Texas Parks and Wildlife Commission
Finance Committee Meeting

Nov. 17, 1999

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


                                                           1
                       

        8                BE IT REMEMBERED that heretofore on 

        9     the 17th day of November 1999, there came on 

       10     to be heard matters under the regulatory 

       11     authority of the Parks and Wildlife Commission 

       12     of Texas, in the commission hearing room of 

       13     the Texas Parks and Wildlife Headquarters 

       14     complex, Austin, Travis County, Texas, 

       15     beginning at 10:25 a.m. to wit:

       16     
              APPEARANCES:
       17     THE PARKS AND WILDLIFE COMMISSION:
              
       18          FINANCE COMMITTEE:
                   CHAIR:     Ernest Angelo, Jr. 
       19                     Lee M. Bass (absent)
                              Dick Heath (absent)
       20                     John Avila, Jr.
                              Carol E. Dinkins
       21                     Alvin L. Henry (absent)
                              Katharine Armstrong Idsal
       22                     Nolan Ryan
                              Mark E. Watson, Jr.
       23     
                                   
       24     
              THE PARKS AND WILDLIFE DEPARTMENT:
       25     Andrew H. Sansom, Executive Director



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                                                           2


        1                    NOVEMBER 17, 1999

        2              MORNING SESSION:  10:25 a.m.

        3                        * * * * *

        4                    FINANCE COMMITTEE

        5                        * * * * *

        6                COMMISSIONER ANGELO:  The first 

        7     item will be to approve the committee minutes 

        8     from the previous meeting.  Do we have a 

        9     motion to that effect?

       10                COMMISSIONER DINKINS:  So move.

       11                COMMISSIONER AVILA:  Second.

       12                COMMISSIONER ANGELO:  All in favor 

       13     please say aye. 

       14          (Motion passed unanimously.)

       15     AGENDA ITEM NO. 1:  BRIEFING - CHAIRMAN'S 

       16     CHARGES.

       17     AGENDA ITEM NO. 2:  BRIEFING - FINANCIAL 

       18     OVERVIEW.

       19                COMMISSIONER ANGELO:  We have an 

       20     official briefing overview by Jayna Burgdorf.

       21                MS. BURGDORF:  Good morning.  This 

       22     is the financial review.  We have three 

       23     sections of the presentation this morning for 

       24     you.  One is the standard updated financial 

       25     information for major accounts primarily 



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                                                           3


        1     geared towards the revenue.  We have a special 

        2     update on the Super Combo and Big Time Texas 

        3     Hunt sales.  And actually, Lydia Saldaņa is 

        4     going to join me and recap the marketing 

        5     efforts.  And the operating budget status will 

        6     be a final slide that I will show you as it 

        7     relates to our expenditures. 

        8          Account 64, State Parks:  September 

        9     through October, the revenue is up 22 percent 

       10     to 2.6 million, and that is a $664,000 

       11     increase.  It is in large part due to the poor 

       12     year that we had during this same time frame 

       13     last year.  If y'all will remember, some of 

       14     our parks were closed due to flooding, and 

       15     just overall, the weather has been much more 

       16     positive lately.  Garner, for example, is up 

       17     $55,000 compared to prior year alone. 

       18          We, at this time, have only collected 16 

       19     percent of the revenue estimate.  So we are 

       20     not recommending any changes at this time.  

       21     It's very early in the fiscal year to do that.

       22          This is the income statement of sorts for 

       23     Parks and Wildlife as far as Account 64 goes.  

       24     We start with our cash balance as of September 

       25     1 at $12 million.  We add in our expected 



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                                                           4


        1     revenue of entrance and use fees, sporting 

        2     goods sales tax allocation, and other, which 

        3     is primarily our TCP sales, which is the Texas 

        4     Conservation Passport, annual pass of sorts, 

        5     and some of the magazine revenue associated 

        6     with the State Park Account. 

        7          We subtract out our expenditures which 

        8     include operations, which is the operating 

        9     budget associated with Account 64, and also 

       10     the employee benefits and the grants related 

       11     to Account 64.  Under Capital and Other, that 

       12     primarily represents your bond payment at $4 

       13     million, $1 million for donations and other 

       14     dedications, and $2.5 million for capital.

       15          Prior year obligations represent the 

       16     accounts payable and encumbrances from the 

       17     previous fiscal year through September 30th. 

       18          The last item there is the biennial 

       19     allocation.  Basically that's an effort to 

       20     address the legislature's request that Parks 

       21     and Wildlife use all available cash resources.  

       22     And so our -- what used to be our estimated 

       23     revenue allocation in any one time revenue 

       24     increases are now being applied on a biennial 

       25     basis.  And so this is really $2 million that 



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                                                           5


        1     we're holding to cover our appropriation for 

        2     next fiscal year. 

        3          That leaves us with an ending available 

        4     balance of a million.  This is in large part 

        5     due to the change in policy, again to maximize 

        6     our available cash.  This year we have a 

        7     policy that says all your obligations from the 

        8     previous fiscal year as it relates to your 

        9     budget, your operating budget.  Again capital, 

       10     we have approval to spend capital over five 

       11     years, but the operating budget, our policy is 

       12     now that it must be paid or encumbered one 

       13     month after the fiscal year or it will affect 

       14     the current year's budget.  And that allows us 

       15     to much more quickly capture what those 

       16     obligations are and what money is really freed 

       17     up that was not spent in the previous years.

       18                COMMISSIONER ANGELO:  Jayna, how is 

       19     that different from what you've done before? 

       20                MS. BURGDORF:  Well, before your 

       21     prior year obligations -- right.  We are 

       22     basically finding out much sooner what our 

       23     obligations are, and at the same time, having 

       24     some savings.  In the past, we would carry the 

       25     remaining budget from the previous year under 



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                                                           6


        1     prior year obligations, and we would 

        2     potentially carry that all the way out through 

        3     January.  So now we know at a much quicker 

        4     date what that lapse was. 

        5          Account 9, Game, Fish and Water Safety, 

        6     your two primary fee driven revenue sources 

        7     are boat registration and titling license 

        8     sales.  Boat registration is up over prior 

        9     year.  Again, a reminder that boat 

       10     registrations are valid for two years, and so 

       11     when we look at our projects we actually take 

       12     into account, yes, this year's increase over 

       13     prior year, but also the previous year's.  We 

       14     have only collected 14 percent of our original 

       15     estimate.  And so we are not recommending any 

       16     change at this time. 

       17          Okay.  License sales, a very positive 

       18     report.  It's up almost $2.3 million through 

       19     November 10th.  The primary drivers are the 

       20     Super Combo and Big Time Texas Hunts.  I put 

       21     some of the other statistics up there, 

       22     although they are not the primary drivers.  

       23     Non-resident hunting is up.  And because 

       24     that's a $250 license, 8,000 -- an 8,000 item 

       25     increase can mean a significant amount of 



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                                                           7


        1     money.  But the fishing license sales and the 

        2     saltwater stamps sales are also up 

        3     significantly, and those are real drivers.  

        4     They reflect the quality of the fishing for 

        5     the red drum and spotted sea trout and the 

        6     good weather that we've been having. 

        7          The other thing I will mention, the 

        8     numbers there on Big Time Texas Hunts are 

        9     slightly different than what Lydia is going to 

       10     show you.  What those numbers are, and it's 

       11     only off by a thousand, but this is what we 

       12     collected this year for sales.  There were 

       13     some customers last year who did not make the 

       14     deadline, and so their purchases are actually 

       15     automatically, they may not know it, but 

       16     they're rolled into this drawing.  So her 

       17     numbers will reflect the total drawing. 

       18          License sales are up, but one of the 

       19     reasons we are not requesting a revenue 

       20     adjustment is because the increases in the 

       21     fishing license and the saltwater stamp may in 

       22     actuality just represent early sales.  At this 

       23     point, we have -- we don't necessarily know 

       24     that those are people buying licenses that 

       25     wouldn't have otherwise.  They may just be 



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                                                           8


        1     purchasing them early because of the good 

        2     weather. 

        3          And the financial statement:  September 

        4     12 cash balance of $32 million.  License sales 

        5     at 61 million.  Boat fees at $14 million.  

        6     Your federal funds at $34 million, which 

        7     include the Sport Fish and Wildlife 

        8     Restoration grants, boating access and EPA 

        9     grants. 

       10          Other:  At $13 million, which includes 

       11     interest earnings, fines, magazine revenue, 

       12     mineral leases, just lots of miscellaneous 

       13     revenues.  Less the expenditures, again the 

       14     operations are both the operating budget, the 

       15     employee benefits and in any grants that flow 

       16     through Account 9. 

       17          Capital and Other represents a capital 

       18     budget of $9 million and dedications such as 

       19     stamps at $3.5 million.

       20          Prior year obligations at $24 million.  

       21     And again, the biennial allocation at $5.  The 

       22     ERA for Account 9 was significantly higher 

       23     than Account 64 because of the volume of 

       24     revenue, which leaves us with an ending 

       25     available balance of $4 million. 




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                                                           9


        1          And if -- are there any questions on that 

        2     section because I'll move into the Super 

        3     Combo?

        4                COMMISSIONER DINKINS:  I would like 

        5     to ask about the Texas Horned Lizard license 

        6     sales.

        7                MS. BURGDORF:  Well, we can -- I 

        8     think that will fit right in if you have that 

        9     information.  Do you want to come up?

       10                COMMISSIONER DINKINS:  I saw an 

       11     article on the cover of the Houston Chronicle 

       12     within the last week or so, and I thought that 

       13     since they'd announced it, maybe you had 

       14     gotten enough orders to go ahead and --

       15                MS. SALDAŅA:  Not quite yet.  We're 

       16     just under a thousand now.  That hit at the 

       17     Houston Chronicle resulted in our phones 

       18     literally ringing off the hook.  We got 

       19     hundreds of phone calls based on that.

       20                COMMISSIONER DINKINS:  I saw the 

       21     applications at the door, too.

       22                MS. SALDAŅA:  We can certainly do 

       23     that.

       24                MS. BURGDORF:  Real briefly let me 

       25     show you some historical numbers.  The initial 



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                                                          10


        1     survey of combination holders back in 1996, 

        2     they told us that half of them would purchase 

        3     a license, and that was about 500,000 

        4     combination holders that year.  They basically 

        5     said that half of them would purchase a Super 

        6     Combo with all the stamps for $49.  And what 

        7     we've seen through marketing efforts, word of 

        8     mouth, education of retailers is that that 

        9     number has grown, and now as of this year we 

       10     have surpassed that expectation, that 

       11     $250,000 -- or excuse me -- 250,000 licenses, 

       12     and that's because of the targeted marketing.  

       13     And just to note as of this time last year, we 

       14     had sold 94 percent of Super Combos.  So that 

       15     number may grow a little, but in general 

       16     that's what we expect will be our Super Combo 

       17     sales for this year.

       18          And I'm going to go ahead and turn it 

       19     over to Lydia.

       20                MS. SALDAŅA:  I'm Lydia Saldaņa, 

       21     Director of Communications.  And I'm going to 

       22     go into some detail about the marketing 

       23     efforts for both the Super Combo program, as 

       24     well as the Big Time Texas Hunts program.  It 

       25     has been or is the largest scale direct 



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                                                          11


        1     marketing effort that we've ever done, at 

        2     least since I've been here, and for the most 

        3     part have been successful. 

        4          The results that we have garnered and 

        5     what we did our marketing strategies for both 

        6     were based on the research that we did this 

        7     last year.  And one of the things that we 

        8     found out is that doing a renewal reminder for 

        9     Super Combo definitely had a positive impact.  

       10     Now, what we did this year was we developed a 

       11     newsletter.  We didn't actually test a 

       12     newsletter, but we ended up producing a 

       13     newsletter called the Hook and Bullet that we 

       14     direct mailed to all 244,000 Super Combo 

       15     customers.  It was mailed with a personnel 

       16     letter, as well, and it reminded our Super 

       17     Combo customers to renew their license.  It 

       18     was also a communication piece to our core 

       19     customers.  And we got some very, very 

       20     positive feedback on that.

       21          We also tested mailing a letter to our 

       22     Combo customers that have zero stamps and one 

       23     stamp to find out if it would be an effective 

       24     strategy next year to do a direct mail to 

       25     them, and we certainly found that it was.  The 



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                                                          12


        1     letter encouraged them to upgrade.  And we 

        2     mailed 50,000 of those letters out today as a 

        3     test -- or this year as a test. 

        4          Now, what we found was that those 

        5     customers that did get the letter did upgrade 

        6     at a higher rate than those who didn't.  

        7     Specifically those who had no stamps, they 

        8     converted at a 4.5 percent higher rate than 

        9     those who did not get the letter, and 7.2 

       10     percent less for those with one stamp.  Based 

       11     on that -- and it doesn't seem like much.  

       12     Those percentages don't seem like much, but 

       13     with a product that costs $49, it certainly 

       14     adds up quick.  What this suggests for us next 

       15     year is that we have the potential to generate 

       16     an additional $100,000 by doing a direct mail 

       17     effort to all of our current combination 

       18     customers that either have no stamp or one 

       19     stamp and convert them up.  So that's 

       20     certainly what we're going to be recommending 

       21     that we do next year. 

       22          Another note about in this newsletter.  

       23     We did -- the research projects were separate.  

       24     I mean, we were testing, and what the research 

       25     that we did that resulted in our strategy for 



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                                                          13


        1     the Big Time Texas Hunts was actually for 

        2     Texas Grand Slam.  That's what we were doing 

        3     research on.  And then we also researched 

        4     separately the Super Combo customers.  What we 

        5     found was that they were the same target.  So 

        6     what we ended up doing instead of doing two 

        7     separate mailings, we combined the mailing, we 

        8     saved postage costs, and with that mailing 

        9     cost savings, we ended up producing the 

       10     newsletter.  So I think it was a calculated 

       11     risk, but I think it has paid off. 

       12          Now, specifically with the Big Time -- 

       13     oh, a little bit more information about the 

       14     Super Combo newsletter.  We got very, very 

       15     positive feedback from our customers.  Our 

       16     customers like to get information from us.  We 

       17     did a little survey for them, and I was 

       18     surprised at the number of responses that we 

       19     got, so was our research staff who had to 

       20     input all the information.  We got over 1,000 

       21     mailed back surveys, lots of e-mailed 

       22     responses, and we're still tabulating that 

       23     information.  But again, an overwhelming, 

       24     positive response, about 95 percent had very, 

       25     very positive things to say about the 



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                                                          14


        1     communication effort.  And overall, the kind 

        2     of comments we got was that our customers want 

        3     more information about, you know, what, when 

        4     and where information about hunting and 

        5     fishing.  So we'll be looking at doing that 

        6     again next year.

        7                COMMISSIONER RYAN:  Lydia, what did 

        8     the newsletter cost us? 

        9                MS. SALDAŅA:  Darcy Hamburg, 

       10     Marketing Director, is here with us.  Do you 

       11     have --

       12                MS. HAMBURG:  $13,000 (inaudible).

       13                MS. SALDAŅA:  Darcy, why don't you 

       14     come up here.  This is Darcy Hamburg, 

       15     Marketing Director. 

       16                MS. HAMBURG:  The newsletter 

       17     itself, the newsletter was a $13,000 cost, and 

       18     then we included that in the mailing to the 

       19     customers.

       20                COMMISSIONER RYAN:  How many of 

       21     those did we produce? 

       22                MS. HAMBURG:   We produced 250,000 

       23     newsletters.

       24                COMMISSIONER ANGELO:  So this was a 

       25     financially profitable even if those people 



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                                                          15


        1     didn't continue to be Super Combo buyers next 

        2     year.

        3                MS. SALDAŅA:  Oh, absolutely.  Very 

        4     much.

        5                COMMISSIONER ANGELO:  Very solid 

        6     profit.

        7                MS. HAMBURG:   Very much so.

        8                MS. SALDAŅA:  I think you -- I 

        9     mean, if you look at that -- that $13,000 

       10     expense, I think that's certainly worth 

       11     communicating to --

       12                COMMISSIONER ANGELO:  You got to 

       13     add the postage to that.

       14                MS. SALDAŅA:  Right.  Right.  And 

       15     again, we have this piggybacking in the Big 

       16     Time Texas Hunt mailing to save that postage 

       17     cost.

       18                MS. HAMBURG:  So we didn't even 

       19     have postage cost.

       20                MR. SANSOM:  We also mailed the 

       21     newsletter to all of our lifetime license 

       22     holders, as well, with a personal letter as a 

       23     kind of a relationship issue.

       24                MS. BURGDORF:  Super Combo revenue 

       25     is up $1.3 million.  And the combination is 



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        1     down half a million, if that gives you an 

        2     idea.

        3                MS. SALDAŅA:  Okay.  Going through 

        4     the Big Time Texas Hunts results for this 

        5     year, what I'm going to do in this portion of 

        6     the presentation is go through what our 

        7     marketing strategy was, historical sales 

        8     comparisons, and we're comparing to Texas 

        9     Grand Slam sales, and also the direct mail 

       10     results.

       11          Our initial strategy here was to develop 

       12     an umbrella brand for the sales that we were 

       13     offering this year.  Certainly the Texas Grand 

       14     Slam, the previous products for the Grand Slam 

       15     and the Texas Exotic Safari, and we also 

       16     developed new products this year.  And that 

       17     was the White-tail Bonanza, the Waterfowl 

       18     adventure and the Big Time Texas Bird Hunt.  

       19     So we were packaging all of these hunts under 

       20     one umbrella brand of the Big Time Texas 

       21     Hunts.  Certainly the strategy in doing that 

       22     was obviously to broaden the appeal of the 

       23     program, make it more attractive to more 

       24     hunters, increase the number of winners, 

       25     maximize the cost effectiveness of the 



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        1     marketing effort, because again, what had been 

        2     happening were individual sale pieces, and we 

        3     developed one sales piece that encompassed all 

        4     the products.  And certainly that improved 

        5     customer convenience in terms of ordering and 

        6     just finding out about the hunts. 

        7          We mailed to all of our 1999 Grand Slam 

        8     customers.  That was 11,000 from the previous 

        9     year.  We mailed to all 244,000 Super Combo 

       10     customers from last year.  We also, this year, 

       11     tested direct mail to lifetime license holders 

       12     and non-residents to see if we could expand 

       13     our reach next year.

       14          We mail a personal letter with a flyer 

       15     and a postage-paid return envelope.  We tested 

       16     both postage-paid envelopes and those that 

       17     were not postage paid and found that we got a 

       18     better return obviously with postage-paid 

       19     envelopes, and that the increase of more 

       20     revenue more than offset the amount of money 

       21     that that cost.  And we also, what we did here 

       22     was we mailed an initial letter in August 

       23     prior to the Super Combo sales going on sale.  

       24     And then we followed up with a reminder 

       25     letter.  We literally were frantically 



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                                                          18


        1     entering all of the entrances that came in 

        2     after the deadline, and some of these results 

        3     we were tweaking this morning.  So a lot of 

        4     stuff was coming in very, very rapidly toward 

        5     the end. 

        6          Here's the historical data.  In 1996 we 

        7     sold 6,829 Texas Grand Slams.  In 1997 that 

        8     figure went up 49 percent to 10,177.  Last 

        9     year it jumped 117 percent, and 65 percent of 

       10     that increase was due to the direct mail test.  

       11     This year the results were 71,297.  As Jayna 

       12     mentioned, that includes some of the last year 

       13     entrances -- entries that didn't make it.  So 

       14     that's 223 percent increase. 

       15          In terms of the response rate, we found 

       16     certainly that our previous Grand Slam buyers 

       17     were our best customers.  They had a 40.7 

       18     percent response rate.

       19          Super Combo customers had a 5.3 percent 

       20     response rate.  Our lifetime customer had a 

       21     2.5 percent response rate.  We think that's 

       22     going to go up next year because we only did 

       23     one mailing to the lifetime license holders 

       24     and that was in October.  We'll do the same 

       25     thing with the lifetime license holders next 



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                                                          19


        1     year of doing a double mailing.  And we feel 

        2     very confident that that number will go up. 

        3          And the non-resident, I think that's the 

        4     most surprising number in here that that 

        5     return was so high.  We did have an issue with 

        6     our mail house this year.  And we had some 

        7     actual letters that did not go out.  So we're 

        8     working through some of those issues.  That 

        9     number will likely go up next year simply 

       10     because about 12,000 letters did not make it 

       11     out.  And then late entries represent about 

       12     1100.  So again, the direct mail total was 

       13     63,000.

       14          And then all the others, those are folks 

       15     that bought either, you know, at the -- 

       16     through point of sale or perhaps at Expo, that 

       17     totaled 7400. 

       18          So the grand total was 71,297. 

       19          Some interesting findings.  What we did 

       20     find again was that the direct mail is 90 

       21     percent of the sales as compared to 65 percent 

       22     last year.  So the vast majority of our sales 

       23     for this program came through direct mail.

       24                COMMISSIONER ANGELO:  Do you have a 

       25     feeling what the direct costs of that 



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                                                          20


        1     marketing effort would be compared to --

        2                MS. SALDAŅA:  Yeah.  And that will 

        3     be the very last slide.  We also found that 

        4     the addition of new hunts -- we were a little 

        5     concerned with adding hunts, that they might 

        6     somehow cannibalize sales, but that did not 

        7     happen.  It didn't increase the response rate, 

        8     but it did increase the number of chances 

        9     purchased.  Last year the average buyer bought 

       10     two chances.  This year they bought four.  So 

       11     clearly having a, you know, broader menu of 

       12     hunts to choose from resulted in additional 

       13     sales.

       14          Texas Grand Slam was the most popular 

       15     package, counting for 34 percent of all 

       16     chances sold.  The Texas White-tail Bonanza 

       17     came in a very strong second with 28 percent 

       18     of the sales.  The Texas Exotic Safari had 17 

       19     percent.  The Big Time Bird Hunt, 14 percent.  

       20     And the Waterfowl adventure had 7 percent of 

       21     the sales. 

       22          Here is, I guess, the money slide here.  

       23     The gross revenue, again, was 712,970.  In 

       24     terms of out-of-pocket costs, the direct mail 

       25     cost 178,100.  That included the production of 



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                                                          21


        1     the piece and the postage.  The hunt cost 

        2     totaled about 70,500.  All these costs have 

        3     not been actualized some of them are 

        4     estimates.  So these will be tweaked a little 

        5     bit as we go through the process of doing the 

        6     purchases of the hunts -- or Wildlife does the 

        7     purchases of the hunts.

        8          An additional 20,000 in other costs that 

        9     included, for example, hiring temporaries to 

       10     input all the information.  It also included, 

       11     for example, the cost of producing a piece for 

       12     the public hunt guide. 

       13          But our total out-of-pocket expenses were 

       14     $268,600, for a net revenue total of $444,370.  

       15     Now Bob Cook always asks me, what about staff 

       16     costs.  So we estimate marketing and wildlife 

       17     staff costs at about $25,000. 

       18          But overall, we certainly feel like this 

       19     has been a successful program.  We have a lot 

       20     of analysis of the results to do.  We're going 

       21     to be further refining these numbers.  We'll 

       22     be analyzing the purchase behavior by customer 

       23     type to see who purchased what and at what 

       24     rate they purchased.  And we will certainly be 

       25     determining the return on investment for each 



.

                                                          22


        1     individual hunt package to make sure that each 

        2     hunt we're offering is profitable in and of 

        3     itself.  We'll continue to tweak and improve.  

        4     And we're still verifying the names of the 

        5     hunters.  We'll be making the announcement 

        6     tomorrow of who won what. 

        7          Any questions?

        8                MR. SANSOM:  Members, I think it's 

        9     important to look at this.  I mean, it's 

       10     obviously very exciting that it is producing 

       11     revenue.  It's also a major opportunity to 

       12     provide the opportunity in a state where 

       13     average citizens do not have these kinds of 

       14     opportunities.  So if you imagine the 

       15     situation which occurs in most of the western 

       16     state where people draw for virtually all 

       17     hunting opportunity, what we've done here with 

       18     the blessed support of private landowners is 

       19     to allow us to provide hunting opportunities 

       20     to average citizens on places where they 

       21     otherwise would not be allowed to hunt.  So 

       22     it's an opportunity issue as well as a revenue 

       23     issue.

       24                COMMISSIONER WATSON:  Now, do you 

       25     have to have a hunting license to buy a 



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                                                          23


        1     chance?

        2                MS. SALDAŅA:  Well, in order to -- 

        3     you don't to have to buy a license -- in order 

        4     to take the hunt, but you don't have to buy a 

        5     license to purchase a chance.  But again --

        6                COMMISSIONER WATSON:  Why not?

        7                MS. HAMBURG:  I think you have to 

        8     (inaudible).

        9                COMMISSIONER ANGELO:  Especially 

       10     those out of state.

       11                COMMISSIONER WATSON:  I don't think 

       12     you ought to be able to buy a chance unless 

       13     you have a hunting license.

       14                MS. SALDAŅA:  Well, remember, we 

       15     are mailing to our Super Combo customers.  I 

       16     mean, that's our primary target are those 

       17     folks who are our license holders, but --

       18                MS. HAMBURG:  Is Herb here? 

       19                MS. BURGDORF:  I don't think that 

       20     we logistically -- I think is the problem.  

       21     Because, as Lydia says, most of the Big Time 

       22     Texas hunt purchases respond by mail.  Most 

       23     licenses are sold through the system.  And so 

       24     what we'd end up doing is basically doing a 

       25     lot of rejection through the mail, sending 



.

                                                          24


        1     their checks back, depositing their checks, 

        2     issuing them refunds.  If we went in -- when 

        3     we go ahead and the temporary staff she was 

        4     talking about actually entered those chances 

        5     and determined that individual has not 

        6     purchased a license, I think we'd end up 

        7     really driving up our costs.  I don't know 

        8     that the revenue that we'd gain from requiring 

        9     a license would necessarily offset those 

       10     costs.

       11                MS. HAMBURG:  We can look into how 

       12     many (inaudible) license if you'd like.  We 

       13     could do a run and see.  It may be that all of 

       14     them do.  We could certainly look into that.

       15                COMMISSIONER WATSON:  You know, I 

       16     think it's something we ought to at least 

       17     monitor the percentage of people that don't 

       18     have licenses that buy the chances.

       19                MS. BURGDORF:  It would be 

       20     interesting to know how many don't.

       21                COMMISSIONER IDSAL:  If you win a 

       22     chance with or without a license ahead of 

       23     time, are you allowed to give that chance to a 

       24     relative or a child or a --

       25                MS. SALDAŅA:  Is Herb here?  Herb 



.

                                                          25


        1     might be better to answer the details, or Bob. 

        2                MR. KOTHMANN:  You can gave it to 

        3     an immediate family member or you can give it 

        4     to a youth under 17.

        5                COMMISSIONER IDSAL:  Okay.

        6                COMMISSIONER ANGELO:  Any other 

        7     questions, comments?  Thank you-all.

        8                MS. BURGDORF:  I have one more 

        9     slide.  I'm sorry.  We talk a lot about 

       10     revenue.  This is a status slide --

       11                 MR. SANSOM:  You could also give 

       12     it to the executive director. 

       13                MS. BURGDORF:  The operating budget 

       14     status:  As of the end of fiscal 99, $6.6 

       15     million or 4 percent of the operating budget 

       16     was lapsed.  And where we stand this year with 

       17     regards to the operating budget, $163 million 

       18     remaining, or 84 percent, and 16 percent of 

       19     the fiscal year has elapsed.  So we are really 

       20     right on target with where we would expect our 

       21     expenditures to be.  Again, salaries are a 

       22     major driver in our operating budget, and so 

       23     it really does track on a monthly basis the 

       24     payroll.  And that is the end of the 

       25     presentation.



.

                                                          26


        1                COMMISSIONER ANGELO:  Any 

        2     questions?  I should have commented in the 

        3     beginning that I'm presiding in the absence of 

        4     Finance Committee Chairman Dick Heath who is 

        5     unable to be here today but will be in for the 

        6     meeting tomorrow.

        7     AGENDA ITEM NO. 3:  ACTION - ARTWORK APPROVAL.

        8                COMMISSIONER ANGELO:  The next item 

        9     on our agenda is the approval of artwork.  

       10     Frances Stiles is going to make that 

       11     presentation, I believe. 

       12                MS. BURGDORF:  Buba Wood is also 

       13     here from Collectors Covey.

       14                COMMISSIONER ANGELO:  I was going 

       15     to recognize him.  Buba, why don't you come up 

       16     and sit with the ladies.  Buba Wood is the 

       17     gentleman that's really the driving force and 

       18     I guess you'd say the father of this whole 

       19     program, and we appreciate very much your 

       20     efforts on behalf of (inaudible) programs.  It 

       21     wouldn't be here without you. 

       22                MR. WOOD:  That might be good for 

       23     all of us. 

       24                MS. STILES:  Good morning.  My name 

       25     is Francis Stiles.  I'm with the 



.

                                                          27


        1     Administrative Resources Division.  And I'm 

        2     here to introduce the agenda item for the 

        3     artwork approval.  Now, we have the artwork 

        4     being set up here for you to review. 

        5          Under the terms of the contract with 

        6     Collectors Covey for the artwork, design and 

        7     marketing of the departmental prints program, 

        8     the Commission approves the artwork each year 

        9     for the waterfowl, nongame, turkey and 

       10     saltwater stamps.  The artwork for these 

       11     stamps is combined into a collector's edition 

       12     consisting of eight stamps and offered to the 

       13     general public by Parks and Wildlife.  

       14     Additionally, Collectors Covey offers the 

       15     print reproductions through their established 

       16     marketing network.  And Parks and Wildlife 

       17     receives a portion from the sale of each 

       18     print. 

       19          This year for the waterfowl stamp, we 

       20     have the Hooded Mergansers, by Sherrie Russell 

       21     Meline.  The nongame stamp features the 

       22     Scissor-tailed Flycatcher by Ken Carlson.  The 

       23     turkey stamp features the Rio Grande Turkey by 

       24     Eddie LeRoy.  And the saltwater stamp features 

       25     the Speckled Trout by Herb Booth. 



.

                                                          28


        1                MR. WOOD:  What can I say?  I'm 

        2     brought to tears by the beauty of it all.

        3                COMMISSIONER WATSON:  Where can we 

        4     find grass like that right now? 

        5                MR. WOOD:  Not in Clay County, let 

        6     me assure you, or anyplace else that I -- 

        7     anyplace south of San Antonio, I guess.

        8                MR. WOOD:  Sherrie Russell -- 

        9     you-all might be interested, Sherrie Russell 

       10     Meline is a California artist, the first woman 

       11     we've ever used in the duck stamp program.  

       12     She's won, I think, the California contest 

       13     twice, which is frankly a nonevent, but it is 

       14     a contest that lots of prominent artist enter. 

       15          She was 6th this year in the federal duck 

       16     stamp contest, which might be interesting for 

       17     you-all to know that this year the mottled 

       18     duck, the Texas mottled duck was selected.  I 

       19     think the only reason they used it, they have 

       20     this system where they're trying to get all 

       21     the species eventually on the federal duck 

       22     stamp.  And obviously the scoters and the 

       23     Texas mottled ducks have been -- there haven't 

       24     been too many entries.  And they've had no 

       25     chance when they're entered against mallards 



.

                                                          29


        1     and pintails and wood ducks and the more, you 

        2     know, colorful species.  So they have this 

        3     system now that I don't totally understand, 

        4     but this year you could only enter a Texas 

        5     mottled duck or a scoter.  Well, you know, 

        6     that's an ugly duckling contest to some 

        7     extent.  But the guy that won it, it was a 

        8     22-year-old kid that no one had ever even 

        9     heard of, won with a mottled duck. 

       10          And Sherrie entered a mottled duck, too, 

       11     because if we could have -- once I found out 

       12     that she had reference and was capable of 

       13     painting a mottled duck, which most of the 

       14     national duck stamp artists don't even have a 

       15     clue what they look like, I didn't want to use 

       16     that because she had entered a federal, and at 

       17     the time she was painting ours, I would be 

       18     afraid, boy, it would be our luck, you know, 

       19     we have a mottled duck and, hell, she wins the 

       20     federal duck stamp contest with a mottled 

       21     duck, which she didn't.

       22          Anyway, we're really excited to have her.  

       23     I think that's really a neat design of a -- 

       24     really one of my favorite of the duck stamp 

       25     design we've ever had.  Unfortunately, I don't 



.

                                                          30


        1     think it's going to impact sales much one way 

        2     or the other, but we know good art won't hurt 

        3     us and bad art can hurt us.  So we're tickled 

        4     to death to have her. 

        5          Of course, Herb Booth, everyone in Texas 

        6     I'm sure knows Herb Booth and his art, did a 

        7     Texas duck stamp for us in 1986 and has done a 

        8     couple of saltwater stamps. 

        9          The problem art is always the nongame art 

       10     because, as you can see -- did you pass out to 

       11     them our little -- last year we sold 119 

       12     nongame stamps.  Well, needless to say, the 

       13     artists are not jumping up when they get a 

       14     call to get to do the Texas nongame stamp.  So 

       15     what the last several years I have done is 

       16     just when I see a neat looking piece of 

       17     nongame art -- actually if you lifted up that 

       18     painting, the matting on that painting, 

       19     there's another scissortail underneath that.  

       20     You know, it's actually two scissortails in 

       21     this painting, but in the duck stamp print 

       22     format, it wouldn't crop.  It's a vertical 

       23     rather than a horizontal. 

       24          But it's usually pretty easy once the 

       25     artist has already painted the art, he doesn't 



.

                                                          31


        1     have to go out and paint a very unprofitable 

        2     painting.  You know, they're more than happy 

        3     for us to use the artwork, and that's really 

        4     how, you know, to have an artists of Ken 

        5     Carlson's stature do the nongame stamp is -- 

        6     you know, is actually a real coup, but that 

        7     also won't result in any more sales.  But it's 

        8     a beautiful piece of art.

        9                MR. SANSOM:  May I ask perhaps a 

       10     question to be directed to Lydia as well, 

       11     whether or not the kind of direct mail efforts 

       12     you've seen on the previous presentation could 

       13     boost those sales.

       14                MR. WOOD:  You know, at the risk of 

       15     just being negative -- I mean, you know, I've 

       16     always felt like the department has a lot 

       17     bigger fish to fry than just the Texas duck 

       18     stamp program or the nongame or the saltwater.  

       19     You know, we're leaving a little exposure on 

       20     the table, but I really don't think that 

       21     people who like to hunt necessarily translate 

       22     into people who like to collect duck stamp 

       23     prints.  I mean, surely there's some 

       24     crossover, but it's just not that simple.  I 

       25     mean, it would be wonderful if we had those 



.

                                                          32


        1     images in some way in the mailing.  And I 

        2     think the department really has over the years 

        3     left a lot of real neat exposure on the table.

        4          I don't think it would result in any more 

        5     print sales.  Most of these prints now are 

        6     bought by people on matching number basis 

        7     through our dealer network.  And you know, if 

        8     you haven't bought the 1998 Texas duck stamp, 

        9     why in the world would you all of a sudden 

       10     were to buy the 1999 one, unless it happened 

       11     to be your favorite duck.  And you know, we 

       12     probably have 50 sales a year that are 

       13     individual sales of just -- but now it's just 

       14     people keeping their collection in tact.  They 

       15     look forward to getting the -- you know, a new 

       16     species of duck to put in their collection, 

       17     just look forward to getting it.  You know, 

       18     we'd be tickled to death to try anything in 

       19     the world short of spending considerable 

       20     amount of money to get more sales, but I 

       21     really don't think it would be --

       22                COMMISSIONER ANGELO:  How do we 

       23     compare with other states?

       24                MR. WOOD:  Oh, there's just no 

       25     comparison.  I mean, we -- the Texas Parks and 



.

                                                          33


        1     Wildlife Department, I wouldn't say they've 

        2     gotten more money than all the other states 

        3     combined, but there's really not even a second 

        4     place.  I mean, we -- the department has 

        5     gotten so much more money and we sell so many 

        6     more prints.  You know, we also happen to be 

        7     lucky enough to be Texans, and there are 18 or 

        8     20 million of us, and 80 percent of the ducks 

        9     in central flyway winter in Texas.  I mean, it 

       10     isn't like we don't have lots -- you know, at 

       11     the time, the first Texas duck stamp was 

       12     published, it was the largest limited edition 

       13     print ever published of any kind, including 

       14     the federal duck stamp prints.  I mean, you 

       15     know, it was just our timing was great, the 

       16     Commission, you know, stood behind our effort 

       17     to try to make it a national program rather 

       18     than a resident artist only program. 

       19          For y'all's information, there's only 

       20     been one Texas artist win a duck stamp contest 

       21     of any kind on a nationwide basis.  So all 

       22     that tells is even as many great artists as 

       23     Texas has, a lot of them don't participate in 

       24     duck stamp contests.  And now that the money 

       25     is not what it used to be, you know, on the 



.

                                                          34


        1     federal level, very little.  There were only 

        2     269 entries in the federal duck stamp program 

        3     this year.  In year's past there has been as 

        4     many as 2000, to show you the sales -- the 

        5     sales in the federal duck stamp print are 

        6     going down just like our sales are.  But, you 

        7     know, still the bottom line in 1998, we paid 

        8     y'all royalty of $130,000, and that's -- beats 

        9     some other things we've done, I'll tell you 

       10     for sure. 

       11          And frankly, it's a big part of our 

       12     identity.  I mean, we take probably a lot more 

       13     pride in the Texas duck stamp that we're 

       14     really entitled to, but it's really our 

       15     identity.  And I think if you ever quit it or 

       16     I think then you'd find out how many people 

       17     really did like it or liked the idea of it.  

       18     And certainly going to automated licenses, you 

       19     know, also tied a pretty good knot in our 

       20     tail, but, you know, there were certainly 

       21     bigger fish to fry in that agenda, too, you 

       22     know, and we understand.  Don't like it, but 

       23     we understand. 

       24                COMMISSIONER AVILA:  We advertise 

       25     these in the magazine, don't we?



.

                                                          35


        1                MR. WOOD:  I wish you hadn't 

        2     brought that up.  We used to, and --

        3                COMMISSIONER AVILA:  Why.

        4                MR. WOOD:  Why?  Because it was a 

        5     great place to advertise.  I mean, over a 

        6     period of a very brief period of time, the 

        7     magazine doubled their advertising rates just 

        8     boom, boom, boom, you know, from like $1800 a 

        9     page to over $5,000 a page.  And at one point 

       10     in time, in one of my more eloquent moments I 

       11     convinced Andy that -- you know, which also 

       12     wasn't a bad decision.  It just put us out of 

       13     the game that the department, because they get 

       14     $28 a print, which is considerably more than 

       15     we get, that there might be some logic to 

       16     giving us a page ad in the spring issue to 

       17     showcase the duck stamp prints.  And we did 

       18     that for a couple of years. 

       19          But in fiscal hard times of the magazine, 

       20     we don't get that free ad anymore.  And that's 

       21     all right, but you know, that's why we don't.  

       22     Because it's just now at this point, you know, 

       23     it's going -- it's $5,000 out of our revenue 

       24     that the department is getting a heck of a lot 

       25     more out of than we are.  And I have no really 



.

                                                          36


        1     ax to grind with the department for not giving 

        2     us the ad.  But Andy, is that not a pretty 

        3     fair -- David Baxter took my ad is what 

        4     happened.

        5                COMMISSIONER AVILA:  I think we're 

        6     going to negotiate this right here on the 

        7     spot.

        8                MR. WOOD:  Let me tell you, when I 

        9     leave here, I'm going to go see Susan Ebert, 

       10     is where I'm going from here.

       11                COMMISSIONER AVILA:  I think we 

       12     need -- and we don't need to seriously 

       13     negotiate, but do the math on that.  If it 

       14     drives sales, then it's just like the mail out 

       15     we just did.  Let's see what --

       16                MR. WOOD:  But --

       17                MR. SANSOM:  It would be an 

       18     accounting issue for us.

       19                MR. WOOD:  Well, sure.  You know, 

       20     the deal -- I think the accounting issue was 

       21     and rightfully so, the department got the -- 

       22     the department got the income and the magazine 

       23     had to fade the $5,000 loss of revenue.  And 

       24     you know, all of us -- shame on David for not 

       25     liking that arrangement was my attitude.



.

                                                          37


        1                COMMISSIONER AVILA:  Well, then I 

        2     think you sell (inaudible), whoever would sell 

        3     more of the -- if you look on this handout you 

        4     passed around -- the nongame.  I mean, these 

        5     birders, they'll collect those, surely, the 

        6     birding community.

        7                MR. WOOD:  I want to use this line 

        8     at least one more time.

        9                COMMISSIONER AVILA:  Okay.  Careful 

       10     my sister-in-law is a birder.

       11                MR. WOOD:  I understand.  But a 

       12     couple of years ago someone brought this up in 

       13     this same conversation we're having now, and I 

       14     made the statement that the nongame stamp and 

       15     print program gives new meaning to 

       16     nonconsumptive user.  You know, the nongame 

       17     people just feel like because they don't hunt 

       18     them, because they -- I mean, who am I to say?  

       19     I'm from Wichita Falls.  That they don't -- 

       20     they don't have the responsibility that we 

       21     hunters and fishermen, you know, embrace to 

       22     help pay the resource and develop the habitat 

       23     and stuff, and the birders just don't feel 

       24     that responsibility.

       25                COMMISSIONER AVILA:  Just put a 



.

                                                          38


        1     little guy at the bottom of the picture with a 

        2     rifle like that.

        3                MR. WOOD:  I would be more than 

        4     happy -- and I say that with the Audoban 

        5     Society and DeDe Armentrout and the people 

        6     that were involved when we first did the 

        7     nongame program.  They could not have been 

        8     more helpful.  They tried their best, it just 

        9     didn't work.

       10                MR. SANSOM:  Would it -- one of the 

       11     things that I keyed on, though, in your 

       12     comments about the nongame is I would presume 

       13     that of the fairly small amount of -- I mean 

       14     not fairly -- substantially small amount of 

       15     prints that you sold that virtually all those 

       16     would be in that collecting category, people 

       17     that --

       18                MR. WOOD:  No.  I would say without 

       19     knowing, 80 percent of those people are duck 

       20     stamp people that like those images, too.

       21                MR. SANSOM:  I see.

       22                MR. WOOD:  You know, when we first 

       23     did the nongame program, I went to the 

       24     National Audoban Society and tried to convince 

       25     them if they would promote this on a national 



.

                                                          39


        1     basis, knowing that we had the best duck stamp 

        2     program, the best dealership network program, 

        3     lots of factors that had nothing to do with 

        4     the National Audoban Society, that we had this 

        5     chance to make this a huge deal on a  

        6     nationwide basis, and then they could take the 

        7     Texas results and take it nationwide to every 

        8     other state and create the same nongame stamp 

        9     and print programs.  They weren't remotely 

       10     interested in that concept.  It was really 

       11     shocking to me that they, ah, who cares, you 

       12     know.  Even though at the time, I think the 

       13     nongame budget was $48,000 in the state of 

       14     Texas.  In the first year we paid $125,000.  

       15     No, I think that's what we lost on the damn 

       16     thing.  We paid a lot of money into the 

       17     nongame program.  Nongame program should be 

       18     the Martin F. Wood Nongame Program, because we 

       19     didn't do -- we were a lot more confident in 

       20     our bid than we should have been.

       21                COMMISSIONER AVILA:  There will be 

       22     no more questions.

       23                COMMISSIONER ANGELO:  A sore 

       24     subject.

       25                MR. WOOD:  Anyway, it certainly 



.

                                                          40


        1     gave me religion.

        2                COMMISSIONER ANGELO:  That was a 

        3     good question, John.

        4                MR. WOOD:  It was.  It was a good 

        5     question.  That's a great question.  And if it 

        6     ends up getting us a continuing ad in the 

        7     Parks and Wildlife magazine, it's the best 

        8     question of all.

        9          Anyway, it's a real pleasure working with 

       10     y'all, and the staff is really -- has always 

       11     been incredibly supportive of what we're 

       12     doing.

       13                COMMISSIONER ANGELO:  We thank you 

       14     for your efforts on it, too, for sure.  Any 

       15     other questions or comments?  Thank y'all.

       16                MR. WOOD:  Thanks.

       17                MS. STILES:  This is eligible for 

       18     the consent agenda.

       19                COMMISSIONER ANGELO:  We do need a 

       20     motion.  Thank you for reminding me.

       21                COMMISSIONER RYAN:  I'll make a 

       22     motion.

       23                COMMISSIONER ANGELO:  We have a 

       24     motion.  Do we have a second?

       25                COMMISSIONER WATSON:  Second.



.

                                                          41


        1                COMMISSIONER ANGELO:  For the 

        2     consent agenda.

        3                COMMISSIONER RYAN:  Right.  For the 

        4     consent agenda.

        5                COMMISSIONER ANGELO:  All in favor 

        6     please say aye.  Motion carried.  Thank you.

        7          (Motion passed unanimously.)

        8     AGENDA ITEM NO. 4:  ACTION - IMPLEMENTATION OF 

        9     HOUSE BILL 1581 - STATE PARK FEE POLICY.

       10                COMMISSIONER ANGELO:  Okay.  We 

       11     have implementation of HB 1581 regarding state 

       12     park fee policies.  Kevin. 

       13                MR. GOOD:  Good morning.  My name 

       14     is Ken Good, and I'm a program administrator 

       15     in the state parks division.  I've got a brief 

       16     housecleaning type item for you today that was 

       17     required by an action of the 76th Legislature. 

       18          The item is the implementation of House 

       19     Bill 1581 which amends §11.028 of the Parks 

       20     and Wildlife Code.  §11.028 in general 

       21     authorizes volunteer activity on behalf of the 

       22     department.  Of particular note is Subsection 

       23     C which authorizes the executive director to 

       24     waive fees for volunteers. 

       25          Director Sansom has delegated this 



.

                                                          42


        1     authority down to the park manager level as 

        2     part of our existing fee policy.  It's 

        3     important to note that managers are not 

        4     required to waive fees for volunteers, but can 

        5     waive the loss of revenue against potential 

        6     benefit gained by work performed.  And I think 

        7     it's also notable to understand that last year 

        8     we did gain over 17,000 hours of youth service 

        9     from volunteer workers. 

       10          House Bill 1581, and I do have copies of 

       11     this available if you would like, adds a 

       12     Subsection E which directs the Commission to 

       13     authorize park managers to waive fees for 

       14     volunteer youth groups, and then goes on to 

       15     define exactly what groups they're talking 

       16     about.  This addition will not really have any 

       17     real effect as it just restates our current 

       18     policy.  This fact was communicated to the 

       19     Bill sponsor.  We did, however, express our 

       20     concern to the sponsor that this could be 

       21     interpreted as requiring managers to waive 

       22     fees for youth groups, and he did agree that 

       23     our policy of performing a cost benefit 

       24     analysis was reasonable and should be 

       25     continued.



.

                                                          43


        1          Nevertheless, the Bill did pass and does 

        2     require your approval on the motion you see.  

        3     And then I would further ask that this be put 

        4     on the consent agenda for tomorrow's meeting 

        5     assuming there's no comment or opposition to 

        6     this action.

        7                COMMISSIONER ANGELO:  To reiterate, 

        8     this is just putting into rules what's been 

        9     the long-standing policy of the Commission.  

       10     Is that right?

       11                MR. GOOD:  That is correct.

       12                COMMISSIONER ANGELO:  Do we have a 

       13     motion?

       14                COMMISSIONER IDSAL:  So moved.

       15                COMMISSIONER DINKINS:  Second.

       16                COMMISSIONER ANGELO:  Seconded.  

       17     All in favor say aye.  Anyone opposed?  Your 

       18     motion is adopted and it will be on the 

       19     consent agenda.

       20          (Motion passed unanimously.)

       21                MR. GOOD:  Thank you.

       22                COMMISSIONER ANGELO:  Thank you.  

       23     AGENDA ITEM NO. 5:  BRIEFING - TEXAS OUTDOOR 

       24     CONNECTION LICENSE POINT OF SALE SYSTEM.

       25                COMMISSIONER ANGELO:  Next item on 



.

                                                          44


        1     the committee agenda is a briefing on the 

        2     Texas Outdoor Connection, License Point of 

        3     Sale System by Jayna Burgdorf.

        4                MS. BURGDORF:  This briefing, as 

        5     Commissioner Angelo stated, presents the 

        6     current and future issues that we'll be 

        7     addressing for our automated licensing system, 

        8     which we refer to as the Texas Outdoor 

        9     Connection.  It's currently a partnership 

       10     between Transactive and Texas Parks and 

       11     Wildlife, which is a subsidiary of -- 

       12     Transactive is a subsidiary of GTECH.  We 

       13     started the system with a pilot in December of  

       14     '95.  With lots of work, we went on-line for 

       15     the entire '97 license year.  We have over 

       16     3000 locations and almost 3800 terminals 

       17     across the state of Texas.  The contract with 

       18     Transactive is for five years and does include 

       19     an option to renew.

       20          Last year we had almost 3.2 million 

       21     transactions.  And we do pay Transactive on a 

       22     transaction basis.  So we also include such 

       23     things as settlement reports, those are called 

       24     transactions.  Those only represent sales.  So 

       25     from year to year, we pay 3.2 million to 3.4 



.

                                                          45


        1     million for the cost of this contract.  This 

        2     year we've already sold 1.8 million items.  

        3     That's 58 percent.  Because some of those 

        4     items are Super Combo, you notice that our 

        5     revenue was at 61 percent.  So, a slight 

        6     difference there between the number of items 

        7     and the revenue in terms of total expectations 

        8     for the year.

        9          Depending on what you purchase, whether 

       10     you answer HIP questions or how smoothly the 

       11     sale goes, it can take between three and ten 

       12     minutes on-line and five to 12 minutes 

       13     off-line.  The contract with Transactive also 

       14     provides for a 1-800 number, and last year we 

       15     had over 15,000 calls. 

       16          You have seen this slide before, just 

       17     want to reiterate that license sales are 

       18     basically a quarter of the revenue for this 

       19     entire agency.  And the spike in '97 

       20     represents the one-time increase in revenue 

       21     from the change in our collection myth as a 

       22     result of going on-line with this system.

       23          Transactive operates a system within four 

       24     primary functional areas.  They have the call 

       25     center, field service and supplies, which is 



.

                                                          46


        1     basically the people who go out and repair the 

        2     machines and deliver the supplies to our 

        3     retailers.  We have reconciliation unit, and 

        4     they handle the electronic fund transfers and 

        5     any differences in the retailer's financial 

        6     reports versus what Transactive says that they 

        7     owe.  And then there is the actual operation 

        8     of the system, including software changes 

        9     which occur on an annual basis as a result of 

       10     our rule changes.

       11          Unfortunately, this license year we did 

       12     experience some problems, especially during 

       13     and preceding Labor Day weekend, which is our 

       14     peak weekend for the entire year.  Reliability 

       15     and response times are obviously very critical 

       16     issues for our merchants.  And so that's one 

       17     of our key issues that we'll be bringing up in 

       18     the study which I'm about to tell you about. 

       19          Right now our collections are at 79 

       20     percent, instead of the 91 percent we had 

       21     collected by this time last year.  And in 

       22     other words, what has happened is when the 

       23     sales go off-line, it causes -- and those 

       24     sales are eventually then downloaded when the 

       25     system can get through, it often causes those 



.

                                                          47


        1     sales to be out of sync with what the main 

        2     database server says.  This results in a 

        3     reconciliation issue, and until those are 

        4     worked, at this point on a manual basis, they 

        5     don't collect the money.  They don't sweep it.  

        6     So that's -- the collections are an issue for 

        7     us, although the number continues to steadily 

        8     improve and there are efforts underway at 

        9     Transactive right now to increase this number.  

       10     As a matter of fact, by tomorrow, I may have 

       11     updated collections information that could be 

       12     even better than the 79 percent. 

       13          The maximum number of machines are in 

       14     use.  We're at a total number of terminals 

       15     allowed under the contract.  And so we have a 

       16     waiting list for our merchants.  Now the 

       17     waiting list isn't large, it's 20, 30 

       18     merchants, but that is an issue for us.  

       19     Again, the contract was written five years 

       20     ago.  And the current contract expires August 

       21     31, 2001, and Transactive has notified us that 

       22     they do not intend to renew the contract.

       23          So the future of the Texas Outdoor 

       24     Connection is the issue at hand.  We have 

       25     contracted with Spectrum Maximus -- they are a 



.

                                                          48


        1     consulting group, a national consulting group, 

        2     but Spectrum actually is located here in 

        3     Austin -- for an analysis of alternative 

        4     study. 

        5          The objectives of the study are to review 

        6     the current system, assess the feature options 

        7     based on these key factors and develop 

        8     alternatives and recommend short and long-term 

        9     strategies.  I would like you to know that our 

       10     steering committee consists of Allan 

       11     McConnell.  He's the director of store 

       12     operations for Academy.  Academy is our second 

       13     largest retailer based on volume of sales.  

       14     And he is -- he agrees with the objectives of 

       15     the system and has met with our consultants 

       16     already. 

       17          The study process will include focus 

       18     group meetings with key stake holders, 

       19     basically customers, our licensed customers, 

       20     and then our customers who are our retailers.  

       21     We have both kind of direct and indirect 

       22     customers.  It will include a review of other 

       23     state systems.  There are 16 other states that 

       24     either have a system or are in the process of 

       25     implementing one.  Once again, Academy is 



.

                                                          49


        1     going to be very helpful, I think, in that.  

        2     They have stores located in Louisiana and 

        3     Tennessee who are just bringing on systems 

        4     now.  And so they have managers who have 

        5     direct experience with both Texas and these 

        6     new states so that they can really give us 

        7     some interesting feedback.  Include, of 

        8     course, interviews with Parks and Wildlife and 

        9     Transactive staff, and surveys to both sets of 

       10     customers, again, our licensed buyers and our 

       11     retailers. 

       12          The consultants will identify 

       13     alternatives, including service delivery 

       14     options, and let me explain what I mean by 

       15     that.  This could range from another turnkey 

       16     contract with a different vendor.  EDS does 

       17     Michigan's system, for example.  LIS is doing 

       18     the system in Louisiana.  So there are other 

       19     players out there in the marketplace, to some 

       20     combination of outsourcing and in-house.  

       21     There are potentially some options of taking 

       22     pieces of the system in-house. 

       23          They will also provide cost estimates, 

       24     transition plans and time frames, high-level 

       25     project work plans and recommendations for 



.

                                                          50


        1     request for proposal.  They won't write any 

        2     RFPs, but they will give us some key elements 

        3     that should be included in any kind of 

        4     request.  With the two most viable 

        5     alternatives, Spectrum will provide a more 

        6     detailed cost benefit analysis and a risk 

        7     assessment. 

        8          They will also examine all the system 

        9     components.  And obviously, it's a complicated 

       10     system, and so there's lots of pieces and lots 

       11     of places where things can be improved. 

       12          They will examine everything including 

       13     Internet sales.  Again, the current contract, 

       14     which was written back in 1995, did not 

       15     envision the level of e-commerce that we 

       16     experience today and our customers have come 

       17     to expect.  So that's something else we want 

       18     to make sure is addressed in any new system we 

       19     put in place.

       20          There are some policy issues that we want 

       21     to explore.  Again, just some examples:  

       22     Service options, right now the contract calls 

       23     for a four hour response time, and that's a 

       24     very expensive issue in that you have people 

       25     going out in Houston and perhaps driving for 



.

                                                          51


        1     hours to get to the retailer, wherever they 

        2     may be located, to service that machine.  

        3     Transactive has actually been helpful in 

        4     suggesting just some policy changes that might 

        5     save money, even though I think they realize 

        6     that that won't necessarily affect them at 

        7     this point.  And one of those options is 

        8     having a vendor overnight a machine.  In other 

        9     words, they would be down but they still have 

       10     the 1-800 option where an individual can call 

       11     from their phone, but to have them overnight 

       12     the machine and then send the other one back 

       13     for repairs at a central location.  Another 

       14     example is every time licenses are voided, 

       15     Transactive actually matches up -- they have 

       16     the retailer send in the little yellow copy 

       17     and match that up against the database to make 

       18     sure that individual really purchased a 

       19     license.  There are ways to automate that or 

       20     do some kind of sampling technique that would 

       21     eliminate or reducing the need for the size of 

       22     reconciliation staff that they have. 

       23          Another issue that we didn't anticipate, 

       24     one of the biggest complaints we had with our 

       25     previous system is that the retailers had to 



.

                                                          52


        1     post a bond in order to get the licenses 

        2     because these were all prenumbered and they 

        3     had a value.  With this system and the 

        4     electronic funds transfer, we were able to 

        5     allow retailers to not have to post a bond 

        6     when they get the terminal.  The terminals 

        7     don't always find their way back to 

        8     Transactive when the business either goes out 

        9     of business, decides they don't want to sell 

       10     licenses anymore, or is somehow damaged.  And 

       11     so we have 200 machines out there that 

       12     Transactive is in the process of rounding up.  

       13     In other words, we have 200 machines that 

       14     didn't get the most current download, and so 

       15     there isn't an incentive in terms of a deposit 

       16     or anything like that to get that machine 

       17     back.  So that's something we have to look at.  

       18     There's other business processes and rules, 

       19     but I wanted to give y'all a flavor of what 

       20     we're talking about here. 

       21          Possible implementation scenarios:  This 

       22     kind of goes hand in hand with the service 

       23     delivery options.  We could reassign the 

       24     existing contract and negotiate future system 

       25     enhancements in exchange for an extension of 



.

                                                          53


        1     that contract.  That is a possibility.  We 

        2     could partially outsource this, or again, we 

        3     could totally replace the system. 

        4          Key upcoming dates:  The study should be 

        5     complete in January.  In February, and 

        6     hopefully early March, we'll do analysis and 

        7     prepare some RFPs.  I'm assuming that there 

        8     will be some written work that perhaps goes 

        9     back and forth between us so that y'all have a 

       10     more recent update than April, but we will be 

       11     prepared to make a presentation to you in 

       12     April, as well as to the status. 

       13                MR. SANSOM:  Members, this is a big 

       14     deal, real big deal.  I met with chairman of 

       15     GTECH recently and expressed to him my desire 

       16     that this be an orderly transition, that it 

       17     not sort of resemble the sale of a house in 

       18     which, you know, if you're going to sell your 

       19     house, you kind of put off painting a bedroom, 

       20     that we really need to keep that level of 

       21     service up.  We've negotiated with them pretty 

       22     hard on the problems that have cropped up this 

       23     year, and in fact, I think we're still 

       24     withholding some funds. 

       25          But it would be our desire to try to 



.

                                                          54


        1     cause this transaction to happen more quickly 

        2     than their two-year contract so -- that and 

        3     they're amenable to that, so -- but this is a 

        4     big deal. 

        5                COMMISSIONER RYAN:  How many years 

        6     do they have left on the contract.

        7                MR. SANSOM:  Two years.

        8                MS. BURGDORF:  Two years. 

        9                MR. SANSOM:  Well, two years from 

       10     September 1.

       11                MS. BURGDORF:  From the start of 

       12     this license year. 

       13                COMMISSIONER RYAN:  So a little 

       14     less than two years.

       15                COMMISSIONER IDSAL:  And you say 

       16     they're willing to shorten the contract.

       17                MR. SANSOM:  If we can -- that's 

       18     right.  I mean, they're -- they just basically 

       19     have made a business decision that this is not 

       20     something they want to do, and so --

       21                MS. BURGDORF:  Transactive 

       22     basically runs our license point of sale 

       23     system and the electronic benefits transfer 

       24     systems for Illinois and Texas, and they are 

       25     winding out of those businesses as well. 



.

                                                          55


        1                COMMISSIONER RYAN:  Jayna, what's 

        2     the value of those machines they are missing? 

        3                MS. BURGDORF:  I think the value is 

        4     probably around -- well, at this point, these 

        5     are five-year-old machines, too.  So 

        6     depreciated, they're probably worth, you know, 

        7     $500, $250.  Initially they're probably worth 

        8     a thousand or two.

        9                COMMISSIONER RYAN:  What are we 

       10     doing now for people that are coming on 

       11     wanting machines to start selling licenses?

       12                MS. BURGDORF:  Well, there's a 

       13     waiting list, and we're actively working with 

       14     Transactive on getting some of these other 

       15     machines back.  If it's a -- some people are 

       16     just kind of putting their names on the list.  

       17     Like, two of those people are potentially 

       18     Internet providers, which the way the contract 

       19     is structured right now, I don't believe that 

       20     they would make any money.  I think they would 

       21     seriously lose money because they'd be selling 

       22     over the Internet and still having to go 

       23     through the whole fulfillment process, and 

       24     their only revenue would be 5 percent from 

       25     Transactive, a 5 percent commission.  I think 



.

                                                          56


        1     if someone -- if an existing retailer has 

        2     another store that they are opening, they have 

        3     been given priority in that list.

        4                COMMISSIONER RYAN:  But what you're 

        5     saying is if somebody wants to start selling 

        6     licenses, right now we're not able to allow 

        7     them to do that?

        8                MS. BURGDORF:  That's correct.  In 

        9     general, that's correct.

       10                COMMISSIONER RYAN:  How long has 

       11     that been going on? 

       12                MS. BURGDORF:  I'd say that's a 

       13     fairly recent phenomena probably within the 

       14     last six months.

       15                COMMISSIONER IDSAL:  Are you also 

       16     saying that if we could get some of these 

       17     machines back that they could then be given to 

       18     the people that are --

       19                MS. BURGDORF:  Yes.  Absolutely.  

       20     And Transactive is in the process of doing 

       21     that right now.

       22                COMMISSIONER RYAN:  What do you 

       23     think the solution to that is?  They wouldn't 

       24     have to put up a deposit to receive a machine 

       25     now?



.

                                                          57


        1                MS. BURGDORF:  Right.  Even if it 

        2     was $50 or a hundred dollars, or if -- even if 

        3     we were talking about people perhaps who 

        4     hadn't done business with us, we could even 

        5     have some criteria that didn't necessarily 

        6     cover everyone because we have some retailers 

        7     obviously who have done business with us for 

        8     years, and we've never had an issue.  And so 

        9     you don't want to all of a sudden put a 

       10     disadvantage or a burden on them.  But an 

       11     option would be on some new retailers or those 

       12     who have multiple machines or we've had 

       13     problems with in the past, that we have some 

       14     kind of a deposit so they have an incentive to 

       15     take better care of the machine. 

       16          Transactive has told me before that -- 

       17     and I don't know if it's in Illinois or where 

       18     it is, but -- or maybe it's the lottery, but 

       19     they own -- retailers are required to purchase 

       20     some of these machines.  And they said the 

       21     difference in the care that is taken -- it's 

       22     not the same, but you understand VeriFone has 

       23     a large corner on the market of these types of 

       24     electronic terminals at stores.  And the 

       25     difference in the quality machines and how 



.

                                                          58


        1     long they last and how well they're taken care 

        2     of based on the ownership is an issue. 

        3                COMMISSIONER RYAN:  So within two 

        4     years, we're going to have to come up with a 

        5     new vendor, and also, they're going to have to 

        6     design another machine.

        7                MS. BURGDORF:  There is a 

        8     possibility that we could continue with this.  

        9     And again, it would involve either another 

       10     vendor or Parks and Wildlife purchasing the 

       11     system from Transactive.  We could continue 

       12     with this system.  Obviously we'd want some 

       13     modifications because we don't think things 

       14     are going perfectly right now.

       15                MR. SANSOM:  There could be some 

       16     formulations that are different than the one 

       17     we have now.  We could take part of the system 

       18     in-house and contract part of it out.  We 

       19     could find another contractor, like GTECH 

       20     would take it all.  But that's what this 

       21     process is designed to do.  And I -- and we'll 

       22     be keeping you up to date at every single 

       23     meeting. 

       24          I would also like to compliment Jayna 

       25     here in that she has skillfully added the 



.

                                                          59


        1     retailers into this whole process from day 

        2     one.  She has got a major retailer, you know, 

        3     basically on the procurement committee to 

        4     select the contractor.  We've got an advisory 

        5     committee made up of everybody from a bait 

        6     stand owner to Wal-Mart, you know, that will 

        7     be involved in this process.  So they'll be 

        8     intimately involved in making these decisions 

        9     and recommendation to you-all. 

       10                MS. BURGDORF:  And they are very 

       11     vocal. 

       12                MR. SANSOM:  Kind of like Buba.

       13                COMMISSIONER ANGELO:  Any other 

       14     comments or questions?  Is that all Jayna?

       15                MS. BURGDORF:  That's all.

       16                COMMISSIONER ANGELO:  Thank you. 

       17     AGENDA ITEM NO. 6:  ACTION - PERSONNEL 

       18     MATTERS.

       19                COMMISSIONER ANGELO:  Okay.  The 

       20     last item on our agenda is a personnel matter 

       21     and it revolves from the last session of the 

       22     legislature, House Bill 1.  It's the General 

       23     Appropriations Act authorizing salaries for 

       24     executive directors of various departments in 

       25     the state, one of which is our executive 



.

                                                          60


        1     director of the Texas Parks and Wildlife, any 

        2     increase in salary for the executive director 

        3     must be approved by the Commission in an open 

        4     meeting.  And certainly based on the 

        5     performance and expertise and commitment of 

        6     our executive director, it's very much in 

        7     line, but ask for a motion to present this to 

        8     the full Commission tomorrow.

        9                COMMISSIONER WATSON:  I so move.

       10                COMMISSIONER (inaudible):  Second.

       11                COMMISSIONER ANGELO:  Any 

       12     discussion?  All in favor please say aye.  

       13     Opposed? 

       14          (Motion passed unanimously.)

       15          Any other business before this committee?  

       16     Madam Chairman, it's all yours.

       17     

       18                        * * * * *

       19               FINANCE COMMITTEE ADJOURNED

       20                        * * * * *

       21     

       22     

       23     

       24     

       25     



.

                                                          61


        1                 REPORTER'S CERTIFICATE

        2                            

        3     COUNTY OF TRAVIS     X

        4     THE STATE OF TEXAS   X

        5          I, Rachelle Latino, certified shorthand 

        6     reporter for the State of Texas, do hereby 

        7     certify that the above and foregoing 60 pages 

        8     constitutes a full, true and correct 

        9     transcript of the minutes of the Texas Parks 

       10     and Wildlife Commission on November 17, 1999, 

       11     in the commission hearing room of the Texas 

       12     Parks and Wildlife Headquarters Complex, 

       13     Travis County, Texas.

       14          I further certify that a stenographic 

       15     record was made by me at the time of the 

       16     public meeting and said stenographic notes 

       17     were thereafter reduced to computerized 

       18     transcription under my direction and control.

       19          Witness my hand this, the 10th day of 

       20     January 2000.

       21     

       22     
                                                        
       23                     Rachelle Latino
                              Certified Shorthand Reporter
       24                     State of Texas
                              Certificate No. 6771
       25                     Expires: 12-31-01




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