficiency is maybe the first step, and then focusing on what we're trying to accomplish with it.

COMMISSIONER HOLT: Brent, thank you.

MR. LEISURE: Absolutely.

COMMISSIONER HOLT: We appreciate you taking the time.

I do want to give Brent, and Scott, later I'll give you credit, but I want to give Brent a lot of credit because he kind of stepped from one role into this role overnight. He's really taken on a load and done a heck of a job ‑‑

MR. LEISURE: Thank you, Commissioner.

COMMISSIONER HOLT: ‑‑ and I want to thank you for that.

MR. BORUFF: Something I did not mention early on is that we also employ a person from outside the agency with 25-plus years of business management experience in state government, Mr. Stan Wedel. He's not here today. We probably should have invited him because Stan and Brent and several other folks really have carried the yeoman's weight here in terms of putting these responses together, of coordinating the actual verbiage that goes into these, and of talking with multiple divisions that are out there. So I appreciate all of them.

Back to the report ‑‑ we're almost through. I apologize for the length of the report. The next to the last rider, Rider 30, required us to submit a business plan for the State Park Capital Program. This is our Infrastructure Expenditure Program. Mr. Whiston is going to talk about it a little more later, as Commissioner Parker referenced. This directed us to consider criteria like public needs, recreational values, cost estimates, health and safety, et cetera, and some of these, we've already talked about here. It also directs us to submit the results of a private vendor study which would determine project impacts on park revenue and visitation. We have done this. First of all, we have already submitted our business plan for the construction or repair of facilities to the Legislative Budget Board. They are reviewing that as we speak. We were also directed to report any variances in capital projects that exceeded 10 percent. We have come up with a procedure that allows us to do that. We have that cost report ready to go. We will be on a periodic basis reporting to the LBB and the Governor's Office on 10 percent variances of our capital projects. I might add that 10 percent variances ‑‑ and I think Mr. Parker could verify this ‑‑ are not unusual in the construction business, but it is something that's worth reporting and we will do so, as instructed.

We have contracted with a private vendor to do a study on the impact of capital repairs. I think the intent of the legislature was to kind of find out the question that you asked. Commissioner Falcon asked us, is this going to result in any new money? I think my answer is a little vague because I don't know the answer yet, Commissioner Falcon, but this is what the study is going to find out for us. They're going to look at the expenditures of capital program money and the associated impact on visitation and revenue. Will it drive visitation and revenue up? Will it not? Will it keep it the same? Those kind of questions will fall out of the study. The study is due. It should be out in the spring, around March '08.


MR. BORUFF: Yes, sir?

COMMISSIONER MONTGOMERY: I have one question on that point, on the private vendor study. Does that study include looking at capacity increases at all the parks where we turn away people now when they get overloaded?

MR. BORUFF: Overloaded with customers?

COMMISSIONER MONTGOMERY: Well, we have Lost Maples and Enchanted Rock; yes, they overflow.

MR. BORUFF: I assume it does.

COMMISSIONER MONTGOMERY: Can you make sure it does?

MR. BORUFF: Yes, sir.

COMMISSIONER MONTGOMERY: I think there are a few cases where we could add parking and bathrooms.

MR. BORUFF: Yes, sir.

MR. LEISURE: Commissioner, I believe it does, and it also takes into account similar services offered in neighboring state parks. So if we are offering a particular facility at one site, and just down the road we are offering that same facility, they're going to look at occupancy rates and determine whether or not we're meeting the public need, if we're satisfying that need or not.

COMMISSIONER MONTGOMERY: I'd just specifically like to make sure we look at additional capital improvements to add capacity at any park where we have a need over capacity and we're turning away people.

MR. LEISURE: Sure. We meet with that contractor Friday.


MR. LEISURE: We'll bring that up.

MR. BORUFF: The last rider, and almost the end of the presentation, is Rider 31. This is an interesting one. It calls for us to conduct a study which creates a definition of a "high quality state park system." We have combined this with the same vendor that's doing the previously discussed study. So at the same time they're doing a study about capital improvements and how much that will impact visitation and revenue, they're going to look at what the definition of a high quality park is.

Some of the interesting components of this particular rider is it would like us to look at things that you might expect, like amenities and public demand and utilization; those will be looked at. One of the things it asks us to do is look at which parks do not fit in the system and which parks should be transferred out of the system. So there will be some document that comes out of the exercise that targets specific parks that might not be appropriate in the State Park System.

The last slide I've got to talk a little bit about our efforts to automate the financial controls, the fiscal controls, that I've talked about earlier. A lot of those 20,000 hours-plus of labor that have gone into this project have been on the fiscal control side because that was the issue that we knew was the most vulnerable and was the most important for us to correct, not just from a credibility issue, but from a business management perspective.

So one of the things we did is we looked at all of the recommendations. We went back and visited with the Executive Office staff, with the Administrative Resources staff, and the leadership in State Parks, and we decided what we needed was an automated way to do financial controls. What we have out there now is a manual system.

When you go to a park, and you give somebody your money, there are going to be two people that look at that money. Somebody is going to have to do it once and somebody is going to have to come along behind them and sign off on it. That's one of a multitude of manual fiscal controls that have been put into place. We're confident that standing alone they will do the job. The only point is that's not very efficient. We're already stretched thin at state parks. It means bathrooms get cleaned less. It means you folks may expect a few more letters about folks that are unhappy with conditions of parks. We're trying to minimize that, but clearly that's not where we want to be years down the road.

So we have, not at the direction of the legislature or not at the direction of SAO, decided to go out and obtain an automated system that would incorporate many of these financial controls, and would link it to our reservations system. We already have a pretty slick reservations system. You can call a 1-800 number and you can get your reservation. Unfortunately, on the back end, there are not many financial controls linked to the system. That was the genesis of many of the problems that we had. So we have gone out for an RFO, or Request for Offers, from vendors to put forth an automated system.

We hope that those, the closing was just this month. In fact, I attended a meeting just a couple of weeks ago where we had a lot of vendors from around the country attend, talking about the parameters that we are interested in, the kinds of things that we want to fall out of this. The vendor should be selected early in the year, around January, and we should have this system implemented, it is our goal to have this system implemented in the winter of '08, prior to the legislative session. It's going to be a tight schedule. Our hope is to have it implemented then. If not, we will have it implemented shortly thereafter.

COMMISSIONER BIVINS: Are there systems of this nature currently in use?

MR. BORUFF: There are many systems around the country in use. None of them is very comprehensive. We were a little bit surprised. We did a nationwide survey of other state park systems. We talked to the National Park Service. We talked to some private organizations that do reservations that have huge fiscal impacts, like hotel chains, and other kinds of things and we were surprised to find that there were at least, that we could identify quickly, there was nothing off the shelf.

In fact, one of the things that has happened ‑‑ Walt has attended the National Parks Conference; I just came back from the Southeastern conference ‑‑ there's a lot of talk out there about the other states looking at this system. So there's a lot of incentive for the vendors that are going to respond to put together a system that would be attractive to multiple states. A lot of states are in worse shape than we are in terms of their fiscal management. Other states have systems that have pieces of a system that we're interested in, but we could not find one that had a holistic program that would do everything we're wanting it to do.

MR. COOK: This level of fiscal control and the management, we cannot find it at all in these type of systems. If we do this, and do it right, which we will do, it will be a pacesetter for a lot of other folks. The need for it is there, clearly. Everybody has been hobbling and getting by, but it's timely. I think we'll have a lot of interest from other states, and from the national system, if we get this system built.

One thing, I just want to regress a little bit, Scott, and I think you all are going to touch on it later, is this private vendor bid that we've contracted with for study of the fiscal impact of some of these capital improvements. In other words, if you go out there and improve your wastewater system, is that going to bring new revenue, yes or no? If you fix the roof, is it going to bring new revenue, yes or no? Some of it is very basic like that. If you repair your RV hookups, if you upgrade your RV hookups, it probably will. So that's the kind of thing that group is going to be looking at.

It becomes real important, and you'll hear more about it in a minute, because some of our repair money is tied to the completion of this report. You will hear more about that in a minute. So keep that report and that date in mind.

MR. BORUFF: I guess my last comment is I wanted to make you aware that when we put this team together, and it's a huge team ‑‑ when I say, team, it's in excess of 100 folks ‑‑ we decided to go out and put together a cross-divisional effort to do this. People were a little confused at first. Why would I put somebody from wildlife on this team? I'll tell you why, or from infrastructure or from other places. This is something we as an agency need to take seriously across the agency and not just in state parks. We don't want to repeat this in other divisions.

And so, I think it's been very helpful for us to have folks from other divisions in on the process to learn about the importance about fiscal management. A lot of our folks were not trained and I suspect you'd find some of the same results outside of state parks in terms of people's backgrounds. So the bottom line is I think this has been important for this to be a cross-divisional effort. We look forward to this continuing process of putting these recommendations in place and we'd be glad to answer any questions.

MR. COOK: I'm going to echo the Chairman's comments on Mr. Leisure and his cohorts at the regional director level. We've got a great group of regional directors. Walt has put together a great team there. Our park managers themselves hunger for this. They are very supportive and we've got a great team out there. I think you'll see the results of this very positively.

COMMISSIONER BIVINS: When we get this system in place, and if it is something that will be acceptable to other states, is there any way that we can benefit from that? Is there any way we could make it proprietary and basically sell it?

COMMISSIONER HOLT: Make it where we can get royalties or something?

MR. BORUFF: Well, we've had that conversation, Commissioners. I'm not a contracting expert. It's my belief that if we go out and have a third party vendor do this that that's probably not an option, but it's certainly something we can look into.

COMMISSIONER BIVINS: You know, if we're going to put all these hours in it, I would hate to just hand it off to Kansas.

MR. BORUFF: Well, yes, and I agree. However, the hours that I'm articulating in this particular presentation are not hours we've put into developing the automated system. They're hours we've put in responding to the recommendations of the State Auditor's Office.


MR. BORUFF: But it's certainly something we considered at one point. We considered whether it might be wise to build this system ourselves. We've had the same discussions around our licensure system and those kinds of things. Ultimately, at least in most cases so far, we've come to the conclusion that that's not the business we're in and we're better off to hire somebody that knows what they're doing.

MR. COOK: That sums it up really.

MR. BORUFF: Right.

MR. COOK: You go back to our automated licensing system that sells hunting and fishing licenses. We've got the greatest IT folks in the world. I mean, they are super, but in order for us to build a system that we owned, that we could market, the cost of implementing that system was, of course, significantly higher than Verizon or someone like that putting the system together. Let's see, Verizon, MCI, WorldCom, I kind of lose track. We're in a similar situation here. We're looking right now. We're talking to these folks and seeing what the possibilities are.

COMMISSIONER HOLT: I'm glad Mark brought it up, Scott, because I think that's part of what you can work with when you work with a third party vendor because we are going to be doing a lot of the work. Of course, there's real risk here as we well know.

So if you want to get it up and running by winter '08, which I would agree is a fairly short time frame for these kinds of comprehensive systems, and then you want to get it up and it doesn't crash on you and it works. So there is some real risk here on our part. Because we have to share some of that risk, I think, as you're dealing with the third party vendors, make sure they understand that. It's their job, but maybe that's where we can get discount, or we can certainly get help relative to getting the system up. It is going to be us eventually that makes it work on the ground.

One other thing I'd like to say, I'd like to thank Scott. Scott has jumped in here with both feet. Maybe you'd say, well, that's his job, and all that kind of stuff, but it trickles down attitude-wise. Walt Dabney has been a big part of this, too, but overall, Mary Fields, everybody, has taken the audit from a positive point of view. Instead of it being looked at as punishment, or we're after you, or that kind of thing, they've taken it and said, this is a way we can improve this department. We can improve parks. We can improve the overall. I really appreciate him putting the committee across groups of people so that everybody gets stronger in our fiscal controls. And so, because of that, it's now looked at as a tool to improve this department. Because of that, I think we're getting the kind of response we're getting.

So, Scott, I really appreciate that. I think a lot of that started with you and the attitude you took. We could have gone the other way, and gotten angry, or said, they're trying to beat us up or whatever. Instead, we said, no, let's take this thing and run with it. So, that's you, Brent, everybody.

MR. BORUFF: I think, in general, the staff thinks we will be a better organization because of this.

COMMISSIONER HOLT: We will be a better organization, absolutely. Any other questions or comments for Scott or Brent or anybody on this?

(No response.)

COMMISSIONER HOLT: So, again, I'd certainly strongly recommend to all our commissioners to kind of keep up to speed on this. It's going to be moving fast, and it's going to be where we're going to get lots and lots of questions starting in January '09.

COMMISSIONER PARKER: Is this included in the hard copy thing that you sent us out earlier?

MR. BORUFF: I think the first two reports have come to you and we will be sending you a hard copy each time we issue a report.

COMMISSIONER PARKER: Okay. And so, we'll get a hard copy of this in particular?

MR. BORUFF: This presentation? If you don't, I'll see that you get one.

COMMISSIONER HOLT: We can get that out to everybody?

MR. BORUFF: Yes, sir.

COMMISSIONER HOLT: Okay, great. Are there any other questions or comments?

(No response.)

COMMISSIONER HOLT: Okay, thank you, Scott. Thanks, Brent.

Committee Item Number 4, Sunset Commission Review of Texas Parks and Wildlife, Mr. Gene McCarty. Sunset, that's another very important issue going on right now.

MR. McCARTY: Very important.

COMMISSIONER HOLT: Very important.

MR. McCARTY: Mr. Chairman, Commissioners, for the record, my name is Gene McCarty. I'm the Deputy Executive Director for Administration. The item before you today is going to be a brief update on the Sunset Review process. The first question ‑‑ and what I'd like to do is give a little background ‑‑

COMMISSIONER HOLT: Please, I was going to say that would be helpful to all of us.

MR. McCARTY: ‑‑ of what Sunset really is, and the first question is, what is Sunset? Generally, it's considered to be a review of the mission of a state agency to determine if the purpose for which the agency was created still exists, and if the agency is adequately addressing that purpose. Agencies are generally reviewed once every 12 years.

Texas Parks and Wildlife, in recent history, hasn't been on a 12-year schedule at all. Texas Parks and Wildlife was last reviewed in 2001. The legislation associated with that review was Senate Bill 305. We call it our Texas Parks and Wildlife Sunset Bill.

A number of different things came out of that Sunset Bill in 2001. The Land and Water Conservation Recreation Plan was directed by that legislation. Changes in how Texas Parks and Wildlife interacts with its nonprofit partners was included in that legislation. The way this committee of the Commission functions was kind of codified and, to some extent changed, through that process. The reason you all don't take a vote here, it was identified as a concern that there wasn't adequate public comment opportunity before the Commission took a vote in the committee. So you don't take votes in committee. It's just an information process. That was brought out through Sunset. A ban on tobacco advertising in any department-related material came out of that last Sunset process.

Sunset, while it's got a finite date of 2009, it's really a four-year process. We began the Sunset process basically as soon as the legislature was over in May. The first part of that process is the submission of a

self-evaluation report, which we did on August 24, 2007. That self-evaluation report is submitted to Sunset staff. They read it and review it. From that report, they get a pretty good feel of what the agency does, what its functions are, what its purpose is, what its mission is, and how it is currently carrying that function out. From that, those staff will begin to conduct field studies and evaluations.

COMMISSIONER HOLT: Can I interrupt you there?

MR. McCARTY: Yes, sir.

COMMISSIONER HOLT: It's my fault. Going back one, why don't we step back one?

MR. McCARTY: Yes, sir.

COMMISSIONER HOLT: As you said, there's a staff. Why don't you walk through how it works ‑‑

MR. McCARTY: Okay.

COMMISSIONER HOLT: ‑‑ at the House and the Senate, who appoints, and then there's the Sunset committees in place.

MR. McCARTY: Okay. The Sunset Commission itself is made up of senators and representatives. Those members of the staff, or of the Commission, are appointed by the Speaker of the House and the Lieutenant Governor. There is one public member appointed by the Lieutenant Governor and one public member appointed by the Speaker of the House. There will be five senators and five representatives. The chair of the Sunset Commission rotates Senate, House, Senate, House. At this particular time, the chair is on the House side. I will go through the membership here in just a minute, the actual current membership of the Commission as we know it.

Now, there is a Sunset Agency, a state agency. It is made up of ‑‑ they have an Executive Director just as we do and staff members. Those are the people that will actually be doing all of the field evaluation work and the actual review of Texas Parks and Wildlife Department. During the last review session, we had four review specialists assigned to Parks and Wildlife.

At this particular point in time, we don't know how many we're going to have assigned, and when, and so forth. One of the reasons we don't know kind of where we are right now in the Sunset process is that the Senate hasn't finished their appointments to the Sunset Commission. So the Sunset Commission has been unable to meet and approve a Sunset review schedule. The field evaluation work will occur from 2007 through 2008, but that schedule has to be approved by the Sunset Commission which is not completed yet.

At this particular time, I think there are 23 agencies up for Sunset review. That's going to force them to go into two review cycles. The first review cycle, they were hoping would have already started and would go through January or February. The second review cycle would then start in January or February 2008 and go through June or July 2008. So they're already starting to get a little bit of a late start. We don't know what review schedule we're going to be in at this particular point in time, and we don't know who our review team is. We will find that out fairly quickly, once they get a full Commission appointed.

At the end of this evaluation period, you will have a staff report that's prepared by Sunset staff. It will generally identify a number of issues within Parks and Wildlife that they would like to take forward to the Commission for review, and hopefully adoption. The last time we were in Sunset, we started in with the Sunset staff report with 12 issues. At the end of the Sunset Commission process, where the Sunset Commission actually reviewed the staff report and they took public comment and some other things, we ended up with 14 issues. So staff brought up 12 issues and the public or the Commission itself identified a couple of additional issues that they wanted to put on.

The Sunset Commission meeting, and basically the adoption of the staff report, or the modification, and then ultimately the creation of the Sunset Commission report will occur probably in late 2008, usually around September or October 2008.

COMMISSIONER HOLT: They've got a lot of work to do.

MR. McCARTY: Yes, they do have a lot of work to do in a short period of time.

Yes, sir?

COMMISSIONER BROWN: Just so I understand, was our agency under total review in 2001?

MR. McCARTY: Yes, sir.

COMMISSIONER BROWN: But they did not, at that point in time, vote to extend it for 12 years?

MR. McCARTY: Yes, sir, they did.


MR. McCARTY: When we went through the Sunset review last time, it started in 1999. Our Sunset legislation was adopted in 2001.


MR. McCARTY: That extended the agency to exist until 2013.


MR. McCARTY: That was codified in Senate Bill 305. Now, that can change at any time. Every time the legislature meets, that date can be changed. That's what happened. That date was changed by legislative process. By legislation, that date was changed from 2013 back to 2009.


MR. McCARTY: Yes, sir?

COMMISSIONER BIVINS: When was the last one prior to 2001?

MR. McCARTY: 1985. We went through a fairly long period of time there and there's a couple of reasons for that.

COMMISSIONER HOLT: They like to run us through Sunset.

MR. McCARTY: There's a couple of reasons for that one, really, and they make sense. At the time we were going to be up for Sunset review again ‑‑

COMMISSIONER HOLT: Oh, '85. I thought he said '95.

MR. McCARTY: ‑‑ again, all of the environmental agencies in the state were kind of in turmoil and up for review. That's when they did a lot of consolidation of all of these. They had probably six or eight different environmental agencies that they ended up consolidating into what became TCEQ finally, ultimately.


MR. McCARTY: So they postponed us a few years to get us back in track so that all of the basic resource and environmental agencies were on the same review cycle. Now, we're off cycle again, but, you know, that's a different issue.

From the Sunset Commission report, they will begin to draft legislation. Legislation will be drafted by one of the members of the Sunset Commission. They will be assigned. Part of the responsibilities of being on the Sunset Commission is you will carry legislation to either abolish or maintain the agencies under review. So a legislator, a House member, will either take the lead. In this particular case, probably a House member will take the lead, but there will be a Senate sponsor and that Senate sponsor will also be a member of the Commission.

They will draft legislation. The draft of the legislation should specifically revolve around the recommendations that are identified in the Commission report. And then, we go through the legislative process. That legislation is carried through the process. Hopefully, it continues the agency and is adopted before the end of the legislation.

Then we go into the implementation. As I said, this is a four-year process. It's not just the review. Then you have to go in and implement what changes they make. So you have about a year to do your implementation. In this case, we'll be under implementation from 2009 to 2010. Then Sunset comes back and does what is called an Implementation Compliance Review. They will carry out that compliance review between 2010 and 2011. Just prior to the 2011 legislative session, they will prepare a compliance report. If you are not in compliance with the recommendations, they have the option to put you back in Sunset and start all over again.

The Sunset Commission, as it exists right now, the House has made its appointments. Representative Carl Isett from Lubbock will be the chair. Lois Kolkhorst from Brenham is a member. Ruth Jones McClendon from San Antonio, Dan Flynn from Canton, and Linda Harper-Brown from Irving are your House members. Your public member from the House is Ike Sugg from San Angelo.

If you're appointed to Sunset, you serve for two terms, four years basically, two legislative cycles. So you have some holdovers. Your Senate holdovers are Senator Kim Brimer from Fort Worth, Senator Robert Deuell from Greenville, and Senator Craig Estes from Wichita Falls. You have two vacancies that we're waiting on appointments from the Lieutenant Governor and you have a vacancy in the public member area. Of your House members, Lois Kolkhorst, Ruth McClendon, and Dan Flynn are your holdovers from your previous session.

Are there any questions? That's kind of briefly where we are in the Sunset process today. We'll be waiting. Basically, we're waiting on Senate appointments and then we're waiting on the Sunset Commission meeting that will designate when we will begin the review process with field evaluations and who our review staff will be.

COMMISSIONER HOLT: So you were last reviewed in 2001?


COMMISSIONER HOLT: And you called it a four-year process?

MR. McCARTY: We completed our compliance report ‑‑

COMMISSIONER HOLT: That's what I was just going to ask you.

MR. McCARTY: ‑‑ in 2003, just prior to the 2003 legislative session. We got a 99.9 percent. There was one item that we had not completed ‑‑


MR. McCARTY: ‑‑ and the reason we had not completed it is that it was one of those items that took funding to complete, and we had not completed it.


MR. McCARTY: That was an acceptable reason for not completing it. It was specifically an item that said we were to implement all of the recommendations of the Joint Committee on Texas Parks and Wildlife State Parks and Historic Sites. To fully have implemented that was going to cost us about $24 million in capital construction dollars that we just did not have.

COMMISSIONER HOLT: Okay. I wanted the other commissioners to know that we have gone through the compliance cycle in the last round and it was very acceptable.


COMMISSIONER HOLT: You said, 99 out of 100 items type of thing, 99 percent.

MR. McCARTY: Yes, sir.


COMMISSIONER MARTIN: When are they looking to have those vacancies filled?

MR. McCARTY: Any minute now.


MR. McCARTY: They are ‑‑ Chairman Isett is very anxious. I spent some time with him this last week and he was very anxious to get his Senate counterparts appointed and get on with the process.

MR. COOK: Although it's a tremendous amount of work, I will tell you that the Sunset review ‑‑ although it's ahead of schedule and as I said it's a tremendous amount of work ‑‑ it is a real opportunity. I think any time you go through a session and come out of it with the additional funding that we came out of this last session with, you can anticipate a lot of close review and watchfulness, and that's fine. We're in good shape.

You know, I've encouraged staff, and we've had a couple of pretty good brainstorming sessions on this, to use this as an opportunity to look for areas that we need to grow in, areas that we need to change, improve in, whatever that is, expand. There are some real opportunities here for us to identify some needs that we see in our systems, whether that be in our hatcheries, whether that be in freshwater/saltwater, state parks, public hunting, whatever it might be that we see, that we hear, that we believe we're going to hear from the public, as to something, whether it's paddling trails, those kinds of initiatives. It's an opportunity to identify those, bring those out, get the legislature to think through some of that process, and say, yes, we support that or no, we don't want you guys doing that.

So we're, again, taking that kind of approach with the Sunset process. That group of people, in general, are very supportive of the Texas Parks and Wildlife Department and the things that we do. They will try to help us, and work with us, and we intend to go at it full speed.

COMMISSIONER FRIEDKIN: Gene, do they also look at all of our advisory committees and evaluate them or is it just the agency as a whole? I mean, how deep a level is it?

MR. McCARTY: They do evaluate your advisory committees, whether or not you have statutory authority to have them, but they don't really get into whether or not they're actually functioning as they should.


MR. McCARTY: They leave that basically up to the Commission to determine whether those advisory committees are functioning the way we want them to.


MR. McCARTY: We have statutory authority to have them, but we don't have a lot of clear statutory direction of how they function.

COMMISSIONER FRIEDKIN: How they function or should function.

MR. McCARTY: That's kind of left to the Commission.


MR. McCARTY: Yes, sir?

COMMISSIONER PARKER: Who was the chair on the Senate side last time?

MR. McCARTY: Kim Brimer.


MR. McCARTY: Yes, sir.

COMMISSIONER HOLT: And he'll stay on through another round, but not as chairman.

MR. McCARTY: We don't know whether he'll be

vice-chair or whether they'll appoint someone else at this time.

COMMISSIONER PARKER: Who was vice-chair last time?

MR. McCARTY: Lois Kolkhorst.

COMMISSIONER HOLT: We have a bunch of past chairs on there, or vice-chairs.

MR. McCARTY: Yes, we do. I'm sorry. I misspoke. It was Truitt.

COMMISSIONER HOLT: Okay, he's off.

MR. McCARTY: I'm sorry. It was Ms. Truitt.

COMMISSIONER HOLT: For them to stay on four, they have to get re-elected, at least on the House side.

MR. McCARTY: That's true.

COMMISSIONER HOLT: Any other questions or comments on Sunset?

(No response.)

COMMISSIONER HOLT: Again, this is another place I'd ask all the commissioners to stay involved. Don't hesitate to call Gene or Bob or Scott because again this is across the full Department. As Bob talked about, I think it's a plus not a minus, and it kind of allows us to go out ‑‑ because part of the process is going out to the public ‑‑ to public hearings getting input. They go also to all the advocacy groups, the general interest groups, the specific interest groups also, and ask them for their input. And so, it's a good way to get a lot of focus and input. As you stack some of it, it doesn't quite make sense, but a lot of it does and it's very helpful for us to kind of test the pulse of the state and what our constituents want to see.

Gene, I appreciate you jumping in with both feet as usual. It's going to take a lot of your time, I know that, but Gene's been through it before. Because of that, I feel confident that we'll do the right thing. Thanks, Gene.

MR. McCARTY: Thank you.

COMMISSIONER HOLT: Committee Item Number 5, License Fee Increases. Dr. Larry McKinney, you lucky guy, you get to do this.

DR. McKINNEY: Well, Mr. Chairman, in answer, someone asked about that yesterday. I said, of those who were willing to give it a try, I was the obvious choice since I was the closest to retirement.

MR. COOK: You may be closer than you think.


COMMISSIONER HOLT: We'll try not to beat you up too much.

MR. BORUFF: Mr. Chairman, for the record, my name is Scott Boruff, Deputy Executive Director of Operations. I just wanted to preface the presentation. We appreciate Larry doing this. He helped us lead this effort the last time around. We thought it was a logical choice for him to take up the banner again. Really the genesis of this thought-process was to fill the Commission in on a looming reality, which is over the next four or five years, particularly in Fund 9, if we don't look at some fee increases, we may be looking at some revenue issues that would not be positive for the agency. I don't want to say much more than that. I think Doc's going to get into the details, so I appreciate Dr. McKinney leading this effort for us.

DR. McKINNEY: Mr. Chairman and members, I'm Larry McKinney. I'm Director of Coastal Fisheries, for the record. I do appreciate the opportunity to talk with you. Scott, I think, has framed it very well. I struggled a bit with how to introduce this whole topic. As he said, I think this will be one of the most important issues that you all deal with, the issue we're trying to address, that you'll deal with in your tenures, which is a very, very serious one and an important one, too.

As we move forward, as Scott talked early this morning, the situation that had occurred with parks that really put our Parks Division, the other side of the house ‑‑ we're talking about now the Fund 9 side, which is Law Enforcement, Wildlife, Coastal Fisheries, and Inland Fisheries ‑‑ the situation that parks had faced over the years, we had been facing the same ones on the Fund 9 side. Now, it hadn't been quite as visible. We don't have bathrooms we have to clean. We don't have battleships and trains that we have to deal with, fortunately, on that side, but we've been dealing with those issues.

A couple of differences have been that we've had a little bit of a buffer to help us deal with it, and we'll talk about that, but also we do have some time, a little bit of time, for us to address these issues so we don't reach that stage where we have to make you all, and we all have, to make some very tough decisions in the future. We have the opportunity to not do that. Clearly, that's where we want to go.

So my first job really is to kind of set a framework, a context, in which we're going to talk about these issues. I want to try to do that for you. The first point I really want to make is that our constituents have really got their money's worth from what we've done over the years. That's not just our own assessment. That's the assessment of outside folks.

I tried to put some of this together for you here, just to give you an idea of what is said. Like, for example, 71 percent of our constituents were satisfied with what we do. Over 87 percent feel that the fish and wildlife resources are being well managed. These surveys, done by Dr. Duda who works around the country on these types of things, and we've talked to him about them, as you've said, he's never really seen numbers like that for an agency of our size. It's pretty incredible that you have 75, even up close to 90, percent of the people satisfied with what you're doing with the resources that you're managing.

Our programs are also very effective. If you take a look at just Hunter Education and Boater Education, since they've been put into place, the reduction in incidents and accidents that we've had I think is indicative of the job that they do. We've been able to increase, even during this time, increase our number of game wardens to 376 in 2004 up to 516 today with the new class there as well. We've certainly built our relationship with private landowners, which is the core of our wildlife management efforts in the state, as we have constantly added new partners, private land partners, and now helped them manage over 20 million acres of land ‑‑

COMMISSIONER HOLT: Congratulations.

DR. McKINNEY: ‑‑ which is ‑‑

COMMISSIONER HOLT: That's a breakthrough, yes.

DR. McKINNEY: ‑‑ a big deal. Mike Berger's staff have really moved on that hard, and obviously the results are coming forward.

This has not been something that's happened in the last few years. We've had a good relationship with our constituents over the years. For example, our annual satisfaction data for many years has been consistent and positive. We've certainly put a lot of effort into bringing new constituents in, just to give you some idea, in 2007, the number of youth and adults that we've worked with to bring them into fishing.

And then, on the other hand, something that Commissioner Montgomery certainly has been involved in, we've talked about our science review, trying to make sure our science is the best possible. I had the opportunity, about two weeks ago, to go out to California and give a talk to the National Academy of Sciences. The president of the Academy and other members were there. The whole issue was how to make science better, more important in making policy decisions around the country.

They were, frankly, just stunned with what we have done here. When I talk to other agencies, this just doesn't happen in other places. People don't put themselves up for Sunset review, basically that's what it is in science, like we have to make sure we're ‑‑ they're very interested in it and they want this model to be duplicated around the country. So it's been a ‑‑

COMMISSIONER HOLT: For our new commissioners, will you go through this a little bit, how you brought in national review?

DR. McKINNEY: I want to give credit to Mr. Cook. This was one of his ideas. I think this is one of his legacies that will last ‑‑


DR. McKINNEY: ‑‑ which I appreciate. That is, clearly, you and the legislature has many difficult decisions to make, and you want to make sure you have the best information available, and that you have confidence in that information. Well, probably the best way to do that, certainly from the science side of that, is to have independent reviews of what you do, peer reviews. It's a basic scientific tool. And so, what we were able to do was to bring in the American Fisheries Society, and the Wildlife Institute, and the National Academy of Science to take a look at our programs, sit down and look through them and tell us what they thought was good about them, what was bad about them, and how we could improve them, and we've done that. Clearly, that's a process we want to continue on a regular basis to make sure that you all continue to have confidence in that science.

COMMISSIONER HOLT: I give all of you credit, and Bob definitely credit as the leader, but also, Larry, you and others who are willing to do that because there's just not many agencies around the country that have ever done that, much less done it openly and inviting people in. So I give you all a lot of credit. It really raises the credibility level in my opinion.

DR. McKINNEY: That's our intent and we appreciate it.


DR. McKINNEY: It has made a difference, all these type of things. As we look at surveys around the country, Texas is the number-one hunting state with over a million participants. We're the number-two fishing state, although I put down as a caveat that Florida beats us out, but only because they have so much coastline and they have so many visitors. If you just look at resident anglers, we have more resident anglers in our state than Florida by over 21 percent. So we really can call ourselves number one in fishing, but they'll argue with us on that. We're number three in wildlife viewing. We have a lot of participants.

Those activities have translated into a tremendous economic benefit for the State of Texas. It's over $4.7 billion in fishing, $4.6 billion in hunting, and $5 billion for wildlife viewing. It's real dollars to the economic benefit of our state.

The challenge, of course, is trying to maintain that in the face of a lot of things going on. Of course, the 800 pound gorilla here is the fact that the population of the State of Texas is doubling and will double by 2031. We'll have almost 40 million Texans. I talk about this a lot. When I talk to out-of-state groups and things, I talk about ‑‑ what the question is going to be, we will have twice as many of us as we do right now, but the issue is trying to deal with that impact. It's just not going to be enough for us just to set bag limits, and seasons, and those type of things anymore. That went out the window a long time ago. In fact, we have to be in a position to influence those factors that really now affect those wildlife resources. Things like invasive species that we've always had. That's a growing problem. With aquatic vegetation, we've been dealing with it for a long time, but we have new things like exotic and Australian jellyfish coming in, and those type of things we have to deal with. We have new technologies, wind farms, that we need to take a look at. Liquefied natural gas plants and vehicles and vessels, those are the type of things we're dealing with there. Of course, the ongoing issue is water. That's one that has been with us and will be us. Clearly, it needs to be a resource issue that Mr. Cook has emphasized over and over.

As we talk to our sister agencies around the country, and Mr. Cook was talking about this the other day, the fact that many of these agencies are now realizing that they need to be involved in these water issues, water quality and water quantity issues, as we have been. For some of them, it's too late, but for others it's not. They need to get involved in recognizing that a lot of what we can do and get done today in protecting fish and wildlife, and meeting our responsibilities, we have to be able to influence other actions beyond those which we directly manage and regulate because that's just not enough. So these issues are going to take time, resources, and money. Yes, sir?

COMMISSIONER BROWN: Dr. McKinney, on the wind farm, I know we've been involved somewhat in what's going on there. Who ultimately makes the decision? Is it the PUC?

DR. McKINNEY: Yes, PUC or federal agencies or ‑‑

COMMISSIONER BROWN: The investment of time there is more on environmental impact to flyways and various other things?

DR. McKINNEY: That has been the primary thing in looking at that. It's scientific information, studies, and information, and making those concerns aware, and being represented on various bodies that are advising the regulatory groups, and being very effective.

MR. COOK: Mr. Brown, just a quick point there, it is based on science. I mean, our input has got to be based on science. This is an area where there's not real good science yet.


MR. COOK: A lot of new areas are looking at wind farms. Whether you're talking water, or these invasive species like Larry's talking about, again the key from, I think, our agency's standpoint is to stand on good science. I think it's worth pointing out that the wind issue is becoming such a big issue nationally that Mr. Kempthorne has recently appointed a committee to look at sort of the ‑‑ I don't know how to say it exactly to you ‑‑ but the placement of wind farms, how they're built, what that machine looks like itself. One of our employees in the wildlife division was appointed to that committee to represent wildlife biologists. So we, again, are very involved in those processes nationally and will stay involved.

COMMISSIONER BIVINS: I'd like to take this opportunity to, to thank Kirby. He's sitting back there. The Texas Wildlife Association initiated a very informative wind and wildlife seminar in Abilene last week, which I attended. It brought up a lot of the issues that Parks and Wildlife is really going to have to get their hands around in this whole, just unbelievable growth in this industry, because the permitting is really not there. We're going to have to get involved on various levels, but endangered species being a primary one.

MR. COOK: We find ourselves there regularly. This presentation, Doc's point here, and our point for having this discussion with you folks, is getting involved in those areas requires research, requires time, requires folks to get in there on the ground and do some work, or to help fund the research through universities or appropriate groups. You look at the picture right there and I see the LNG ship. I think about a little episode we had about ‑‑ it's kind of an ongoing episode actually ‑‑ a particular one we had about a year ago, and what is the impact of warming that material out in the Gulf. What's the impact on fisheries? You know, folks, it's hard to find data on which to base your recommendation. The companies are responsive. They're working with us and they've got to continue to work with us.


MR. COOK: Again, this brings us back to why we're having this presentation.

COMMISSIONER HOLT: Just one more thing ‑‑ and, Mark, I certainly understand what you're talking about ‑‑ I think we've got to be real careful as an agency that, going back to what Bob said, is that the way we get involved is through science, because, certainly, you've probably received calls ‑‑ I think a lot of commissioners probably have ‑‑ trying to, for lack of a better term, pulling us in from a political point of view, or come up with reasons to or not to do these things. The way I've just referred that back to the science side of it. To be blunt, on wind farms, there's not a lot of science. There's not a lot. There's not at a national level or at the local levels. We haven't done much, but my guess is because it's going on, not only in the state, but nationwide, you're going to see more and more coming.

DR. McKINNEY: Right.

COMMISSIONER HOLT: We may get asked by our legislature to do that eventually.

DR. McKINNEY: Right.

COMMISSIONER HOLT: And that's great. We'll be glad to do it.

COMMISSIONER BIVINS: Based on science.

COMMISSIONER HOLT: Based on science, not politics.

MR. COOK: I think, Commissioners, that a good example here to look at is water. You know, we have no regulatory authority in most of these water decisions, and yet every time the issue comes up, we're looked to and asked, what does your science say about this? If we take this much water, what happens? What's the impact at the bay? What's the impact in the river? Mr. Durocher and Dr. McKinney's staff, right now, are studying those kind of issues, what's the impact if, to the springs, to the bays, and ‑‑ again,

DR. McKINNEY: That's a good point.

MR. COOK: ‑‑ back to you, Doc.

DR. McKINNEY: That's a good segue. Basically, in the fact of doing all this, and we have to do this, has certainly stressed us out in the same situation we talked about in parks. We've had to make some decisions with the monies we've had, how to allocate them. We've had to defer capital projects, purchase of vehicles, boats, those types of things. We've had to take down that type of thing. Also, as we've gone through, our salaries have become less and less competitive. I know all of us have had to deal with this type of thing. For example, in the last year, I've lost several of my best and brightest to other agencies. I can lose them to privates because sometimes we can't compete with the privates, but I sure hate to lose them to other agencies.

COMMISSIONER HOLT: Other agencies, yes.

DR. McKINNEY: That hurts. I don't want to be a training ground for other agencies. I'd rather it be the other way around. These are issues that we're going to have to address. Of course, we need resources to do so. That's really where I want to focus now. I begin to get into really dangerous ground here, moving from the science side to the budget side, but they figured if I could understand it and explain it, maybe I could get it across a little better.

(Simultaneous discussion.)

DR. McKINNEY: Thank God, I've got Mary behind me, and her staff, and Julie Horsley, and others, and Gene, who really have spent a lot of time on this. They kind of put this together for me and walked me through it, which I appreciate all three of them in particular for doing so.

Let's talk about it. This is, as we said, Fund 9. This is the side of the agency, the other side from Parks. This is wildlife, law enforcement folks, and then the fisheries. This is how we are funded, our budget. This shows you our fund balances. We do have a balance above the line available to us. This is what it was in '07. I want to give a little bit of detail on it, but one point I want to make first is that has created some issues with one, with the legislature, is that the legislature deals with billions of dollars. They look at a very high level. When they come and look at Parks and Wildlife, and our agencies, and we talk about dealing with pay increases and operational increases, they look at this fund balance, and say, well, you've got $73 million there. They can deal with these type of issues. It's there. What's not often clear is there are a lot of restrictions on these funds. That's what I want to cover with you a little bit now.

Now, a significant part of these funds in 2007, almost $40 million, would be available for our basic operations of salaries, and gasoline, and those types of things. That's the part of the fund that would be available, if appropriated by the legislature. Another significant part of the funds are, though, in restricted accounts, stamp accounts. They are set aside for specific purposes, buying back shrimp licenses, building a fish hatchery, acquiring white wing dove lands, or other things. They are very restricted as to what they can be used for. So they're not available for general use, discretionary-type use.

Then there's another fund, a smaller fund, but it's also a restricted account. This was a situation where, for example, we might sell lands, and that money has to be used for purchase of additional land. A big part of that is our artificial reefs. These are monies donated by oil and petroleum companies and they are absolutely restricted to going back in to monitor and manage those artificial reefs. They can only be used for that type of thing. So these are the types of restrictions, and basically what our fund balances look like.

So before we start talking about the future of balances, one of the questions is how do we generate that balance. Basically what happened was when we went through a fund increase in 2004, we worked with the legislature in adopting that fee increase with the understanding that those funds would be made available to us through the legislative process to carry out the programs and so forth that our constituents were expecting us to do, when they agreed in support of those fund increases.


DR. McKINNEY: Well, the economic situations were not that good in the following sessions and there certainly were some changes in the legislature. Across the board, agencies were getting budget cuts as a matter of fact, because they're general fund agencies. Despite the fact that our constituents had stepped up to the plate, and bought those licenses, and generated those funds, we could not access them. In fact, our budgets were cut during that period, along with everyone else. So our actual operating expenses went down, but these balances began to generate. And so, that's what we were left in 2007.

When you take a look at our estimated fund balances starting in 2007 and going out to 2011, you get an idea of where our concerns are. The red bars there represent the general Fund 9 monies that are available for our salaries and operating type costs. The stamp funds, of course, are restricted and those are the blue ones, as are the green ones. So as we move forward, our balances, available balances, to do basic operations will frankly quite rapidly diminish until 2011 when we don't have those balances. In fact, they'll be a little bit negative.

COMMISSIONER MONTGOMERY: What are the major assumptions that are driving the revenue down and expenses up and causing this to collapse?

DR. McKINNEY: I'm going to go into that right now. That's where I'm going. Thank you for the heads up. That's what I'm going to do, as to what is happening and that type of thing.

One of the things that did help us begin to address some of our issues was Rider 27, which basically allowed that the agency could expend funds over the Comptroller's estimate. Each session, the Comptroller makes an estimate of the revenues coming in. That's the basis of the appropriations and we go forward with that. This rider allowed us to basically say that if we generate money above that estimate, then we can expend it on operating costs. So that's what did happen. Over the last two years, we did acquire $14 million. Those incremental monies are being added after 2007 and on to deal with that.

The big driver has been this, has been the salary increases. Our salaries in the department are in two sources. We have an A and B classification group, which is most of the employees. Then we have the C classification which is law enforcement and game wardens. The C group got some significant pay raises, well deserved, and we appreciate that. We also got other salary increases for the B and C group and those accumulate. As you add them in every year, they grow, and that's what's shown there. So between those two, Commissioner, that's what you're talking about. That's what's going to hit those funds. We're going to have to use more and more of those available funds in order to meet those legislative requirements. Is that clear?

MR. COOK: Correct me if I'm wrong. The basic assumption here is maintaining what we have.

DR. McKINNEY: Exactly. We're saying that there's level budget ‑‑

MR. COOK: There's no particular increase ‑‑

DR. McKINNEY: ‑‑ on level budget.

MR. COOK: ‑‑ in staff, but we see fuel increasing. We see cost of materials increasing. This is just to pretty much maintain what we have and conduct the work that we're currently doing ‑‑

DR. McKINNEY: That's the assumption.

MR. COOK: ‑‑ and spend those dollars there.

DR. McKINNEY: Exactly.

COMMISSIONER FRIEDKIN: And the salary increase assumption?

DR. McKINNEY: Salary increase is there and increased costs ‑‑

COMMISSIONER MONTGOMERY: Current salary increase ‑‑

DR. McKINNEY: Right.


DR. McKINNEY: Right.

COMMISSIONER MONTGOMERY: Are you talking about some number that's a projected inflation number for these salaries or what's the basis for the salary increase?

DR. McKINNEY: Of the salary increase?


DR. McKINNEY: Oh, those were legislative mandates.

COMMISSIONER MONTGOMERY: They're there, all right.

DR. McKINNEY: They're there. They've been approved.


DR. McKINNEY: So we're adding them into the mix.

MR. BORUFF: This does not contemplate future salary increases.


MR. BORUFF: That's correct. We're assuming flat FTEs and flat salaries for this data.


DR. McKINNEY: What we have, you know what we are operating on is a budget of what we have today, which you approved in August.


DR. McKINNEY: It's what we assume for the future, no changes.

COMMISSIONER MONTGOMERY: This doesn't deal with the competitive issue that you've raised?

DR. McKINNEY: No, not at all. It's just trying to hold ground which ‑‑

MR. BORUFF: It's a very conservative model.

DR. McKINNEY: Very much so. I think it's actually going to happen more quickly than this, but we want to be conservative. That's what they said.

COMMISSIONER BROWN: Just from a conversation standpoint in arriving at these numbers, if we're losing a lot of good people to other agencies, don't we really need to know what these other agencies are paying and at least have our budget at that level so that we can remain competitive?

DR. McKINNEY: We actually do know it. Scott's been looking at this very carefully, which we appreciate. I think ‑‑ isn't it lower quartile?

MR. BORUFF: Well, the reality is that many of our positions, we've looked at the relative salaries across agencies. Our agency happens, on general pay, to be in the bottom quartile of the classification range. Each position is classified a certain way and has a range of salary that's available within that classification. Our salaries tend to fall in that bottom quartile, the bottom one quarter, of that range. We have for many years, under Mr. Cook's leadership, been trying to force that phenomena up into the middle of that range to more of an average in the range. However, every time we do that, of course, without new funding and new appropriations from the legislature, it means something else has to give.

So we have made some progress. I don't think we're happy with where we are yet, but it's a balancing act. You have to be careful as you raise the salaries because you impact existing services. In many cases, your only option is to get rid of employees in order to give other employees a raise. And so, that's something that's a difficult management issues. It's something that we're very keyed in on, particularly this year with Mr. McCarty's help. The division directors, and Mr. McCarty, and I have been trying to address that as we can move forward, but it has been an issue.

MR. COOK: It's particularly a sensitive issue where you're dealing with dedicated funds in Fund 9 divisions and Fund 64 divisions. Let's take any classified position you want to talk about, whether that's administrative assistant, technician, something that you've got them over here and you've got them over here. Division directors, let's just say. If you raise a division director because you've got a little money in Fund 9, you raise those division directors up and the division directors sitting over there in Fund 64 are going ‑‑

COMMISSIONER HOLT: What about us, yes.

MR. COOK: ‑‑ and I hate to make light of it that way, but it's just a fact. That's what we've been dealing with. Just like Scott says, in order to raise some salaries, we give a 5 or 10 percent salary increase with a flat budget or a declining budget, that means FTEs are gone. That means instead of having 10 people in that park, you've got eight. That's what we've been working with. These numbers, these estimates, that you're looking at here do not incorporate any additional salary increases. This is if we just hold where we are, without a fee increase or without additional revenues of some kind, that's what's going to happen.

COMMISSIONER BROWN: Are we going to have to look at it at some point to be competitive at least with other state agencies?

MR. COOK: Absolutely. Mr. Bingham's staff is already looking at that. Commissioner, we basically know what the numbers are from the state agencies' standpoint, from comparable agencies, whether they're federal or state. You know, we looked at some of the private sector, but it's very, very difficult to compete with the private sector.

COMMISSIONER BROWN: I understand that.

MR. COOK: Agency-wise, yes, sir, we need this thing. It's something that we've looked at very closely and we're ready to move on it. We just need to do a little foundation for it.

MR. BORUFF: I think as we move forward in the discussion, that's some direction we're looking for from the Commission. What we're presenting here, we'll kind of tell you the assumptions we've made. We have not assumed, under the model that Dr. McKinney is presenting here today, that we're going to drive equity up to where we want it to be in terms of salaries across the agency. We're assuming a static model. Obviously, if the Commission so desires as we go forward in the discussion about license increases, we could drive a model to try to address some of those equity concerns, if that's the Commission's will.

COMMISSIONER FRIEDKIN: I think it would be good to do that sensitivity analysis and just see how that comes out, what the impact of that is.

COMMISSIONER PARKER: Mr. Chairman, are we seeing here something that happened 10 or 12 years ago in our state parks? Are we seeing something here that we need to really address now, and correct it, and not let it ‑‑

COMMISSIONER HOLT: Let the situation get too far?

COMMISSIONER PARKER: ‑‑ get too far?

COMMISSIONER HOLT: I'm getting an affirmation there.

COMMISSIONER PARKER: You are, yes. So the ball doesn't get bigger?

COMMISSIONER HOLT: Yes, of course, and that's why we're starting to talk about this now. There are other issues, too. I don't know if Scott and Dr. McKinney are going to talk about it, but of course we're focusing here on talking about potentially increased fees on hunting licenses, fishing licenses, and those kinds of things. With that, we're going to have to start talking about ‑‑ how this ties into the Sporting Goods Tax, for example ‑‑ other ways that we can start bringing funds in from people that are using our facilities, using the natural resources of the State of Texas. I'm talking about, for example, eco-tourism. We've been talking about ‑‑ and Scott and a group have already started this ‑‑ talking to the Audubon Society, canoers, kayakers, those kinds of people who are using these facilities and at this point really aren't putting any money into helping the agency in its conservation and the State of Texas conservation needs.

So, yes, I guess to answer your question a little long, ultimately we've got multiple ways to approach it. The key is we have to start today so that we don't get in a situation on the wildlife side and on the conservation side, that happened to the parks side.

DR. McKINNEY: Right.

COMMISSIONER HOLT: So this is a start, but we can't keep burdening it at any higher level probably, except for what I'd call natural increases, the hunters and fishermen. We're going to have to expand our constituency that helps us in our conservation going forward. So it's a long-winded answer, but absolutely yes.

DR. McKINNEY: That's an excellent segue, just what I was looking for.


DR. McKINNEY: That's actually a segue to the remainder of the presentation. Really, the goal of this exercise is for us to present to you at this time, is to develop and implement a series of strategies that will help us maintain the successes that we've achieved and really enhance our ability to deliver others. There's a whole series of these strategies, and a fee increase is just one of them. There will be a series of presentations at this Commission meeting, and the next, and others, to talk about this. So my objective today is to present that framework and so I want to talk about that.

We will talk for a minute about fee increases just to give you some background. This is the first of the slides. It's just to give you a summary of the number of licenses we sell, how they break up between the different users, and the revenues that they've generated over the last two years. That's the upper right and lower

left-hand sides there. And then, as Mr. Cook referred to this morning, there's kind of a status of our sales, which actually has been quite good. When you look at the difference between 2007 and 2006, last year overall we were up 1.8 percent and revenue was up 2.8 percent. This year, so far, we are up almost 5 percent. So, you know, our constituents are there, and they're supporting us, and we appreciate that. So that's that part of it.

I'm going to give you a little background on license fee increases in the past. We have data back from 1988. This gives you a graph here. The yellow line going across is the volume, the number of licenses sold. The red is the revenue generated. I pulled out of that, the yellow line down at the bottom is our Super Combo, and we'll talk about that in a second. Those are numbers that are not in addition to these others, but just because they're of particular interest, I put them in there to show you.

Talking about fee increases, I picked just two licenses. Of course, we have many licenses that we deal with so I picked two of them. I picked just the basic hunting and basic fishing licenses to track through this period of time, just so you can get an idea of actual changes in fee increases. We had our first increase there in '92 of about 30 percent, where licenses went up. We had another one in '97, or '98, yes '98, a 32 percent increase there. Then in about the 2004 license year, about 17 percent across the basic license to today where the hunting license is $23 and the freshwater fishing license is the same. Saltwater is a little more expensive. That just gives you an idea of the fee increases through that period of time.

When you look at the Super Combo, which began back in the late '90s, you can see the changes there as well. It went from $49 to $59 to $64. A couple of little interesting points on there. One is that you see that blip right there that our numbers are steadily declining. That's gone along the national track. We had that pretty significant 70 percent decline over that period of time there. Really, as I've tried to analyze that, in talking with Mr. Gene McCarty and others, they had the idea ‑‑ and I've done some analysis ‑‑ it looks like it's really, I think it's on track. It's when we put that Super Combo into place, we had people who were buying a hunting license and a fishing license. Now all of a sudden, they're buying one license. So basically we cut the licenses in half.


DR. McKINNEY: So that 70 percent is about 150,000 licenses.

COMMISSIONER HOLT: That makes sense.

DR. McKINNEY: In that first couple years of Combos, we sold about 250,000. So that's probably about right.

COMMISSIONER HOLT: That explains that.

DR. McKINNEY: That explains what happened. That defines why there's a sudden jump and then it goes steady again. At least I'm satisfied with that explanation. That's my story and I'm sticking to it.

We have some other indications of impact. One of the concerns or issues that you want to deal with in license fees is what is the resource impact you have. Clearly, that period there, that down tick, we had a drought condition going on around the state. And then, we had a hurricane on top of that. So that was the down tick that we saw. I think that we're going to be able to see, over the next year, the opposite situation. We're going to see what the impact of a situation where it's the best hunting and fishing situation in Texas that I have ever seen in my life.

COMMISSIONER HOLT: Oh, it's phenomenal.

DR. McKINNEY: I mean, the conditions, the habitat is in wonderful condition. Our reservoirs have been full and we've had great water last year. Now, coastal fishing was down a little bit because of the freshwater, but I'm talking to my guys now and they say it's like it's on fire. Now, the tides will come back in, in the spring. So we've never seen conditions like this. So we'll see the impact of absolutely great resources on license sales.

COMMISSIONER HOLT: We'll have to hold our meetings outdoors from now on.

DR. McKINNEY: Well, we should, I'll tell you.

COMMISSIONER HOLT: We should go hunting and fishing.

DR. McKINNEY: That would be good. I think it's going to be good, yes.

Let's take a look, very quickly at the non-resident hunting and fishing license sales, just in contrast. I'll run through the fee increases with them very quickly. A couple of times when we had fee increases for fishing, we finally had a 20 percent increase there in '97 for hunting and then again in '04. My conclusion from this is I can't draw any conclusion. I don't think that our non-resident hunting and fishing has anything to do with our license sales at all. It's something else all together, be it economics or whatever. You can see the changes in that. We're trying to take a look at that, and we do have some tools now to do analysis that we haven't had in the past ‑‑


DR. McKINNEY: ‑‑ but clearly there's something driving it up and down, be it economics or whatever.

MR. COOK: If oil goes to $100 a barrel, I predict that it will continue on that track.


DR. McKINNEY: Yes, it will. So that's the summary on that.

COMMISSIONER FALCON: It may have done it while we're sitting here.

DR. McKINNEY: Yes. So basically we'll be coming back to you in January with some options to take a look at. Our goal, and the guidance that Scott said we'll need from you, is what are we trying to do. We need to define our goals. Are we just trying to maintain what we have or do we want to try to address those issues and expand the program as we've been asked to address it? How do we want to deal with it? It's going to take money to do either one, but obviously we need to define the goals of what we're trying to accomplish as we go and talk to our constituents. If we want them to support the fee increases and other things, we have to be real clear on what we're trying to accomplish, and that will be key for us to do.

Now, we talked a little bit about trying to understand the fact of the effect of fee increases and others. Of course, how do we best mesh a fee increase proposal consideration in with other strategies that we're going to talk about in a moment? We are very fortunate that we have a number of tools, some individuals and staff that we have not had before. We understand these types of issues so we're going to be able to provide you with some good information and analysis on our end. Thank you.

COMMISSIONER PARKER: May I ask you a question?


COMMISSIONER PARKER: I'm sure you've done this. Have you sat down and listed every item that we offer and the price that we offer that item for? And then, have you moved over on the right-hand side of the page and listed every item/service that we offer and do not charge for?

DR. McKINNEY: No, I haven't done that right-hand exercise. That would be a lot of work. I understand what you're saying. You'd like to have that. We're going to talk a little bit about that now.

COMMISSIONER PARKER: It might be a lot of work, but I would like to see posted up here those items that we offer free of charge right now. If any one of them is significant and affect a great number of people utilizing a product that we are selling, not selling, that we are giving away, then I think we need to take a look at that.

DR. McKINNEY: Well, I'm going to give you some examples in just a minute.


DR. McKINNEY: We can do more. That's another good segue. In fact, we can do that right now. It's one of the other strategies of developing new funding sources. I've just picked two examples. One is paddling trails and the other deals with artificial reefs.

On the paddling trails side of it, we've had briefings on this and we've been working on those for a number of years. They're very popular. In fact, we have far more demand right now for establishing paddling trails than we can meet. Between Mr. Durocher, and Lydia Saldana, and I, we've put a lot of resources into trying to develop those things, but frankly we can't meet the demand. If we want to expand that program, that means we're going to have to take it from other important areas as well and we just can't do that right now. So that's an area where I've got many arrows in my back. Mr. Cook has a few, too.

Of course, I've several times raised the issue that in every community we should have something. There's a small but vocal group there that frankly don't want that. I guarantee you that because this is on the agenda today you're going to get some calls about it, but it's an important issue. We have long provided lots of support for them, be it water for their rivers, or game wardens to rescue them when they get lost, but now we certainly have concrete items. So this is an area that I still think we ought to be looking at. I think perhaps we'd have more support now that those folks are beginning to realize what we are providing for them. And so, I think there's a basis for going forward on that.

COMMISSIONER FRIEDKIN: It's also, just to say something quickly, it's an area where we can really leverage public and private partnerships.

DR. McKINNEY: Absolutely.

COMMISSIONER FRIEDKIN: We're going to need to get the community to do something.

DR. McKINNEY: Exactly. There's some real opportunities to expand access to folks that they've never had before and also make some fiscal resources available. It's pretty neat.

On the other hand, artificial reefs, we're about, hopefully, in a few days, about to sink probably the largest, most diver accessible artificial reef ever done in the Gulf of Mexico, probably in the United States. That's the Texas Clipper. It will be an incredible economic boom for south Texas and we're going to be doing studies on that as to what that is. Fishermen will benefit from it, too, and they've kicked in some money, but the reality is that this will attract a lot of divers to all of our artificial reefs. This is a group that has come to us and said, we'd like to help. We'd like to see more. We'd like to pay for it. We just don't know how. Let's figure out a way to do it. And so, there are those groups that just say, let's just figure out a reasonable way to do this and we'll be ready to go. So there are sources like that, that we want to look at.

Of course, the 800-pound gorilla out there ‑‑ and Mr. Chairman, you referred to this ‑‑ is the 4 million wildlife watchers that benefit from all the work that we do and how can we get them involved to help us support this conservation work, which is the basis of what they're enjoying out there. We need to figure out an equitable way to do that. I think there's a lot of support from folks to participate in that.

COMMISSIONER HOLT: I think there's more and more and I think the advocacy groups, and the organized groups in particular, are starting to understand, one, that a lot of this has been on the backs of the hunters and fishermen, and that it's time for, as this group is growing, and it will probably begin flattening out at some level, you know, they need to start participating more.

COMMISSIONER FRIEDKIN: Are there any benchmarks from other states on that and how they've been able to do that?

DR. McKINNEY: Well, actually in a number of states the most common approach is that when you go to buy a license, the first thing you buy is a conservation license. It's $2 or $4. That's the base. And then, you add what you want on top of it.

MR. COOK: I think the most successful programs overall have been the excise tax approach that was initiated in Missouri where all citizens pay a tiny portion. Their only benefit may be an urban wildlife program, or a backyard landscaping, or something along those lines, but those are probably, you know, if you look at real dollars, those are probably the programs that have been most productive, most successful.

COMMISSIONER MONTGOMERY: I was going to add to that. To me, thinking politically as well as economically, a smaller and broader base ‑‑


COMMISSIONER MONTGOMERY: ‑‑ is going to be a whole lot better for a whole lot of reasons.

DR. McKINNEY: Yes, otherwise you're still putting it on the backs of anglers and hunters ‑‑

COMMISSIONER MONTGOMERY: The dollars are going to be bigger. The pain is smaller. The stability is going to be better working with the user groups than to fight battles to get little dollars.

DR. McKINNEY: Yes, and there are several or those models out there.

COMMISSIONER MONTGOMERY: When you come back at some point, will you bring some kind of revenue estimates attached to a variety of options?

DR. McKINNEY: Yes, we'll be doing that. Another strategy, I was looking at how we can enhance our existing fund sources. Very quickly, we do know a lot more about our constituents than we have in the past. There's a lot more information. This is just some information on anglers. We know the status of angling in the U.S., where the numbers are. We know a lot about who buy our licenses, what segments of the community buy our licenses.

One thing that's definitely gotten our attention has been what's called "churn." In the angling side of it, for example, only 15 percent of our anglers, people who fish, buy a license every year. You know, many of them buy them once every five years or some period at a time. For example, 43 percent buy them at least once every five years. The idea would be ‑‑ and it's probably oversimplifying ‑‑ if you could just send a reminder card to buy a license and you can increase your "churn" by 10 percent, you're talking several millions of dollars.

COMMISSIONER MONTGOMERY: That would be big dollars.

DR. McKINNEY: That's a pretty good investment if we could do that. We're about to start on the pilot program to try that, to do those types of things. So we're looking at how we can address that.

COMMISSIONER MONTGOMERY: Do other states sell multi-year licenses for discounts?

DR. McKINNEY: You know, I think at least one state does.

MR. BORUFF: It's been tried.

DR. McKINNEY: I just can't remember.

MR. BORUFF: Most of them, I believe, Phil, go on weight limit.

DR. McKINNEY: Lydia is helping me. She said there are four.


DR. McKINNEY: Four states have them.

COMMISSIONER MARTIN: Can you buy a license that you renew every year?

DR. McKINNEY: I'd like that. It would be one of those type of things that you buy and we bill them every year.

COMMISSIONER MARTIN: Say, that your number is up for renewal, do you want to?

MR. BORUFF: We're looking into all of that.

DR. McKINNEY: That's like a reminder card ‑‑


DR. McKINNEY: ‑‑ and that's what we're talking about. You know, that's a small investment for a big return. So we need to do that. We need to look at that because the "churn" is there. The hunting side of it is a little more loyal. They buy a little higher, but that's something out there that we need to look at. If it's just where we send a postcard or whatever it is, that's work. So we're going to be looking at those.


DR. McKINNEY: Yes, sir?

COMMISSIONER PARKER: You know, one of the very most successful programs that Texas Parks and Wildlife has ever entered into, and it's been highly, highly accepted by hundreds of thousands of people across the state, and we have spent probably millions of dollars implementing the thing since we have had it in place, but we have never charged a dime for it, and that is Managed Lands Permits. Now, I realize that Managed Lands Permits is a stretch from the beach to where those items are utilized. I realize you're just making a presentation here, but it would appear to me that maybe we need to take a look at that because while Managed Lands Permits, a lot of burden is on the private landowner, still yet he receives a fruitful bounty for that permit which he receives and is not charged for. It would appear to me that there might be some consideration. I'll toss that out.

MR. COOK: We have looked at it.


MR. COOK: We'll sure be glad to provide that information to you. There is some opportunity there, but frankly it's not a large dollar number. If our goal in the Managed Lands Program has been ‑‑

COMMISSIONER PARKER: That depends on how much you charge for it.

MR. COOK: ‑‑ our goal ‑‑ that's true, but our goal has been improved habitat and better habitat management implemented at the cost of the landowner. I'm not trying to defend it one way or the other. I'm just trying to say the benefits from the program, from a wildlife and a habitat standpoint, have been the focus of the program. The permitting itself, by law, we are allowed to recover our cost of the permit. There are some restrictions there that we have to work with, but we'll be glad to provide those numbers. It's an area that, yes, we'd look at.

MR. BORUFF: You might want to clarify real quickly for the new commissioners, we're talking about the Wildlife Management Plans out of the Wildlife Division, a cooperative, voluntary program for landowners to get help. Part of that is to issue Managed Land Deer Permits for the harvesting of deer. So that's just to put this in context.

COMMISSIONER FALCON: Mr. Chairman, I don't want to sound psychotic and out of touch with reality with this comment so I'm going to ‑‑ being a new commissioner, if I say something that's out of line, please correct me ‑‑ but going back to the wind farm situation, because that's going to take some resources to do studies, either before or after. If it's after, how do we avoid the killing of fish, or migratory birds, or birds along the coast? Is there any way that we could implement some kind of a cost to that energy company that would offset the cost that it's going to take for us to look at some of these things and to see how we can continue to preserve our wildlife?

MR. COOK: We cannot do that.

COMMISSIONER FALCON: We cannot do that?

MR. COOK: We cannot do that.


MR. COOK: The legislature could do that ‑‑

COMMISSIONER HOLT: The legislature.

MR. COOK: ‑‑ if they so chose to.

COMMISSIONER HOLT: And that's part of what's being pushed down south on the coast, in Kenedy County, is that there should be a permitting process. I think that's the angle the anti-wind farm group down there is taking, going to the legislature to set up a permitting process through the legislature which would then theoretically could have those kinds of costs in it; that as you go to apply for the permit, you have to pay certain permit costs. I've had certain legislators talk to me, then we could be part of the study and those permitting costs would pay for that study, let's say, but that has to go through the system and that has to go through the legislators. They would have to enact it into law. As you can imagine, there would be a heck of a battle there. I think, again, it goes back to where our position as an agency is to stay out of that battle.


COMMISSIONER HOLT: That's not for us to get involved in.

MR. COOK: We have some very similar ‑‑ when I get the call, it's a very similar sounding call, whether it's a coal-fired plant ‑‑

COMMISSIONER HOLT: Right, exactly.

MR. COOK: ‑‑ an atomic energy plant, or a dam that's going to generate electricity. From a resource standpoint and a science standpoint, we need to be looking, I believe our responsibility, and I believe we all agree that our responsibility, is to look toward that impact. Right now, we're funding the work that we do, the work that Mr. Durocher's staff, the fisheries staff, the coastal staff, the wildlife staff, are doing. It's funded by hunters and fishermen. The rescue work and the emergency response work that Colonel Flores and his law enforcement people do are paid for totally by hunting and fishing dollars. So, yes, there are some opportunities there.

Certainly, I think we have the opportunity to make a legitimate case to the legislature and say, we are involved in these kinds of things and we need some help. We did that this last session in law enforcement, for example, where we spoke to the time and manpower and equipment used in hurricane response, and floods, and those kind of things, and they helped us. Our border security, Homeland Security, they have provided some general revenue dollars to help. So those opportunities are there. It's a process that we have to work very, very closely with them on.

COMMISSIONER HOLT: I think you're bringing up a good point, Commissioner Falcon, that, yes, we have to be aware from the point of view of making sure that we're educating the legislators, which is going to go forward with requiring us to be involved so that there will be funds then to help us. We're at a point now where we keep asking the hunters and fishermen to keep funding things that you could argue aren't directly related to what they think they're paying for. And so, you're making a very good point and I think it's well taken.

DR. McKINNEY: It illustrates another point as well. We're looking at all of these strategies. Some of these strategies, our agency can do. Some of these strategies will take Commission action. Some will take legislative action. In a number of them, it will take all of us acting. So it will be a process that we have to go through to do.

Another area is in fund management. This is dealing with, for example, our stamp funds. Our dedicated funds in stamps have been really an effective tool to get things done, and certainly very popular with our constituents because they know what's going to happen with those funds. They get behind them typically and support them, be it a freshwater hatchery, or a shrimp buyback, or migratory birds, or whatever it is. They've been there to support those and pay above the license, to pay the fees to do those particular activities. That's been a wonderful addition, a way that we could address things that we otherwise could not.

Some things that we've done, that we've had the luxury, let's say, over the years to be able to support these activities with our broader funds to some degree, to be able to absorb some costs that probably should be assigned to those stamp funds. I'm talking about things like that biologist that's out there acquiring lands or a shrimp buyback license, and their vehicles, and salaries, and all that probably should be coming out of these stamps and not out of the general fund. We just can't afford it. So we're going to have to be much more disciplined in how we use these stamps and make sure that they're paying their full cost.

At this point, when we're doing activities for one stamp or another, it's affecting another user. So we don't want to affect an angler to buy white wing dove, property, or shrimp licenses, or buying other items. We want to make sure that this is as clear as possible. Some of that will take some legislative action, but clearly we're going to have to make sure we make the best use of those stamp funds because the funds are there and that's what they need to be used for.

A final item is in the license simplification. We started this process last year. This is House Bill 12. It is requiring us to go back and reassess all of our licenses and report back to the legislature next time, and we will do that. Fortunately, we've already had a start on that process. A year ago we went through a simplification process. We came to you all with a number of recommendations. I'm happy to say, and appreciate the fact, that you all have adopted all of those that you could. We've made all those changes that were possible, but there a number of them, some 27 recommendations, that would require legislative action to simplify that process. We didn't take them forward last time, because clearly we were focusing on parks issues, but as we come forward in the next session, this is an opportunity for us to make our license scheme as simple as possible. That certainly can't do anything but help us address some of these issues. So with that, I would conclude to tell you that in January we'll come back with some specific options and we'd appreciate any guidance that you have to help us do that. We'll come back with some options for you all to consider and consider that process, because although the issue that we're going to deal with doesn't get critical more or less until 2011, a few years down the road, the actions necessary to address those ‑‑


DR. McKINNEY: ‑‑ really have to start now. Because of the process that we go through, we have to start now or we will not be able to do that. So that's really why we're in front of you today and we look forward to working with you. I'm certainly happy to answer any questions. I'm sorry we took so long on this, but it is an important topic for us.

MR. COOK: Doc, your last point there, I want to take one more minute on that. If we are going to address that issue in 2011, that means that additional funds for September 1, 2011 would have to be there. Not maybe they'll be there, or we wish they could be there, but they'd have to be in place.

So if you look at implementing a fee increase, let's just say of some magnitude whatever, on September 1, '08, those funds would be available and could be looked at, the potential revenue there, as early as the '09 session. The '09 session will be appropriating money for '11 and '12. So if we're going to do something, we're in a timely fashion. We're on schedule. If we skip this year, typically we would not, the agency would not want to be in the middle of a fee revenue, fee increase, during the legislative session.


MR. COOK: So if we don't do it now, which that's an option ‑‑ and it's one that you'll have to seriously consider ‑‑ then probably you're looking at '09 before you start that process back up again.

COMMISSIONER HOLT: That helps to put everybody on the timeline.

MR. COOK: Yes.

COMMISSIONER HOLT: That's why we felt we needed to start bringing it up now.

MR. COOK: We're okay, but it's time to start looking at it.

COMMISSIONER HOLT: Yes, absolutely.

COMMISSIONER BIVINS: So in other words, it needs to be in place by September 1, '08?

MR. COOK: Yes, sir.



COMMISSIONER HOLT: Yes, if we're going to go forward.


COMMISSIONER HOLT: Any other questions or comments for Dr. McKinney or Scott?

(No response.)

COMMISSIONER HOLT: Thank you all. I'm going to move on. I know the last three rounds have been very detailed, but the State Audit, the Sunset, and these fee increases are obviously very, very sensitive. They're something that the Commission has to be very directly involved in. So, please, on the fee increases too, while I'm thinking about it, don't hesitate to call Scott, or Bob, or anybody if there are ideas you may have. You'll probably start hearing from constituents, as you can imagine. Fair enough, I think the more input we have, for one, we can get more creative, maybe be more dynamic, in figuring this out, maybe with some new ideas and thoughts that aren't just based on the traditional ways we've raised money in the past for conservation in this state.

MR. COOK: If we ‑‑

COMMISSIONER HOLT: So I would like you all involved, too.

MR. COOK: If we go down this path, there will be an extensive public involvement process.

COMMISSIONER HOLT: Oh, very much so.

MR. COOK: We will want their input. We will want them with us on this. We always have had it and we always will have it. The final decision in order to implement a fee increase September 1, '08, your decision would have to be made at least, by the latest, by the May Commission meeting. So we've got six, seven months here that we can work on this and wrangle it this way or that way.

COMMISSIONER HOLT: Massage it, as they say.

MR. COOK: Yes, sir, absolutely.

COMMISSIONER HOLT: Any other questions or comments on the fee increase?

(No response.)

COMMISSIONER HOLT: Okay, thank you all. Committee Item Number 6 ‑‑ we'll try to move it along a little bit now ‑‑ Approval of Projects Funded from the Texas Parks and Wildlife Conservation Capital Campaign, Julie Horsley. Julie?

MS. HORSLEY: Good morning. My name is Julie Horsley. I'm in the Budget and Planning section of the Administrative Resources Division. I'm here this morning to provide information regarding the use of funds in the Texas Parks and Wildlife Conservation and Capital Account. I'd like to start out just with some general background on the fund. This is a statutorily dedicated account that consists primarily of allocations of Sporting Goods Sales Tax and revenues from the sale of our four conservation plates. These include the white-tailed-deer, the bluebonnet, the horned toad, and the largemouth bass plates.

Section 11.043 of the Parks and Wildlife Code governs the uses and the revenue sources from this account. It provides that money in the account may only be spent on projects that have individually been approved by the Commission. The statute states that preference be given to projects that directly provide hunting, fishing, and outdoor recreational opportunity, but it also goes on to state the allowable uses, and provides many examples of those, and they're pretty broad in ranges. For example, it provides that funding could be used to develop and improve facilities or land for operations and maintenance costs associated with state parks, wildlife, and fisheries projects, and also for efforts to enhance conservation of natural and cultural resources.

We did, during this last legislative session, see an increase in the amount of funding that was appropriated to us from the sources that make up this account. The total that was appropriated to us in the General Appropriations Bill was $6.48 million. Of that total, about $2.92 million consisted of conservation plate balances and revenues. Accumulated account balances accounted for about $2.56 million of that total. And then, the remainder, about $1 million, was Sporting Goods Sales Tax funds that were allocated into this account.

The fiscal year 2008 Commission-approved budget, which was adopted in August, reflected a total of $6.45 million from these sources. The difference there between those two is really just due to some adjustments that were made during the budget process. For example, on the conservation plates, the General Appropriations Act figure includes both balances and revenues that were estimated to be collected in 2008. In developing the budget, a decision was made not to include those estimated revenues at that time and instead wait until we actually collected them to bring them into the budget.

The other main adjustment has to do with fringe benefits. In the budget figures ‑‑ you see those reflected there ‑‑ those amounts aren't actually appropriated to us in the General Appropriations Act.

While the overall amount of funding that's shown on this slide was approved by the Commission at the August meeting, the specific listing of projects to be funded from these sources was not provided at that time, which is why we're coming to you now with this project listing for review and approval. The project listing is included as an exhibit, Exhibit A, in the commission materials.

There are just a couple of items I'd like to point out to you regarding that list. The legislature did provide some direction on how these funds were to be used. For example, the bluebonnet plate funding that we got was directed to be used for state park transportation items. A portion of the account balances in Sporting Goods Sales Tax allocation was directed to infrastructure support costs and FTEs related to the state parks' exceptional item. House Bill 12 provisions, in Article IX of the Appropriations Act, directed that a little bit over $2 million in account 5004 for balances be directed to state park minor repair projects. As you look through the listing in the exhibit, you'll see these items out there as well as others. The total for the identified projects in the list is about $5.8 million. The bulk of that is associated with projects in Infrastructure, State Parks, Wildlife, and Inland Divisions. There is about $686,000 that's being held of white-tailed-deer and horned toad plate for 2009 projects. That's going to be carried forward into fiscal year 2009.

This last slide just basically shows the recommended motion that we'll be bringing to you tomorrow for approval, and basically just asks for your approval of the projects that are listed, as shown in the exhibit. That concludes my presentation. I'd be happy to answer any questions that you might have.

COMMISSIONER HOLT: Which plate sells the most?

MS. HORSLEY: It's the horned toad.

COMMISSIONER HOLT: All right. Not the bluebonnet, but the horned toad?

MS. HORSLEY: No, bluebonnet is second.



COMMISSIONER HOLT: Any questions for Julie?

(No response.)

MS. HORSLEY: Thank you.

COMMISSIONER HOLT: Thank you. If there are no further questions, I will place this item on the Thursday Commission meeting for public comment and action. So this is an action item for tomorrow. Thank you, Julie.

Committee Item Number 7, Equipment and Maintenance Provider Review System Rules, Ms. Ann Bright.

This sounds exciting Ann. You lucky person, you get to do this.

MS. BRIGHT: I don't know if I can make this as exciting as the fee increases. I'll give it a shot. One of the things that you're going to hear about a lot, and you've already heard about it, is HB 12. That was an omnibus bill that was passed towards the end of the session. It dealt with a lot of Parks and Wildlife issues. One of the things that was included in this bill was a requirement that we establish two types of systems. One is an equipment review system and the other one is a maintenance provider review system.

The equipment review system requires the department to annually review maintenance equipment to determine if it has become outdated. And then, the outdated equipment is to be sold as surplus. Maintenance equipment is equipment that's used to maintain the real property. In the rule that we've proposed, that the Commission approved proposing, would apply only to maintenance equipment that's capitalized. That means it has an acquisition value of $5,000 or more. The reason for that is we that have restrictions on the purchase of capitalized equipment. We do not have similar restrictions on lesser value property. So in other words, if we have property that's outdated, and it has a value of less than $5,000, it's a lot easier for us to get rid of that equipment and actually replace it than equipment over $5,000.

Under the proposed rules, equipment will be considered outdated if it is, one, no longer operational and cannot reasonably be made operational, or it no longer serves a department purpose ‑‑ I think both of those are pretty self-explanatory ‑‑ or, three ‑‑ and it has to meet all three of these criteria ‑‑ it has a fair market value that is less than the cost to repair the equipment, that the cost to replace the equipment is less than the maintenance cost, and we have sufficient funds and budget authority available to replace the equipment. The idea here is that while often it may cost more than a piece of equipment is worth to repair it, it would cost us even more to replace it. We want to get rid of that equipment only if we're going to be able to replace it. We want to make sure we have sufficient funds and authority to do that.

Under the proposed rules, the agency will annually prepare a report regarding outdated maintenance equipment. If equipment is outdated, we will begin the process, within 60 days, of disposing of the equipment. That is handled through an established procedure. We will dispose of property otherwise pursuant to other procedures. For example, this isn't going to replace our normal process of getting rid of surplus property.

The other part of this process is a maintenance provider review system. This has to do not with the equipment but with the people that are actually performing the maintenance services. Under the proposed rules, the department will annually identify the cost of staff to perform maintenance tasks, like custodial, mowing, landscaping, minor repairs, trash collection, and the cost of contracting with a third party to perform those tasks, and whether the quality of the result is going to be at least equal to or better than the cost of having it performed by staff.

For example, one of the things Walt has told me ‑‑ and I mentioned this last time ‑‑ at Garner State Park during the summer, we have staff that do nothing but clean the bathrooms. They finish a bathroom and they just keep going until they're clean. And then, they start all over again. If we have somebody who says they can come out and clean the bathrooms for us, but they're only going to come out once a week, that's not going to be sufficient quality. That's not going to be enough quality to satisfy us.

Under the proposed rules, if the cost of contracting with a third party is less than the cost of us performing the job ourselves with our staff, and we're going to get a better quality, or at least equal to or better quality, then we're going to begin the process of going out and contracting with a third party to perform that task.

We received seven comments on these rules and only two of them were in disagreement. One comment was really not germane. It just basically said that we needed to take care of our equipment and exercise safety precautions, which we will do. The other one was they recommended that vendors not have control of our equipment, which they wouldn't anyway, and that we include tree-trimming services, and we believe that's included in landscaping, which is one of the items we're going to seek information from vendors for.

This is the recommendation that we will be presenting to you tomorrow. I'd be happy to answer any questions.

COMMISSIONER HOLT: Any questions for Ann?

(No response.)

COMMISSIONER HOLT: And we are looking at doing more contracting and trying to find areas where we can bring in more concessionaires and doing those kinds of things? Walt and his group are very strong. As part of this overall audit and everything we're looking at is ‑‑ is there more opportunity? Now, it sounds easy, but remember concessionaires are in business to make a profit. So certainly there has to be enough business there where they feel they not only can move in and take over, whatever it may be, and they can make some money from it. And so, it's not quite as easy as it sounds sometimes, relative to the volume and the things we do in the parks particularly. Ann, thank you. Let's see, if there's no more discussion or questions, I'll place this item on the Thursday Commission meeting agenda for public comment and action.

Committee Item Number 8, Party Boat Regulations, Mr. Al Campos.

MR. CAMPOS: Commissioners, Mr. Cook, and Chairman Holt, I'm Alfonso Campos, Chief of Marine Enforcement. Party boats, or charter boats, they're basically the same, they're boats that are rented for hire. They've been under regulation for years on the coast, there on coastal waters, but there has been no regulation on inland waters. It's been a big concern with high profile accidents around the country about when the states are going to get on board and do some regulations.

So House Bill 12 was passed and it defined party boats as boats that are rented or leased for more than six passengers and that operate on inland waters. We already have the regulations on coastal waters. Now, these regulations are not going to apply for boats that are less than 30 feet in length, sailboats, livery vessels that are under the command of the renter for the whole time. So it's going to apply if there's a captain or somebody that's in charge of the boat for the constituents. Also, it's for any vessels that are used for training purposes.

Other than what's covered in statute, what we're proposing is a rule that is going to add the process to do an annual inspection, which is required by statute. The annual inspection would be conducted, for example, by a game warden or a third party that is contracted if we choose to do so. We would look at safety measures that are in place, that have to be place so that that boat passes the inspection. We would look at passenger capacity limits. They would have to be in detail. We would also inspect that they have liability insurance in place. So that's the annual inspection.

The other big thing is going to be the operator licensing. An operator, to operate and carry these passengers for hire, is going to have to be at least age 21. It requires that they have some experience and that they pass a written exam, which will be precluded by having a boating safety exam that we already have.

We did receive some comments, five comments on the rule and then five on the fee that we set. The ones that were of any relevance are waiving the fee for the annual inspection if the boat is inspected by a federal entity and that is already incorporated into the rules. So we have that one covered. And then, another comment that was relevant was the belief that $300,000 was not sufficient liability insurance for one of these boats. You know, we did a business study on these and a lot of times they're insured as a group of boats. For example, somebody will have 10 boats and they may spend like $3,000 is the cost for insuring one boat, but it actually covers many boats when you couldn't actually go out and insure one boat by itself for $300,000.

So that's what we'll be proposing tomorrow is the party boat rules. Do you have any questions?


(No response.)


MR. CAMPOS: Thank you.

COMMISSIONER HOLT: If there are no further questions or discussion, I'll place this item on the Thursday Commission meeting agenda for public comment and action. Thanks, Al.

Committee Item Number 9, Local Park Grant Rule Amendments, Tim.

MR. HOGSETT: Good morning, Mr. Chairman, members of the Commission, I'm Tim Hogsett from the Recreation Grants branch in the State Parks Division. This is the kick off of the formalization of the process of rewriting rules for the Park Grant Administration, the administration of the park grant programs. The Commission has the legislative authority to make rules under Chapter 24 of Parks and Wildlife Code for the program. Rules, as far as the staff is concerned, are the administrative processes we use, but primarily the scoring system, the criteria we use to review applications since there are always more applications than we have the funding resources for. And then, the application of that scoring system is that we will, after you adopt the scoring system, we will review applications and bring those forward to you in terms of recommendations for funding.

The last session of the legislature really restored our grant program to where we were in fiscal year

2002-2003. We've been appropriated approximately $15.5 million a year for each of the next two fiscal years, fiscal year '08 and '09. Those are for competitive grants. As a result of that restoration of funding, we feel that it's important that we go out to our customers and come to you to seek guidance as well for making new rules and just looking over the process by which we make grants available.

For the new members, I'd like to take just a couple of seconds and talk about each of these grant program opportunities. The Outdoor Recreation Grant Program is the traditional and oldest grant program that we have. These are all programs which are funded through the dedication of Sporting Goods Sales Tax. Outdoor Recreation Grants are typically either active kinds of projects for things such as ballfields or swimming complexes, but can also be for conservation, acquisition, and conservation kinds of projects, including very passive sorts of recreation. They're matching fund grants to local governments, 50 percent match. It requires the match be available at the time of the application submission.

Indoor Recreation Grants are very similar. They are grants to local governments of 50 percent for indoor recreation facilities. That can vary from anything such as a typical indoor recreation center you'd see in an urban environment with a gymnasium and an indoor swimming pool, those kinds of things, all the way to conservation kinds of projects involving buildings that interpret natural resources, such as natural learning centers and that kind of facility.

Community Outdoor Outreach Grants, these are the only grants that we administer which are not brick and mortar, or construction and acquisition grants. These are program grants. They are small grants that don't require a match of up to $30,000 to either local governments or nonprofits to introduce people to the outdoors, to introduce traditionally underserved populations like youth, youth at risk, that kind of thing, to Parks and Wildlife facilities, but also just in general to outdoor recreation and outdoor experiences.

Regional Park Grants, these are large grants. These have been on suspension for the last couple of years with the funding cuts that we endured the last couple legislative sessions. These, when we were doing them, were up to $2 million grants to large projects, either large conservation or large recreation projects that typically involve multiple partners, several government entities or public and private partnerships.

We have, and we'll hopefully be continuing, the Small Community Grant Program. These are small matching grants of up to $50,000 for small communities, communities with population of 20,000 or less. It's a very popular program that often provides the first park facilities in smaller communities.

Finally, there's a new program that I'm going to talk about in a minute that was created, carved out if you will, the legislative appropriation exclusively for large communities, communities of 500,000 or more.

The review process that we're going through, culminating hopefully in a presentation to you for adoption of new rules in January, we've done a staff retreat. We've done a survey, an online survey, of our customers. We held five public hearings around the state. We had about 250 people attend those. They were mostly our traditional customers, people that we do business with daily.

And then, for the Urban Park Grant, the new program that we're going to need to pull together rules on, we did an urban park summit. There are 13 eligible sponsors for that program. So we pulled in the directors of those parks departments, brought them together in a facilitated environment, and did a two-day-long draft rule-making process, with them basically, hopefully, helping us write the rules for the program.

I won't focus too much on this slide, other than the bottom pie indicates that there is an amount of the Sporting Goods Sales Tax that is dedicated to park grants. That, by law now, is split into two pieces with 60 percent of the money going to what we call our traditional Texas Recreation and Parks Account. It's the balance of the state of all sponsors who are not specifically eligible for the new Urban Park Grant Program. That Urban Park Grant Program will be allocated 40 percent. So there's $9.3 million approximately for TRPA and $6.2 million annually for the Urban Park Grants.

We don't really anticipate, as a result of the public testimony and public input that we've gotten so far, that we're going to be recommending dramatic changes in either the scoring systems or administrative processes.


MR. HOGSETT: We took a look at the ranking systems for all the programs and we also looked at the administrative practices, things such as annual deadlines, how many times a year we take applications. We looked at the efficiency with which people are using money and are going to probably be proposing some tougher guidelines in terms of administration and expenditures of those funds.

In the area of priority ranking systems, a few things did pop out at us with both from our own review and with review as we were dealing with our customers. We are probably going to recommend that we allow, or use, some outside review expertise. At one time, I, for example, had a staff member who was a professional engineer, who could review cost figures for applications for the costs of facilities that were being proposed. I've lost that position and I feel that it's necessary if we can get someone from the outside to give us some real, live, current cost figures to take a look at the costs relative to applications.

Also, we want to be able to maybe consult with people like the recreation profession, maybe universities, looking at recreation trends. Recreation always, like anything, is a changing situation. There are new kinds of outdoor recreation and indoor recreation opportunities coming online. You know, a few years ago, it was skate parks. Now, it's things like geo-cashing and all kinds of new recreation trends and we want to be sure that our program stays current.

We're looking at evaluating, possibly increasing, the amount of priority points given to environmentally responsible activities. That's really green construction, green construction kinds of projects.

We want to take a look, as always, at the amount of weight and priority given to conservation. We understand that it's the key mission of the agency, conservation and recreation, and we want to be sure that there are high priorities given to projects which have high important natural resource conservation attributes.

We have a piece of the scoring system in place that currently rewards sponsors for doing local parks and recreation master planning and then coming forward with the applications which ask for their high priority local needs. We're taking a look at the relative weight of how much credit, or how much priority, those are given.

One of the attributes of the scoring system is recreational diversity. Applicants that ask for more than one kind of recreation opportunity and will provide more than one sort of facility are given higher priority. One of the flaws that we have in our current system, in our view, is that equal weight is sometimes given for less expensive facilities to larger facilities. An example might be that an equal competitive score in this particular criteria would be given for something small, like maybe a horseshoe pit or a volleyball court, as opposed to a major recreation facility. We're going to try to find a way to categorize those a little better and make that recreational diversity make a little more sense.

We had some programming-related points in our scoring system, specifically as they relate to youth at risk. We give additional priority currently to projects that will target youth at risk. Some of what we heard through our customers, as we were doing these public hearings, was they didn't really feel like that was an appropriate or proper response to what they were doing. In other words, they didn't really feel that necessarily it was our role to be in the programming area, that we were really more providing dollars for brick and mortar and parks, and that it was up to them to make the programming kinds of decisions.

In terms of administrative practices, we're seeing a trend, unfortunately, of some projects that are struggling, failing to meet all of their goals. We think that part of that can be addressed through tighter administration on our part as the staff, but we also feel like that there ought to be some punitive measures if you will that the Commission has in its toolbox to be able to allow staff to, if a sponsor truly has not done well with the administration of a grant that they've gotten, that it would either make them ineligible or at least maybe reflect in some negative scoring in the criteria that they have. Again, the idea is that we have very limited funds. We've got extremely high rates of competition. This was very well received, by the way, in the public hearings. Everybody pretty much was unanimously in favor that, yes, if you're going to get money to us, that we've got to responsibly spend it and that we need to be held accountable for it.

We're looking at the possibility of renewal of more than one annual deadline for a couple of the programs. We scaled back, for example, the Outdoor Recreation Grant Program from two annual reviews to one as a result of less funding being available. It's the same thing on the Community Outdoor Outreach Program. We're looking at recommending that you allow us to take applications more than once a year on those two programs. Again, that was well received.

Funding ceilings is the same kind of thing. We've reduced the amount of money that people could ask for in several of the programs as a result of decreased funding overall available. We're going to look at recommending that you allow us to bump those funding request ceilings back up a little bit higher with $15.5 million a year available.

Real quick, on the Urban Park Grant Program, again, the legislation carved out 40 percent of the money that we get annually for an exclusive competition for the 13 largest cities and counties in Texas to compete only among themselves for. That's who you would expect. It's Austin, San Antonio, Dallas, Fort Worth, Houston, El Paso, and then the counties in which those reside. That makes 12. And then, you add Hidalgo County, which is the McAllen area and the Rio Grande Valley. They will be helping us develop a scoring system and rules that we will propose to you for adoption that will be strictly for them and for their programs.

We expect to have mirror programs for that piece of the pie if you will, an Outdoor Recreation Grant Program for them, an Indoor Recreation Grant Program for them, some community outdoor outreach money for them. That's really a new territory for us. It was really interesting as we did the hearings, the folks that were not eligible for this, the 60 percent balance of the state, most of the folks were encouraged by this. They felt like it would set aside money just for them, for the big guys, and then they would sort of be out of the way, if you will.

Having said that, we will be happy to talk with any of you individually, get you whatever information you would like in terms of what we're going to be proposing. Obviously, this will be posted in the Texas Register. We'll receive formal comment through that process, but we'd be more than happy to visit with any of you individually to answer any questions you might have or take any advice and counsel that you might have.

So tomorrow, we will be asking you for permission to post in the Texas Register and proceed with the process of going forward with hopefully bringing something back in January. I tried to run through that really quickly. I'd be glad to answer any questions.

COMMISSIONER MARTIN: Is there any advantage to a group in the scoring system if they have matching dollars already?

MR. HOGSETT: We require matching dollars to be in place at the time of the application and there is an advantage in the current scoring system if the match comes from outside the sponsor themselves ‑‑


MR. HOGSETT: ‑‑ to promote cooperative agreements. For example, if two governments work together and both provide part of the match, or if there's public and private partnerships for the match, then they definitely get a higher priority in the system.

COMMISSIONER HOLT: Any other questions?

Yes, sir.

COMMISSIONER MONTGOMERY: I appreciate the program is not broken. It's not broken too much. I think it's a healthy review. I just have one comment. I agree that we probably ought to stay away from any items which require ongoing programming. It's just hard to monitor. It makes the whole penalty issue a lot bigger.

MR. HOGSETT: Yes, we have a very limited ability to go back and see what they're doing after we foot the bill.

COMMISSIONER MONTGOMERY: Yes, it's a good way to clog up the system. A question related to that is ‑‑ how do we assess and weigh usage or projected use or need? Do we factor that into any scoring we might do?

MR. HOGSETT: Currently, really the only use or need criteria is the criteria that involves the master planning. The local government goes through the process of determining what their high priority local needs are based on, I'm assuming, things like use and resources available, but we don't have a current scoring criteria, or really a method currently, where we can look at how much existing parks are being used.

COMMISSIONER MONTGOMERY: One park in one city, 10,000 or whatever size, that scores higher, it's got a bunch of attributes that they can score higher on, so one city here might get a grant over one that might have 10,000 people that have less attributes, in theory?

MR. HOGSETT: In theory. I think this split of urban versus the rest of the state will approach that somewhat in that obviously the sponsors that are eligible for those urban grant funds are dealing with a much smaller area with a whole lot more people in them, but we've really never gotten into the business of need based on numbers of users. We've left that as a process that comes up through the local review process.

MR. COOK: I think, Tim, would it be safe to say that if a community, large or small, is going to put their match, they're weighing that usage and that need and that demand as they say, we're going to commit $100,000 to this project, or $50,000, whatever it is, in small communities.

MR. HOGSETT: Yes, those local elected officials have the accountability for what they propose and how they spend the money, in terms of being able to justify that it's a ‑‑

MR. COOK: I think that's the only way that I can think of to explain that, Commissioner.

MR. HOGSETT: ‑‑ it's a need.

COMMISSIONER MONTGOMERY: I was just trying to think about it.

MR. COOK: Yes.

MR. HOGSETT: We've talked about that as staff a little bit and we'll kick that around a little more and see if there's some way that we can look at the usage.

COMMISSIONER MONTGOMERY: Being a real estate broker, I can appreciate the ability people have to inflate projections. So I don't, without suggesting it was ‑‑

MR. HOGSETT: Understood.

COMMISSIONER HOLT: Yes, because we don't want to rule from above. Probably, it can be part of the questioning process.

COMMISSIONER MONTGOMERY: At the extreme, though ‑‑


COMMISSIONER MONTGOMERY: ‑‑ it would be nice to find some way to factor that in a little bit.

MR. HOGSETT: We'll take a look at it.

COMMISSIONER MONTGOMERY: The other question I've got is ‑‑ can we or do we favor, score favor, TPWD, our own staff's recreational supports? Are we advocating trying to build up a package of recreation supports now in the park system now? You mentioned several other community things. Do we have the latitude, if we wanted to, to give higher weight to those things?

MR. COOK: Like fishing?

COMMISSIONER MONTGOMERY: Yes, just take it down to that, hunting, fishing ‑‑

MR. HOGSETT: Oh, I see.

COMMISSIONER MONTGOMERY: ‑‑ hiking, biking, boating, you know, in general conservation, and things that are getting the most funding and most support here, paddle trails, programs started have ‑‑

MR. HOGSETT: I honestly believe that even our existing system brings conservation and mission-driven kinds of projects to a higher priority, but that's definitely one of the things that we have discussed with our customers and one of the things that we're looking at possibly increasing scoring for. This is not the first commission group that has made that comment. We have continued to reflect up-ramping the priority given to mission-oriented kinds of results for projects.

COMMISSIONER MONTGOMERY: I don't know how anybody else feels. It would be my preference to have some weighting in that direction.

Another question I have is ‑‑ how does our system weigh programs that have sort of strategic and regional impact even if they're in the small grant program? It goes back to usage, but a facility that might really have a much broader impact, just a local community impact, even though it's in the local community grant program.

MR. HOGSETT: That was the focus of our Regional Park Grants when we were giving those. Those were the larger grants that we were doing the things like helping build a trail along the Rio Grande River in El Paso that will be 40 to 60 miles long eventually or doing the major access to Trinity River in Arlington as part of the Trinity River Corridor. That's the best way I think we address it, by bringing that program back online, which we hope to be able to do. Beyond that, things in the scoring system that relate to multiple partners involved in the match, the more of the match that comes from outside resources, I think that maybe addresses it.

COMMISSIONER MONTGOMERY: Since we're a state agency ‑‑ I realize these are local grants ‑‑ but could we think about giving some weight to factors that broaden the impact, or broaden the availability, or broaden the appeal outside of that particular community? I realize our regional grants do that.

MR. HOGSETT: Tell me what you're thinking. I'm not sure.

COMMISSIONER MONTGOMERY: Well, I'm thinking of communities who might apply for pieces of bigger projects or projects that lead to bigger projects, but under one of these smaller grant programs. Like you mentioned ‑‑

MR. HOGSETT: So a sponsor in an application would tell why that project is a piece of an overall larger recreation planning effort or something?


MR. HOGSETT: Okay, we'll take a look at it.

COMMISSIONER MONTGOMERY: Where you get a little leverage on a bigger project.


COMMISSIONER FRIEDKIN: To the extent that they're funding a lot of it though, that might get them out of their kind of mission. I don't know.


COMMISSIONER FRIEDKIN: It's something to look at though. Right?

COMMISSIONER MONTGOMERY: In these urban environments though ‑‑


COMMISSIONER MONTGOMERY: ‑‑ how do you define these smaller grants?

MR. COOK: I think that those happen frequently, Tim. I mean, not frequently, but for instance any kind of connection where a trail system, a river system, that connects to parks or connects to communities, you know ‑‑ I think about the little Luling paddling trail and all that brings to communities together in a project, it's very, very conservation oriented, very, very outdoor oriented ‑‑ we encourage those kind of projects in all different fields.

MR. HOGSETT: So does the scoring system. The existing scoring system gives some additional priority to linkage types of projects. It gives additional priority to where, again, the match involves multiple jurisdictions cooperating for part of the match. Greenbelts and those kinds of corridors are typically higher scoring projects.

COMMISSIONER MONTGOMERY: They may have an effect and therefore my question along this point. Do I remember right that a few years back we embarked in-kind so that poorer communities weren't disadvantaged relative to wealthier communities? What did we do with that?

MR. HOGSETT: Always, we have allowed in-kind contributions as part of the match, whether it be work that a city or county can do with their own resources, building roads or building parking lots, or other governments can bring to the table and supplement, and also donations, donations of labor, equipment, materials from the private sector can be leveraged and be a part of the match. Again, those kinds of projects are higher priority projects in that criteria in the scoring system, in that they're providing part of the match from other than just coming out of the budget of the city or the county that's submitting the application.

COMMISSIONER MONTGOMERY: What criteria are you using for valuing the kind? What's the meter in the valuing that in the process?

MR. HOGSETT: In-kind contributions, if it comes directly from the sponsor, is based on the value of the labor, equipment, materials ‑‑ based on what they can justify to us through their accounting process. Labor is based on what they pay them. Equipment is based on, unless they have an auditable set of equipment rates, FEMA equipment rates. Materials are based on whatever their stock value is. We thoroughly audit that, and ensure that the reimbursement is based on that, and that it's substantiated.


COMMISSIONER HOLT: Any other questions for Tim?

(No response.)

COMMISSIONER HOLT: I would authorize staff to publish this item in the Texas Register for the required public comment period. Up next is Item 10, Approval of National Recreational Trail Grant Funding. Tim's up again.

MR. HOGSETT: Thank you, Mr. Chairman, members of the Commissions. For the record, I'm Tim Hogsett, Recreation Grants branch of the State Parks Division. This is going to be proposing funding for an off-road vehicle trail in Crockett County, which is close to the city of Ozona in west Texas. This particular site is about 3,300 acres, and it's 20 miles or so southwest of the city of Ozona, and five or six miles to the south of I-10.

Why are we in this business? Well, we have a federal funding pass-through that provides us resources for trails. Included in that is a requirement that 30 percent of that federal money be dedicated to off-road vehicle trail opportunities. That's because of the funding resource for that federal aid. It's gas tax generated on off-road vehicle use.

We have had, traditionally, not a lot of sponsors for this program. And so, we've been able to fund a little more freely the applications we've had with less competition than we've had in our non-motorized trail program.

We're also in this business because of legislative mandates. The 78th Legislature took this kind of activity out of the streambeds, with a couple of exceptions. It took the ability to use our streambeds for off-road vehicle traffic. At the same time, it directed us, Senate Bill 155 directed us to begin to develop plans and eventually facilities to compensate for that, to provide opportunities for these folks to participate in the recreation that they enjoy.

The next session of the legislature enacted a specific program where we are allowed to sell stickers to off-road vehicles. At least theoretically, that money comes back to us and can be used to supplement these federal grant funds, again to provide opportunities for off-road vehicle recreation. It's a legitimate form of recreation. The legislature has told us that we need to help foster that kind of recreation.

This specific project came to us in 2005. It was really pretty controversial when it came in. It was originally the acquisition of this property in west Texas, 3,323 acres. Frankly, there was a lot of adjacent landowner opposition to this. This big map, the yellow square is the property. The yellow name tags, if you will, are adjacent landowners. They were really all pretty much opposed to this. It came before the Commission. We brought this application to you the first time for the acquisition. They voiced their opposition.

We then worked with them, had some public hearings out there, brought it back as an acquisition project, and they were still opposed, but you granted us the authority to go ahead and allow a nonprofit who was to sponsor this, the Texas Motorized Trail Coalition, to be granted the money to acquire this property, contingent upon that no use of it or development of it would occur until we had gone through the process of thoroughly vetting this project with that community and with the adjacent landowners by doing a formal management plan of the facility.

We've since done that. The land was bought in 2006. It's closed down, not currently publicly accessible. The management plan has been done. We have conducted public hearings in Ozona. We have met with each and every individual landowner. I can't tell you that they are totally happy with it. I don't think that they would ever totally be happy with it, but I think that they are convinced that this will be a good neighbor kind of relationship and that this group, Texas Motorized Trail Coalition, have a proven track record on another site near Gilmer in north Texas, and that they are, and can be, will be, good stewards and good neighbors. We'll obviously be continually closely monitoring it as development begins if you give us permission to make this grant for the development portion of this project.

It's a little difficult to see, but there is a map showing the proposed trails, if you will, within this 3,300-acre site. We have done environmental assessment in terms of endangered species issues, archaeological issues, and we feel that the plan that is proposed will take those issues into account adequately. Again, we've reviewed the management plans and hopefully answered the adjacent landowners questions, as well as the community's questions on things such as law enforcement and fire protection and other issues that came up in the review process.

So having said that, tomorrow, staff is going to be recommending ‑‑

MR. COOK: Tim?

MR. HOGSETT: Yes, sir?

MR. COOK: Tim, I think it's real important, particularly for the new commissioners, that you speak to the landowner that this property was bought from was a willing seller. He was very, very supportive ‑‑

MR. HOGSETT: Yes, he was.

MR. COOK: ‑‑ very, very helpful to the process. Just a little bit of history, the local community, county commissioner's court, city council as I recall, were supportive throughout and continue to work with us. This has been a long and quite frankly a difficult process, but I think the community is going to pull together there and we're going to be okay.

MR. HOGSETT: I do as well.

MR. COOK: I'd like to point out that willing seller thing. That's important to us.

COMMISSIONER BROWN: I think the approval was a huge issue.

MR. COOK: Yes.

COMMISSIONER BROWN: I think the Chamber, didn't the Chamber there support it also?

MR. COOK: Yes.

MR. HOGSETT: They were the forerunner bringing this thing forward. It's looked at as very much an economic development issue for that community.

MR. COOK: Right.

MR. HOGSETT: The Gilmer model was very much that way. In fact, we produced a video, that we'd be glad to share with you, where we went and interviewed folks in Gilmer and neighboring landowners, neighbors to this other park that this group, TMTC, has. We interviewed the county sheriff, the Chamber of Commerce, the neighboring landowners, and really they were really turned around in their opinion after having experienced living next to that facility for a couple of years. We hope that this will be very much the same model.

COMMISSIONER HOLT: Thank you. Any other questions? Are you done on this one?

MR. HOGSETT: I'm finished, yes, sir.

COMMISSIONER HOLT: Any questions for Tim?

(No response.)

COMMISSIONER HOLT: This is one we will be voting on tomorrow. If there's no other discussion, I will place this item on the Thursday Commission meeting agenda for public comment and action.

Tim, thank you. You're up one more time for Committee Item 11, Local Park Grant Funding for Projects Identified by Appropriation Rider.

MR. HOGSETT: This one should be short. As part of the appropriations process we received, as I mentioned earlier, $15.5 million a year for competitive grant funds for the next two years. On top of that, the legislature gave us a list, if you will, of 18 projects for about $16.8 million, that they said, these projects in these communities, you will give grants to, matching grants, and you need to move forward from there.

We're bringing, tomorrow, two of those to you. One is from the City of Houston and the other is from the City of Weslaco. The Weslaco project ‑‑ and let me say this, I honestly believe that we will make really good recreational projects out of all of these riders as we call them, these 18 projects. In spite of the fact the legislature has given us specific guidelines on where to put the money, all of them will meet the requirements of the program. They will require match. I think we can, through working with them closely, make ‑‑ it might not have been the most competitive projects ‑‑ but they will be good, solid outdoor and indoor recreation projects at the end of the day.

The Weslaco project is for the construction of a 7,000-foot building. It's a nature center, a small nature center in the city that they plan to use as the focus of their interpretive efforts for that nature center. This is the largest single appropriations rider.

The piece of property in northwest Houston, just inside the loop, that was owned by the school district, 20 acres of property right in the middle of an older subdivision. It's an island of green within the subdivision. The school district needed to divest themselves of property. The city has already, through the Houston Parks Board, acquired 15 of the 20 acres. The legislative appropriation is to complete that with a quite expensive, but quite important filling out of that green space and putting it into the public trust of the City of Houston. So that's what this project is about.

We're going to be requesting that you endorse these projects and allow the staff to enter into contracts.

COMMISSIONER HOLT: Questions for Tim?



COMMISSIONER BIVINS: In your presentation before on these park grants, you put a number of $15.5 million per fund. Then in this presentation, you have a number of $16.685 million.

MR. HOGSETT: Okay. It's $15.5 million per year for each of the next two years. That's the two $15.5 millions. So that's $31 million. Plus, on top of that, there's an additional $16 million for these appropriation riders.

COMMISSIONER BIVINS: These are additional riders?

COMMISSIONER HOLT: For a total of $47 million.

MR. HOGSETT: This is $47 million, $48 million of new park money for grants for local parks ‑‑


MR. HOGSETT: ‑‑ of which, of that about $31 million will be within the competitive process.


COMMISSIONER HOLT: How are you doing timewise on the 18 stipulated to us by the legislature?

MR. HOGSETT: I've met or talked personally with all but two of them.

COMMISSIONER HOLT: Okay, so it's moving along.

MR. HOGSETT: We've got the next two full fiscal years in the legislation to enter into contract with those. My hope is that we will have all of those before you, most of them if not all of them, in this '08 year.

COMMISSIONER HOLT: In the '08 year, okay, that's not bad. I hope we can, for obvious reasons.

MR. HOGSETT: They're all unique, they're all challenging, and they all require some special attention and guidance if you will.


MR. COOK: Tim is so diplomatic.

COMMISSIONER HOLT: He's very diplomatic.

MR. COOK: Very diplomatic ‑‑

COMMISSIONER HOLT: He has to be in the job that he's in.

MR. COOK: ‑‑ and I compliment him.

COMMISSIONER HOLT: I do compliment you because I know a lot of times there's a lot of push and pull and a lot of politics in these particular local grants.

MR. HOGSETT: This is really the only place where politics is ever entered into the program, to be honest with you.

COMMISSIONER HOLT: Yes, because other than that, it's bidding competitively.

MR. HOGSETT: Yes, sir.

COMMISSIONER HOLT: It's been a pretty good process really.

MR. HOGSETT: This isn't the first time this has happened, no, sir. It's happened in previous legislative sessions. This is absolutely the first time it's ever happened to this degree.

COMMISSIONER HOLT: Yes, that amount of money.


MR. COOK: Usually, it's been one or two ‑‑

MR. HOGSETT: One or two.

MR. COOK: ‑‑ projects here or there.

MR. HOGSETT: I guess I ‑‑

MR. COOK: I think the important thing again, folks, is the direction of the legislature. We're going to make these good projects. We're going to make them solid. We're going to try to keep them conservation oriented, and supportive of the community, and ‑‑

COMMISSIONER HOLT: Benefitting the constituents.

MR. COOK: Exactly. We don't operate them.

MR. HOGSETT: We don't have to operate them.

MR. COOK: We don't operate them.

COMMISSIONER HOLT: Or repair them.

MR. HOGSETT: The legislature gave us additional money to do these projects in this session. That might not be the case in future sessions, but this time, we were restored to where we were, what we call full funding of $15.5 million a year.

COMMISSIONER HOLT: And you got this.


COMMISSIONER HOLT: Well, we'll keep trying to get that done for you, Tim.


COMMISSIONER HOLT: Any other questions or comments for Tim?

(No response.)

COMMISSIONER HOLT: Okay. With that, we'll place this item on the Thursday Commission meeting agenda for public comment and action. Is there any other business to be brought before this committee, Mr. Cook?

MR. COOK: No, sir.

COMMISSIONER HOLT: Okay. Thank you, Tim. We appreciate it.

MR. HOGSETT: Thank you.

COMMISSIONER HOLT: Unless there's any other discussion, the committee has completed its business and we'll move on to the Conservation Committee, but I think what we'll do is break. It's 12:30. We'll break for lunch and have Executive Session. Am I correct?

MR. COOK: Yes.

COMMISSIONER HOLT: Am I saying all that right?

MR. COOK: Go ahead and open the meeting.

COMMISSIONER HOLT: I turn it over to you, sir.

COMMISSIONER BIVINS: Thank you, Mr. Chairman.

(Whereupon, at 12:25 p.m., the meeting was adjourned.)


MEETING OF: Texas Parks and Wildlife Commission
Finance Committee
LOCATION: Austin, Texas
DATE: November 7, 2007

I do hereby certify that the foregoing pages, numbers 1 through 157, inclusive, are the true, accurate, and complete transcript prepared from the verbal recording made by electronic recording by Penny Bynum before the Texas Parks and Wildlife Commission.

(Transcriber) (Date)
On the Record Reporting, Inc.
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Austin, Texas 78731