Texas Parks and Wildlife Commission
Finance Committee

Nov. 5, 2008

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

BE IT REMEMBERED, that heretofore on the 5th day of November, 2008, there came to be heard matters under the regulatory authority of the Texas Parks and Wildlife Commission in the Commission Hearing Room of the Texas Parks and Wildlife Department Headquarters Complex, to wit:

APPEARANCES:

THE TEXAS PARKS AND WILDLIFE COMMISSION:

• J. Robert Brown, El Paso, Texas, Committee Chairman
• Peter M. Holt, San Antonio, Texas, Chairman
• Mark E. Bivins, Amarillo, Texas
• Ralph H. Duggins, Fort Worth, Texas
• Antonio Falcon, MD, Rio Grande City, Texas
• T. Dan Friedkin, Houston, Texas, Vice Chairman
• Karen J. Hixon, San Antonio, Texas
• Margaret Martin, Boerne, Texas
• John D. Parker, Lufkin, Texas

THE TEXAS PARKS AND WILDLIFE DEPARTMENT:

• Carter P. Smith, Executive Director, and other personnel of the Texas Parks and Wildlife Department

P R O C E E D I N G S

COMMISSIONER HOLT: Commissioner Brown, we'll start with Finance.

COMMISSIONER BROWN: Thank you, Mr. Chairman. I did want to make one public statement. I promised Commissioner Bivins that I would not bring up the fact that Texas Tech did defeat the University of Texas this past weekend. So I'm not going to bring that up in this meeting.

COMMISSIONER PARKER: Brown, there is a consensus of one that Texas Tech will go down.

COMMISSIONER BROWN: Thank you, Commissioner Parker.

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

COMMISSIONER MARTIN: So move.

COMMISSIONER BROWN: Got a motion by Commissioner Martin. Is there a second?

COMMISSIONER FALCON: Second.

COMMISSIONER BROWN: Second by Commissioner Falcon. All those in favor?

(A chorus of ayes.)

COMMISSIONER BROWN: Opposed?

(No response.)

COMMISSIONER BROWN: Hearing none, motion carried. Committee Item Number 1 is the update of the — on the Texas Parks and Wildlife Department progress in implementing the TPW Land and Water Resources Conservation and Recreation Plan. And, Mr. Smith?

MR. SMITH: Chairman, just a couple of things real quick. I just want to call everybody's attention to the report that the Comptroller did on state parks. It was as great, great report highlighting the benefits of our state parks. Just want to make sure everybody has a chance to take a look at that.

COMMISSIONER HOLT: Is that going to be handed out to everybody?

MR. SMITH: Did everybody get that from the Comptroller's Office? Okay. Good. It's a really, really good report.

COMMISSIONER BROWN: Very good.

COMMISSIONER HOLT: I haven't gotten one.

MR. SMITH: Okay. We'll make sure you have one.

COMMISSIONER HOLT: Okay.

MR. SMITH: I guess in keeping with that I just want to point out that last weekend the interim committee looking at the sporting goods portion of the sales tax met and had their first hearing. And they were given essentially two charges by the Legislature in the last session to come back and make a recommendation to the Legislature by December 15th on, one, the statutory definition of what should be included within the sporting goods portion of the sales tax — or what are those items that are included in part of that calculation, and then, secondly, what should the recommended appropriation be to support the needs of our state parks, but also historic sites, and they're also looking at water planning and some coastal erosion needs.

So it was a very productive hearing last week, and there's going to be some more work to be done by that committee, which is chaired by Representative Hilderbran and Senator Averitt. And so we'll talk more about that at another time, but I wanted to let you know that that process is underway. It is a critically, critically important one to the future of our parks fund. Mr. Chairman, that's it for me.

COMMISSIONER BROWN: Thank you, Mr. Smith. At this time we will take Item Number 6 out of order. And Item Number 6 is the briefing on Parks Excellence Report required by the 2007 General Appropriations Acts, the Texas Parks and Wildlife Department Rider 31. Mr. Scott Boruff and Brian Trusty are going to make the presentation.

MR. BORUFF: Thank you, Mr. Chairman. And for the record, Commissioners, and Mr. Smith, my name is Scott Boruff, Deputy Executive Director of Operations, here today to give you a briefing on Rider 31.

A little bit of context — as you'll recall in the last session we were fortunate enough to get the additional appropriation funding for state parks. As a condition — or at least as a requirement for that funding to be triggered we were required to implement 48 auditors' recommendations and five riders. So from our perspective we had a list of 53 to-do items.

This presentation today will culminate the end of the 50th one of those requirements being completed. It's an important one for us. This was a rider which — in which the Legislature asked us to look at what it would take to move into a system that was a high-quality state parks system. We decided internally to pair this up with the Rider 30 exercise, which asked us to find an outside consultant to look at the impact of both improvement of facilities and major repairs on our visitation and revenues. So we have employed Fisher-Heck, which is a very reputable architectural firm out of San Antonio, and PROS Consulting — Mr. Brian Trusty is up here with us today from PROS Consulting, which is an organization that for many years has worked with State Park Systems, the federal park system, and local park systems in terms of identifying issues that could improve those systems. So it's with great pleasure that I introduce Brian, and he's going to talk us through this.

MR. TRUSTY: Thank you, Scott. For the record my name is Brian Trusty. I'm with PROS Consulting. It's my privilege to be in front of you again today to talk to you a little bit about the results of the Rider 31 study. Do we have the presentation that we can bring up here or —

COMMISSIONER HOLT: We have it.

MR. TRUSTY: It's because it's out of order. Can I just kind of scan real quickly or she can do that in the back.

MR. BORUFF: They'll get it up.

MR. TRUSTY: Okay. Just a brief summary as we're bringing this up. This was a — and I know I'm in a little bit of a dangerous position being between you and lunch, so we'll try to make sure that we are as complete and comprehensive as possible in the briefing of this process and the results, but at the same time making sure that we stay as concise as possible too.

This was a great project and we really enjoyed being a part of it. There's a lot of passion that we brought to the project as citizens of Texas and wanting to see a legacy of the State Park System continue into the future.

We were asked to do a number of things, and so we'll cover that in the agenda today. We're going to provide you an overview of what the project was about and a review of the study requirements. We'll also talk about some of our key findings, the recommendations that stemmed from that, and the strategic outcomes that we're hoping to obtain.

By the way, this presentation was also delivered to the Legislative Budget Board, the State Auditor's Office, and, let's see, members of the Sunset Commission, as well as staff from the Lieutenant Governor's Office last week, and it went over very well. And if you have any other comments you want to add about that —

MR. BORUFF: That's well said.

MR. TRUSTY: Okay. So, again, we want to talk about ‑‑ a little bit about the objective of the project. The Rider 31 asked us to identify what are the characteristics of a high-quality park system and then to assess where we were as the Texas State Park System against those criteria. We also were asked to identify what actions were necessary to be able to fill that gap and meet the standard of high quality. We were asked to estimate projected costs and potential revenues associated with those actions, to assess public need for state parks and state park amenities.

And we did the public need analysis we did that through a multi-varied approach. We went out and conducted numerous interviews across the state of community leaders — and those folks are acknowledged in the report — going from state elected officials to local elected officials, as well as local chamber and convention and visitor bureau folks. We also went out and did a statistically valid household survey across the entire state that also took into account the distribution of the population of the state. Texas is unique — we've heard a lot about our uniqueness today. Texas' population distribution is also very unique. We have 254 counties within the state, and over 50 percent of our population is concentrated within 20 of those counties. And so obviously we have a — you know, this has an impact on the distribution of our park system.

In addition, we also took into account the findings from the recent focus groups that Parks and Wildlife has completed within the last couple of years.

We were asked to estimate the economic impact for state parks, both statewide and for local communities. To do that we also borrowed from the study recently completed in 2006 by Dr. Crompton from Texas A&M, which was a great report — and we'll some of the key findings from that today. And then to assess which state parks should be considered to be closed, sold, or transferred out of the State Park System, which was a question nobody wanted to ask, but we were legislatively mandated. So we approached that.

Some of the specific requirements — again, just a quick review — high-quality park system, the condition of facility infrastructure, maintenance requirements, amenities that are available, high-demand amenities, facilities with high return on investment, the degree of recreational value that parks provide, and justification of all operating costs, parks that meet these standards and criteria, parks that could not, and the cost of the upgrades, eventual revenues, and then the closure transfer list, and then evaluate the economic impact.

Our key findings — it really comes down to these five key findings. And these are some very bold statements, but they again — they are the foundation of some innovative and creative recommendations that come from the report as well.

The existing conditions of Texas state parks are not reflective of a high-quality park system. Now, that's a big statement and it requires some caveat as an explanation. And we define that in the report. The reason that the Texas State Park System, according to our findings, don't meet that — those high-quality standards is a resource issue. It is the amount of resources available in the State Park System to be able to keep up with ongoing facility demands, meeting public need. It is certainly not an issue about the intent and the quality of the staff in the State Park System that are out there and working every day to make these amenities and make these sites available for public use. And we want — we made that clear in the presentation last week. We also made that clear in the report.

This is about funding and resources available to the State Park System to be able to meet demands, meet evolving needs, and deal with the fact that our state parks are aged and they're being loved to death and they're not being funded — supported through funding means to be able to deal with ongoing facility maintenance requirements.

Secondly, we found that Texas State Parks are managed from a defensive position. In many cases the Department ‑‑ again, this is not a critique of the state park management. And Walt Dabney and his staff are extremely talented and very well-skilled at what they do. This is really about being victims of circumstance. It's kind of on both sides. Both — the Legislature puts this Department in many cases in a defensive posture by some of the nature of how you have to go through your funding requests and some of the other aspects that we'll get to here in a second.

We made some very specific recommendations — and we talked about this a lot last week — about how both this Department and the legislative leadership can work together to help remove the Department from the defensive position it finds itself in in the state parks side.

But communications and messaging about the Texas State Park System to the public and potential visitors are not sufficient to inspire action. Again, this is a resource issue. Lydia Saldaña and Darcy and a lot of the communications staff here at the Department are very talented at what they do and very committed to making sure the information gets out there, but they're also very limited with the resources they have to be able to get out and promote parks and park experiences to our public.

One thing we've also found in working with agencies across the country — and Texas is not unique — that communications and promotions around parks and park experiences comes from an historic mantra that is outdated — and that is traditionally if we asked you to envision what a park brochure would look like, without looking at it you could probably tell us. And that was that it was either a trifold or a panel card with a map, rules and regs, hours, maybe trails and some basic amenity listings. And what this comes from is this very traditional communications and creative mantra that to really — to communicate about parks and park experiences is to inform the customer. Well, today, what we find is that parks are competing increasingly with non-traditional competitors for people's disposable time and money to come out and spend time in the parks and to do that. So the mantra also has to evolve. Park communications anymore cannot get away with just informing the customer — informing the public about what's out there, they have to inspire the public to be able to come out and visit the parks. And that's a little bit of a shift. And so that shift also takes resource support, and we make that argument here in the report.

New development at select state parks can dramatically improve the ability of the system to meet public needs, as well as increase the revenue generating capacity of the system, and, finally, strategic business planning needs to be expanded to multiple management layers. And what we're talking about there is we do do business management here in the Department for individual parks, and that's an evolving business plan with the State Park System. In between there's the regions — the park management regions. And being able to continue strategic business planning at the regional level is something that we recommend so that we can see the business plans and strategies of individual parks roll up to the regions and then roll up to the System. And it helps folks to be able to manage kind of performance goals a little bit more tightly.

What is the definition of high quality? There are several pages in here about the definition of high quality, but it basically comes down to these five key factors. One, is it starts with a vision that's unfettered by political, operational, or financial circumstances of how a high-quality park should look and feel and the value it provides to the general public.

So the first way we approach the value — what is the definition of a high-quality park is from the experiential component. It's if you were driving in the gate — what does it look like, what does it feel like, and what does it represent as a value to the community in which these parks are located.

And the last four deal with standards — standards for how the parks are managed to provide safe, enjoyable, and meaningful experiences to all segments of the general public — not just select segments. And that helps us also evaluate how we want to distinguish and establish standards for having certain types of park amenities, such as playgrounds or picnic areas or campsites of different types of intensity and based upon the population and the population demographics.

We want to look at how — have a standard for how parks provide value to local communities, standard for how parks are operated and maintained, and a standard for how parks in the park system pursues development and acquisitions. And we address all of those in the report we'll get into in just a second.

Knowing that the Legislative Budget Board and a lot of the legislative leadership would want to — knowing that they knew we did a household survey we expected they would want to know a little bit about some key results that came from that. So we also wanted to share that with you. This slide turns out to be slightly small, certainly on these other screens. But what we're looking at here is the — kind of the upper half of the curve. This question was question 6 on the survey about what are the needs out there for facilities and services. And we want to start with kind of the outdoor activity and instructional programs, which we saw at 35 percent indicating that there was a need, and moving up into the picnic areas and shelters at the top. Of all those — of all the amenities in between those two only two of them stand out as areas in which we have difficulty meeting. One is swimming pools, whereas the public always says we need more swimming pools. Recreationally that's not necessarily an area of focus that we recommend for state parks. That's where city and county parks play a major role. Of course, the public will constantly try to tell you that swimming pools are necessary and maybe if there's ways in which the State Park System can build more or assume some — but, again, we recommend that that's something that you manage responsibly with other local jurisdictions.

The other issue that's very difficult is to deal — to address is river and lake access. The public — this is second from the top. The public loves river and lake access, but you can only provide so much of that unless you're building more lakes or opening up — purchasing properties on rivers to be able to do that. So we understand that that has some issues with it as well.

You'll see as we take these — a lot of these values that come from this finding, you'll see that reflected in our recommendations for needs in certain amenity types.

We also wanted to provide you information on the importance — the public felt on the importance of various actions that the State Park System to take to improve and expand park facilities. We thought these were all very relevant to the priorities that the agency already has, so this is a sense of validation for a lot of the strategic direction the Department is going with the State Park System — develop more traditional recreation opportunities, acquire land for preservation — this is the public speaking — improve conditions at existing state parks. Number three, provide — number four, provide environmental education, watershed protection, local state economic development — and we'll talk a little bit about that as well — develop more outdoor adventure opportunities, and increase the level of quality of park services.

And this was another interesting finding that we wanted to include because this seems to be non-intuitive to a lot of folks — and that is respondents were asked would they support an increase in user fees for the purpose of supporting the costs of park improvements. And, you know, you would generally expect most folks would say, No, we would not support fee increases. But when you put in there that it's going towards park improvements what we saw the majority of respondents said, Yes, if we see where our money is going towards park improvements then we support fee increases.

And so it's not — if we ask this question, Would you support fee increases to improve the financial performance of state parks we probably would have gotten a very different answer. But the fact that we're asking them if they would approve — support it if it went to park improvements is key here.

We also see this and PROS sees this around the country in the initiatives that we do. Folks want to see how their dollars go towards actual tangible and visible results at parks. We've helped a lot of our customers and agencies put together and pass over $3 billion worth of park bond packages. And, again, it's going towards very visibly and tangibly improving park conditions. In fact, we're very happy — last night at the elections Mecklenburg County in North Carolina — we just finished their master plan — and Charlotte is the urban hub there — we put together a bond package for them and last night it — a $250 million park bond package passed 62 percent in that county based upon the very same level of analysis that we performed for you. So it does work, and people really appreciate being able to understand how their money goes towards improving the conditions of the parks.

So economic impact — and, again, this is taken from Dr. Crompton and Culpepper from Texas A&M and the study they performed in 2006 — just a quick caveat on this study to remind you — and I'm sure you've probably heard the results of this study previously. This study looked at only people who are coming to — solely for the purpose of visiting state parks — or at least primarily to visit state parks. It was not necessarily folks that are coming to visit family and then while they were there they were visiting state parks. So these are how state parks drive economic activity. This was also — filtered out people that were from the local area. So this is only looking at the influx of out-of-area dollars to a local community.

But what it says — what the findings showed was that $935 million a year is the economic activity that was driven by state parks in 2006. And we did not adjust this for 2008 dollars — these are 2006 dollars. The estimated impact on household income as a result was down across the state was $538 million, and the estimated number of jobs created by all that economic activity is 14,061.

So what's important here to note is that state parks are an incredible economic driver in our state, particularly supporting the tourism industry. Dr. Crompton left us with a quote there at the bottom of that slide — a very bold statement, but saying essentially that Texas Parks and Wildlife is the steward for a lot of the nature-based tourism that we see that — the attractiveness that people come to the state for, and they should, therefore, be recognized for that, positioned for it, and then supported by it.

Now we're getting into the key recommendations. And this first key — this first recommendation we spent a lot of time on last week when we were visiting with the Legislative Budget Board and the legislative leadership. And if there's any one single legacy that PROS and Fisher-Heck would like to see come from this plan it's this recommendation right here. This addresses how we make funding appropriations and how funding appropriations are reviewed and evaluated and approved by the Legislature supporting capital projects for the State Park System.

Currently the way the funding appropriations are made ‑‑ and this is not unique to Texas; this is something that we're working with a lot of agencies across the country that move towards — it makes a lot of business sense. It's a little bit of a departure from the tradition. Traditionally, and here in the state of Texas, how you make a funding appropriation request for capital is you identify your priority projects and then you put together — you're supposed to put together some very tight cost estimates based on very loose assumptions. And you're held to those cost estimates.

What happens — and this may or may not sound familiar to you — is it goes to the legislative session and then a series of debates begin that last for weeks, months about the legitimacy of your projects, the legitimacy of the priority of your projects, and then the legitimacy of your cost estimates around the projects. That debate, albeit it healthy, results in delays and a lot of compromise and usually ends up in a funding appropriation that is certainly well appreciated but never enough.

This process is something that we're recommending be looked at critically and changed — developed as a new process and looking at how we reinvest in our capital assets on an annual basis based upon a percent value of the total asset value, not including land. A lot of private industry does this. A lot of really innovative park agencies around the country do this.

It starts first with how do you value your total assets. We have a challenge with trying to develop a value of the total assets of the State Park System. So we've put together a hybrid approach. We visited with some of the stakeholders downtown to make sure this was going to work in terms of making — that it met their expectations of how you would value the Texas State Park System, and this is how we did it.

The first thing we start with was the valuation provided by the General Land Office. The General Land Office does an evaluation of your facilities and structures, like your buildings. They do not look at a lot of non-things that are outside their scope and expertise, such as picnic grounds and campsites and a lot of underground utilities and things that cost real money and that are real assets and cost real money for you to maintain.

But they provided us a base value which we applied — normalized to 2008 dollars so we could put it in the same context. And then we went out and we developed a standard program for every single major type of park asset you have, be it campsites, picnic grounds, playgrounds, boat ramps, fishing piers, bunkhouses — every — we had over 35 different types of assets. And we went to a professional cost estimator and got a 2008 capital replacement cost for each one of those assets, and then we applied that to your inventory of assets. We combined these two values and got an estimate — a very conservative estimate that the total values of assets in the State Park System is $808 million. That — we know that's conservative because we have 93 state parks in the system and we know that it costs at least $20, $30 million to build one.

And so we know that the real value of assets in 2008 ‑‑ real 2008 capital replacement value is probably closer to $2.4, $2.7 billion. But $808 million was an estimate we could pull together, we could easily defend and substantiate, and it was conservative — we recognize that.

The industry best standard right now is 4 to 6 percent of an annual reinvestment in your capital. If we apply at the bottom end 4 percent to $808 million that is a $32 million annual reinvestment in major capital replacement and repair for the agency, which equates to a $65 million biennial appropriation request. This appropriation request would be for major capital repair and minor repair.

We also made a recommendation that the minor repair approach and how minor repair projects are defined and managed within the state be critically reviewed. Right now minor repair is anything that's $25,000 or under. Twenty-five ‑‑ it's very difficult to do any kind of repair with $25,000 anymore. This is something that the legislative leadership is open to — they're looking at — they're getting a lot of pressure and requests from other agencies as well. We recommend that minor repair be reconsidered to be $100,000 or less.

And so minor repair, major capital, and repair and replacement — this does not include acquisition, nor does this include new development. What this would do is have a standard appropriation methodology you could use and that the Legislature could easily evaluate. Instead of getting in and debating very specific projects and cost estimates you could make a standard appropriation request. And then if Scott and his team get $65 million that biennium to work with he has his own methods for being able to prioritize projects within that and use that money as far as it can go.

It helps us also get away from this futility of trying to identify every session this gigantic number of deferred maintenance as a number that changes every day. What is the point? Unless somebody's going to sweep down and come up with a $400 or $500 million bond package today to take care of all of it, it's very difficult to be able to spend a lot of resources substantiating that — and it's such a dynamic number.

So what we do not recommend is we lose sight of the whole picture. The whole picture is very important. The whole picture of deferred maintenance is critical to understanding how we're gaining ground. But at the same time we want to recognize where resources can be best spent, and that's focusing on a year or two at a time. Did you have comments you want to add to that?

MR. BORUFF: I think the only thing that fell out of the conversation with the legislative leadership last week is probably not on this slide — I think it gets addressed later, but there was confusion — is that this does not envision us catching up with the major backlog. This recommendation is related to an assumption that if you don't want to fall further behind this is a model to keep us from getting further behind.

So with this very conservative estimate of $808 million, if you apply the 4 percent industry standard you're talking about $32 million a year in order to keep from falling further behind. It does not address the critical backlog. And, as Brian suggested, we do think it is largely futile to continue to try to gin out a 4-, 5-, $600 million number because those numbers change dramatically and we have never had any opportunity to address that large of a backlog.

But he's going to talk about the backlog in a minute. But I just wanted you to understand this is to keep — just stop the bleeding. And there is another recommendation relative to the backlog coming up.

MR. TRUSTY: So Scott's exactly right. This is founded on the assumption that we're starting with a high-quality park system. This is about maintaining a high-quality park system, not necessarily obtaining one from an aged and deteriorated system.

And also a little bit of background on where this came from. Besides being an industry best practice we're trying to help a lot of agencies around the country move to — the State Park Advisory Board here in this Department had kind of leg up on us. They had already kind of floated out there with the LBB and with the Legislature and with you that it is needed to have — it was needed — necessary to have $25 million a year go towards helping us keep up the facility needs at our parks.

Well, in visiting with George Bristol and a lot of the folks on the advisory board what we wanted to do here was substantiate that — where did that come from. And so we went through a method of substantiating it and found that they were pretty close. But we actually think it should be closer to 32.

So additional key recommendations — and that are how do we meet unmet recreational needs or develop new assets to meet demand and increase revenue-generating capacity. We look at how we're going to develop new assets selectively. We want to look at which needs we feel like are not being met. There are seven basic needs that we found that folks indicate that are — there's a lot of room to be able to grow into.

First of all, picnic areas and shelters, group facilities, upgraded campsites — and when we refer to upgraded campsites — we're generally talking about upgraded utilities at campsites, such as transitioning from 30 amp to 50 amp service to deal with — in RV campgrounds to deal with the growing size of our RV equipment.

Cabins — cabins are huge because a lot of folks who are not in the position to be able to afford an RV but also not — don't have the desire to go camping in Texas in the summer are looking for some type of middle ground, and cabins do it. I think this agency can easily share its — the fact that its cabins have a backlog. It's very difficult to get into cabins, which is a great indication of the demand.

Youth facilities — and youth facilities included additional playgrounds from a basic level, but it also includes looking at facilities that are appropriate for our value set as a State Park System, but also appeal a little bit more to youth. And common examples — I'm not recommending that you go out and build a whole bunch of these, but common examples on a list that you can choose from include things like a BMX bike area, mountain biking areas that are a little bit improved. And so looking at how you can increase opportunities to appeal to a younger generation is also important.

Hike and bike trails — there are two projects in particular we'd like to commend the Department on — and that is the trailway in and around Caprock Canyon, the trailway in and around Mineral Wells. These are great projects. Hopefully you can continue to pursue connectivity between parks or connectivity between parks and the local communities because this is something we're seeing around the country as extremely popular.

In visiting with — Ernie Leffler is the general manager of the chamber and visitor bureau there in Fredericksburg. You know, you don't have a lot of opportunity necessarily to increase the size of Enchanted Rock or to build another Enchanted Rock. But Enchanted Rock is a very popular park that gets closed down around two o'clock — between noon and two on a peak season because it reaches capacity and they can't take any more. Ernie gets all those people back in Fredericksburg. They're very upset because they couldn't go to Enchanted Rock. But a trail system — a nice trail system in and around that area very well might be able to serve their needs. And so looking at opportunities like that as some other recommendations.

Programs is the final area which — both outdoor adventure programs, educational programs. The outdoor family program that Mr. Dabney is putting together and launched with introducing folks to kind of skills — basic skills of camping is a great example of this. And I think the participation in that and the feedback you're getting supports the popularity of that type of stuff.

The next recommendation is about acquisition. Again, I apologize — some of these numbers are fairly small. We started the acquisition question with when is enough enough. If you base, you know, the traditional method of basing park needs is acres per thousand population — this came from economics and sociologists — Peter Druckman actually many decades ago. NRPA, the National Recreation of Parks Association has picked that mantra up, and for a while the national standard was 10 acres per thousand — and it tends to grow. And what we've looked at now is that — actually the evolving methodology of looking at this is at levels of service. And the way we did that is we broke the State Park System into different types of parks because not all parks are equal — or the same. You have a regional park is the basic state park unit. All state parks are a regional park in the fact that they serve a region larger than just a local community.

The next layer of park is a signature park. What distinguishes the signature park from a regional park is that there's overnight facilities available there beyond camping, such as cabins or a bunkhouse group facility. And usually there's also other types of services available.

A state natural area is self-explanatory, as well as state historic site and a special use area, which is those amenities that really don't — I mean, sites that really don't fit into any of these categories. Examples include Wyler Aerial Tramway and Sheldon Lake.

So we looked at applying standards to each different type of park, but not universally across the state. We've talked about the population distribution being a little skewed. And there's also this other issue. You have a park region, in particular Region 7, which is the Texas Hill Country — does not have a major population center, has a very low relative population to the other park management regions, yet it's the — one of the most popular park regions — park destinations within the state. So the demand for parks within that region is very high. In addition, a lot of the environmental sensitivities of the habitat in that area are also very high.

So we couldn't just go with the one-size-fits-all standard of acres-per-thousand for each different type of park across the state. We had to unique-tify it — I'm going to make that word up — to each region. And so this is how we ended up. And we also had to put that in relation to other parks within the state. I don't know if you were aware, there's 220,000 acres of city and county parks within the state of Texas. And so the State Park System should not be looked at to try to bear this burden alone. In addition, there's several million acres of federal lands which are open for public access and recreation. So we put all that in context.

Our recommendation is that — you know, within this table, and it results — and by the year 2020 an acquisition of 51,000 acres across the state. And I want to provide a couple of numbers that put that, again, into context. That's by 2020 — that's not by today. And it also is built to support the recommendations that came out previously about 5,000 acres around each of the major population centers in the state. This is helping us understand well what types of parks and exactly where should they be.

We looked at the national standards that we referenced earlier from National Recreation of Parks Association. We applied it to Texas, and it came out that maybe we should acquire 188,000 acres. And we looked at if we maintain our current level of service and we continue — and we extrapolated that across the growth in estimated populations in the state it came up with we should acquire 207,000 acres.

We felt like these numbers were outside of political realism and they also didn't represent a strong balance in the system. So we landed on some recommendations that we felt like created that balance, that put the Department in a great posture for acquiring land in the next ten years, and at same time without trying to take on more than you can chew. Did you have anything you want to add to that?

So moving from acres to assets — this is a chart of all the assets you have across the entire system. And the columns are the 2008 inventory, and then the 2010 needs based upon the estimated population in 2010, the 2020 needs based upon the 2020 population, and under the assumption that all the 2010 assets were constructed, and then what the resulting inventory would be in 2020.

And then we also looked at what was the representative percentage growth in inventory. The seven key assets that we are recommending that grow, in terms of the largest growth of inventory, include natural surface trails, trails, trails, trails — that's all we hear anywhere we go about what's very important to people. I think you probably know that as well.

Cabins — full service cabins and limited use cabins as well as screened shelters. Overnight group facilities, group recreation facilities — these are other — some other great examples of amenities that we feel like should represent kind of the leading-edge of asset inventory growth.

So where does all this get us? And we were asked to look at these capital cost estimates. We devoted — we went state park by state park. In this plan every single park has a recommendation about very specific capital projects we recommend within the next ten years to meet evolving recreational need and to meet the standard of a high-quality park system as we defined it.

We broke those into three categories — improving existing conditions, recommended upgrades, and then recommended new developments. And then we broke that out across the different park management regions.

What you see here is that we recommend a total — the total capital figure here for us — and this is a very conservative estimate. This is also kind of a snapshot in time and does not necessarily include — it definitely does not include land acquisition, nor does it include sometimes land acquisition necessary to make recommended developments. It does not include upgrades to infrastructure necessarily to support the upgrade or the development. So there's a lot that's missing from this, but it should give you some type of general sense of scale about where we stand. $436 million is what we looked at.

Recommendations in the key — in business and management practices. Enhanced maintenance and facilities — this is, again, a resource issue. The zero-based budgeting process that Walt and his team are going through is absolutely landmark. They should be commended on the progress and the process that they're going through, and that should continue.

The increased usage of key facilities — not all facilities produce great revenues, but there are some that do. Cabins are one. RV campsites are others. Group facilities are some. So instead of trying to go at increasing use across the board let's start first with trying to increase use very targeted on certain key facilities.

Diversified facilities programs and events — improved marketing communications — again, that's a resource issue. Consistent and formalized partnerships — the agency has done a great job and kind of a standard approach to engaging the private sector in partnerships. But we feel like you've gone as far as you really can with that, but there's a lot of opportunity that's possible out there for you to crack open new ways to engage the private sector to help share the burden and helping — and become involved in providing facilities and services at state parks.

We do not believe this is a silver bullet that will solve all problems, but it is certainly going to be a great contributor and great partner in the end. A good example is we helped — we put together the plan for Dallas — the City of Dallas Parks and Recreation — the Renaissance Plan. That recommended $800 million in recreation — in parks and recreation facility and service upgrades and improvements.

They put together a bond package of almost half-a-billion — that's $500 million — and the private sector came out to the tune of the rest. And so there are ways to be able to engage private sector beyond — above and beyond the traditional ways in which the agency has done it up to now.

In proving for the positioning of the state parks as a community and economic development asset — this will help us both downtown and with the private sector as we understand parks are more than just places for folks to go recreate. A lot of times they're community center — the city manager of this town of Mathis, in which the Lake Corpus Christi State Park is located, shared with me in his interview, if it weren't for the state park my town would dry up. And you should be commended for that across the board. And so being able to position and champion the state parks as those community and economic assets is critical.

Customer fulfillment — not just retention, but fulfillment. There are three parts to an experience — being able to — you know, the anticipation of the experience, the experience itself, and the nostalgia. Parks and Wildlife does a pretty good job with the front two — and that is getting folks engaged to come out to the parks, preparing them for the park experience, and then while they're there the park services and the facilities — yes, they're pretty good.

It's just where we miss the boat is in the customer fulfillment side — and that is being able to help manage the nostalgia and return visits. We have a tremendous amount of contact information of folks that are coming out and making reservations to stay at our parks. This is a database that we can use to reach out to folks via the postcard — something simple throughout the year to remind them what a great time they had at our state parks and encourage them come — make another reservation to return. I think you'll see great responses from that.

And then, finally, as we mentioned before, layered strategic planning throughout the system.

But finally the question nobody wanted to answer in all the 25 interviews I conducted around the state from literally El Paso to Tyler — this was — when we asked, Do you feel like there are criteria that should be considered for state parks to be sold, transferred, or closed — we very rarely got a straight answer. This is a difficult question and — you know, our folks downtown also recognize this. As it's easy for us in a closed room or a vacuum to identify maybe a small set of parks that should be considered, and the moment we take it public, it is a firestorm.

So the way we looked at it is there should be standardized evaluation criteria for consideration — and we provide some of those in here for you to consider. We also wanted to pay homage to the fact that since 2000 — since the year 2000 the State Park System has reduced in size by 26 percent. This is not a front in which you have been quiet on for the last eight years. You have been effectively reducing the size of the State Park System, both progressively by your own strategic decisions, as well as by legislative mandate in the last eight years to a tune of almost a third of the size it was nearly a decade ago.

So let's recognize that as well. This is not something that you shy away from. That includes 15 state parks and historic sites that were transferred for the provisions of House Bill 2108 of the 76th Legislature. And that was done — none of these parks were closed by the way. All these parks are open and maintained for public recreation. This was a — these provisions allowed you to be able to upgrade the facilities to a condition in which it was responsible to hand it over to a local jurisdiction — and you did so and have done so very successfully. The challenge for that is that it takes a willing local jurisdiction, and those are few and far between.

The last thing was that it also includes the divestiture of 18 state historic sites last year to the state Historic Commission.

So we did provide a list of parks that, you know, could be looked at for evaluation. We do not recommend they get sold, closed, or transferred. But they are a list of parks that, again, we don't recommend that they cease being open for public access and public recreation, but they can be considered to be transferred to a local jurisdiction if that jurisdiction is willing.

The strategic outcomes we want out of it? We want to be able to improve the ability of the State Park System to meet public need, now and into the future — we want to elevate the status of the state parks to a high-quality system. You know, the county judge in Bandera told me this. He said — and I heard this from other folks as well — If we could just get our State Park System back to the glory it was in the '60s and '70s. There is this memory — this institutional memory of a great State Park System that we've had in the last 20 or 30 years. But the starving of the system through limited funding resources because you're competing against all other types of requests for state funding has put the park system in a — deteriorated it to a level and it's not necessarily meeting those standards anymore. And so we know how to do it, we know how to do it right, we were there before. It's just about getting back there.

Repositioning them as viable assets, strengthening them as destinations, creating and improving earned income opportunities, and eventually all that will result in improving the value of the experience to — of state parks to visitors.

One comment that we left the folks with in the session last week was that we feel strongly that this State Park System needs a campaign. It needs a campaign that engages the public, that is the idea of the policy makers, and the result of your blood, sweat, and tears. We've seen this work. In the state of Washington ‑‑ in celebration of the hundredth anniversary of the state in 2013 they put together, I guess about five years ago because it was a ten-year plan — the Centennial Plan. And that mobilized millions of dollars out of public bond and referendum issues supporting state park improvements.

The community came out in droves. Mecklenburg County last night came out in droves celebrating a campaign around renovating the parks. Dallas did the same thing several years ago with the Renaissance Plan. So we believe that the State Park System is ripe for a campaign, and we'll kind of leave you with that big mess. But, nonetheless, we feel pretty passionate about it.

We hope this has been informative. It was over 1,600 pages of data that we crunched into this report and tried to squeeze into 30 minutes of a briefing to you. And, hopefully, we've delivered on that.

COMMISSIONER HOLT: You did a good job.

COMMISSIONER PARKER: Mr. Chairman?

COMMISSIONER BROWN: Yes. Mr. Parker.

COMMISSIONER PARKER: I have one question. Can we keep this guy from January 1st to April 30th ‑‑

COMMISSIONER BROWN: Take him over to the Capitol on a daily basis, yes. Get him a room. Excellent question. It's a great presentation.

COMMISSIONER DUGGINS: You said you presented this same — made this same presentation to the LBB last week or week before?

MR. TRUSTY: Yes, sir.

COMMISSIONER DUGGINS: How were you received? Were you kicked out?

MR. TRUSTY: No. You know, we found actually — the LBB in particular is very interested in trying to find new, innovative ways to work with the agency and improve the ability of the agency to work with the Legislature. So we found them to be very engaged. We spent a lot of time on that 4 percent issue. Clearing up, you know, a lot of assumptions that could be made — is this all you need? Is that it? And we made sure they understood, no, that's not it. It goes from the assumption that we started with a high-quality park system. It just keeps us from falling further behind.

We talked a little bit about acquisitions. We talked a lot about public need — got a lot of head nodding. I felt like it was a very supportive environment. You have other comments?

MR. BORUFF: I thought it was generally supportive, Commissioner. I mean, there's a little skepticism here and there. One point that's probably important for the Commission as you go into the session is to understand that we were not mandated vis-a-vis Rider 31 to go out with an out-of-the-agency study. We were mandated under Rider 30 to do so. We made the decision because we wanted an independent, arm's-length opinion about what it would take to get a high-quality State Park System.

And I will tell you that from the Commission and the Executive Office perspective we stayed out of this study. We did not impose ourselves on PROS Consulting or Fisher-Heck. You can get verification from Brian. I did not very often attend these meetings. And we did that on purpose — we wanted this to be an independent study that was not driven by the agency, but was driven by the expertise that these folks brought to the table. So we think this is a good study. I think it does support many of the arguments we've been making over time. I think there will be skepticism in certain corners.

COMMISSIONER BROWN: Commissioner Martin.

COMMISSIONER MARTIN: In your presentation — in your study — did you have any recommendations or ideas on a campaign? Or is that —

MR. TRUSTY: That's a great question. And, no, we didn't. We didn't provide — we didn't want to put the Department in a — we didn't want to pigeonhole the Department there. But that's something we feel like you need a lot of latitude to think through. We just feel like one is necessary and has a high probability of working.

COMMISSIONER MARTIN: I like that idea. Thank you. Great presentation.

MR. TRUSTY: Thank you.

MR. SMITH: Brian, I assume that recommendation is also predicated on the fact that we've had so many successful local ballot campaigns throughout the state that have passed overwhelmingly in terms of support for parks and green space and open space and water quality lands.

MR. TRUSTY: Absolutely. We — you know, we've seen that here in the state of Texas. Generally the public is somewhat naive and takes for granted the true costs of maintaining great park systems. But when they are confronted — they're a very intelligent public. When they're confronted with the real costs then they generally step up to the plate overwhelmingly.

As a good example, two months ago I was in Flagstaff. I'm wrapping up the master plan for Coconino County, which is the second largest county in the country, and it includes the Grand Canyon for the county park system. And their parks — they only have six parks in that county, but they've accumulated $35 million in deferred maintenance because they have starved that park system of the necessary funds to meet facility needs.

Well, this is a — was a sharp point for the county commissioners. And the chair said to me when we presented the findings of just the assessment of facilities — she said, Man, this feels like a shot between the eyes. I said, Well, you can perceive it like that, but it's really meant to be more of a shot in the arm for the community about the realities of where your facilities are and what you need to do about it.

They opened it up for public comment after the findings report and five folks stepped forward. Three of them verified that they felt like the facilities were in those — that state of affairs and something needed to be done about it. Two other folks stepped up and asked them to please raise taxes so that they could do something about it.

That's not unique to Flagstaff, nor do I feel like it would be unique to Texas based upon what you're saying, Carter, on the success of local initiatives. Folks, when they're faced with the realities they get it — they understand it.

COMMISSIONER BROWN: Any other questions? Thank you.

COMMISSIONER HOLT: Very good.

COMMISSIONER BROWN: Mr. Chairman, I would now recess the Finance Committee and turn it over to my able colleague in the Conservation Committee, Chairman Bivins.

(Whereupon, at 12:55, a short recess was taken.)

COMMISSIONER BROWN: Thank you, Commissioner Bivins. We will now take up Committee Item Number 2, the Proposed Stamp and Print Artwork Program for Migratory Game Bird, Upland Game Bird, Nongame, Saltwater Fish, and Freshwater Fish Stamps. And Ms. Frances Stiles and Marvin Wood are going to make the presentation.

MS. STILES: For the record my name is Frances Stiles. I'm with the Administrative Resources Division. Today we're here to do the presentation of the prints for this year under the terms of the contract for the print program. Mr. Wood brings the artwork down for review. We have those displayed. These are combined into a collector's stamp set, and both the stamps and the prints are offered for sale for purchase. So I'm going to turn this over to Mr. Wood to go through the prints that are available today.

MR. WOOD: Thank you, Frances. My name is Martin Wood for the record. Last year we paid the Department $52,900 for the stamps and prints we sold. That $52,000 brought our total to over $7 million that we've paid the Department in the last 28 years.

If you want to go over the art — I learned when we get down here in the regulations that we clearly have a problem. We featured the Lesser Prairie Chicken in the upland bird, thinking that it needed as much attention as it could have and that it was something we were going to hunt. And, obviously, we've taken the right turn, which I am totally in favor of, but, you know, your decision would be with the — in addition to accepting the art, would be what do we do?

You know, I mean, we've got a great piece of art. You know, I think it sends out — you know, it obviously calls attention to the Prairie Chicken, but I don't see how we can possibly put a bird that we're not going to hunt this next season — or I assume. I mean, I know that was just put out for comment. But by the time you get the comment and make the decision and — when is it? — in March that you do the regs — or when do you actually do the regs?

MR. SMITH: March.

COMMISSIONER HOLT: March.

MR. WOOD: You know, it's almost too late —

COMMISSIONER HOLT: It's too late, yes.

MR. WOOD: — to make the change, you know. And I would assume, based on the status of the Lesser Prairie Chicken, that we're not going to hunt them next year. Right? I mean —

COMMISSIONER HOLT: More than likely you're right.

MR. WOOD: It's more than likely. So I guess what we have to do is to get a new piece of art of a different bird. And obviously our choices of what we haven't used since it's been the Upland Game Bird are a turkey or a Gambel's quail. You know, that pretty well covers the — we've done blue quail, bobwhite, and a pheasant.

But, anyway — and we'll take this art and try to find a fund-raising cause or something to use it with because it's a great piece of art. The preeminent duck stamp artist in the country, Jim Hautman — I thought I was really doing good. Obviously I didn't —

COMMISSIONER HOLT: No, it's beautiful.

MR. WOOD: — know what was going on.

COMMISSIONER PARKER: Mr. Chairman?

COMMISSIONER BROWN: Yes, sir.

COMMISSIONER PARKER: Why can't it still be used and us turn this fluke of timing into a positive by drawing attention to the fact that this bird is in trouble and we're doing everything we can to help it and blah, blah, blah, blah, blah.

COMMISSIONER HOLT: Well, rules and regulations are ‑‑ you mean, sell it somehow as a fund raiser or some way to raise money for it?

MR. WOOD: I mean, if you had this on the Upland game stamp some guy is going to shoot a Prairie Chicken and claim that he thought that the image on the stamp —

COMMISSIONER HOLT: No, no, and I understand your issue —

MR. WOOD: — you know. We can put a Labrador duck on it and really open up the season.

COMMISSIONER HOLT: Yes, I think John's asking is there some other way we can use it —

MR. WOOD: Well, I don't know. I would —

COMMISSIONER HOLT: — to be a fund raiser —

MR. WOOD: — assume at some point the people that are —

COMMISSIONER HOLT: Of course, you could — you know, put it in an auction somehow —

MR. WOOD: Oh, I mean —

COMMISSIONER HOLT: — through Texas Parks and Wildlife foundation or something —

MR. WOOD: This is not an — I mean, it's an inconvenience to the artist, and he's going to be disappointed, but, I mean, that's just — you know, this is just a drive-by shooting that no one could anticipate, you know. And, frankly, I'm tickled to death.

COMMISSIONER HOLT: Don't use that term.

MR. WOOD: I'm tickled to death that you guys are suspending the season on them. I mean, you know —

COMMISSIONER HOLT: Well, it's the right thing to do.

MR. WOOD: It's the right thing to do.

COMMISSIONER HOLT: It looks like it's the right thing.

MR. WOOD: I mean, this is just a piece of art. You could look at it from the Prairie Chicken side of the bed, you know. Anyway, if it's all right I'll pick something else and we can perhaps disseminate it to you by e-mail for you all to approve?

COMMISSIONER HOLT: Yes, why don't you do it that way. You know, you're the expert on this. So let us know what you think is the most appropriate way. And it's an original, beautiful piece of art. Maybe there's a way then we can, you know, raise some money through an auction with it or something — up in Bivins country or some place. Bivins said he'll pay big money for it.

MR. WOOD: Well, if he would commit now for $25,000 we could get this thing done.

(Simultaneous discussion.)

COMMISSIONER HOLT: Don't you dare shoot one, but you can buy that picture.

MR. WOOD: You might even attach — well, you can shoot one if you pay $25,000.

COMMISSIONER HOLT: Oh, no, no, no. We'll get in trouble now.

MR. WOOD: Anyway, we'll come up with something different and I'll — I mean, the art's not a — that's not a problem.

COMMISSIONER HOLT: Okay. Fair enough.

MR. SMITH: Mr. Chairman, can I just make a suggestion?

COMMISSIONER HOLT: Yes, please.

MR. SMITH: Once Bubba —

COMMISSIONER HOLT: Open conversation.

MR. SMITH: — makes a selection here as to what he thinks would be an appropriate substitution it might be easiest if you want to just delegate that decision-making authority to me so that we can move ahead with that pretty expeditiously as opposed to wait to another meeting.

COMMISSIONER HOLT: Sure.

MR. SMITH: So if you're —

MR. WOOD: I'll just send you — when the art's finished I'll send you a digital image of it, tell you what it is —

MR. SMITH: You think I'm going to have a hard time identifying a wild turkey, Bubba?

(Simultaneous discussion.)

MR. WOOD: The —

COMMISSIONER HOLT: Do we need to make some move and all that or can we —

MR. SMITH: Yes. You're going to need to formally delegate that to me.

COMMISSIONER HOLT: Okay. So moved to delegate that Carter Smith will make a decision on changing, I guess, the bird —

MR. WOOD: Upland game bird stamp.

COMMISSIONER HOLT: — Upland game stamp from one to another.

COMMISSIONER FRIEDKIN: Second.

COMMISSIONER HOLT: Second. All in favor?

(A chorus of ayes.)

COMMISSIONER HOLT: Okay.

MR. WOOD: The first stamp on y'all's right is the blue wing teal by Scott Storm. He's a Minnesota artist — won the federal duck stamp in 2004. And this is the first year we've ever used Scott and his art. Sort of — we get lots of calls during the year of people wanting to know what the contest is —

COMMISSIONER HOLT: Right.

MR. WOOD: — you know, to get art in the deal. You know, someone — and my first question is have you ever entered a duck stamp contest? No, but, you know, I'd like to do the duck stamp. And not every artist that has done our duck stamp has won the federal duck stamp, but a vast majority of them have — or they're real prominent Texas artists that will bring their own market to the deal.

COMMISSIONER HOLT: Right.

MR. WOOD: So — but Scott won in 2004 — yes, 2004 ‑‑ and is a terrific artist. The next piece is the freshwater — that's a white bass by John Dearman. And John Dearman has done 12 stamp prints over the 28 years we've been doing this.

The next piece is by Tom Quinn, who's one of the most famous wildlife artists in the world. It's a Harris hawk, which I found interesting the guy this morning talking about flying his Harris hawk.

COMMISSIONER HOLT: Exactly.

MR. WOOD: I'd love for him to look at it and see what he thought of it. Tom Quinn shows at the Prix de West in Oklahoma City, at the American Masters Show in Los Angeles at the Autry Museum, at the Leigh Yawkey Woodson Art Museum Birds and Art Show, which is by far the most prestigious bird art show in the world. And he's really not a duck stamp artist, but he's a heck of an artist and we needed something that you couldn't shoot. So he won.

The saltwater is a cobia or ling. Don Ray has done two saltwater stamps for us — of a dorado, a dolphin, and a blue marlin. And he's illustrated Saltwater Sportsman, Field & Stream, International Game Fish Association World Record Book, Cabelas' catalogs, a member of the Society of Animal Artists, and pretty much is a saltwater fish specialist, although he has done one freshwater print for us. He's from Vero Beach, Florida. And that's our deal.

COMMISSIONER HOLT: Thank you, sir. As always you've done a tremendous job.

MR. WOOD: Thank you.

COMMISSIONER HOLT: It might be interesting — we have some new — fairly new Commissioners. A couple of years ago you took us through — how the — amounts of dollars have changed so dramatically over the years —

MR. WOOD: Right.

COMMISSIONER HOLT: — dropping. It might be interesting just for people to understand how much we use versus —

MR. WOOD: Right.

COMMISSIONER HOLT: — what is up front.

MR. WOOD: Right. The duck stamp started — at first there was only a duck stamp, it started in 1981. At the time we published that print it was the largest, signed, and numbered limited edition print ever published of any kind, even larger than the federal duck stamp prints. We paid the Department that year $770,000 in royalties.

The Texas duck stamp print, and because of the money it raised, spawned the next 25 state duck stamp print programs, virtually none of which are even in business anymore. They only went two or three years. And, of course, they didn't have 22 million people and Texans and 80 percent of the birds in the Central Flyway. There were lots of things going in our favor.

But — and we didn't have any idea what the ongoing impact was going to be. But the next year everyone learned that on a nationwide basis people collected the First of States, and they started really with the Texas. But the next year our royalty — we paid you all probably $400,000. The number I'm looking at here that Frances has is just the print revenue number. But the real — is the number of stamps also sold with those prints.

And it continued to decline until the infamous 1995 when we automated the license system. And at that point the stamp was no longer required and everyone said, Well, it's not collectible. Now, every other state that has automated their license system still requires a printed duck stamp. But, frankly, that wasn't the way Andy wanted to do it. He had a bigger agenda, and certainly I wasn't going to stand in the way of a bigger agenda.

What we didn't know was, at that time, the real sales pitch was the mailing list that was going to be generated from all these license sales that would be available to sell prints and other things to. They didn't think the person entering that information was going to be a WalMart employee, and, of course, the mailing list is absolutely worthless.

And, now, I think it's prohibited by law to sell because now isn't it under the auspices of the Highway Patrol or something? Isn't that who —

MR. SMITH: There is a statutory prohibition I think.

MR. WOOD: Statutory prohibition for it. So, you know, our puppy died and everyone went on down the road. And you can see from the numbers — we went from $139,000 in royalty to $99,000 the next year, and then it just continued to decline. The good news is is we — the state of Texas has made times a factor of many what every other — any other state — may have made more than all the other states combined on their duck stamp print program because the Commission set it up right and said to us as the winning bidder that, Hey, do it any way you want to, just pay us — you know, tell us how much royalty you're going pay us. And that's what the bid was on.

And it was bid for about five or six years, and the last three or four years we were the only bidders because no — everyone wanted the gravy of the first one, but didn't want to mess with it on an ongoing basis. And so, you know, you've inherited me by default.

But the positive thing I could say is it's still $52,000 a year.

COMMISSIONER HOLT: Yes.

MR. WOOD: And I think I'm the only one showing up here today bringing a check as opposed to telling you it's $880,000, of which you know you're not going to get to work on parks.

Anyway, it's been a great relationship and I really enjoy it. And while it's not as near as big a part of our business as it used to be it's still our identity. I mean, it's the thing I'm proudest of is the amount of money ‑‑ I mean, the wonderful art that we've done — I mean, every great artist in the country has done — Bob Kuhn —

COMMISSIONER HOLT: Oh, absolutely.

MR. WOOD: — Ken Carlton — I mean, it's just remarkable. And still guys want to do it. They know there's not much royalty money in it for them, but they want to do it because it's such a prestigious thing to be with Kuhn and Carlson, among others — and Jim Hautman I might add. Anyway, it's been a lot of fun.

COMMISSIONER HOLT: Well, you've represented us well and you've represented the state well, and I thank you for that and I appreciate it because I know it's deteriorated fairly ‑‑

MR. WOOD: And, of course, the good news is — one thing I might ask you all, last year I requested, frankly of Frances, if she could see if we could use our stamp print art for the Texas Hunting Digest. The reply I got back was Texas Monthly doesn't want to do it. You know, that's the moral equivalent of you telling me you want a cinnamon teal on the duck stamp next year and me not doing it. I mean, you know, that's just not good business. I don't know why we can't use art — publicize the art — you know, Orville Wright was a fabulous 1940 vintage illustrator, but he couldn't clean Bob Kuhn or Jim Hautman's paintbrushes, and you get a royalty off of the art that we would put on there.

And I don't think we're going to sell a lot of prints, but it just seems crazy to perpetuate art that had been used on a Parks and Wildlife cover 50 years ago rather than using this new art that we have every year.

COMMISSIONER HOLT: Write a note and we'll look into it.

MR. WOOD: It won't make up for discontinued stamps, but it will be a stamp, you know.

COMMISSIONER BROWN: Are there any other questions?

COMMISSIONER DUGGINS: What happens to the original?

MR. WOOD: Sometimes the artist has them sold, sometimes we sell them, and, believe it or not, sometimes they just don't sell. But the artist has the original. I mean, if we sold the art we would pay the artist the same commission — or he would pay us the same commission that he normally does — and our commission is a third. You know, that's — but a lot of times the artist will say, I want you — you know, they maintain the ownership of the original that — but they either have it sold or they — you know, you might have a new artist. Scott Storm might ‑‑ he hasn't said, but he might say, You know, I don't want to sell any of my art. I want to keep all of my duck stamp art. I just want to keep it for my kids or something. Sometimes it just goes back to them.

MS. STILES: As an addition, under the contract Mr. Wood gives us conservation prints that we can provide for conservation activities.

MR. WOOD: We give hundreds of artist proofs — or actually conservation edition that the Department gives Ducks Unlimited and, you know — you know, they can't give them all away. Put it this way — I mean, I'm sure you've got a closet that's got a lot of prints in it.

MS. STILES: We do.

MR. WOOD: But that's the deal.

COMMISSIONER BROWN: Any other questions? Thank you very much.

COMMISSIONER HOLT: Thank you, sir. We appreciate you waiting for after lunch.

COMMISSIONER BROWN: Commissioner Parker?

MR. WOOD: Could we have a deal that maybe next year I could be first on the agenda?

COMMISSIONER HOLT: Yes, we — I'm sorry we got you caught up in that.

MR. WOOD: Please. You know, three-and-a-half hours down and five hours wait, adjourn for lunch, and then come back. You know, that's — I know on occasion I'm critical of something the Department's doing, but, you know, that's cruel and unusual punishment, you know. You know, at least —

COMMISSIONER HOLT: That hurts my feelings that you didn't enjoy all four-and-a-half hours sitting there —

MR. WOOD: Hey, listen —

COMMISSIONER HOLT: — listening to all this.

MR. WOOD: You all did great. I could nod off — you know, I was not under the gun. But one of you all did too.

COMMISSIONER HOLT: Yes, sir.

COMMISSIONER PARKER: Let me ask you a question. Say, for instance, the migratory game bird stamp — when we originally — and I say we because this was — what year did we do that, Bubba?

MR. WOOD: 1981.

COMMISSIONER PARKER: 1981. Ducks Unlimited was going boom-boom across the state. And —

MR. WOOD: John, let me tell them the history of that. The duck stamp legislation got passed — it was introduced by whoever the head of Ducks Unlimited was for that year for the state of Texas. John Wilson, who was a senator from LaGrange, carried the legislation. And the way the bill was written was that 50 percent of all the revenues generated from the stamp and the prints — they didn't even mention prints because they didn't even know anything about — they didn't even know about the possibility of the print — would go to Ducks Unlimited.

And I went to Perry Bass, who was the chairman, and I said, Mr. Bass, this is crazy. Texas — you know, at that time Ducks Unlimited had singleness of purpose, which meant every penny they sold — that they spent, they spent it in Canada, you know, because that's where the ducks nested, and also because it wasn't a political football if it all went to Canada. You know, Minnesota wasn't fighting with Texas or California about who got the money. And Perry Bass and Gib Lewis turned that bill around and redrafted the bill where the Department got all the money and the money stayed here.

You know, because this money originally qualified for Pittman-Robertson and Dingell-Johnson matching funds. I understand now that it's a multiple effect, but I understand now for the last 20 years that we've been maxed out on Dingell-Johnson and Pittman-Robertson money anyway. So it really doesn't now, but back then it really — it brought, you know, millions of dollars in addition to what we —

COMMISSIONER HOLT: I'll be [inaudible].

COMMISSIONER PARKER: My question was the migratory game bird stamp may be used ‑‑ according to Texas law — may be used only for management and research concerning migratory game birds — acquisition, lease, or development of migratory game bird habitats. Contracts, donations, and grants — and it's — all that is under Section 43.659. But my question is what acquisition, lease, or development of migratory game bird habitats have we made in the last six years or the last 12 years?

MR. SMITH: I can't answer that question in terms of the use of those funds — the duck stamp funds to acquire migratory waterfowl habitats. Scott, can you — or can we get back to you with an answer on that? I just don't know, Commissioner. It's a good question. Can anybody answer it here?

MR. BORUFF: I don't think we want to venture a guess.

MR. SMITH: Okay. Could we get you answer on that?

COMMISSIONER PARKER: I think I already know, but go ahead and you get me an answer.

MR. SMITH: Okay.

COMMISSIONER BROWN: If there are no further questions or comments I will place this item on the Thursday Commission meeting agenda for public comment and action. And in the interest of time we will hear Item Number 3 tomorrow.

COMMISSIONER HOLT: Thank you.

COMMISSIONER BROWN: Thank you. So we will hear Item Number 3 tomorrow. And we'll take up Committee Item Number 4, Briefing on Recently Concluded and Ongoing Internal Audit Activities and Reports and Request Approval of the Fiscal Year 2009 Internal Audit Plan. And Carlos Contreras is going to make the presentation.

MR. CONTRERAS: Good afternoon, Chairman, Commission members, and Mr. Smith. Thanks for the opportunity to provide you an update on the activities of the office of Internal Audit.

During our last meeting we were requested to restructure our reporting mechanisms so that we could actually — instead of having straight compliance audits what we needed to do was do a list ranking of the severity of the findings that we found. Subsequent to the meeting we met with state parks and executive management to develop a scoring mechanism for the non-compliance issues. And the severity of the non-compliance issues is based on a ranking from the findings that are brought forth from the individual audits. And then another component is the risk ranking associated with the revenue for the year, and that is a function of the revenue and the visitation for that time.

We worked with state parks and came to an agreement on the proposal that we had provided for the risk ranking component for our reporting. And during the process now for rounds five and six we've provided those results in the rankings to state park for their use in making their management decisions.

The severity of the non-compliance is scored, and park audit results are classified into one of the four agreed-on rankings that we've come up with. Based on the score the rankings are compliant, least severe, moderately severe, and most severe. And that's — like I said, that's based on a scoring.

So moving ahead to round five, which is the first round that we had where we used this scoring mechanism, we found that of the 12 parks that four of them were compliant with the procedures and their fiscal control plan. And the testing period for this round of audits was in March — or six months after the initial training session.

And the results total for round five were we had four parks that were compliant, four that were in the least severe category, three moderately severe, and one in the most severe category. So that puts two-thirds of the parks either compliant or having a minimum of errors.

In round six we had discussed the possibility of re-auditing some of the parks that proved problematic in rounds one and two. So we went ahead and included six of the 13 parks as re-audits. And when we finished that round five of the 13 parks were compliant, of which four of them were re-audited. The test weeks for that were in April and May and were seven months following the original training sessions.

Now, for round six we had five parks compliant, four of them that were re-audited, one of them — on their initial audit they were compliant — two least severe, four moderately severe, and two in the most severe category.

Again, in round seven and eight — for round seven we have drafted the response letters and written a report — and that ought to be coming out here sometime later on this month. And we're in the process of reviewing round eight.

I did want to speak a little bit about what we've done here since the beginning of the fiscal year. We had — obviously round one of the park audits was in September. We completed five parks in the first round. In October we also did five parks, and for this month we plan to do 13 parks. So far for this fiscal year — by the end of the month we should have 23 of the parks for FY '09 audited, and that will be about 48 percent of the total 2007 revenue that we saw. And that's what we based the '09 audits on.

Additional audits — if — in September and October of 2009 [sic] we only went to five parks, but that's because we also added some lease concession audits to our audit plan. Again, within a couple of days you should receive the Cedar Hill State Park report — that one's completed. And we have the Eisenhower State Park that's in the reporting process and our sand and gravel audit that we're completing also.

As far as administration of the office, tomorrow we're seeking approval of the FY 2009 Audit Plan that's required for the Government Code, Chapter 2102, Texas Internal Audit Act. Earlier — actually last week I distributed the Internal Audit Annual Report that goes out to four of the oversight agencies, which is the Governor's Office, the Sunset, the LBB, and the State Auditor's Office. And I believe each of you all received a hard copy of that also.

We've been working with several of the divisions — a lot in particular with internal affairs. And what we've done is we've developed a fraud, waste, and abuse e-mail box and a hotline that we've set up so that the public and staff can report suspected violations. As we move further down that path I am seeking information so that we can create some posters for the use here at headquarters and out in the field offices.

And what we're also doing is taking a look at the overall policies because some of them — well, they're located in two distinct areas in budget and financing and human resources. And what I'd like to do is work with Ann and H.R. and Mary's group so that we can consolidate and strengthen the fraud policy that we have that's currently in existence.

COMMISSIONER BROWN: Who gets that information? Who is going to receive the information or actually audit —

MR. CONTRERAS: Take a look at that?

COMMISSIONER BROWN: Yes.

MR. CONTRERAS: The way we've got the mailboxes set up is Grahme Jones from Internal Affairs and I are the primaries, and we have two individuals — one in each of our sections — that's our secondary person that's going to receive it. And actually it's going to be I guess up to the discretion of Grahme as far as how he wants to route that out. What Internal Audit will do is act in a supporting role for a lot of the instances that we find where there's been, you know, any problems with fraud, waste, and abuse or which requires I guess an investigation as opposed to audit work.

And, finally, we revised the Audit Charter and got it officially approved and got everybody's signature for that. And that concludes my presentation. I'll be happy to answer any questions you might have. Yes, sir.

COMMISSIONER DUGGINS: I got this — as I'm sure each of you did — this anonymous letter about the game warden contract —

MR. SMITH: Game warden training center?

COMMISSIONER DUGGINS: Yes. Did that — does that fall within this fraud, waste, and abuse?

MR. SMITH: Well, it potentially could. That letter was sent to Commissioners, as well as to I believe Pete Flores. And we have investigated that and found there to be —

COMMISSIONER DUGGINS: Well, I understand there was no — I'm just say is that the type of complaint that falls within the scope of this bullet — third bullet point?

MR. CONTRERAS: Yes, sir. I believe it would. Not only internally, you know, if there's fraud or theft, but also with external providers — contractors or vendors. You know, it's essential that we take a look at those relationships too just in case there's some wrongdoing.

MR. SMITH: Well, and also just to add to it, make sure we exonerate staff that are being falsely accused of things. So I want to make sure that we've got a fair and transparent process because we have people that bring forth allegations that are unfounded on a very regular basis — to make sure that we're able to clear their good name. We need to look at that objectively. So that's a key element of it.

COMMISSIONER MARTIN: I want to thank you for that ranking system. It helps in mentally evaluating, you know, where each park really is instead of under the umbrella of, you know, pass or fail.

MR. CONTRERAS: Right. Yes, that was a problem before. It was either, you know, like you say, black or white and they were in compliance or they weren't. And this provides a much clearer picture I think for state parks, in which they can base their decisions on.

COMMISSIONER FALCON: Again, thank you for that system. I think that certainly helps us. And now we can ask the executive director some questions based on this. What are we doing with the most severe problem parks, Carter?

MR. SMITH: Absolutely. And that — Scott, you want to come forward — Walt, too — Walt to address that because that does give us an area of focus on that.

MR. DABNEY: Afternoon, Commissioners. Walt Dabney, State Parks Director. We receive each of these audits and go through them line by line and come up with a management response for these things and follow up. I just met with my regional directors yesterday again. We went through all of this again as to how we're dealing with each one of these audits.

I just met with the superintendent for Mustang Island just a few minutes ago, and he had just had a re-audit and did find findings on his second audit. He went from 57 to 5. And I truly do believe with a couple of exceptions that we are constantly improving. We are truly struggling with what is a very — some of you have seen this — a very manual situation. And we're at the same time trying to develop a very automated system, which will be TexParks, which will eliminate a lot of the manual stuff that we're doing.

But we are working diligently to try to address these. If at any case — and we're dealing with a couple of them right now — there's any indication that the superintendent is not taking this serious we're going to deal with that from a disciplinary standpoint. And we discussed that as of yesterday, and we have two in the mill that that is, in fact, occurring right now that — whether there's intent or just lack of success we're going to deal with that. And we are taking it extremely serious.

Our folks are trying, and they're trying hard. And if I believed otherwise I would tell you so. But that's just — this has been very difficult, and some of it's staffing, some of it's these manual processes, and I would really encourage you to go out and look at some of the things they are doing to try to make this work and some of the things that makes it difficult to be successful in all cases.

We were sorry to have Hurricane Ike strike us, and we've got two parks that we got pretty well wiped out. We have literally taken four positions out of those two parks for state parks and we've established four positions that we're calling fiscal control specialists. They're not auditors — they're people that are going to go out and — each one of them is going to work for two regional directors. And they're going to go out to parks that the regional directors feel are the ones that we need to spend the most time with. And in many cases those are the bigger parks that have the most revenue we're handling. And they will stay there from two hours to two weeks and work with the staff, again, training and working with these folks to seriously improve the process.

Another thing you have in state parks is this is very manual, very complex, very difficult, and our turnover rate in positions that we're paying $9 an hour for is constant, which makes your training challenges absolutely constant. And that makes it even more daunting because you're trying to hire people at not very much money out in the middle of nowhere and get them trained up in something that's not easy to do anyway. And I'm not trying to make excuses, but this has been a challenge for all our folks in state parks, and we're taking it very seriously. And I think Carlos will tell you we are making continuous progress, and it's not perfect yet, but some of them are getting to be close to perfect.

And then we're going to have a new automated system and we're going to have to go all the way back in, redo the fiscal control plans, retrain everybody with the new system, and start again. So it's going to be a little bit of transition here for a while.

COMMISSIONER MARTIN: Are some of the parks that are in the most severe because of Hurricane Ike?

MR. DABNEY: No, ma'am.

COMMISSIONER MARTIN: Oh,

MR. DABNEY: I don't think that has anything to do with it.

COMMISSIONER MARTIN: Okay. Thanks.

MR. DABNEY; One of them that is severe was hammered badly by Ike, but that won't be an excuse for why we had the audit finding the way it was.

COMMISSIONER BROWN: We appreciate the fact that you obviously recognize the significance and importance of what we're doing and the function of what internal audit is. And I know Rome was not built in a day, but I think we've made great strides in getting there.

MR. DABNEY: I think so.

COMMISSIONER BROWN: Do appreciate the effort.

MR. DABNEY: Appreciate it.

MR. SMITH: Commissioner, I'll tell you right after Houston, Walt and Scott and Dan Sholly, I mean, came back and addressed this immediately in terms of conveying the seriousness of the issue and the expectations of the regional director and the park superintendents that we were going to comply with the fiscal controls — and that that was a very, very high level expectation of this agency and the Commission.

So I just want you to know everybody responded right after the Houston discussion, which was very helpful, in addition to the development of the severity rankings, which I think has been a very helpful management tool to allow us to know where we really need to focus our resources on where the problems are.

COMMISSIONER BROWN: Any other questions? If there are no further questions or comments I will place the Fiscal Year 2009 Internal Audit Plan section of the item on the Thursday Commission meeting agenda for public comment and action. Mr. Chairman, we're going — we are going to withdraw Item Number 5. And I believe that completes my Committee report.

(Whereupon, the Finance Committee meeting was concluded.)

C E R T I F I C A T E

MEETING OF: Texas Parks and Wildlife Commission
Finance Committee
LOCATION: Austin, Texas
DATE: November 5, 2008

I do hereby certify that the foregoing pages, numbers 1 through 72, 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.

11/14/2008
(Transcriber) (Date)
On the Record Reporting
3307 Northland, Suite 315
Austin, Texas 78731