Texas Parks and Wildlife Commission
Finance Committee

March 25, 2009

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

BE IT REMEMBERED, that heretofore on the 25th day of March, 2009, 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: We will now move into, or on to, the Finance Committee, so I'm passing the gavel to myself at this moment. Commissioner Brown is not here today. He's our Finance Chair.

The first order of business is the approval of the minutes from the previous committee meeting, which have already been distributed. Is there a motion for approval?


COMMISSIONER HOLT: Okay. Moved by Duggins, second —


COMMISSIONER HOLT: — by Bivins. All in favor?

(A chorus of ayes.)


(No response.)

COMMISSIONER HOLT: Thank you. Committee Item Number 1, update on TPWD progress in implementing TPWD Land and Water Resource Conservation and Recreation Plan.

Mr. Smith.

MR. SMITH: Thank you, Mr. Chairman. Appreciate it. Just a couple of things you all want to know, and obviously we are halfway through the session, and obviously there's a lot going on, and if some of us look like we hadn't gotten much sleep, there's probably a good reason for it. Just in your presence I want to make sure that you understand the work and leadership that Gene McCarty, in particular, and Harold Stone are doing on behalf of the Agency right now.

They are having to essentially manage all of the machinations of trying to get a $400-million-plus budget through, track and monitor 400 bills, manage the Sunset hearing process, and coordinate all the staff participation in hearings that happen almost every day. So it literally is a Herculean effort to coordinate all of that, and I just want you to know how hard they, and many others, are working on behalf of the entire Agency. And so I want you all to know that.

We have passed out a sheet that shows basically where we stand in the appropriations process. We expect both the Senate and House to pass out appropriations bills sometime in the next week. They continue to work on a host of things. I'm not going to go through this sheet; it changes almost daily in terms of our exceptional item requests, and what's being considered, and what's not. But suffice it to say if you have any questions about it, please, please let me know. But I do think we're making some significant headway in certain areas.

Obviously, as you all are acutely aware, we are going through the Sunset process. Both bills have been filed, sponsored in the Senate by Senator Hegar, and on the House by Representative Harper-Brown. We've just had our Senate Committee hearing on the Sunset bill two days ago, and that went remarkably expeditiously. I think it lasted for three and a half minutes, so we were pleased about the efficiency of that, and we expect a hearing on the House side next week in cultural recreation and tourism under Chairman Homer. So a lot going on on the legislative front, and if you all have any questions about specific things, let me or Gene know.

With that, I'll turn it back over to you, Chairman, as I know we're trying to move forward.

COMMISSIONER HOLT: Sure. Thank you. Committee Item Number 2, our financial overview. Mary is gone, so we've completely changed this financial structure.

Mr. Gene McCarty, please make your presentation.

MR. McCARTY: We haven't changed it at all.

COMMISSIONER HOLT: (Laughter.) Well, I guess maybe some of the people doing it right now, you and I.

MR. McCARTY: You and I, yes.

COMMISSIONER HOLT: Yes. That's right.

MR. McCARTY: It's no longer Chairman Brown and Mary Fields, it's —

COMMISSIONER HOLT: No, that's right. So are we interims? Is that what we are?

MR. McCARTY: Acting.

COMMISSIONER HOLT: Acting. Oh, acting. Okay. Acting.

(General laughter.)

COMMISSIONER HOLT: I get confused on this interim and acting.

MR. McCARTY: Good afternoon, Mr. Chairman, Commissioners. My name is Gene McCarty. I'm Deputy Executive Director for Administration, and acting Chief Financial Officer.

(General laughter.)

MR. McCARTY: What we have before you today is our standard financial overview focusing on the current revenue and budget structures for fiscal year 2009. To get started, let's start with park receipts. When comparing the receipts through January 31st at $11.26 million, we are down .8 percent, or $95,000 under last year's collection at this same time.

You may think this is not good news, but this really is when you take into consideration that these comparables here of $11.35 million against $11.26 million are really not apples and apples. We lost a considerable amount of revenue when we lost Galveston Island State Park and Sea Rim and the Battleship for a period of time. When you take those out of the equation, really you're looking at park receipts at all the other parks being up 3.8 percent instead of down .8. So that's really kind of good news for State Parks.

Moving on to boat revenue, as of January 31st we were at $4.4 million, and this is 12.1 percent down, or almost 306 — $603,000 compared to last year at this time. Again, this is a lot like hunting and fishing licenses where we're down, but we're making moves every month. We're improving, improving. If you'll remember the last time this was presented, it was about at 15 percent down. So we're making some moves, we're about 12 percent down. And if you look at the actual data, the data to date, we're only about 9.6 percent down to date. So we're continuing to make improvements in our revenue stream on boat revenue, and I think that will continue to improve over the spring. So by the end of year, you know, we're hoping to be looking at a lot better picture than we're looking at right now.

When you look at license sales revenue, at $66.4 million, or being 3.4 percent down, or $2.4 million as compared to last year at this time, all categories of revenue, when compared against 2008, are down except for resident hunting. But in the same way as boat registration and titling is improving as time goes by, this license sales are also improving. If you'll remember back when we last presented this to you, we were about 9 percent down. We're now 3.4 percent down as of January 31st, and actually as of today we're only about 2.9 percent down, so. See we continue to improve as time goes by, and, you know, hoping that we have a good weather condition through the spring, and that our fisheries — our fishing license sales recover to a level that our hunting licenses performed at and we should be okay.

COMMISSIONER HOLT: Is that a norm, meaning that, you know, as you started — for both boating and for their fishing as it gets closer to the "season" that it's —

MR. McCARTY: It's a normal for — of course we have a secondary peak in the spring for fishing license sales.


MR. McCARTY: The trend that we're seeing is kind of — and if you can say a norm for a hurricane year, the trend we're seeing —

COMMISSIONER HOLT: Well, that's right.

MR. McCARTY: — this winter is almost the same trend that we saw in Rita and Katrina. We lost a lot of revenue early in September and October, but we regained most of that revenue in the March, April, May time. So it's — we're hoping to be on the same kind of trend that we were with Rita and Katrina and we get people coming back.

COMMISSIONER HOLT: Okay. That's referred to from that. Okay.

MR. McCARTY: Looking at total license sales, when compared to our FY '09, looking at total license sales, at the end of January we'd sold a total of 2.08 million licenses, which is down about 1.2 percent compared to last year. Total hunting license sales was up 1.3, but total fishing license sales are down 9.6, and combos are basically flat at .4 percent down.

COMMISSIONER HOLT: Hurricanes primarily?

MR. McCARTY: Primarily hurricanes. I mean you're really looking at the — our hunting licenses were real slow in coming on. We had a bad October. And then November —

COMMISSIONER HOLT: They just came on.

MR. McCARTY: — they just came on.

COMMISSIONER HOLT: I'll be darned.

MR. McCARTY: And so we're hoping to see that same kind of trend in fishing. I mean we lost a lot of fishing license sales in the area. There was some areas down along the coast that license sales were 75 percent down in that area.

COMMISSIONER HOLT: Yes, and Carter pointed out that's where people are buying — that's where they buy their licenses. I mean that's where your concentration of fishing —

MR. McCARTY: Right.


COMMISSIONER MARTIN: Do we sell very many of the lifetime licenses?

MR. McCARTY: Not a whole lot. We don't sell a lot of lifetime licenses. I mean I think we sell a few hundred a year.

COMMISSIONER MARTIN: You know, I don't know if it's —

COMMISSIONER HOLT: Of course, those are gifts.

COMMISSIONER MARTIN: — a big problem, but I get a lot of complaints that hunters go into some of these different areas that sell the license, and the person doesn't know how to run the machine, so —

MR. McCARTY: We do have that problem. I mean our license deputies —


MR. McCARTY: — are contract deputies and, of course we do a lot of training with them, but if they also — you know, they're Walmart clerks that aren't paid a lot and there's a lot of turnover, so we do have that problem with — and that problem is really a real issue for us at the early time of the year where we get long lines and we got a clerk that's not well-trained and is slowing the process down. It's getting better, and certain vendors are performing better than others. I mean I'd have to say, you know, that Academy is doing a great job.

COMMISSIONER MARTIN: Yes, they're doing good. That's what I always tell them.

COMMISSIONER DUGGINS: But to your point, I raised that issue with you a few months ago when I went out to get them in Fort Worth, and I would like to see us take the — redouble our efforts to sell them over the web page —

MR. McCARTY: Yes, sir. We're —

COMMISSIONER DUGGINS: — and open a link that when somebody comes on to the web page, it essentially markets. I just think we can market a lot of our stuff better than we're doing. No criticism — I'm just saying we ought to look at that, and that's such a bargain for people and a lifetime of commitment to this mission if we can get people to move on it.

MR. McCARTY: Yes, sir. Yes, sir. Based on our conversations, we're developing a whole plan for that and also for Law Enforcement offices.


MR. SMITH: Gene, do you want to say something about how lifetime license fees are managed in endowments, and the corpus is are kept intact, we only get to use the interest?

MR. McCARTY: Yes, one of the issues about the lifetime license is it doesn't come into our revenue stream.


MR. McCARTY: It goes into an endowment. And up to this point we've — not that endowment revenue has not been part of our revenue stream, we're trying to work with the legislature right now to make a method of finance switch so that it does become part of our revenue stream and help — and begins to start funding some of the initiatives in the Agency.

COMMISSIONER MARTIN: So where does the money — when can the money be used, or where does it go, or —

MR. McCARTY: Well, right now it just rolls over into — it's just rolling and compounding. And so it's —


MR. McCARTY: Well, we're asking for access to it through the appropriations process. You have to go through the appropriations process to get access to it, and so we're asking for that this year.

COMMISSIONER MARTIN: See, I have no idea.

COMMISSIONER BIVINS: Why would a lifetime fee be any different from a normal license fee?

MR. McCARTY: Well, it's principally because you're taking revenue out of the revenue stream because that person —


MR. McCARTY: — and future revenue out of the revenue stream, and so the idea was to create a mechanism by which you could get that long term revenue back into the revenue stream through building an endowment.

COMMISSIONER BIVINS: Why not amortize it over the life of the — the estimated life.

(General laughter.)

COMMISSIONER HOLT: I mean, you know, in my case my father gives it all to his grandkids when they're born. So I mean, you know, and then you've got some that buy it at 70 years old. So I guess you can statistically come up with some average.


MR. McCARTY: Well, it —

COMMISSIONER DUGGINS: I just think we ought to get the money.

COMMISSIONER HOLT: Well, no, naturally.

MR. McCARTY: — it really has to do with the appropriations process and how you get money appropriated to you by the legislature.

COMMISSIONER HOLT: Yes, it has to be appropriated every two years anyway.

MR. McCARTY: And they will not then — one legislative session will not bind future legislation. So it's very difficult to get those kinds of long term revenue streams set up like that.

MR. McCARTY: When comparing our FY '09 revenue collections as of January 31st to the annual revenue estimates, we're doing pretty well, despite being down in most of our revenue sources.


MR. McCARTY: With 42 percent of the year has elapsed and we've collected about 61.5 percent of our Fund 9 and about 41 percent of our State Parks revenue, about 35 percent of our local park fund, and 87 percent of our others category. That others category is driven by a couple of fairly large donations that have come into the Agency principally as shrimp license buy back, and of the donations for the construction of the Game Warden Academy.

Our overall budget for the Agency has increased by $16.5 million since our last Commission meeting in November, taking our budget to $462.8 million. Budget adjustments were made during the months of December and January, are summarized on this slide. The largest adjustment relates to federal grants. That's principally the grants section there, and $13.4 million. Those grants are pass through grants to Travis County for a Grandview Hills acquisition of Balcones Canyon Land Preserve, and that was almost $11 million. Again, the donations section is driven by shrimp license buy back, and the interagency contracts — or a couple of contracts for border security and TCEQ.

With 58 percent of the fiscal year remaining, we have about 61.2 percent of our budget remaining. All categories other than operating equipment are basically on track. Operating is a little bit ahead, but we buy a lot of our materials and so forth up front. We also pay a lot of our rents and our services up front, so this is not to be — this is not unexpected. And the capital expenditures are running a little behind, but that's also normal for us, just from the standpoint of the amount of time it takes to carry a capital construction project to fruition. So I don't see anything unusual in terms of our budget versus expenditures.

With that I'll take any questions that you may have.


(No response.)

COMMISSIONER HOLT: They're being really nice to you, Gene.

MR. McCARTY: They are; they're taking pity on me —


Okay. Why don't we move on then? Committee Item Number 3, license and boat registration fee.

Gene, you're up again. Or somebody's up again.

Ah, Lydia, you're up on this one?

MS. SALDAÑA: I'm going to help him out.


MR. McCARTY: I've got my sidekick here.


MS. SALDAÑA: We really miss Larry, don't we?

MR. McCARTY: I've pulled in the troops for support.


MR. McCARTY: For the record, my name is Gene McCarty. I'm Deputy Executive Director for Administration, and I have with me today Lydia Saldaña, Director of Communications. She's going to help me talk a little bit about some of the survey data that we've got concerning the acceptance of a fee increase, and she's also going to help talk a little bit about a couple of our new, very exciting revenue generating projects that we may be proposing.

So what we're here today to talk about is a proposed increase in license and boat registration fees. Just to give you a little background, Texas Parks and Wildlife has a long history of I guess having long periods of time between fee increases. Our last fee increase for Parks and Wildlife was done in 2004; prior to that it was done in 1996. We have a tendency to wait long periods of time and we have a tendency to make fairly large fee increases. The fee increase in 2004 was approximately 17 percent, and the fee increase in 1996 was approximately 30 percent. That creates a bit of a problem for the Agency. We get into this feast and famine kind of situation where we get revenue, and then we — for a long period of time we absorb a number of increases in operating costs, which puts us in a situation where we're needing money again. And, in fact, since 2004, operational costs of the Agency have increased 6.1 percent per year, which brings us to the point where we're back in a situation where we need a fee increase to continue to be able to provide the level of services that we provide to the hunters and fishermen and boaters of Texas.

Just to give you a little background on the fee increases that are going on other places in the United States, seven states have recently increased fees in the last two years. That's Alabama, Alaska, Arizona, Colorado, Florida, Minnesota, and Montana, and their fee ranges — increase range from 20 percent to 60 percent. Two states are currently proposing fee increases for 2010, which is the same time that we would be proposing this fee increase, and that's Idaho and Oregon, and you can see their fee increases are proposed at 15 and 20 percent. I'm told that they're based on public comments and other things. They may be reconsidering that level of fee increase, and maybe ratcheting that down a little bit.


MR. McCARTY: Let me give you a little bit of an update on what we've done since 2004 and how we can use the funds that we've got. You know, as one of our major focuses at the Chairman's direction has been the increase of hunting opportunity of both public and private lands, the popular Private Lands Leasing Program has expanded since 2004 and provided additional opportunities for big game hunting, game birds and small game. The Dove Lease Program, which is immensely popular with hunters, has grown to more than 140 units, and more than 70 percent of these opportunities are close to major metropolitan areas of the state.

Another key focus has been assisting landowners with technical guidance. And since 2004 we've grown to 22 million acres under Wildlife Management plans. We've graduated 162 game wardens from the Game Warden Academy, and we have another 50 wardens — or another 50 cadets being trained there right now. The 50 cadets that are in the Academy right now today will be the first to graduate from our new Game Warden Training Center in Hamilton County, which we're going to be breaking ground on next month. We've stepped up our efforts in boating safety including an outreach campaign called Nobody's Waterproof.

On the fishery side, you know, since 2004 both inland fisheries and coastal fisheries have stocked over 186 million fingerlings into Texas waters. And we've also brought fishing closer to the urban areas by developing neighborhood fishing programs. This provides fishing opportunities close to home for Texans all over the state. And as you all know, we've also broken ground on a new fish hatchery in East Texas in Jasper Country.

On the coastal front, we continue to grow our artificial reef program. Since 2004 we've added 20 sites and that's brought with it an additional $4 million in donations to support those sites. Progress also continues on implementation of the Sea Grass Conservation Plan. The Commission established regulations, and we continue to evaluate their conservation effectiveness. As you heard from Carter earlier, the Abandoned Crab Trap Program continues to be effective, and since 2004 we've collected 12,000 additional abandoned crab traps in coastal waters.

So the question is, what do we need this money for? What are we going to do with this money? And I think the real issue is that we need this to address growing demands for such things as I originally discussed in terms of inflation and increased expenses. We have aging infrastructure all over the state. We have an increased demand for aquatic vegetation control, increasing demands for wildlife technical guidance to private landowners, increased demand for public hunting opportunities, providing fishing opportunities in urban areas, and as you heard in a presentation earlier, we need to address recruitment and retention challenges in our fisheries and wildlife professional positions.

So what are we proposing? We're discussing, or we're asking to propose what we call a 5 percent roll up plan, which is basically an increase of licenses, 5 percent rolled up to the next highest dollar. What this really equates to is approximately a $2 to $5 increase for most of our popular recreational licenses. It's more than that on a certain number of licenses, and those are some of our very high dollar licenses that are associated, mostly associated with commercial operations.


MR. McCARTY: I mean you know that many of our commercial licenses are $1,000, and so a 5 percent roll up on that is — or a 5 percent is certainly more than $2 to $5, but for the vast majority of the licenses that we sell, the recreational licenses that we sell, it's less than $5 in terms of the total cost to the individual. When you apply this 5 percent roll up across all our licenses, it actually ends up being a 7.1 percent total increase in the price, in the total amount of revenue. And this proposal would bring in about $3.6 million a year in additional revenue.

This kind of gives you an example of how that applies across our most popular license packages. Our super combo is currently $64; it would go to $68 — that's a $4 increase. Our resident hunting license is $23; it would go to $25 — that's a $2 increase. Our resident fishing — freshwater fishing license is $28; it would go to $30 — that's a $2 increase. And our resident saltwater fishing license is $33; it would go to $35 — that's a $2 increase. Our most — our least valued license — or not our least — our licenses that are the cheapest license, which is our senior license, and our youth license, both of which are currently $6, we just go up one dollar — go up to $7.

Moving on to boat registration and titling. Kind of similarly, we did our last boat registration and titling increase in 2004. I want to remind you that boat registration is for a two-year period. So when you register your boat, it's not like you have to register it every year; it's every two years. So for what you're getting is — for the cost you're getting it's two years worth of value. These increased costs are associated — or the increased revenue would be associated with improvements and updates to our boat registration system. In fact, we just, 12 days ago, opened up online registration for vessels, which is a really, really good thing. In that 12-day period we've registered about 506 vessels online, and about — I think it was $24,000 —


MR. McCARTY: — in revenue. We have increased costs associated with boat theft enforcement, boating fuel costs for the game wardens, and as our lakes and waterways become more and more crowded, we have more and more issues and concerns about boating safety and BWI enforcement.

Again, we would propose what we call a 5 percent roll up to the next highest dollar. I have two exceptions to that rule, and those are trying to get our licenses a little more commensurate with the value of the vessel, and I'll go through that in just a minute. The additional revenue generated by this 5 percent roll up would be about $1.7 million.

Just kind of going through what this means to the average boat owner, if you own a vessel that's less than 16 feet, you're currently paying $30. You will be paying — we propose $32. Remember that's two years, so that's $16 a year for boat registration. Boat registration on a 16-to-18 foot vessel is currently $50; it'd go to $53. Again, that's two-year registration, that's, you know, $26.50 per year. Just from a personal — just from my personal experience, I own an 18- foot boat and I pay $50 a year for the trailer the boat sits on for trailer registration.

COMMISSIONER HOLT: Fifty dollars a year?

MR. McCARTY: Yes, a year.

COMMISSIONER HOLT: And this $53 for two years — well, you want to raise it to $53 for two years.

MR. McCARTY: Yes, sir. Yes, so the boat — the actual registration of the vessel, which is what I really have it for, is half of what it costs just to drag it down the highway. Boat registration, and this is — these are the exceptions here, boat registration for vessels 26 to 40 feet in length, which is currently $70, we would propose to go to $110.

Obviously that's way over 5 percent, but we're trying to get that a little bit more commensurate with the value of the vessel, and also looking at some things that are going on in some other states, it's on the high end of what's going on in other states, but it's within the range of what's going on in other states. And boat registration for vessels over 40, which is currently $90, we'd go to $200. You know, titles are currently $25, we'd go to $27, and that's still considerably cheaper than a vehicle title with TxDOT.

COMMISSIONER DUGGINS: Can I ask you a question?

MR. McCARTY: Yes, sir.

COMMISSIONER DUGGINS: What number of — in terms of numbers of boats registered, would you not agree that the vast majority fall in the 16 to 26 foot range?

MR. McCARTY: Absolutely. Sixteen to 20 foot is about 180,000, is the average.

COMMISSIONER DUGGINS: Number of registrations?

MR. McCARTY: Yes, sir. Right. And then less than 16, there's about 107,000.

COMMISSIONER DUGGINS: And when we have fishermen and ladies who fish from out of state who come to tournaments, do they have to register their boat for the —

MR. McCARTY: No, sir. If they've got a valid registration in another state, they can put the vessel —

COMMISSIONER DUGGINS: So we don't have any kind of temporary tag?

MR. McCARTY: No, sir. As long as their registration is valid and, you know, proper registration in another state, it's okay.

COMMISSIONER HOLT: Is that true vice versa?

MR. McCARTY: Yes, sir.

COMMISSIONER HOLT: Are we honored if we go to Florida or something?

MR. McCARTY: Yes, sir. Let me — we have one other — I have — we have another — a number of other additional revenue opportunities we'd like to talk about. One of them that came forward from Law Enforcement is to implement an administrative fee of $100 for reinstatement of revokes licenses. You know, TxDOT does this in terms of your driver's license, if your driver's license is ever revokes, you have a fairly significant charge to get your driver's license reinstated.

When we revoke an individual's license of any type, whether it be a commercial fishing license or whether it be a recreational fishing license, well, we would like to implement a fee to allow that individual to reinstate the license. So that's one of the initial new possible revenue generating potentials there.

And I'm going to turn it over to Lydia at this point to talk a little bit about another opportunity.

MS. SALDAÑA: Thank you, Gene.

I want to talk to you about an idea we'd like to implement this year. It's an annual lifetime license drawing. And I want to point out that Carter brought this idea to us from the Texas Freshwater Fishery Center last year. When Carter first started he made the rounds of town meetings and this was an idea that came up from, I believe it was a maintenance specialist at the Texas Freshwater Fishery Center had this idea. And Carter came back just on fire. We've got to look into this and really see if it'll work. So there's been a team of folks that have been looking at all of the license fee structure, and this was one of the ideas that we've tossed around.

This is where we are right now with the idea. I'm going to present to you what — it's our kind of best idea of what we can do this year. The idea is that there would be an annual lifetime license drawing, and it would be an opportunity for ten folks to win lifetime licenses. The entry fee would be $5, and we'd begin the sales push with the licenses that go on sale on August 15. The marketing message would be, throw your name in the hat and enter the lifetime license drawing for a chance to hunt and fish forever for free. There would be no limit on the number of entries that anybody could buy, and it could be transferred to a friend or family member within 30 days of winning.

The target customer is going to be similar to what our target customer is for the Big Time Texas Hunts, which is our super combo customer, our combination folks that have a combination license, and we think this will be pretty successful. I think like Big Time Texas Hunts, we'll probably start slow. When we began that program back in 1996 I think we had about 6,000 entries, but it has steadily grown over time. We would have a big promotional push around the time licenses go on sale, so again, that would create some excitement about licenses being on sale. We would do another push in the spring time to get anglers, and then we would draw it on August 1 of next year. That way we would have a chance to inform those folks who won before they have to buy their next year's license, and would also create some excitement for the next promotional year and for licenses in general.

So that's kind of where we are on that. We will market it in all the ways that we possibly can with an emphasis on internet marketing. Certainly we have all of our communication vehicles that we would use, but I think this will generate a lot of excitement and I think that we could — you know, I think we'll do some good with it. There were a lot of ideas on the table. The folks involved in this team are all very creative folks, and we tossed around every imaginable iteration of this. But one of the things that we came down to, you want to keep the message real simple. And keep the first year promotion pretty simple as we get word out about it, and as we go forward we might try some twists or tweaks on it, but we thought this year keep it simple, a very simple message, and launch it in a big way with the sale of licenses this year.

COMMISSIONER BIVINS: Would you be promoting this at every point of sale?


COMMISSIONER BIVINS: And then there's ten, you said there was going to be ten available.

MS. SALDAÑA: Correct. And that number is rather arbitrary. I mean we tossed around several numbers. One thing that we kind of harken back to was during the Big Time Texas Hunts several years ago, we went from offering — and if Linda's in the room she can help me on this — but I think we went from offering ten hunts, the white-tailed hunt, to 20. And we didn't see that big of a jump in revenue. So we kind of took that learning, and we just started — we just thought we would start with ten and kind of see where we go. We also have to keep in mind obviously that we pull these folks out of our revenue stream, so we want to think about that as well, and I think ten is a good number, I think it's going to generate some excitement, so that's where we would recommend starting.

COMMISSIONER BIVINS: So would you have a drawing here in Austin, or —

MS. SALDAÑA: It would be just like we draw Big Time Texas Hunts. I mean just computerized drawing, and then obviously make a huge deal about those winners.




MS. SALDAÑA: Any other questions about that?

COMMISSIONER HOLT: Any estimates on how much money you could raise?

MS. SALDAÑA: Well, that is — it's a guess. We think that that — the only other state doing it is Washington, and they're getting about a .7 return. We think we could get about a one-percent return on our target audience, so that would be less than $100,000, but that's kind of where we started with the Big Time Texas Hunts Program. We started with our first year at less than $100,000 and now we're bringing in close to $800,000 in revenue, so —


MS. SALDAÑA: Yes, I think we can do a better job of marketing than Washington, so.


MS. SALDAÑA: I want to go through some survey data as well. We'd like to share some of the data with you about how Texans feel about the job we're doing and how they feel about a potential fee increase. And somebody earlier this morning referenced this same study. In 2001 we contracted — it was a Texas Tech study, and we contracted with Mark Duda from Responsive Management, a very well-respected, well-known surveyor. And in this comprehensive statewide survey, and again, this is back in 2001, over 90 percent of those polled were either very satisfied, or somewhat satisfied with Parks and Wildlife. In addition, at that time, nearly half of those polled supported an increase in license fees to increase conservation funding for Parks and Wildlife.

Now more recently, in 2006, Texas A&M did a study. This was anglers, and it showed that support for Parks and Wildlife continues to be very, very strong among the — in the case among hunters and anglers. This survey showed that of all licensed anglers, 89 percent of licensed resident anglers were moderately to extremely satisfied with the job done by Parks and Wildlife, and that number increased to 91 percent for saltwater anglers. Now it's probably never a great time to propose a fee increase, but certainly in this economy we were — are very concerned about the impact of a proposed increase. We really thought long and hard and talked about this a long time. So we wanted to make sure to get a pulse on this before going too much further down the road.

Just last month, as some of you may know, the Texas Coalition for Conservation commissioned a poll to ask Texans about the sporting goods sales tax, and they also added a few additional questions to get a pulse of how folks felt about a potential hunting and fishing license increase. The results showed — in my view it was surprising strong support, and the support increases when the situation is explained. Fifty-nine percent of those polled supported a hunting and fishing license fee increase to finance conservation. When they were then told that we hadn't had an increase since 2004, support increased to 63 percent, and then support increased to 72 percent when informed that the increases will be less than $5. Again, I think that it underscores the importance of communicating the different things that we're talking about here, that it's a relatively small increase, and that we haven't had an increase in a while, and that what the money goes to support. So certainly this information will be very mindful of it as we put together a communication plan.

And we're requesting permission to publish these proposed changes in the Texas Register for public comment. We'll be happy to take any questions — Gene will be happy to take your questions.

(General laughter.)


COMMISSIONER DUGGINS: No mention of increasing the lifetime license fee.

MR. McCARTY: We've got a little thing going on right now with the legislature that we're working on, and we're hoping that will pan out to where the legislature actually does a statutory increase. The way the fees are worked in Texas is that the fee is delegated to the Commission, the ability to set a fee is delegated to the Commission with a statutory floor. So right now the statutory floor on the lifetime is $300. And we're talking with members of the legislature to make that statutory floor higher, even higher than what we currently have the license at, and they're — it's a bit of a trade for something that they want, but I think it will work out.

COMMISSIONER DUGGINS: Well, you're proposing to go to $68 for a combo, super combo.

MR. McCARTY: The actuarials on that go down. I mean they're already bad, just to tell you the truth, they're already bad. If we don't increase the lifetime, they will get worse.

MS. SALDAÑA: But you asked about the super combo?


MS. SALDAÑA: Oh, okay. I'm sorry about that.

COMMISSIONER DUGGINS: — just looking at the — I mean looking at if you extrapolate out $68 over a lifetime —

MR. McCARTY: Over time the actuarials — the actuarials on the lifetime right now are not where we want them to be. We do want to increase it, but right now I'm trying to work through this legislative fix. If that doesn't work, then we'll be back.

COMMISSIONER DUGGINS: But should we — is there a way to tee that up for the May meeting in case it doesn't happen, so if the Commission were to —

MR. McCARTY: Yes, absolutely. Yes, sir, and I would —

COMMISSIONER DUGGINS: I would like to suggest we do that.

MR. McCARTY: That will be fine with us. We would like that.

COMMISSIONER HOLT: How many do we sell in a year, lifetimes?

MR. McCARTY: Let's see if I've got it on the list here. Oh, I don't have it on this list.

MS. SALDAÑA: We don't push them very strongly —

COMMISSIONER HOLT: No, I was going to say —

MS. SALDAÑA: — because of the — yes.

COMMISSIONER HOLT: I'm not looking for an exact number, but I thought you indicated it was in the hundreds.

MS. SALDAÑA: Not many.

MR. McCARTY: It's only in — it's in the hundreds, I don't know the exact number.

COMMISSIONER HOLT: Yes, I'm not saying we shouldn't do it, but I'm just trying to indicate to you that — you're not talking about dollars.

MR. McCARTY: It was on our list, it was on our list —


MR. McCARTY: — and we didn't — we're working with the legislature right now and we didn't pursue it. But I would like to keep it on the list. Now the issue is right now it's $600. It's $600 for a hunting or fishing, and it's $1,000 for the combo.

COMMISSIONER HOLT: A thousand for the combo.

MR. McCARTY: To get your actuarials where you want them, you really need to be talking about the individuals being approximately $1,000 and the combination being about $1800. That was our original proposal —


MR. McCARTY: — but that's a pretty big jump. But that's where you really need your actuarials to be on that lifetime.

COMMISSIONER DUGGINS: If it's where it needs to be, it's where it needs to be. And I know there aren't very many of them sold, but I also think we don't market them at all.

MS. SALDAÑA: We don't. Yes, we don't. That's correct.

COMMISSIONER HOLT: I don't disagree. Your issue is it's endowment —

MS. SALDAÑA: Purposefully, yes.

COMMISSIONER HOLT: — dollars and it doesn't — if we don't spend that, we don't get the money, I mean it's a way to look at it. Sorry to say it that way, but it's true.

MR. McCARTY: No, you're right. We have absolutely no problem with adding that to this proposal for the purpose of getting public comment. And I appreciate that very much.

COMMISSIONER HOLT: Sure. And, again, that's a good point, I think we should. Also, we just need to — you know, the problem is the jump is so large we want to be really sensitive. It's all relative to the economy we're in right now.

COMMISSIONER MARTIN: I didn't realize that we didn't get the money.

MR. McCARTY: Well, we don't get it now, but we're asking through the legislative process to be able to utilize that and not limit it extremely, at least be able to utilize the interest earned that's off of that endowment.

COMMISSIONER HOLT: Offsetting deficit with that.

MR. McCARTY: Yes, sir.

(General laughter.)

COMMISSIONER HOLT: Any other questions on this?

(No response.)

COMMISSIONER HOLT: And we definitely need to go out and get the public with this thing and talk about it, and we'll have some sensitivity to it. We'll be very sensitive to the citizens of the State of Texas, at the same time this is the right thing to do. It's just unfortunate the time we have an economic down turn.

COMMISSIONER DUGGINS: And the proposed increases are very modest.

COMMISSIONER HOLT: No, it's still very — yes, and we're trying to be very fair about this, and then maybe try to get eventually some kind of process in place where it's done on a more regular basis. And you saw one for — I mean before 2004 and I was here for 2004. It was 1996, been eight years. I mean that's just — we went way too long there. So we're doing a little better, but.

MR. McCARTY: It is a very modest proposal at five percent rolled up.


MR. McCARTY: And like I said, that ends up being about 7.1 percent across the board. But for those more expensive licenses, as I talked to, there's a lot of more expensive licenses out there that are mostly commercial licenses. It really is, it's just five percent because they're so large that there's not a roll up.


MR. McCARTY: And so it truly is just five percent because I mean there are — I mean we do have a license out there which we had action on in the last year, like the midhaven [phonetic] boat license, which is a $4,000 license. So, you know, five percent on $4,000 is, you know, is a couple of hundred dollars. But at the same time there's only 12 of those licenses sold, so it doesn't mean a lot in revenue.

COMMISSIONER HOLT: Okay. Any other questions?

(No response.)

COMMISSIONER HOLT: Great. Then I will authorize staff to publish this item in the Texas Register for the required public comment period. And I assume you'll be bringing it back in May to —

MR. McCARTY: Yes, sir.


MR. McCARTY: We'll bring it back —


MR. McCARTY: — in May, we will have public hearings between now and then —


MR. McCARTY: — and we will have a lot of news —

COMMISSIONER HOLT: And you'll do those on a statewide basis —

MR. McCARTY: Yes, sir.

COMMISSIONER HOLT: — since it obviously affects all of our citizens. Okay. And all our constituents. Great.

MS. SALDAÑA: Thank you.

COMMISSIONER HOLT: Committee Item Number 4, audit reports. Mr. Scott Boruff and Mr. Carlos Contreras, please come up.

Gene, thank you. Thank you, Lydia.

MR. BORUFF: Mr. Chairman, Commissioners, Director Smith, my name's Scott Boruff, Deputy Executive Director of Operations. I'm here today to give you what I hope is the swan song in terms of our reporting on the State Auditor's report on State Parks. We are, for all practical purposes, completed with that project, but I did want to give you a very brief update, and realizing how late in the day we're getting, I will focus on the brief part of that.

As most of you know, rolling into the 80th Legislative session, the session before this current session, the Agency had made some significant requests of the legislature for additional funding for State Parks. As you will recall, we had partially closed 52 of our state parks preceding that legislative session, and when I say partially closed, I mean limiting the hours and reducing some of the operations at almost half of the parks that we had at that current time. So the State Parks in Fund 64 were in bad shape in terms of the funding available to run the parks. The base budget then was about $57 million in operating for State Parks, and we made about a — a request for an additional 40 percent, another $23 million in funding for operations. We made bigger requests than that, but I'm talking about for operations in State Parks.

So it was a significant request, and rolling into the session the legislature directed the State Auditor's Office to come out and take a look at the appropriateness and reasonableness of those requests. So in December of '06, just before the beginning of the session, the State Auditors came out, began their audit of our state parks system, and they stayed here for about three months, through around February of '07 after the start of the last session, and then in March, the middle of March, they issued their report containing 48 specific recommendations for State Parks. Those recommendations were broken into four main categories, which I'm going to share with you a little later. They were in terms of visitation and reporting, park management, capital repairs and fiscal controls, those were the four major areas that they looked at.

I will say that our immediate response when we got the audit was to the then Executive Director, Bob Cook, and Chairman Fitzsimmons asked me to make sure that this project rolled out appropriately, that we had appropriate response. So we had executive office oversight from day one. We immediately went out and developed a cross-divisional team where we pulled in all the divisions that had anything to do with this, primarily State Parks of course, Administrative Resources relative to the fiscal controls, Information Technology, and Infrastructure, who had to do with the capital projects. We put together a very robust team within the Agency which included folks from here in Austin, but also from the field. Obviously this is an important field exercise.

We immediately created a new shop in Administrative Resources, headed up by Kim Dudish, of about ten folks, I believe, to put together an oversight group in Administrative Resources to help us develop appropriate fiscal controls and make sure those things rolled out appropriately in the field. Per the direction of the legislature, we hired 16 auditors, under the direction of Mr. Contreras, who's up here with me. Mr. Contreras came on board and began hiring those 16 auditors. And then ultimately we also hired four fiscal control specialists in the State Parks Division to go out and help prepare the State Parks for future fiscal control audits, which Mr. Contreras is going to talk about in more detail later.

In order to keep this short, I'm not going to necessarily run down each of these bullets. I'll be glad to respond to any of these; I wanted to give you just a real brief overview. Under visitation and reporting we had several recommendations. Most of that had to do with standardizing our fiscal control processes and other planning processes. We had a lot of different methods and procedural models out in the field, so there was confusion when you went out there about how we counted visitors and how we accounted for the revenue that came into the parks. So a lot of what we did was standardize our accounting methodology. We standardized the equipment that we were using across the system so that it was easy to see that we were using the same procedures and policies park by park by park. We did some business enhancement planning, and those kinds of things. So that was the first major category.

The second category was improving effectiveness of management. We did several things here, several of them this Commission participated with us in, in terms of decision making. As you'll recall, we adopted a land transaction policy that required two presentations to the Commission before we committed to a land transaction. We had also committed to a very robust public transparent policy out there to make sure there was lots of opportunity for the public to comment. We developed enhanced budget monitoring processes at the local level, so each park developed its own business plan and each park now operates under a business plan that has been vetted through the Administrative Resources Fiscal Control shop, as well as the leadership at State Parks. And we also began, as you know, the updating of the Land and Water Plan.

The third major category of SAO requirements were relative to capital projects. Once again, you will remember that the Commission was asked about a year ago now to endorse, or to approve basically our criteria that we use to prioritize capital projects. And just as a reminder, those criteria are first and foremost health and safety, obviously if we've got a situation that could evolve into a health and safety issue, it becomes the top priority. We never let a health and safety issue linger. If we have an imminent health and safety issue, we close that facility and fix it now. But I'm talking about in terms of planning. If you have something like a roof that's leaking, it becomes a health and safety issue if you don't patch it up.

The second criteria that you approved was regulatory, and I'm talking about ADA and other kinds of regulatory oversight, water quality, and those kinds of things with our water systems.

The third criteria is mission focused. In other words, we're going to put energy into those things that promote our mission, and last and certainly not least were the business focuses, to increase potential revenue opportunities for the Agency. So we've done a lot of things there. We did have a process in place that essentially had been in use for many years that ultimately became the process that you endorsed. So it was some validation of what we'd been doing prior to that.

The last major category in terms of the 48 recommendations were fiscal controls, and to be honest with you, these were the issues that the legislature, and honestly the executive office and State Parks leadership had the most concern about. We did have problems out there, we did go out immediately and develop manual fiscal control processes. We did this in concert with the Administrative Resources shop. It continues to be very labor intensive; there's a lot of redundancy now in the system out there; there's a lot of separation of duties that was required. We are, as you're going to hear, beginning to have better compliance, very good compliance in the last couple of rounds with the audits that have been done. I don't want to steal Carlos's thunder there. But I do want you to know we're working very diligently with a group called Infospherics to put together an automated system that towards the end of this year we hope will come online and will allow us to discontinue some of these labor-intensive manual processes that pull a lot of folks off the jobs they should really be doing in the parks and pulling them into the office to make sure that these manual fiscal controls get done appropriately. So I think there's light at the end of the tunnel for State Parks in that regard. I think the system is something we're all looking forward to. We've had great cooperation from Information Technology, Administrative Resources, and State Parks to get there.

And with that, I will let you know that essentially all we have left with the State Auditor's report are two items. One of them is called zero-based budgeting. We were asked to look at a zero-based budget process to inform us. We've done a survey of the entire country, there's only one other state that attempted to do a true ZBB, zero-based budget exercise, that was the State of Oregon. Excruciatingly detailed and ultimately not very effectual in terms of every year starting from zero and saying, "What would it take to run Parks?" So we are soon to be recommending to the executive office that we not go through a detailed ZBB, but that we use the information we have obtained through the analysis of these zero-based budget exercises to inform us as we move forward what are important elements in the development of a budget each year.

The only other thing that's really remaining out there is the completion of our Land and Water Plan, which I think all of you know we are moving forward on and will be completed with by December of this year. At that point the only remaining requirements will be reporting, and we'll do that until we're told to stop. But for all practical purposes we're through.

With that I'll turn this over to Mr. Contreras, and we thought that we would answer questions after he gets through if that's okay with the Commission.

MR. CONTRERAS: Before I get started on my presentation — excuse me — for the record, my name is Carlos Contreras. I'm the Director of Internal Audit. And thank you to the Commission for the opportunity to provide an update.

Now prior to me starting the presentation on the FY '09 Audit Plan, I wanted to talk a little bit about the last two rounds in FY '08, rounds seven and eight. Those were reported back in the January meeting. Now in those two rounds we took a look at 26 parks, of which 14 were compliant, a little over 50 percent, which is a drastic improvement from the earlier rounds in '08. One of the other improvements that we saw was a minimum of findings in the reporting and visitation area. And of those 26 parks that we've looked at in the last two rounds of FY '08, only one of them was in the most severe category. So a lot of the parks seem to be moving up to having less revenue findings, less critical findings.

And with that we can move into the 2009 Audit Plan. Now in rounds one and two, what we did is we went to five and six parks, but we issued just one report on that. Now four of the 11 parks in these first two rounds were compliant, and the testing period for all of these parks was approximately a year after the fiscal control procedures were set up. Now we look at — when we look at those two rounds, we did identify that seven of the parks needed fiscal control improvements, three needed to strengthen internal controls in their park store operations, and as you can see, only one park needed improvement in visitation collecting and reporting. We did have one park in those two rounds that was in the most severe category. And information from each of these rounds is being provided to Scott and Walt for their use in managing their operations of the parks.

Now round three. Round three we went to 12 parks and ten of the parks were compliant for that period, and that was about a year after — the test period was about a year after the completion of the Fiscal Control and Reporting and Visitation Plan. Now of those ten parks that were compliant, six of them were in the high risk category, three were in the moderate category, and one was in the low, which is good because what we're saying is more of the parks that have the higher revenue, that take in the higher revenue, have the higher visitation, are becoming compliant. And we're talking about the Garners, Ray Roberts IDB, Cedar Hill, those parks, parks of that size.

Now there was only two parks that needed any kind of really improvement in the fiscal controls, and you can see again in this slide that they're — none of the parks were in the most severe category. So, again, we're seeing quite an improvement.

Round four, within the next few days you ought to be receiving that report, but I have some good news on that also. We went to five parks during that round, all of those were compliant. Again, three of the five parks were in the high risk category, including Goose Island, Indian Lodge, and McKinney Falls. So again —

COMMISSIONER HOLT: So when you say —

MR. CONTRERAS: Yes, sir.

COMMISSIONER HOLT: Sorry to interrupt. High risk, you mean high visitation, high revenue?

MR. CONTRERAS: High visitation and high revenue —


MR. CONTRERAS: — yes, sir.


MR. CONTRERAS: And so we've got three of those parks. Lost Maples and Martin Creek Lake were the other two parks in that round. For round five, again, this round looks good. I really can't mention anything because we're still in the process of doing the quality assurance review for that. But, again, in speaking with the team leads, Cindy and Ed, they've informed me that there's a number of the parks that are going to be compliant there.

And round six audits we just got started here this month, so they're still doing the field work on it.


MR. CONTRERAS: Additional audits that we've done, on February 25th we distributed four reports that had to do with the least concession. And they were at Lake Brownwood, two of them in Huntsville State Park, and at Longhorn Caverns State Park.

Other audits that we've got going on are sand and gravel audits, which is reporting on the cash handling at the Law Enforcement offices, which is in reporting. And those two reports ought to come out within the same time frame here in the next few days with the round four park audits.

And we're doing a key performance measure review and that's currently in the field work stage.

One last thing, I guess, through round four, and in the time frame from the beginning of FY '08 through round four of FY '09, what we're looking at is, is at least 43 of the individual parks have gotten the compliance rating — a compliant rating which is about 54 percent. And there's actually one park that we've gone through twice and both times — the last two times it's been compliant. But, you know, we're making great progress there at 54 percent, when you consider that for the whole of FY '08 we only had 30 parks — I mean 24 parks that were compliant. So just in the last few rounds of FY '08, and in the rounds that we've done in FY '09, we've seen a tremendous increase in compliant parks, and especially those in the high risk category.

That concludes my update. If there are any questions for me or Mr. Boruff.

COMMISSIONER HOLT: Any questions on that?

Yes, sir.

COMMISSIONER DUGGINS: What was the name of the lease operation where you were — you and Scott were working on the renegotiation of the lease where there had been some issues with compliance with the lease agreement.

MR. BORUFF: It was — well, I think you're probably referencing, Commissioner, the Reena lease at Eisenhower Lake State Park.

COMMISSIONER DUGGINS: Has that never been audited?

MR. CONTRERAS: We took a look at that. We had a request from the Park Superintendent and management to take a look at some of the information from there, and we went ahead and we did an analysis of their payments, and that information was provided to Randy Bell and Paul Kaiser, I believe was his last name.


MR. CONTRERAS: Kisel. Kisel, the Park Superintendent. And they were able to use that information in their negotiations.


COMMISSIONER FALCON: Mr. Chairman, I think —


COMMISSIONER FALCON: — this is great news for us. I know when I got on the Commission the summer of '07, this was really big news, it was going on here at the Department.

And, Carlos, I want to congratulate you for bringing us to this point, because it's really, really great news, and it comes at a very appropriate time, now that our leadership is meeting in Austin.


Any other questions?

(No response.)

COMMISSIONER HOLT: I did want to recognize some people because this is — and Walt Dabney will attest to is, and Scott, and of course Carlos coming aboard, and I want to congratulate you three, but is it — you know, almost a complete change in how we did everything. And then remember you're asking these same people to run the parks and, you know, to take care of the visitors and do everything else they were doing. And so it's been a real culture change. And most culture changes we know usually take three to five years, and these people, this group, has really jumped aboard and cooperated, and collaborated, to get this done, and I just want to recognize a few people.

Obviously in the Auditor's office, Cindy Hancock and Ed Best have been here quite a long time; Carlos came aboard, but they kind of carried the ball until Carlos got in, from the leadership point of view, and did a great job. Brent Leasure is Regional Director of the State Park, Region 5, has kind of been Walt's right hand man in this thing. And then Larry Sieck — am I pronouncing that right —


COMMISSIONER HOLT: — I think I am — Kevin Good, Jeannie MuÑoz, Randy Bell and Kim Dudish are all various people in the Parks that have been very, very focused on this aspect of the — what we're trying to accomplish there relative to the legislative requirements. And as we get through it and work through it, and I'm like, whew, God, I hope we're at the end of it, in the sense of getting this process established, figured out, and hopefully get this system in place, and it gets, you know, labor intensive, the intensity of this has been a big part of the problem. But hopefully we can get it automated at some level, and then we'll be on track.

But I want to thank all of you, because obviously the legislature, in its wisdom, gave us the monies and the citizens of the state who voted for these bonds to allow us to do the things we wanted to do in the parks, and we're certainly working to keep that momentum going. But this was part of the requirement. And that's the way the regs and the laws and the rules work, and I appreciate you all's collaboration and cooperation. So it's been great.

MR. BORUFF: Thank you, Mr. Chairman. I'd like to take just a minute to thank all those people in the field that rarely —


MR. BORUFF: — get thanks for this.


MR. BORUFF: I will tell you that we logged 75,000 man hours in Austin in pursuit of this successful completion. But that's only a fraction of the real hours that were put into this project by the people out in the field who were struggling to make this thing work. We obviously can't thank all of them, but rarely do they get thanked enough for what they've done.

COMMISSIONER HOLT: Well, thank them for me, and, you know, you can tell them when I'm out in a park I do thank them, because I know, you know, all the double checking, you know, just — yes, it was just so labor intensive. And so, you know, in one way we were all worried about it; it had the potential to take away from our basic mission in the parks, which is take care of our visitor, take care of our parks. But it didn't, and everybody doubled up on their work and their work loads and we succeeded and have been very successful. So why don't you pass that out and congratulations to everybody.

Now the one thing I am worried about in this additional audit is this cash handling in Law Enforcement. I'm worried about that.

MALE VOICE: We'll be watching that one.

(General laughter.)

COMMISSIONER HOLT: Thank you. Thank you both. I guess I'm talking to myself here.

Mr. Chairman, this Committee has completed its work. Chairman, we will now move into the Ad Hoc Infrastructure Committee. I think I'm Chairman of that one too, so — everybody's bailed on me. No, that's our wonderful friend John Parker who's in charge of that, and so in his honor certainly I'm glad to pick that up for right now.

(Whereupon, at 3:55 p.m., the meeting was concluded.)


MEETING OF: Texas Parks and Wildlife Commission
LOCATION: Austin, Texas

DATE: March 25, 2009

I do hereby certify that the foregoing pages, numbers 1 through 54, 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.
3307 Northland, Suite 315
Austin, Texas 78731