Texas Parks and Wildlife Commission
Finance Committee

March 26, 2008

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

BE IT REMEMBERED, that heretofore on the 26th day of March, 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:

THE TEXAS PARKS AND WILDLIFE DEPARTMENT:


P R O C E E D I N G S

COMMISSIONER HOLT: Good morning, everybody. This meeting is called to order. Before proceeding with any business, I believe, Mr. Smith — and congratulations, Mr. Smith, this is your first meeting — has a statement to make.

MR. SMITH: I do. Thank you.

I just want to make this statement that a public notice of this meeting containing all items on the proposed agenda has been filed in the Office of the Secretary of State as required by Chapter 551 of the Government Code, referred to as the Open Meetings Act.

I would like for this fact to be noted in the official minutes of this meeting. Thank you.

COMMISSIONER HOLT: Thank you, Mr. Smith.

Commissioner Brown, Finance Committee, please.

COMMISSIONER BROWN: Thank you, Mr. Chairman.

COMMISSIONER HOLT: Do you want the gavel?

COMMISSIONER BROWN: Oh, thank you.

COMMISSIONER HOLT: Hand him that gavel.

COMMISSIONER BROWN: Thank you. I'm not sure what I'm going to do with it.

(Laughter.)

COMMISSIONER HOLT: Power, that gives you the power.

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

COMMISSIONER HIXON: So move.

COMMISSIONER FRIEDKIN: Second.

COMMISSIONER BROWN: Okay, we've got a motion —

COMMISSIONER HOLT: The name — each commissioner — the name that —

COMMISSIONER BROWN: I'm sorry. Who — Hixon?

COMMISSIONER HOLT: Oh, yes.

COMMISSIONER BROWN: Commissioner Hixon, seconded by —

COMMISSIONER FRIEDKIN: Friedkin.

COMMISSIONER BROWN: — Commissioner Friedkin, yes. All in favor, please say aye.

(A chorus of ayes.)

COMMISSIONER HOLT: And can I stop you —

COMMISSIONER BROWN: Yes.

COMMISSIONER HOLT: — Robert? Sorry.

We do have a new Commissioner here today — and I apologize, Ralph. Ralph Duggins has just joined us as our new Commissioner from up north, the Fort Worth area. And so please welcome Ralph.

Ralph, welcome aboard.

COMMISSIONER DUGGINS: Thank you.

COMMISSIONER HOLT: Sorry, I skipped over that.

COMMISSIONER BROWN: Okay. So we — is anyone opposed?

(No response.)

COMMISSIONER BROWN: None being opposed, the motion carries.

Committee Item Number 1 is Land and Water Plan Update. Mr. Smith, please make your presentation.

MR. SMITH: Yes, thank you, Chairman.

A couple things. Just as a point of departure, one of the procedures that we want to institute with all of our committees is to have a designated staff liaison, just to provide clarity for the Commissioners as to kind of our single point of contact for each committee. Hopefully, that will help with centralizing communications and coordination.

And so I just want to point out that on our Finance Committee, Chairman, that we've asked Gene McCarty to serve in that role. He'll obviously be supported by Mary Fields in her capacity as Chief Financial Officer. But I wanted to mention that for the record.

A couple of other things that I want to bring up that I think are germane to this particular committee. I think, as everybody knows, our State Park staff have been working very assiduously to institute new fiscal controls, to help standardize our visitation counts, how we document our revenue. Many of those processes that we have are largely manual in scope right now, so they're not terribly efficient.

So we have been working on putting in a new automated system that will be a new centralized, both a registration and a revenue documentation system, and our staff has been working with the company, Infospherics, to put that in place. I think we have that rolled out the 1st of November, and that'll be a big help to us statewide.

And we're going to call that system our Texas Parks System. So anybody that wants to call in and make a reservation for a park, and then all of our documentation on every transaction associated with park use will be put in place through that system. So that's been a huge, Herculean project and we're excited about that, coming to fruition.

I think also that most of you are aware that at the start of each fiscal year, we are given a base revenue estimate by the Comptroller's Office; our budget comes off of that. It's an estimate of the funds that we will generate, both through our Fund 9 programs, our fishing and wildlife, and boater safety, and law enforcement, and then also our State Parks Fund.

During the course of the year, at midyear, we have an opportunity to work with the Comptroller's Office to adjust those revenue estimates, based upon our estimates of state park fees, oil and gas revenues, license sales and so forth. And Mary and her team have been working with the Comptroller's Office on a revised estimate. It looks pretty good so far.

We're going to submit a final recommendation to the Comptroller for her consideration. She'll review that, and if she concurs, we'll issue a certificate of fact on that, and then that will enable us then to hopefully have some additional revenue to be able to invest in our programs. So we'll keep you all apprised of that, and Mary may say a few more words about that a little later on.

So that's the sum and substance of it. If anybody has any questions, I'll be happy to address them.

COMMISSIONER BROWN: Any questions?

(No response.)

COMMISSIONER BROWN: Thank you.

MR. SMITH: Thank you.

COMMISSIONER BROWN: Committee Item Number 2 is Internal Audit Report. I think Ms. Cindy Hancock and Ed Best will give the presentation.

MS. HANCOCK: Good morning.

MR. BEST: Good morning, Mr. Chairman, Commissioners. For the record, my name is Ed Best and this is Cindy Hancock from the Internal Audit Department. And we're here today filling in for the Audit Director, to give you an update on the Fiscal Year '08 Internal Audit Plan, and our completed active and planned audit.

As discussed in the previous Finance Committee in January, as of October of last year, all 16 additional auditor positions, as required by Rider 29, were hired and in place. Two positions were placed here at Austin headquarters, and 14 were placed in the field, to cover all eight park regions. We have two auditors at each of the larger six regions, and one auditor at each of the two smaller regions.

We've performed a risk assessment on all parks, based on park fee and revenue numbers, and developed a schedule of park audits to be performed in Fiscal Year '08; you should have a copy of that. We started the initial or first round of audits for nine parks in early November. Audit and review work is complete, and park audit response letters with management responses have been issued, and these will be included in the overall Audit Report, which Cindy will address in her portion of the update.

We started the second round of audits for eight parks in early December. Field work is complete, and review and park audit response letters are in the process of being completed. We started the third round of audits for 11 parks the third week of January. Field work is complete and the review process will start in early April. And the fourth round of audits, for another 11 parks started last Monday on March 24th.

For the months of April through August, we have 48 more park audits planned. Some of these could be follow-up audits on parks that have material compliance issues, and this could change, based on what the new audit director decides he wants to do.

If there are no changes, this will be a total of 87 park audits for Fiscal Year 2008, which is approximately 90 percent of the total number of parks. The internal audit plan for fiscal year 2008 is limited in scope, and it was based on the State Auditor's Office recommendation that we have an aggressive program to monitor and enforce implementation of the State Park fiscal control plans.

And our audit plan includes the following: State park field audits, approximately 87, which we discussed; and overall audit reports for each of the eight rounds of audits; we'll also have possible follow-up audits for problem parks; monitoring of headquarter-based state park issues; and any special projects, consulting, management or training that is needed.

Cindy will now give an overview of the audit report process, and the overall report for the first round of park audits.

MS. HANCOCK: For the record, I'm Cindy Hancock, Internal Audit. As Ed stated, we've audited nine parks in the first round. The overall report is scheduled to be formally released on Monday, March 31st, if all goes well. The Fiscal Control Plan and Visitation Plan were developed to address a large majority of the deficiencies pointed out in the State Auditor's report. These plans were developed by a cross-divisional team, including members from State Parks, Administrative Resources, and Internal Audit.

The objective of the Fiscal Control Plan is to set a standard for basic business processes, where these procedures can be implemented to improve internal controls. The objective of the Visitation Plan is to provide statistical visitation data based on state park use, and provide a uniform methodology to collect and report the data.

We designed the park audits to determine if the parks are complying with all procedures in these plans. So ideally, if the parks are complying with the procedures, the objectives of the plans are met, internal controls will be improved, and visitation data will be reflected more accurately.

We first issued a park audit response letter to park management, listing each non-compliant practice found during the audit. Each non-compliant practice listed has the correct procedure written next to it, citing which handbook and chapter it was taken from. This can be used as a tool to help park staff learn the proper procedures, and where they can find them in the plans.

After the park audit response letters were completed, we composed an overall, or composite report. We extracted findings that had an impact, or potential impact, on park revenue and/or visitation. The overall report should provide executive management, the Commission, and our oversight agencies with the information needed to determine if parks are complying, or accomplishing their goals.

The problems that come forth in this first round are very similar to our previous audits. Internal control areas dealing with supervision and documentation need improvement in all nine parks. We also found that two of the nine parks have not fully implemented some of the basic controls. Park visitation processes reflected numerous tabulation and recording errors, with most resulting in under-reporting visitation data.

Park management indicated that these findings listed in the park audit response letters have been addressed, or are in the process of being addressed. I think you will find that some of the procedures, because some of the procedures are new, compliance issues could be a problem in the first audit. However, as these processes become more familiar to park staff, compliance issues should lessen over time.

That concludes our presentation. Do you all have any questions?

(No response.)

COMMISSIONER HOLT: Thank you. Well, one, I want to thank Cindy and Ed. I don't know if you all are aware, but maybe you do by just listening to this presentation, how much they're having to take on over and above what has been what I'd call the norm. So I want to thank both of you. And obviously, this is ongoing, so it's a start, not a finish.

Secondly is, I appreciate the attitude that you all have taken, because I think it's going to make a lot of difference for people out in the field. And, you know, obviously it's created more work for kind of everybody. Plus the fact, I don't know if everybody on the Commission is aware — Ralph, you're probably not — they've essentially had to take the responsibility on of help train 16 other auditors who we've hired literally, what, in just the last few months.

MS. HANCOCK: That's correct.

COMMISSIONER HOLT: So Ed and Cindy have been a little overwhelmed, and I appreciate, again, the attitude. On the second side of it, I'm so pleased, though, that you're not finding really any patterns of any issues I'd call major, let's say. Am I saying that correctly?

MS. HANCOCK: I agree.

COMMISSIONER HOLT: Yes. And my understanding is you're getting good cooperation —

MS. HANCOCK: Yes.

COMMISSIONER HOLT: — from the field, which of course is very important.

MS. HANCOCK: Park staff has been very cooperative.

COMMISSIONER HOLT: Good, good. So I just want to make sure that I recognize formally both of you for all the extra time and effort that you all have put in to get this thing moving, because you had to get it up and running and then keep it going and keep the momentum going. And as you all may know, our Internal Auditor Director had retired as this started, and so we're now in the midst of hiring somebody else, who we're going to talk about later today.

But I just want to give you two a lot of credit. Thank you very much.

MS. HANCOCK: Thank you.

MR. BEST: Thank you.

MR. SMITH: Thank you.

COMMISSIONER HOLT: Any other questions?

I'm sorry, Robert, I didn't mean to interrupt, but —

COMMISSIONER BROWN: No. No, that's —

COMMISSIONER HOLT: — I just —

COMMISSIONER BROWN: Any other questions?

(No response.)

MS. HANCOCK: Okay.

COMMISSIONER BROWN: Thank you.

COMMISSIONER HOLT: Thank you all.

COMMISSIONER BROWN: There's no action required on that, just forward. Committee Item Number 3 is an update on the State Auditor's Office audit of state parks' financial processes. Scott Boruff.

MR. BORUFF: Mr. Chairman, Commissioners. For the record, my name is Scott Boruff. I'm the Deputy Executive Director for Operations. I'm here today to give you the latest installment of the progress we've been making to

implement the State Auditor's recommendations and the related riders.

I probably will do a little bit more detail again this time since we have the new Commissioner here — just to give you a little bit of background, Commissioner. This audit was actually started in late calendar year 2006 as we rolled into the Legislative Session, and we have made a pretty significant request from the Legislature for additional funding for state parks.

State Auditor's office came out and actually did an intensive survey that ran from about November through about March of '07. And so kind of in the middle of the Legislative Session, they issued a report, which, by the way, was pretty consistent with previous internal audit reports.

I might take the time to second the Chairman's appreciation for the Internal Audit staff here. Cindy and Ed have done a yeoman's job prior to this, to be honest with you. They had early on helped us identify some of the very problems that the state auditors came in later and also identified for us.

There were 48 recommendations specifically issued by the State Auditor's Office. There were an additional five riders that we thought were very key issues for us to address relative to the audit items. So we've put together a cross-divisional team to look at the 48, plus the five riders. I would like to take a minute to thank that cross-divisional team; it's been an extraordinary process here. It's been good for us, and we've learned a lot.

Obviously State Parks has been intimately involved in this, both Walt Dabney and Dan Sholly, but also his regional leadership, Brent Leisure, Randy Bell, Ellen Buchanan, Laird Fowler. I'm not going to name them all and I apologize to the others. But all the regional directors have taken a major role in coming into headquarters and helping us, as a team, develop the responses to this report, and then take that back out to the field.

In addition, Administrative Resources has obviously played a critical role. One of the things we did in the wake of the report is, as a management team, we got together and made the recommendation to then Executive Director Bob Cook and the Chairman to go above and beyond the spirit of the report. We wanted to become the best state parks outfit in the country.

And so we went into that with this spirit: That we were going to do more than we were asked to do; that we were going to set the bar high for both ourselves and for other state organizations as we tried to fix those problems that had been identified in State Parks.

And so we created, in Administrative Resources under Mary Fields' leadership and Gene McCarty's support there, a whole new shop that does nothing but looks at state park revenues and finances. Kim Dudish is the leader of that, and I don't know if Kim's here, but she and her folks, and I think there's about 11 folks in that shop now, if I'm correct, have been an integral part of that team.

And then in addition to Parks and Administrative Resources, the Information Technology group under George Rios' leadership and his staff, those three divisions, along with support from Legal and the Executive Office, have really done an incredible job of putting together not just the responses to the SAO report, but to developing a system that we'll all be proud of when we're done with this.

The objectives of the audit, as defined early on, would determine whether the budget projections that we were going into the last Session were appropriate and reasonable, and were supported by documentation, and to, in particular, look at the deferred maintenance issues.

Most of you are, I think, aware at this point, maybe not the new Commissioner, that we at the time had in excess of $400 million in backlog capital needs across the State Park system. So it was a major piece of the LAR that we put forward in the Legislative Session, was to get funding to help us address those capital issues, and so they took a close look at that.

The audit report as it came out was divided into four major sections. The four sections were primarily business related in terms of management of state parks, secondarily the second was the infrastructure component, fiscal controls, which was the final segment was really the most important and most critical, and that's where we had the most problems. So a lot of what we've talked about in these reports are how we've managed the fiscal control piece.

Executive Director Smith referenced in his opening comments the importance we place on getting those right, and the system that we're trying to identify to make it more efficient, and I'll talk about that a little bit in just a minute.

We are required to do periodic reporting to the SAO, the Governor's Office, and the other oversight agencies that we work with. We have met all those deadlines. I'm not going to read all these bullets; you're certainly welcome to read them and ask me any questions. But we have, on time or ahead of schedule, submitted every report that we were asked to submit.

Once again I want to emphasize, we've gone above and beyond. I want to give you a couple of examples. The SAO report asked us to identify and address fiscal control weaknesses. Well, we went beyond that. We developed comprehensive fiscal control plans for every park, based on private sector and other state agency models that were out there. So we did a comprehensive look at fiscal controls, not a limited look at the fiscal control weaknesses.

They asked us to address business weaknesses identified by SAO, which were fairly narrow and specific in scope. We took that and developed individual strategic business plans for every site, and things like visitation and revenue and those kind of issues were identified, site by site, the potential for growth and the potential for improvement.

I think the last slide there is very telling. There have been at this point 55,000 man hours clocked in regard to setting up and trying to implement these recommendations. And I want to point out, that does not include the field staff's time to make these things work in the field. If we were capturing that, the number would have many more zeroes behind it.

This is the time that the team here in Austin primarily, with help from the field staff, have come in here and spent developing the system. It's now — as Mr. Smith referenced earlier, it is out in the field, it is being implemented, you heard from the auditors just now that we are taking this seriously. Not to say we're not going to be, you know, stumble a little bit in the early processes, but we're committed to making it right, and it's moving forward rapidly at this point.

We have completed 45 of the 48 recommendations, so we are substantially finished with this, with a couple of exceptions. which I will share with you here in just a second.

Chapter Two, there are — and by the way, under Chapter One as we call it, Section 1, there are no remaining deliverables; we have finished that section completely.

Under Section Two, there are two remaining deliverables, as you'll see up there. The first is the revamp or the re-look at the Land and Water Conservation and Recreation Plan. And for those of you that have been here, and the new folks, we do that every five years. It was last done in 2005, and the next scheduled review and modifications for — and that's our Operating Plan. It's a little confusing sometimes, particularly the folks just coming into the agency.

We have two strategic plans. The plan that I'm referencing here is our Operational Plan. The Land and Water Conservation Plan is the plan that drives what we do out in the field and how we try to address both our recreational and conservation responsibilities.

We are in discussions right now with you ladies and gentlemen and the Executive Director about whether or not we want to move this up; it may be appropriate for us to do this before 2010, given the fact that we've gone through all these changes. So we will continue to keep you informed as to what the time line is. Under the Plan, we planned to do that in 2010. And so we will continue to have that discussion.

The second task that remains in Chapter Two is the development of a zero-based budget. I'm going to take just a minute on this one, because, you know, zero-based budgeting is an interesting phenomenon, as we found out and looked around the country. There are very few state park organizations that have undertaken that.

We did find one. The State of Oregon has undertaken a zero-based budget exercise, and that, for your edification, is basically going in and looking at every single thing that happens in a state park. You got to mow the lawn once a week, for example, and how long does that take? What kind of equipment does it require? How many quarts of oil? How many gallons of gasoline? How many man hours.

So it's very detailed, looking at everything you can imagine that would go on in the state park, and building up basically a model that says, this is what it takes, both in terms of man hours and in terms of dollars and in terms of equipment.

I will tell you that the State of Oregon launched their ZBB, zero based budget exercise six years ago, and are completed with about 50 percent of it. If you want to look at that in terms of the relative workload, you can imagine the number of state parks in Oregon are not near the number of state parks in Texas, and yet it's taken them six years to get that exercise complete.

It's not easy, it's intensively man-hour-driven. We will have done it in about, overall, about a year and a half from the time we started. This is going to be delivered in January, right at the beginning of the Legislative Session, we will have the zero based budget complete.

And it will, I think, set the foundation for us. If we want to move forward under Rider 31, which I'll talk about in a few minutes, to look at what it really takes to have a high-quality state park system, this will be part of the foundation of that discussion.

The third section of deliverables has one task remaining, which is the Rider 30 report. And I have two gentlemen here that I'll introduce in a minute, from the private sector, who've partnered up with us to complete a study on the impact of the return on investment, if you will, on capital construction projects out there.

Rider 30 essentially said for us to find someone in the private sector who had experience and competency in looking at return on investments relative to capital expenditures. We've been going through that process for many months now. I'll introduce the two folks here in just a minute, they're going to give you a briefing on where we stand on that.

This is very important to us. Rider 30 is essentially the last piece of the puzzle that will trigger $69 million in capital funding; about $52 million in old bond money — new bond money, and about $17 million in old bond money; so about $69 million of money. This is the final piece of the puzzle that will hopefully trigger that.

I might mention that those are big numbers, $69 million; you might recall that $25 million of that is for the Battleship Texas, so if you pull that off, the rest is available for the other state park components.

Last, and certainly not least, was the last section, which was loaded up with the fiscal control issues that both the SAO and our own internal auditors had identified. We are now complete with all the recommendations relative to that chapter. Mr. Smith said it's a pretty tedious process. It is labor-intensive in the field, because at this point it's all manual, there's lots of pieces of paper to fill out, lots of redundant oversight that has to occur to ensure appropriate handling of money and those kinds of things.

The fact that we are looking at an automated system that would link reservations and fiscal controls is something that once again represents our willingness to go above and beyond in this regard. This was not something that the SAO asked us to do, nor anyone else. It's something that we realized was good for business, would make us much more efficient. When we get this automated system in, we believe it is going to reduce the workload on the field staff.

We'll have a lot fewer pieces of paper out there. Redundancy will be built into the system, and won't have to be completely human driven at the field side. I think it's going to loosen up some resources where we can get back to doing some of the customer service things that we've had to juggle at the same time that we're doing these fiscal controls.

As you'll see from this slide, Rider 23 is an annual state park performance report, which is due in January '09, and it will be completed. Major Equipment Report is due this October, and we're on target to be completed with that.

Rider 29, our quarterly reports, which we have been completing ahead of time, actually, by several weeks. Riders 30 and 31 are the two riders that we outsourced, to Fisher-Heck and Pros Consulting, which are represented by the two gentlemen here with me today. I'll introduce them in just a second.

Rider 31, just as a preview, is the rider that asked us to look at what it would take to create a high quality state park system, both in terms of funding, personnel, equipment, and those kinds of things.

So these companies that are here today are doing both of those studies. They're doing Rider 30, which looks at the return on investment issue for capital projects; as well as Rider 31, which says, here's what a quality park system would look like.

For the automated system that I talked about, we selected the vendor just about a month ago who's going to be helping us with this process, to make everything automated. We hope to implement that — I mean we say when — our actual target date is November prior to the Session we will go automatic with these fiscal controls.

So we have four tasks left to go and then we will be completed. Now, we will be reporting on this process for years to come, so I — you know, "completed" is a relative concept in state government — but in terms of the actual work that's going on here, we will be completed with implementation. We'll get this zero based budget exercise finished in January; the vendor studies, one will be done here in a couple of days; Rider 30 is due at the end of this month; Rider 31 is due at the end of October.

The State Park Automation System, which I just referenced, will be ready to go rolling into the next Session; and then we need to make a decision about when we're going to do the next Land and Water Resource update, no later than 2010.

Here at the table I've got with me today Brian Trusty from Pros Consulting, and Jim Heck from Fisher-Heck Architects out of San Antonio — other way around, this is Brian, this is Jim. I apologize for that, gentlemen.

I asked them to come in today to brief the Commission on where we are with Rider 30. This is a reminder, this is the one that's going to trigger the $69 million in capital funding. Before I let them have their moment of fame here, anybody got any questions, I'd be glad to answer them.

COMMISSIONER BROWN: I just want to compliment you and the whole team effort that I think everyone in the agency has put behind this work, and I think you've done a fabulous job, and you've come a long way in a short period of time, so thank you.

MR. BORUFF: On behalf of the team, I appreciate that.

COMMISSIONER HOLT: And how are you getting along with the SAO, and what's their sense of it from your point of view?

MR. BORUFF: We always get along well with the SAO and all our oversight agencies, Mr. Chairman. I mean, it's an important part of our business, and we take it pretty seriously.

We communicate regularly with the SAO; I talk pretty regularly with their senior staff person who's been assigned to do this, Mr. John Young. I introduced him to Mr. Smith, just last week, he was over here for another related audit that we're going through.

I think, and at least in the letters that have come out formally, they have endorsed what we've done; they've said, we're on the right track. So my perception is that they're happy with what we're doing, and I feel like we're taking it seriously.

COMMISSIONER HOLT: Good. So we're keeping them informed as we move along —

MR. BORUFF: Absolutely.

COMMISSIONER HOLT: — relative to methodology, and follow-up.

MR. BORUFF: Yes, sir.

COMMISSIONER HOLT: Okay.

MR. BORUFF: Not just them, I might point out. I mean, we talk pretty regularly to all the oversight agencies.

COMMISSIONER HOLT: Yes, good.

MR. BORUFF: We work closely with Tina Beck over at LBB; we regularly communicate with the staff at the Governor's Office, Lieutenant Governor's and Speaker's Office, we work with Mr. Hilderbran and others over there. So I mean, we try to keep everybody in the loop. And we certainly encourage their feedback, and they have been an important part of the team.

COMMISSIONER HOLT: Scott, I appreciate it, because also, this is going to tie into then, Sunset, which we're going through also, this Session.

MR. BORUFF: Yes, sir. Okay. Gentlemen, you're on.

MR. TRUSTY: Well, we appreciate the opportunity. It's our honor and our privilege to not just be here today to share with you a preview of our results for the study we did with Rider 30, but also to be a part of this project. As citizens of Texas, and avid park users, this is something that was near and dear to our hearts. So it is something that we're very happy to be involved in.

As Mr. Boruff mentioned to you, we've also distributed to you an executive summary of the Rider 30 Report, which is going to be submitted to the LBB by Monday. And that report is substantially complete, as we are finishing some minor polishing at the end here and making sure we are ready to go and able to answer and address all issues and questions.

I'd like to also reinforce this body's praise of the staff of this department; I know I do that also with the commitment from Fisher-Heck as well, that this is not an easy study to go through, and particularly when they started off this project with the statement of, "We want to be better, we want to be the best, and we want to be able to address things that we need to do differently."

Introspection can be a very painful process, and we want to honor the fact that this staff went into it with open arms and open eyes, and very receptive to whatever recommendations we had. So you certainly have high quality folks that are working to make this happen.

Jim, did you want to make any other additional comments?

MR. HECK: The only thing I do want to add, I do have from my office Jason Wynn. Jason's here to answer any questions you may have about any of the sites that we visited. Jason actually did go out physically to 24 of the park sites, and did the evaluations onsite, so he's here if you have any questions in that regard.

MR. TRUSTY: Great. So today's presentation, we want to be able to make sure we take efficient use of your time. What we're going to do is, provide you an overview of what we have done with this project, who we are, where we came from, and therefore kind of what the level of expertise and objectivity we're lending to the results. The key findings that we've resulted with, with Phase One, and Phase One is the Rider 30 project which is an assessment of capital projects, the '08-'09 biennium for state parks, that whether or not they will increase attendance or revenues at those select state parks in which they're located.

We'll provide you a progress report on Phase Two, which is the Rider 31 aspect. Okay, again an update of the schedule of where we are with outcomes, kind of a detail of the expected outcomes we'd like to see happen as a result of our study and our work collaboratively with the Department, and be available for your questions.

So, again, the overview will consist of the objective of the project, and the overview of who we are. The objectives were aligned with the legislative directives of Rider 30, particularly Rider 30(a); 30 had seven subcomponents, and the first subcomponent required the Department to hire a private vendor to assess whether or not these capital projects will increase attendance at Texas State Parks, or generate revenue to cover costs.

They appeared to be fairly — two simple questions, but of course as you can imagine they involve voluminous answers, because they're not necessarily easy to just go in and peg whether or not improvements to restrooms or improvements to ADA at certain select parks are going to increase attendance or revenues. So we certainly dove into it as deeply as we could, and we'll get into a little bit of that process.

Rider 31, as Mr. Boruff mentioned, is again identifying the requirements for Texas to have a high quality park system, basically identifying the gap of where we are now to where we're trying to go, and to lay out the strategy to get there.

And of course there are several subcomponents to that, and one of those is assessing public need; making sure we're developing a park system that is responsive to validated public need based upon demand and interest and trends in the state; operational enhancement recommendations, asset protection and improvement, and it will explore entrepreneurial opportunities maybe we haven't looked at before, or rethinking those that we have. And then of course a park development plan.

Jim, would you like to share a little bit of where you guys are?

MR. HECK: Yes. Just to give you a little background on our firm, we're a 16-person firm in San Antonio, and we were selected to be involved in this project primarily because of our background in site planning, and also historic preservation and restoration, building renovation projects, because that's primarily what this Rider 30 was looking at.

I do want to mention also that we have a team of consultants; we have a cost estimating consultant out of Houston who's looking at the cost estimating procedures; we also have a civil engineering firm, landscape architectural firm, mechanical and civil engineering firms that have also gone out and done site visits to go ahead and evaluate the various projects and conditions.

MR. TRUSTY: And I'm, of course, with Pros Consulting. And again you can read the bullets, but kind of the highlight of who we are and where we come from, Pros Consulting is a niche consulting firm that specializes in management and strategic planning, specifically for government agencies, and uniquely in parks and recreation.

We've completed 600 projects in 46 states and five countries, and helped our clients and customers pass over $3 billion in bond packages supporting their park and recreation projects. So we use, as a measure of our success, the fact that we have a multitude of implementation plans that have been adopted by our clientele and put into action, because they represent the best practices of the industry, and are reflective of the political realities in which those departments are operating.

So Phase One, Key Findings. Again these key — this is a 138-page report that we're dropping on the desk of LBB and SAO next Monday, but we managed to filter that down into six pages, and an eight-slide presentation. Again, here's the highlights, the 30,000-foot look of what we found.

First of all, all capital projects should be allowed to move forward without delay. These projects are addressing reasonable and appropriate issues in state parks that are either deferred maintenance or maintenance that has come about within the last couple of years that need to happen; continuing to delay those will cost the state additional dollars.

Capital deferment is something that we're working with the Department to help quantify, so the state and the leadership of which you are accountable to can understand that there is actually a real cost to pushing off capital projects that are inevitable.

All capital projects we found to be relevant and appropriate to the mission and obligations of Texas Parks and Wildlife Department. When we began this project, and we got really into it starting in January, we sat down and we organized a briefing session with several of the state's leadership which were calling for the study to be conducted, and that included the State Auditor's Office, LBB, representatives from the Governor's Office, Lieutenant Governor's Office, Senate Finance, House Appropriations, and several other folks from the Legislative leadership side.

We're actually very pleased that everybody responded quickly to come in and sit down with us to talk about our objective, our process, and our plans for the project. This was something that we did completely independent from this Department.

It was important to us to be able to assure to that group that who is eventually the end audience of our studies that this is an objective process that is completed without the influence of the Department, but based upon our own expertise and our own examination of the park system and where it's at, and these particular capital projects.

Because of the quick response we got from everybody on scheduling that meeting, we didn't know exactly what to expect, whether or not that was going to be a group that was very excited to hear what we had to say, or a group that was going to be very critical of the process in which we were undergoing. We are very pleased to report that that was a group that met, that listened to what we had to say regarding our process, the procedures, the expected outcomes, and they validated everything that we were getting into the project for, and that was that, essentially, they wanted to just have a clear understanding of whether or not — what are the returns on investment for capital projects in state parks.

They also understand parks are not something that are big revenue generators for the state, but we want to try to couch that in terms of re-framing and repositioning the State Park System to be evaluated more appropriately on its financial performance.

So that was something that — I don't know, Jim, if you want to add any more to that — but we were very pleased, and we got a lot of validation from that group that we were going in the right direction.

MR. HECK: Yes. I think Brian summarized it well enough.

MR. TRUSTY: So additionally, we found that projected consequences of no action taken on any of these capital projects can be detrimental to park operations, the maintenance of state assets, and future park development opportunities. In FY 2007, the State Park System operated at 65.50 percent operational cost recovery. That is a cost recovery ratio that is factored at the local state park level, so we're not including overhead or administrative costs that are attributed to park operations above the state park level.

I will share with you, however, that the cost recovery ratio of the Texas State Park System, once that administrative cost is applied, is 53.6 percent. The national average for a park system and their cost recovery operations is between 40 and 60 percent. So without including administrative costs, the Texas Park System is performing above average, above state and national averages. Even if you do include it, it is operating within the average range. So this is definitely a park system that is performing well, or above average based upon how you look at it.

There is an important note here though, that is very important for us to — a message to get across, and you'll also find it here in this summary: Operational cost recovery is a performance measure that has been adopted really strongly in the last 10 to 15 years judging the performance of state park systems, or local park systems.

It is not always the most appropriate performance measure, because, again, parks are not generally huge revenue generators to generate huge public benefit as they're designed to do.

Sometimes, and in this case, we would also advocate that the higher park operation cost recovery ratio we see with the Texas State Park System is not only a result of good revenue generation, but diminished operational budgets that are available to the state park system.

So trying to get to a magic number of 85 percent or 100 percent is not necessarily what is advisable for a high quality park system. Identifying that proper balance is a critical part of Rider 31, and what we'll be working closely with the Department to do.

Here's another interesting fact: of 93 operating state parks, 40 of them had these capital projects located in them, so a little, you know, roughly 40 percent, 45 percent of our state park system, these 40 state parks hosted 85 percent of all state park visitation. These parks are being loved to death, and hence these capital projects. A lot of these capital projects are addressing the fact that these parks are under such heavy use, and that has accelerated wear and tear on the facilities.

Each of the 98 projects were reviewed and analyzed; there were 98 capital projects. And here is how the results fell out: We found that 37 percent of them will likely increase attendance and revenues because they are bringing on facilities back online that have suspended operations due to their conditions, or they're bringing on new facilities online, they're enhancing facilities, making them more attractive to marketable use, et cetera.

We found that 40 percent of the projects will not likely increase attendance, but are necessary to maintain current visitation. This relates to infrastructure issues. For instance, they may be addressing deficiency in water supply or wastewater systems, or electrical delivery. Being — even though fixing those issues may not increase attendance or revenue directly, they are absolutely necessary for the park to maintain its current performance.

We found that 45 percent of the projects will likely — will not likely increase revenues, but are necessary to maintain or improve the current financial performance of that park. So again in the same vein. We found that 23 percent of the projects will not likely increase attendance, and 18 percent will not likely increase revenue. The report goes into detail about what these projects are.

Generally, these projects are addressing federal ADA requirements, they are addressing the restoration of historic structures that may or may not be in direct service to the public, but are a part of the parks portfolio, such as historic residences that are utilized by park managers. Again, so we're very clear in defining each one of those cases, and why it is that we found that they would not necessarily increase attendance or revenues, but why they're important and appropriate for the Department to conduct.

We found that 20 percent of the projects, representing a total of 9 percent of the proposed capital budget, capital expenditures, are addressing federal ADA and state TAS, which is Texas Accessibility Standards regulatory requirements. This is an important issue too because even though, you know, a part of a high quality park system is accessibility and equity for opportunity. So we need to make sure that our parks have a relevant and appropriate level of accessibility aspects to them. ADA compliance is a federal mandate, and the loss of compliance with ADA regulations can result in the loss of eligibility for the entire Department to receive any form of federal funding, even if it's not related to state parks. So this is a minor investment to protect the much larger investment that this Department receives and leverages against state tax funds to perform its duties above and beyond the state park system.

Finally, 18 percent of the proposed projects address repair and improvement to historic properties. Nine percent of the proposed capital expenditures are for historic buildings; that's not including the Battleship Texas, which is approximately 42 percent of the entire $69 million request.

The capital — the Battleship Texas is an interesting issue. I mean, this Department has been given the obligation and the responsibility by the State of Texas to manage these historic structures. These capital projects we found to be appropriate and relevant to maintaining these historic structures and their historic integrity. So we did not find any fluff in these budgets.

The Battleship Texas is a giant project. But at the same time, the dry-berthing of this facility is going to be unlike any other capital project in history. There has been no similar dry-berthing of a vessel of this size. So we do believe —

COMMISSIONER HOLT: Of this size.

MR. TRUSTY: — that this project will have —

(Laughter.)

MR. TRUSTY: — or whatever — however you want to take that.

(Laughter.)

COMMISSIONER HOLT: You didn't have to bring that up.

MR. TRUSTY: It definitely is, in the long term maintenance interest of this historic icon. It is currently undergoing massive amounts of hull corrosion sitting in the Houston Ship Channel. The only way to protect that, and to actually make this a one fell sweep and so you're not finding yourself biennium after biennium going back for more and more money to repair — make hull repairs, is to pull it out of the water, and to make it an amenity that's an attraction, not just for the Texas State Park System but the region at large, because, again, it will be an attraction unlike any other.

So that gets us through the key findings for Rider 30. Phase Two is the Rider 31, and just kind of a snapshot of where we are. This involved extensive community and stakeholder input, of which we conducted a household survey across the entire state, representative of not only socioeconomic breakdowns of the state's population distribution, but where they're located.

They have 254 counties in the State of Texas and ironically enough, over 50 percent of our population only lives in 20 of those counties. So we wanted to make sure that we made — our household survey was representative of the population distribution of the entire state.

In addition, we've conducted extensive interviews with community leaders, involving state senators such as Eliot Shapleigh, state representatives such as Gallego, out in the West, mayors, judges, chairmen of community and economic development groups, chamber of commerce directors, and members of this very Commission, to get an idea of what they feel like are the perceptions of the current state operating circumstances of our park system, as well as what we need to do to get to a high quality system in the long run. That has been a very enlightening process. We will also incorporate previous focus group findings that this Department has conducted recently, to make that a robust element of the project.

We are 40 percent complete with our park and facilities assessment, which will, of course, get us to the park development plan, which we will deliver. We're anticipated to deliver to this Department a month before it's due to the LBB, on September the 5th; it's due October the 1st. We're approximately 25 percent complete with that aspect. So again, our schedule: March 31st we're done with Rider 30; October 1st, we're completely wrapped up with Rider 31.

Finally, our expected outcomes: We are identifying attendance and revenue impacts of our current proposed projects. We have created an extensive, and innovative, and a unique capital project evaluation model, that takes public — inputs for public benefit, which are both tangible and intangible, and takes capital investment, capital return, capital deferment — the cost of capital deferment, projected increases to operating budgets or savings to operating budgets, and spits out a score for capital projects, and we're working with the Department to make sure that that is an inclusive tool that you can choose to use in the future if you care to.

But this was something that was very important for us to take from our peers in the finance industry, and our peers in the parks industry, and have a collision of trying to measure return on investment for something that's very hard to measure.

We want to result in repositioning the state parks as viable assets. In Arkansas, they're finding diamonds in the state park system. We have diamonds of our own, and we want them to be known as such. So how can we reposition state parks as a viable asset to not only our citizens but the visitors of the state.

We want to strengthen the state parks as destinations; we want to create and improve our earned income opportunities, and we want to improve the value of the state park experience for visitors without having a huge impact on your expense bottom line. So we were trying to explore and identify where our opportunities are there.

And with that, that's the conclusion of our presentation and we certainly are open to any questions you may have of us.

COMMISSIONER BROWN: Thank you.

Any questions?

COMMISSIONER HOLT: Well, again, of course, we want to thank both groups for helping us and doing it so quickly, because this is — had very tight time lines on it.

And Scott, maybe I can ask one question, I mean, kind of what are the next steps? And then how do we get feedback relative to this report?

MR. BORUFF: The report will go to the oversight groups, the SAO and LBB and so forth, next Monday I believe. It will be — the ball will then be in their court to review the document and signal their support or approval of that document. We will certainly be down to answer any questions they might have as quickly as possible next week, and to be available to them, and to stand ready to exercise our next step, which is then to go forward with the issuance of the bonds. That will be something the Infrastructure Division leads.

But as soon as we get feedback from the LBB and the SAO, and the Governor, Lieutenant Governor and Speaker's Office, we will move forward with the fairly normal process that we've been accustomed to for many, many years.

Our hope is to be able to get those bonds issued early in the next fiscal year, probably in September or October, then to be able to move forward with letting the design piece for most of those projects. That typically lasts six to nine months on most projects, which would put us in construction towards the middle or latter part of this Legislative Session.

COMMISSIONER PARKER: Mr. Chairman?

COMMISSIONER HOLT: Yes, John.

COMMISSIONER PARKER: You know, I love this report; I understand it completely. I want to be sure that everyone in Austin, all of our brothers down at the Capitol understands it, and understands the magnanimity of it, and also, understand what Scott just alluded to, and that is the time line of going into this.

Because I can see where if we do not make sure that every member of the House, every member of the Senate, and all of the leadership understands that we've been doing what we were told to do, yet we have not been able, because of restrictions placed on us, we have not been able to begin the repairs on the state parks, and here we're going to be into the middle of a Session. And we are also going to have studies done on other state parks that need repair, that were not included in 30 and 31.

So we're walking a tightrope, balancing, to make sure that all of our colleagues downtown understand this completely. And if they're happy with the report, then let's move forward with our next request, and it will come right on the tail end of 30 and 31. It would appear to be; I don't know. Dan, do you have any thoughts about that?

COMMISSIONER FRIEDKIN: I agree with the amount, but I think we need make sure that we do it in a timely fashion —

COMMISSIONER PARKER: Yes, this is a wonderful presentation, but we need to, maybe we need to spread this presentation fairly in every office downtown.

MR. BORUFF: I would add one caveat, with your permission, Mr. Chairman, and that is that we've asked these two gentlemen to go downtown, after the oversight organizations have had a little bit of time to digest the report, and to be available to them to make sure that they understand the report, make sure there's any questions that they have could be independently answered by the consultants. So not only will the Agency be downtown making sure we're available, but these consultants will also be there to talk about the report.

And I probably would be — it would not be good of me to miss the two key points to this report, and that is that, number one, the Infrastructure Division I think has been borne out through this report; they know what they're doing, that they've put together the projects in a reasonable fashion, that have, in fact, been vetted by outside sources.

And I think that's something, particularly with Mr. Parker's help, in that Division, is it reflects the long history they have of successfully expending the dollars. We have this will slow us down a little bit at this time, but once that trigger is pulled, we will get after it. We've taken your directions, and Mr. Parker's directions, seriously to get as efficient as we can at this so we're going to be bundling even bigger packages in the future.

So I think the silver lining is here, as we've done this effectively, done it appropriately, we have a track record of success in expending these funds, and we intend to continue that track record.

COMMISSIONER PARKER: And please don't misunderstand me, no one, I'm not being critical. But you know, we need to look into the future, and we see January 3rd, '09 coming, and the conductor is going to holler, "All aboard."

COMMISSIONER HOLT: Yes. Now, John, I think Commissioner Parker is making a good point. But I don't want to get ahead of ourselves, only from the point of view of first, Monday, we have to get it downtown. And we've got to get it in to all the various groups that, the leadership groups that must look at the report, and we've got to get it understood and accepted.

And then I agree with you, though. Then we have to

get at is as an educational process, because the second part of it is, there will be a lot of legislators in January who won't understand, "Well, wait a minute. We appropriated it, we, you know, authorized and appropriated those dollars, how come they're not spent?" And they're not going to remember that this was a big part of the requirement before we could even go out —

MR. BORUFF: Right.

COMMISSIONER HOLT: — to sell the bonds. And this has to be accepted first, before we can —

MR. BORUFF: Correct.

COMMISSIONER HOLT: — do it. So I agree with you, John, so — but first we have to get agreement, I think, between all of the leadership downtown, and LBB and everybody else, that this report is acceptable to them. And the way we're going to get that is, when they say, "Go sell the bonds."

Once that's done, I think I agree with you. Then we go out, and get into the education process, particularly on the various committees that are our oversight committees, the individuals on them.

COMMISSIONER BROWN: I have a question, Scott. Has the Lieutenant Governor appointed an oversight committee at this point?

MR. BORUFF: An oversight committee?

COMMISSIONER BROWN: Well, on the House side, when they — did the Speaker appoint a committee to —

MR. BORUFF: I believe you're probably referencing the sales tax —

COMMISSIONER HOLT: Yes, sporting goods tax.

MR. BORUFF: — with it being — sporting goods sales tax; there was an issue there. I do not believe the Lieutenant Governor's appointed them.

Gene? I think the House side —

COMMISSIONER BROWN: Okay. So that's strictly done on the sales — on the sporting good tax.

MR. BORUFF: It's on the issue of how much and whether to appropriate a sporting goods sales tax. It came up during the last Session as a major issue relative to the funding of state parks; there was an interim committee supposed to be appointed. I believe the House has selected their members, but the Senate has not —

COMMISSIONER BROWN: Okay.

MR. BORUFF: — at this point.

COMMISSIONER BROWN: All right. Thanks.

COMMISSIONER FRIEDKIN: I think also with all the various constituents who you're going to be educating and discussing the results with, this is an nice summary. This executive summary's great and helpful, I presume you're going to be distributing that as well?

MR. BORUFF: Yes, sir.

COMMISSIONER HOLT: Thank you.

MR. BORUFF: Thank you very much.

COMMISSIONER HOLT: And being fair to our Legislators, there's a lot of them — I mean, this is what they'll look at, I mean, because this isn't their top priority, and so you're going to, again, getting back to John's point, just education is going to be the key. But we've got to get it accepted first at the various levels, leadership levels.

MR. HECK: And I think one of the key things that we did is, as a team is, you know, we had the two questions of increased revenue, increased attendance —

COMMISSIONER HOLT: Right.

MR. HECK: — we really wanted to emphasize also the consequence of no action.

COMMISSIONER HOLT: Yes.

MR. HECK: Because that really puts you — if you have a roof that's leaking, that's easy to fix; you wait a few years, you have rotted deck and interior damage, and it's a lot more expensive. So those consequences also were something that we thought had to be really answered in this report.

COMMISSIONER HOLT: I appreciate it. And people saw it coming.

MR. HECK: Sure.

COMMISSIONER HOLT: I'm in there —

MR. HECK: Yes.

COMMISSIONER HOLT: — and it's dripping on me while I'm sleeping at night —

(Laughter.)

COMMISSIONER HOLT: — that's not what I paid for.

(Simultaneous discussion.)

COMMISSIONER BIVINS: What was the time line, I'm sorry for my late arrival but what was the time line on distributing this?

COMMISSIONER HOLT: Monday. It gets out to the various leadership groups; Governor, Lieutenant Governor, Speaker of the House, LBB —

COMMISSIONER BIVINS: SAO.

COMMISSIONER HOLT: — SAO. And so the report will literally go Monday to all of those groups.

COMMISSIONER BIVINS: Okay.

MR. HECK: And we are in the process of — the team's in the process of trying to set up the meeting with all those groups, so we — you know, a similar meeting to what we had before with them.

COMMISSIONER BROWN: Great. Thank you.

COMMISSIONER HOLT: Yes. Thank you. Thank you both, also.

MR. HECK: Very good. Thank you.

COMMISSIONER HOLT: You did a good job and you did it quickly.

MR. TRUSTY: Thank you.

COMMISSIONER BROWN: Committee Item Number 4 is the Financial Overview. Mary Fields and Julie Horsley to present.

MS. FIELDS: Good morning, Commissioners. For the record, I'm Mary Fields, Chief Financial Officer, here to provide the financial overview.

The focus of the presentation today will be to provide a revenue and budget status for Fiscal Year 2008, and, again, I'll introduce Ms. Julie Horsley, she's our Director of Planning and Analysis, and she will provide a status update on the strategic plan. And finally I will wrap it up with an update on our 2010-2011 Legislative Appropriations Request.

Let's start out with the revenue and budget status, and I want to start just with a reminder here that the comparison of the state park receipts has been revised to only include continued operations. We want to make it more comparable to the prior year, so the receipts from the historic sites and the Texas State Railroad that we are no longer operating are not included in the '07 totals, or in the first part of the '08 totals.

When comparing the state park receipts through January 31st, at $11.35 million, we're up 9.5 percent, or $988,000 over last year's collections at this same time. The most notable increases are in entrance fees and facility fees. We're doing real well with the state park receipts; this will be very helpful for us in the revenue estimates that Mr. Smith mentioned earlier in the Land and Water bullets.

Our boat revenue as of January 31st is at $5 million. This is up 2.7 percent or $132,000 compared to last year at this same time. Boat registration revenue is down slightly, while revenues for titles issued and sales tax is up. We continue to transfer that 15 percent of registration and titling revenue to Fund 64, our state parks account, and that amounts to about $637,000 based on the revenues through January.

More good news here with the license sales revenue; this is also up as of the end of January, at $68.8 million, we're up $2.1 million in revenues as compared to last year, or 3.1 percent. All of the categories of revenue are higher than the previous year except for resident hunting, which is down 1.8 percent; however, the combo sales are up 2.4 percent, so this could just be a shift in license purchase or preference. The other category is also just slightly down from the prior year.

In reviewing the number of licenses sold at 2.11 million, we're up 6.1 percent as of the end of January; total hunting is down 0.8 percent, that kind of drives with the revenue we just talked about; fishing is up 14.5 percent; and fresh water is really driving that percentage real well. Total combo sales are also up 3 percent.

When comparing our 2008 revenue collections as of January 31st to the annual revenue estimates, we're doing well with all of them, which is no surprise after we just talked about the growth in all the revenue categories. With 42 percent of the fiscal year elapsed, we've collected 60.8 percent of our game, fish and water safety funds; 40.3 percent of state park funds; the local park fund is at 42.8 percent, and the other categories are at 104.6 percent. There are multiple funds included in that other category, and there are a couple of them that are doing real well, and that's what's driving the percentage up.

Our overall budget has increased by $18.3 million since November 30th, taking our budget to a total of $442.9 million. Budget adjustments made during the months of December and January are summarized on this slide. The largest adjustment was to recognize the portion of bonds that were appropriated to us this year, and were approved by the voters in November; these are the Prop 4 bonds. There's — half of the battleship bonds are in there at $12.5 million, and the remaining $2.1 million is the portion of the bonds for state park repairs that was included in this fiscal year. You'll see the rest of it appropriated in next year.

I will mention that the bonds are unissued at this time; we did want to go ahead and recognize them since they were approved by the voters. The schedule, in speaking with Steve, and Scott also talked a little bit about that earlier, the schedule is to get the bonds — let's see, first to get that Rider business — the Rider 30 business plan approved and those projects. We're hoping to have that done hopefully by the end of April; of course we don't control that.

If all goes as planned there, we'll request funding from the Texas Public Finance Authority in June, and we'll request further approval from the Bond Review Board in July, and then I think there are plans again to really issue those bonds in September or October. Steve Whiston, our Infrastructure Director, I believe has a presentation planned for the May Commission meeting, and he'll talk more about all of these projects and the plans, during that time.

The other sizeable adjustment is the carryforward of unexpended balances there, at about $2.8 million. The majority of that are federal grant funds that are being carried forward.

In reviewing our Fiscal Year 2008 budget versus expense, we have 69.5 percent of the budget remaining, with 42 percent of the fiscal year elapsed; the salaries and operating categories are basically on track. The capital expenditures include construction and capital equipment. Of that $59.1 million, $50 million of it is construction.

Just a reminder that those construction projects we do when — they take three to four years to complete, and so we'll see a pretty good remaining balance there, but you'll see, as this project rolls from year to year over a three- to four-year period, you'll see those balances drop. And, again, Steve will cover more of that I believe in the next meeting.

COMMISSIONER HOLT: Steve, you lucky guy.

(Laughter.)

COMMISSIONER HOLT: Three to four years, you're going to explain three to four years?

MR. WHISTON: Yes.

(Laughter.)

MS. FIELDS: I asked him.

COMMISSIONER HOLT: I know, Mary. No, and I pick on him all the time. You're talking about from start to finish. Right? When you say that? Yeah, okay.

(Laughter.)

MS. FIELDS: Yes, we start talking about the bonds and the construction projects, that's definitely out of my purview.

COMMISSIONER HOLT: Yes, pass the buck. Yes, I don't blame you.

(Laughter.)

MS. FIELDS: So moving on here at this point I'll hand it over to Julie to give the status update on the appropriation and the strategic plan for 2009 through 2013. And just a reminder here that this plan is called the Natural Agenda; we do have the two strategic plans, you heard Scott earlier talking about the Land and Water Plan, which is the strategic plan that we operate with. The Natural Agenda is more of the strategic plan that we use when we're dealing with the Legislature and our oversight agencies. It is still a key driver for us in performance and other measures as well.

So at this point I'll hand it over to Julie.

MS. HORSLEY: Good morning. For the record my name is Julie Horsley, I'm the Director of Planning and Analysis in the Administrative Resources Division.

I'll just add a little bit more to the comments that Mary just made, in that the Natural Agenda is more of a Legislative strategic plan. It really establishes the budget structure for the agency, and serves as a mechanism for us to identify any anticipated funding needs that we have. We do make an effort to link the Natural Agenda to the Land and Water Plan, and I'll discuss that a little bit more later on in the presentation, about how we're planning to do that this time around.

Just as some background on the strategic plan, the requirement for strategic planning was established by the Legislature in 1991. Provisions of the Government Code require that all state agencies engage in strategic planning and prepare and submit a five-year strategic plan every two years. So this time around we're working on the plan for FY 2009 through 2013.

All agency plans have to include specific components, as required either in the statute or via the instructions that are issued by the LBB and the Governor's office. For example, all plans have to include, you know, a mission statement, goals, objectives and strategies, an internal and external assessment, and then a set of measures to gauge progress toward achievement of those goals and strategies.

The budget structure that — the goals, objectives and strategies that are developed as part of that strategic plan form the budget structure for each agency, and it's — that's used as a basis for requesting legislative appropriations.

In terms of the due dates and processes, any proposed changes to budget structure have to be submitted to the LBB and the Governor's Office by April 16th. Once those proposed changes are submitted, there's usually a set of meetings that occurs where we negotiate and review the proposals, and final approval of those structures rests with those two offices. The final strategic plan itself, the document, which incorporates that approved structure as well as other elements, is due July 11th.

Internally we do rely quite a bit on division input into preparation of the strategic plan. Back in January we asked all the divisions to begin looking at their budget — the budget structure and performance measures; and we received proposals from them, and I'll be reviewing those with you over the next couple of slides. They've also been asked to provide input into the actual text of the strategic plan.

In terms of the proposed structure changes that we plan to submit to the LBB and the Governor's Office, we are requesting a revision to a total of three strategies, the first set of these changes has to do with our existing inland and coastal fisheries management strategies.

Right now we have two separate ones: one deals with inland and one with coastal, and our proposal is to consolidate those into just one strategy. We feel that that's going to be an appropriate change and beneficial to us. Right now, there are some fisheries management activities, particularly in resource protection area that are more statewide in nature, and don't easily lend themselves to categorization into one division or another.

And this change will kind of reflect that.

The other change that we have is in the park support strategy, and it's really just a minor wording change to reflect that the activities conducted in that strategy are management-related, as opposed to direct provision of services.

We are also going to be moving forward with the request to change several of our measures. In all, we will request deletion of 15 measures; two of those deletions have to do with programs that have either been scaled back, or are being eliminated, or have been eliminated. There are five measures in communications and the state parks division that we're requesting deletion of, but which will be replaced with new indicators. And then finally, there are eight, four in inland and four in coastal, that are being deleted due to the strategy consolidation I just spoke of.

We will move forward with a request to add a total of eleven new measures. Two of those are in the Wildlife Division, and would allow that division to better reflect their efforts related to endangered species research, and wildlife management on private lands.

Then there are four measures within Communications Division, and that's basically kind of the flip side of the deletion, where we're asking to delete some but we're replacing them with some indicators in Communications Division that are more kind of — to reflect the programmatics and programmatic shifts that have occurred in their programs.

One State Parks measure would focus on the state park volunteer program, and capture information on the value of volunteer labor in that program. And then four measures, those last four there would reflect combined inland and coastal efforts under the Consolidated Strategy. So basically, we're eliminating eight measures, but we're kind of collapsing them into four that capture both inland and coastal efforts.

Then finally we'll be requesting revision to a total of 21 measures, and these are really minor changes, to measure definitions, not to the measures themselves, just for clarification and cleanup purposes.

In addition to the proposed structure changes, we're currently working on updating the text of the strategic plan, including sections on key events and legislative initiatives and strategic priorities. And it's really within the text of the plan that we've tried to kind of link up to the Land and Water Plan, and this is one area I wanted to focus on.

We try throughout the text of the plan to be consistent with what's the message that's in the Land and Water Conservation Plan, so we make every effort to do that. But also, within the strategic priorities section, we kind of do a crosswalk between the Land and Water Plan, and the Natural Agenda. That section, kind of similar to how it was laid out in the last strategic plan, we are planning to organize it according to the major Land and Water Plan goals.

And then within each Land and Water goal, lay out the key issues and challenges, and the key accomplishments, and then link and show the relevant strategic planning and budget structure goal that links up to that particular Land and Water goal.

We hope to provide you more information on each of these sections at the next Commission meeting, and hopefully by that time we'll have a draft ready for review and circulation. And then once we get comments back on that and are able to incorporate them, the final plan will be submitted to the Executive Director and the Chairman for review and signature.

And that concludes my presentation. I'd be happy to answer any questions.

COMMISSIONER PARKER: I have a question.

COMMISSIONER HOLT: Yes, sir.

COMMISSIONER PARKER: Back to that part where you're going to consolidated inland fisheries, and I may not have understood exactly what your wording was, but are you saying that we're going to combine inland fisheries and coastal fisheries into just one division?

MS. HORSLEY: No —

COMMISSIONER HOLT: No, no.

MS. HORSLEY: — it's actually a strategy change, it's not a divisional change. So in terms of the way the funding is appropriated, it would go into one strategy, and it could still be split between two divisions.

COMMISSIONER PARKER: Okay.

MR. SMITH: Could I add to that, Julie?

It's just, Commissioner, there are a number of strategies that span the work of both divisions, and given that, you know, they're functioning across watersheds, so, yes.

COMMISSIONER FRIEDKIN: When will this be submitted, I may have missed that?

MS. HORSLEY: The final strategic plan is due July 11th.

COMMISSIONER FRIEDKIN: Okay. I think it would be helpful if we could get that crosswalk you're talking about between the Natural Agenda and the Land plan just to understand the totality of the strategic planning process; it would be great.

COMMISSIONER HOLT: Good point.

COMMISSIONER BROWN: Any other questions?

(No response.)

COMMISSIONER BROWN: Thank you for your presentation.

MS. FIELDS: Thank you. I'll move forward to — I have one more section here. The strategic plan does lay out the needs for the agency, which then we proceed with in our Legislative Appropriation Request, if there's funding needed. So I do want to give you an update on where we're at with our, I'll call it the LAR just to shorten it for us, the LAR update.

And just, let me mention just a couple of key points about the LAR for Commissioners that are new to the process here. The base budget for 2010 and '11 is really established based on our 2008 projected expenses, and our 2009 operating budget that we'll establish.

And the — when we establish that base then, the Legislative Budget Board and the Governor's Office can establish limits to that base. Last biennium we were asked to limit the base to 90 percent of our general revenue, and general revenue related funds. While there is not a directive that's officially out there yet, we have heard that there is a possibility that we will be asked to limit our base again this time; we won't start out with 100 percent of our base budget.

On top — so with the base budget, if there are any additional funds that we want to ask for, we ask for them via exceptional requests. And it's a good idea to try to limit those number of exceptional items basically to around five, because when you're discussing it with legislators, and during the Session, they kind of start losing attention after you get past five. So I think last year we ended up with seven exceptional items, and we were pretty successful in actually getting attention on almost all of those. So we'll move ahead there, and we're still working on our list of what those exceptional items might be.

We are, as far as developing the LAR, we will be beginning the operating budget process for 2009 here in April. And we are still working on our time line here for the LAR preparation; we know it will be from April into August. We do anticipate the receipt of the instructions from the LBB and the Governor's Office in late May or June; I think last time we got them in early June.

But we've started already with our base reconciliations and all that sort of thing, so — and then again the LAR will be due in August, and it looks like it will be, based on some of the other due dates, it will probably be late August. So that's kind of where we're at.

In the next meeting we'll talk a little bit more about where we're at with the Legislative Appropriation Request, as well as another update to the strategic planning.

And that concludes my presentation. I'll be happy to answer any questions.

COMMISSIONER BIVINS: Is the strategic plan document submitted with the LAR —

MS. FIELDS: No.

COMMISSIONER BIVINS: — to the Legislature?

MS. FIELDS: No. The strategic plan is actually submitted in July; so it will be submitted July 11th, and it will begin review and circulation. And then the LAR is actually due in August. So during the Session they will reference both documents, but they're not submitted together; They do have separate due dates.

COMMISSIONER BIVINS: So they see our strategic plan —

MS. FIELDS: First.

COMMISSIONER BIVINS: — approximately a month or six weeks before our actual request.

MS. FIELDS: And it will lay the groundwork for some of the needs that we'll be, you know, again asking for funding for in our Legislative Request, Appropriations Request.

COMMISSIONER BIVINS: Okay.

COMMISSIONER BROWN: Any other questions?

(No response.)

COMMISSIONER BROWN: Thank you, Mary.

COMMISSIONER HOLT: Thank you, Mary. That was good.

COMMISSIONER BROWN: Committee Item Number 5 is Facility Use Fees at the Parrie Haynes Ranch, and we'll be asking for permission to publish. And Mr. Ernie Gammage is going to make the presentation.

MR. GAMMAGE: Commissioners and Mr. Smith, good morning. My name is Ernie Gammage, for the record. I'm the Branch Chief for the Urban Outdoor Program section of the Communications Division, and I'm here today to request your permission to publish amendments to the fee schedule for the Parrie Haynes Ranch.

Let me see if I can get that picture up there, it's a beautiful shot; many of you have been up there, but some of you have not. And I'd like to give you a little bit of background about the ranch. It is a 4500-acre facility located in Bell County near Killeen; it actually abuts Fort Hood. We have two — we have a Black-capped Vireo and also a Golden Cheeked Warbler up there that run back and forth from Fort Hood. We lease this facility from the Texas Youth Commission. The current lease expires in 2018, and the donation of the property originally was made for the benefit of the children of Texas from the late Parrie Haynes.

The ranch itself is divided into two parcels. The eastern parcel is known as the Equestrian Center, it has 26 campsites, over 60 miles of marked trails for equestrian use, and is certainly a highlight of the system. The western parcel we call the Hilltop Complex, and it provides facilities, lodging, it's where we provide meals to groups and also activity opportunities. And in 2003, the Camp Coca-Cola Foundation began an investment of over what is now $2-1/2 million of commercial kitchen, dining hall, nine camper cabins, a home, swimming pool, pavilion, and a bunch of other stuff.

The current fee structure does not include all these facilities and activity uses, and we want to speak to that issue; nor does it allow us to recoup operational expenses. Our proposed fee schedule will provide a base fee for all users, for overnight lodging, meals and the various activity opportunities out there, which include five stand shooting sports, a ropes course, swimming pool, kayaking, fishing, and other opportunities.

It does provide a discount of 40 percent for youth groups that use the ranch, and we are defining youth groups as any organization that has over 60 percent youth, 17 or below, as their makeup. This is not like a state park, you don't just come out there, it's by reservation only.

And the proposed fees will provide a fee range that will later allow us to amend upwards any of the fee that we wish to increase. To give you an idea of the fee comparison, right now, for example, in the current schedule, we have the entire Hilltop Complex that can be rented per day, 24-hour period, for $1,000 to $5,000; and we are proposing increasing that fee, $2,250 to $3,500. This is based, by the way, on an examination of similar facilities around the state, including some of those from LCRA and other private camps and facilities.

One of the issues related to cabin use is that we did not have a fee established for the rental of a single cabin used for campers, and we are addressing that by proposing a fee range of $400 to $600. And finally a bunk in a cabin, the current fee is $20, and we propose raising that to $30.

With your permission, we will publish these in the Texas Register for comment, and then they will be approved at the next Committee meeting. And I'll be happy to answer any questions.

COMMISSIONER HOLT: Ernie, where did you come up with these numbers? Have we talked to some of the user groups that use it on a regular basis, is that —

MR. GAMMAGE: We surveyed similar facilities around the state. I think we talked to somewhere between eight and 12 of them and got their published fees. And this is based on that.

COMMISSIONER HOLT: But other than that, we really haven't talked to any users yet, and so we'll —

MR. GAMMAGE: Well, we looked at our — we looked at it, yes, sir, we did look at our current users, and what they have traditionally paid, and what we believe they will be willing to pay.

COMMISSIONER HOLT: We'll find out when it's published. Okay.

COMMISSIONER BIVINS: What creates the range on the renting of the Hilltop Complex?

MR. GAMMAGE: Well, when we first put that together, and we've never actually rented the entire Hilltop Complex, but based on the availability of bunks and so forth, that was our wild guess. And we have amended that to raise the floor, again, based on individual fees for renting cabins and the meeting facilities, but lowered the top range; we feel like we won't have an opportunity or a need to take it up to $5,000.

COMMISSIONER BIVINS: But would different groups for some particular reason pay a different price?

MR. GAMMAGE: No. That range is from the floor all the way up to what we could, sometime in the future without having to come back to you gentlemen and ladies, raise the —

COMMISSIONER BIVINS: I see.

MR. GAMMAGE: — per day fee.

COMMISSIONER BIVINS: Thank you.

MR. GAMMAGE: And all of these ranges are based on a 24-hour use.

MR. SMITH: Ernie, it might be helpful to describe for the Commission what all is encompassed within the Hilltop Complex. It's pretty extensive, and that's why you're saying that fee rate there.

MR. GAMMAGE: Right. The Hilltop Complex has a dining hall that seats 160 folks and a commercial kitchen; it has a really nice pavilion, outdoor activity area, an open-air pavilion; it has nine camper cabins; it has a four bedroom home; it has a Swiss chalet type lodge that also has lodging in it; and then it has grassy fields; we have a five-stand shooting range; we have a campfire ring for campfires; a swimming pool. There's a lot that you can do up at the ranch.

COMMISSIONER BROWN: Ernie, you brought up something on food cost. How do we recoup that? Is that just included in this field?

MR. GAMMAGE: There is a, we offer a range of menus depending on whether or not you want shrimp and steak, or you want, you know, baked potatoes or French fries.

COMMISSIONER BROWN: Right.

MR. GAMMAGE: And we allow the individual user to choose that menu, and it's priced accordingly. So it is mentioned, but it's not on the slides here.

COMMISSIONER BROWN: Okay, thank you.

Any other discussion?

(No response.)

COMMISSIONER BROWN: If not, if there are no further questions, I will authorize staff to publish this item in the Texas Register for the required public comment period. Thank you.

MR. GAMMAGE: Thank you.

COMMISSIONER BROWN: Next is Committee Item Number 6, Internet Sales of Big Time Texas Hunts. Darcy Bontempo.

MS. BONTEMPO: Good morning. Good morning, Commissioners. For the record, my name is Darcy Bontempo and I'm the Marketing Director here at the Department in the Communications Division.

I'm here this morning to present an Action Item on Internet Sales for Big Time Texas Hunts. This program has been a successful revenue generating program since 1999, and last year we brought in about $799,000 in gross revenue to the Department. That revenue funds such things as wildlife research, habitat management, and public hunting opportunities.

In addition, beyond generating revenue, the program gives hunters the opportunity to win one of seven premium hunt packages. Participants pay $10 an entry; they purchase an average of 4.5 entries; and most of those, 84 percent of all participants enter by mail. As you may know, the Parks and Wildlife Code requires the Commission to set fees for participation in public drawings, and that's why I'm before you this morning.

In the January meeting we did receive permission to publish the proposed amendment in the Texas Register to authorize the sale of Big Time Texas entries at $9 versus $10, if they were purchased online, and to clarify that the existing $5 convenience fee per online transaction occasion applies to Big Time Texas Hunt Program. And I just want to also clarify that; that $5 convenience fee is the same no matter how many entries or other licenses you purchase during that one shopping occasion. So that's a one-time fee no matter how many entries or licenses are purchased.

The expected benefits are, we expect with this promotion to increase the number of participants by offering this reduced price option; the promotion will allow us to put promotional messaging on hunting related websites, which we believe will attract out-of-state as well as instate hunters, and with a link to purchase, so it's very convenient for them to then purchase entries once they learn about it.

It also provides a news pay for press releases; this is a maturing program, so we see this as another benefit. And another key point is direct mail continues to increase every year for us; printing and postage continues to increase. And we're going to — we plan to use this promotion as an opportunity to encourage those online buyers to sign up to receive Big Time Texas Hunts information next year by e-mail as opposed to mail. And we're hoping that — we will let them know that will help us save money that will therefore then increase the proceeds that go directly to benefit the programs I've mentioned earlier, so.

And then finally it's an opportunity to raise awareness of the online option for all licenses. Right now, about 2 percent of hunting and fishing licenses are sold online, and we see that there's room to grow this. We received 29 comments, about 66 percent of those agreed with this rule change.

The ten disagree comments, we had three opinions that were provided that related to Big Time Texas Hunts. One was a concern by an elderly person that perhaps older hunters might not have access to the Internet, one other opinion was that they'd had a bad experience in the past regarding purchasing online with our website, and one other was just a comment they felt the price should be the same for all entries.

And that concludes my presentation. I'll be happy to answer any questions.

COMMISSIONER FRIEDKIN: Darcy, how long — has it been at seven for — since program inception, seven hunts?

MS. BONTEMPO: Well, we've had a few hunts change over the years, but I think we — it was originally six; I think we added one more, so — but it's been seven for probably about five years. So that's —

COMMISSIONER FRIEDKIN: In terms of expanding the program, are there — have we thought about ways to expand that number on the supply side?

MS. BONTEMPO: Well, we are actually getting feedback. One of the things we're also going to be doing with our e-mail blast, as we call it, we're going to be actually asking hunters for — to take a survey, I think this came up in the last Commission meeting, to give us feedback on any ways they'd like to see us improve the program, including adding more hunts.

We're always trying to be very sensitive to the fact though, we do not want to cannibalize the program. Some of the experience we had in the past was adding hunts or even more winners per hunt wouldn't —

COMMISSIONER FRIEDKIN: Right.

MS. BONTEMPO: — actually — didn't actually increase the number of entries; it just increased the number of costs. So every hunt we add does add cost, so we're trying to do that. But we are going to be getting feedback, and we look forward to sharing that with you when we get that at the end of this program.

Any other questions?

(No response.)

MS. BONTEMPO: Thank you very much.

COMMISSIONER FRIEDKIN: Thank you.

COMMISSIONER BROWN: Thank you, Darcy.

I will place this item on the Thursday Commission meeting agenda for public comment and action.

Mr. Chairman, this committee has completed its business and we'll move on to the Conservation Committee. I'm going to pass the gavel to Commissioner Bivins.

(Whereupon, at 10:36 the 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: March 26, 2008

I do hereby certify that the foregoing pages, numbers 1 through 77, 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.

4/03/08
(Transcriber) (Date)
On the Record Reporting, Inc.
3307 Northland, Suite 315
Austin, Texas 78731


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