Texas Parks and Wildlife Commission
Finance Committee Budget Workshop
June 30, 2011Commission Hearing Room
Texas Parks & Wildlife Department Headquarters Complex
4200 Smith School Road
Austin, TX 78744
BE IT REMEMBERED, that heretofore on the 30th day of June 2011, 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:
THE TEXAS PARKS AND WILDLIFE COMMISSION:
- Antonio Falcon, MD, Rio Grande City, Texas, Committee Chairman
- Ralph H. Duggins, Fort Worth, Texas
- Dan Allen Hughes, Jr., Beeville, Texas
- Margaret Martin, Boerne, Texas
- S. Reed Morian, Houston, Texas
- Lee Bass, Fort Worth, Chairman-Emeritus
- Peter M. Holt, San Antonio, Texas, Chairman (Absent)
- T. Dan Friedkin, Houston, Texas Vice-Chairman (Absent)
- Karen J. Hixon, San Antonio, Texas (Absent)
- Dick Scott, Wimberley, Texas (Absent)
THE TEXAS PARKS AND WILDLIFE DEPARTMENT:
- Carter P. Smith, Executive Director, and other personnel of the Texas Parks and Wildlife Department
P R O C E E D I N G S
COMMISSIONER FALCON: Good morning. Good morning.
COMMISSIONER FALCON: Everybody have their coffee this morning?
Welcome to our Budget Committee meeting. Today is the 30th of June for the record. I’d like to, before we start, welcome Lee Bass to the meeting. Chairman Holt asked him to be specifically here to make sure that I didn’t get out of line.
COMMISSIONER DUGGINS: Before you proceed, this is not the same Lee Bass whose picture is on that conference wall, so I’d like to ask Colonel Holt to check his ID ‑‑
MR. BASS: Hopefully my badge isn’t expired.
COMMISSIONER FALCON: But thank you very much for making time to be here today, Lee.
The meeting is called to order, and it is 10:18 on the 30th. Before proceeding with any business, I believe Mr. Smith has a statement to make.
MR. SMITH: I do, Mr. Chairman. Thank you.
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, Government Code, referred to as the Open Meetings Act. I’d like for this fact to be noted in the official record of the meeting.
Thank you, Mr. Chairman.
COMMISSIONER FALCON: We have just one committee today, and so I will call the Finance Committee to order. Committee Item Number 1, proposed fiscal year 2012-2013 operating and capital budget overview.
MR. SMITH: Thank you, Mr. Chairman. And I’m going to ask Gene McCarty to be up with me as well. We’re going to kind of tag team this presentation, and it may be, depending on the level of detail of questions that you have, that we may ask some of other colleagues to come forward.
Just as a point of departure, I think what I’m going to do is give kind of a broad overview of the budget bill itself, what was specifically appropriated to us for the upcoming biennium, so I am going to talk about this in the context of the biennial budget, and I’m going to cover some of the big decisions that were made by the legislature in terms of dollars and FTEs and specific direction. And so we’re going to revisit some of the ground that we visited at the last Commission meeting. There’s also been some new decisions that were made by the legislature subsequent to the last Commission meeting and our opportunity to visit about things, and so I’ll be sharing those with you as well today.
And then Gene is going to get into the more specifics of how we propose to execute the budget bill in the upcoming fiscal year 2012. And so that’s how we’ll kind of go through that this morning.
And so just as a point of departure, let me start off with a slide here that basically shows a budget comparison in what we had originally proposed in our legislative appropriations request going in to the fiscal year ’12 and ’13 budget versus what was actually appropriated. The bottom line numbers, essentially the legislature appropriated about $150 million less than our legislative appropriation request over the two-year biennium. It’s about a 21-1/2 percent dimunition in the budget.
And from that slide you can kind of pick out the big drivers there, capital equipment, obviously you know how important that line item is to our field-based agency in terms of funds for vehicles and boats and trailers and computers and in phones and so forth, weed eaters, lawn mowers. Essentially 100 percent reduction in any new funding for local park grants. Essentially an elimination of any state funding for land acquisition. So those are some of the big drivers in that budget, again, at a high level.
Going into the FTEs and what the legislature has asked us to do with respect to those numbers, in the biennial budget bill the legislature has asked that we request ‑‑ or that we reduce our number of FTEs by 231.5 positions. You will see that the legislature also made provisions in Rider 27 for us to be able to restore an additional 60 FTEs.
Those are really in state parks, and that’s contingent, of course, on us being able to generate revenue to cover the cost. But that was essentially the legislative direction and solution to trying to be able to help with keeping our state parks open to the extent we can and giving us some mechanism to restore FTEs that had been previously proposed to be cut in the original budget bills from both the House and the Senate.
Also it proposed restoring two FTEs associated with our off-highway vehicle program. That’s the program that’s funded through the sale of decals that off-road vehicle enthusiasts buy when they are using their vehicles on public land. And so a restoration of two employees to help with that. So that’s a quick synopsis of what we’re looking at from a personnel perspective over the next two years. And obviously I’ll be coming back to talk about how we’re going to manage down to that.
There were some key Conference Committee decisions that were made, again, subsequent to the last Commission meeting, and so I just want to quickly cover those, and I think we did allude to the fact that we thought that there was very good probability that we would have additional bond authority granted to the Agency. That is a very positive thing.
Essentially $32 million in bond authority was bestowed back to the Agency that will help us with obviously critically important capital construction and repair projects. Absolutely essential that we’re able to address the long-standing deferred maintenance that you all are all well aware of in our facilities throughout the state, state parks, wildlife management areas and fish hatcheries. And so that was a really important one for us and we’re very grateful for that.
Now, in addition, the legislature restored almost $4 million in capital equipment and transportation funds in fiscal year 2013, the second year of the biennium. As you will recall, the legislature had originally proposed to zero out those funds, which would have been very challenging for, again, a field-based agency and to be able to operate our field programs with no funding. This basically amounts to 25 percent of what we’ve had in the past, and we’re going to see this restored in the second year of the biennium, and Gene will talk a little bit more about that.
In addition, in Article IX, both the House and Senate were very focused on trying to restore funding for law enforcement. As you will recall, in the original House bill there was a proposal to reduce the number of game warden positions. In the Senate bill they did not want to see any game warden positions reduced.
And so in Conference Committee, really outside of our budget, but in Article IX they built in provisions to help restore funding for law enforcement, and so that was a very key outcome of the budget deliberations in the Conference Committee.
The next slide is one that we’ve talked a lot about, and this was basically the strategy that the Commission had articulated for the Agency and asked us to go forward with in working with the legislature over the last six months. And that, again, was looking for all of the opportunities to help garner flexibility in terms of how we make these very difficult and challenging decisions, how we’re going to manage down to these numbers, both in terms of people and resources.
And so there were a number of these key riders that were granted to the Agency to help us be able to most effectively prioritize on the decision. You’ll remember these, but I’ll go through them for you again. First, the ability to have unexpended balance authority within the biennium.
Essentially, if we have funds that are not encumbered or expended in the first year of the biennium, with this budget rider we’ll have the ability to move those into the second year of the biennium. A really important flexibility tool just from a budgeting perspective.
The FTE cap flexibility. Obviously as all of you know, the legislature caps the number of FTEs that we can have inside the Agency. Traditionally they have required that we essentially look at that on a year-by-year basis and we’ve been able to average our number of FTEs over the four quarters of a year.
What we asked for and received here was the ability to look at our FTE numbers and meet the cap over a two-year basis. So we could essentially manage the number of FTES over the eight quarters of the two years to give our teams more flexibility on that front.
The intern FTE exemption. You know, we currently have an exemption for our cadets when they’re in the law enforcement academy for not ‑‑ so they don’t count against our FTE cap. This is kind of a corollary to that. That basically, when we have interns working for the Agency, their positions do not count against the FTE cap, and so, you know, in good times we’ve had as many as 160 to 170, maybe as many as 200 interns inside the Agency, recent times those numbers have been 60 to 70.
Obviously we feel this is a very important recruitment tool for us to be able to help attract and recruit talent, give us a chance to get to know them, and similarly give them a chance to know us and see if we’re going to have a good fit. And we’re very proud, perhaps present company withstanding, of all the interns that have come to work for the Agency full-time. So important pipeline for us.
You’ll remember the exemption from Article IX, transferability. This was a big issue for us. In Article IX of the budget bill, there was a prohibition about being able to move funds between strategies. And in this case this was particularly challenging because our Information Technology Division, our operations for IT, was located under our indirect support and administration. And the original budget bills precluded us from being able to transfer funds back and forth between strategies to help address that.
The budget bills had called for us essentially paying for all of the additional costs with the Data Center consolidation project out of our IT operating budget. That would have had a disproportionately large impact on our IT division. And so we asked for flexibility of being able to transfer funds into that strategy subject to the normal and customary 20 percent cap, and we were granted that.
And so that’s a real cornerstone of our budget and we’re going to talk more about that just because of the significance of the IT program in terms of supporting our operations, but also because of big technology initiatives that we have going on inside the Agency and that will be going on that we’ve got to have folks who can help us with that.
Capital budget expenditures from federal and other funds. This allows us to essentially grow our capital budget authority with federal dollars and private dollars. And to be able to use those for, again, equipment and transportation. Also, they restored the ability for us to expend appropriate federal dollars for land acquisition, if we have those opportunities.
And as you will recall, funds for land acquisition from the state side were completely zeroed out. This gives us an opportunity, if we have funding available, to be able to use some of that for land acquisition. So some important flexibility in the process from a budget and planning perspective that we’re making absolute full use of going forward.
A little reminder about Budget Rider 27. It is commonly known. This is, as you will recall, essentially the entrepreneurial rider that allows us to utilize and budget additional revenue that we generate above and beyond the Comptroller’s biennial revenue estimate in both Fund 9 and Fund 64. An absolutely essential part of our budgeting process to be able to support our divisions and do things like try to really minimize the probability of closing any state parks.
And so over the biennium 6.06 million was appropriated to the Agency, if we generate the revenue and if we get the Comptroller’s certification of the revenue. Six million in Fund 64. We talked about the fact that we have a little over 60 FTEs in state parks that are specifically tied to this rider.
And we have a proposal that’s going to be going to the Comptroller imminently to certify our revenue estimates, and it’s going to be essential for our strategy on how we’re going to manage through this with state parks. So we’ll come back to that as well.
In addition, they built in the flexibility for us to collect additional revenue so that we could pay the fringe benefit cost associated with those 60 FTEs, and that’s above and beyond the six million there that we talk about in Fund 64.
Okay. So that is a quick high level update of essentially the budget bill, and the prescription that it gave us looking ahead to the next two years of the biennium. Now we’re going to transition into how do we take that and execute and build and deliver a budget for the next fiscal year that ultimately you all will need to approve at your August Commission meeting. And so let’s transition again from a two-year look at the budget to a specific one-year look in fiscal year 2012.
As you all will recall, we had a fairly significant conversation with you all at the last Commission meeting about how do the guiding principles for how we wanted to build the budget, what were essentially going to be the things that the leadership team felt were the most important in terms of organizing our budget around. And so I want to go through those, and then also talk about the feedback that we received from you all at the last Commission meeting.
The land and water plan. That’s the strategic document, it’s the vision that you all have given us, the guidance, it’s the four major goals of science and stewardship, getting kids and families into the out-of-doors, helping to promote and build conservation awareness and education, and an ethic in this day, and also practicing the best possible business practices and being responsive and transparent, and good fiduciary stewards for all of our constituents.
So that plan is guiding what we’re doing, and the divisions have operating plans in turn that support those goals, and the key actions and strategies that you approve in these budgets are also being cross-walked to make sure that they’re supporting them.
Obviously the statutorily-required functions in core services of the Agency, the things that the legislature has told us, You will do. These are things we have to do and that it is fully expected of us. They’re not optional, they’re not discretionary. These are the core elements of the Agency.
You know, also, clearly, to the extent we have the flexibility that we ask for, you know, we said we want to be able to make our funding and FTE allocations according to the most strategic of priorities for the Agency. And while the Legislative Budget Board helped set direction and specific recommendations for particular reductions and certain budget strategies, we do have flexibility to depart from those in certain parameters. And we are capitalizing on that flexibility with some of the decisions.
Also, we talked about the criticality of using adaptive management going forward, that this is going to be an iterative process. We’re going to make some big decisions here that are going to have implications for much longer than a two-year budget cycle, and we need to be mindful and cognizant of that.
We’re also going to make some decisions, I feel certain, that is we start to see the downstream impacts of that, we’re going to need to adjust, or we’re going to need to realign, or we’re going to need to revisit. And so we fully expect this to be an adaptive process and additional discussions with the Commission as we execute this challenging budget over the next two years.
One of, of course, the most challenging parts of this budget that we have is the fact that we’re going to have to eliminate jobs inside this Agency. That is the clear-eyed and unassailable reality of this budget. The legislature has asked us to reduce our positions by 231.5 FTEs. We have done all we can to try to attenuate that impact through hiring chills, through keeping positions open, through trying to move positions around to other open positions inside the Agency, to the flexibility that we have received from the legislature to maintain state park employees for instance.
But there is no way of getting around the fact that at the end of the day and in preparation for the next fiscal year, we’re going to have to be letting around and slightly more than 100 of our colleagues go from their positions inside the Agency, 100 colleagues whose jobs are filled. And we’ll be letting them know that their positions can no longer be supported inside the Agency because of budget decisions and the resource realities that we have.
And the promise that we have made you and the promise that we have made them is that we’re going to do this with compassion, we’re going to do it with respect, we’re going to allow folks to retain their dignity as we’re letting them know that their jobs are being eliminated. And we’re going to do it in a fair way that treats all of our colleagues equally that are in this very, very difficult position of losing their positions with Texas Parks and Wildlife.
We’ve tried to build in as much flexibility as we can on these conversations. We’re going to be carrying out our reduction in force over the next two weeks starting next week. Our team has been told that. Those conversations with affected colleagues will be in person, and they will be with senior managers inside the Agency.
Almost all of our colleagues will be given the option to have up to two days to help wrap up their affairs to be able to make appropriate notices, to be able to sign out other projects. And so we feel that is very important, again, to treat folks with dignity, respect them as professionals, and give them a chance to handle things as they are wrapping things up. We’re going to be paying them for 45 days of administrative leave, plus the lump sum vacation obviously that they have accrued, as well as any accrued overtime.
For colleagues who are eligible to retire between the time in which we give them notice and August 31, we will certainly give them the option to work through the end of August if they so choose. Also, we have colleagues that may be on this list who will be first eligible for retirement by state standards between September 1 and December 31. If a colleague so chooses and they want to continue to work up until that time, and they will essentially tell us if they’re planning on retiring in September, October, November or December, we will absolutely allow them that flexibility to do that.
So I guess the message that I want to give to all of you is that we’ve tried to give as much flexibility here and as much respect to folks going forward with these decisions.
MR. BASS: You lost me a little bit. Would you mind walking me through that ‑‑
MR. SMITH: Sure.
MR. BASS: ‑‑ again in terms of upcoming or near term retirement opportunities and what the flexibility we are able to grant.
MR. SMITH: So if we have a colleague whose position is being eliminated for business reasons because we simply don’t have the funding to be able to support them, and they tell us, for instance, that they’re going to be eligible to retire in September, October, November or December and that they would like the ability to continue working up until their first eligibility for retirement, we are going to allow them to do that.
MR. BASS: So it’s basically a six-month window.
MR. SMITH: Depending on when you’re eligibility is.
MR. BASS: Yes.
MR. SMITH: Yes. Yes, it could be up ‑‑ as much as up to that.
MR. BASS: As much as six months. If somebody’s earliest retirement date is some time in 2012, we’re unable to help them.
MR. SMITH: To accommodate that. That’s right. Yes, we had to find a ‑‑
MR. BASS: Right.
MR. SMITH: ‑‑ cut off place at some point.
MR. BASS: Right. Obviously. I am just being sure I understood.
MR. SMITH: Yes. Yes.
Gene, you want to say anything on that, or is that ‑‑
MR. McCARTY: No ‑‑
MR. SMITH: ‑‑ clear?
MR. McCARTY: ‑‑ it’s anyone who become eligible who ‑‑ first eligibility for retirement occurs between the time of notification and December 31, 2011. We will allow them to continue to do that so that could build their eligibility.
MR. BASS: And just ‑‑ I’m sure it’s complicated, or has nuance, but in simplified terms what is the threshold for first retirement opportunity under the state rules, how many ‑‑
MR. McCARTY: Well, it’s ‑‑
MR. BASS: ‑‑ years of service and ‑‑
MR. McCARTY: ‑‑ either 80 points, which is a combination of age and tenure, it’s 80 points, or it’s 60 years of age and five years of service makes you eligible, so.
MR. BASS: And to get 80 points, is it a year of age and a year of service each a point?
MR. McCARTY: Yes, sir. That’s two points.
MR. BASS: So 50 years of age, 30 years of service ‑‑
MR. McCARTY: That’s 80. Yes, sir.
MR. BASS: ‑‑ it’s the earliest threshold.
MR. SMITH: That make sense?
MR. BASS: Yes.
MR. SMITH: Okay. Any other questions on that?
MR. SMITH: At the last Commission meeting, we asked for your feedback and kind of high level guidance on the strategic direction from you all with respect to these budget decisions, and there were a number of things that you told us, and so I want to make sure that we repeat those so that we feel like we captured those well.
You let us know that it was very important to the Commission that as we are thinking about these decisions, that we’re reminding ourselves of the importance of supporting our programs of getting children and families into the out-of-doors. You will recall that there was a pretty active discussion about the Texas Outdoor Family program, a program that has really done, you know, extraordinary things in terms of helping to build mentors and create family-related outdoor activities and build confidence and opportunities.
And we had talked about, at least under the initial contemplated budget cycle, that there would be impacts to that program. State parks team heard the feedback from the Commission, and so we’re not looking at making any reductions to the Texas Outdoor Family going forward. So an example just of how we got that feedback and then that is now being executed with respect to our plan.
You reminded us that, you know, we need to be thinking about, again, those core services and those activities and functions that are really kind of singularly unique to Parks and Wildlife, you know, state parks, conservation law enforcement, the provision of science to support our fish and wildlife regulations, those things which, again, which are absolutely core and indispensable to the mission and service of this Agency, that we needed to keep a strong focus on those.
And then, of course, and also a reminder in these very challenging budget times that the value of public-private partnerships to help leverage our limited dollars with additional private and other public philanthropic dollars needed to be leveraged in any way possible.
So looking for opportunities, whether it is to, again, maximize the relationship with the Texas Parks and Wildlife Foundation. If we need to raise additional funds to help support our freshwater fisheries Hall of Fame event, and we need other private dollars to help support that and replace any state dollars that have been used to support it, this is where we need to look for those opportunities.
You know, clearly helping to fashion partnerships from a marketing perspective to get the word out about the opportunities for Texans to make a voluntary contribution to state parks when they register their vehicles. That bill was passed. We’ll talk about that. We need to leverage those kind of opportunities.
The crab trap clean up on the coast in which we partner with a lot of NGOs to do that to the extent that we can help raise additional funds and get other private organizations to help us achieve that are areas that we absolutely need to leverage. And I think the role of the Parks and Wildlife Foundation is only going to have to elevate as we go forward to ask for their support for, you know, again, what we think are really important mission-based programs, but which we don’t simply have the amount of dollars that we’ve had in the past.
So those were kind of the keys areas of feedback that we gleaned from the last Commission meeting. Did we capture that adequately? Is there something that you felt like that we missed?
COMMISSIONER HUGHES: That’s pretty accurate.
COMMISSIONER DUGGINS: I agree.
MR. SMITH: Okay. All right. In the budget bill that was ultimately passed, there were some very specific directives that came from the legislature with respect to areas that they had proposed and asked that we reduce expenditures on. And so let’s spend a little bit of time here talking about each of these.
The license buy-back program in coastal fisheries. You know, again, an extraordinarily successful program in terms of buying back bay and bait and gulf shrimp licenses and retiring those to help protect the health of our shrimp populations, and really the health of the entirety of the bay ecosystem as a whole.
Legislature has directed that we cut about $2 million over the biennium in terms of state funds. Now, we still have private dollars, and private philanthropic support that Robin and his team will have available to continue to buy licenses, finfish, shellfish licenses where the opportunities present themselves. But the state dollars essentially were eliminated.
MR. BASS: Are there any existing balances of state funds?
MR. McCARTY: Yes, sir.
MR. SMITH: Yes. Yes.
MR. BASS: Are those frozen or can we use those?
MR. McCARTY: Those are frozen. No appropriation authority for any state funds are in this budget.
MR. SMITH: And, Mr. Bass, I’ll come back to that in turn because we have a number of ‑‑
MR. BASS: Of any funds that were previously appropriated, they’re either spent or available?
MR. McCARTY: No, sir. Anything that’s previously appropriated must be spent by the end of this fiscal year. It will not UB ‑‑
MR. BASS: Carry over.
MR. McCARTY: ‑‑ into the next biennium.
MR. BASS: Thank you.
MR. SMITH: Any donations going forward though we can use, they’ll bring their own appropriation authority.
MR. BASS: Yes.
MR. SMITH: And I’ll talk about some of those ‑‑
COMMISSIONER MORIAN: You going to the discuss the fund balances and ‑‑
MR. SMITH: I’m going to come to that at the end ‑‑
COMMISSIONER MORIAN: Good.
MR. SMITH: ‑‑ on kind of some of the key issues there, Commissions, that I think the Commission needs to be aware of across the state funds support.
COMMISSIONER DUGGINS: Carter, before you move on from that, have we in the past ever received any funds from the Foundation for license buy back?
MR. SMITH: Well, yes, I mean there was a major effort by the Foundation, or certain individuals, to raise funds to have dollars then come to the Foundation to help support that program.
So, yes, they have been involved really since its inception, Gene, haven’t they?
MR. McCARTY: Yes, they’ve been involved since its inception. And they’ve done a couple of ‑‑ maybe three different fundraising initiatives, the last one being the more successful working with past chairman Fitzsimmons and raising about $1.2 million to go into this program. And that’s really the funds that we’re working off ‑‑ the private funds that we’re working off of right now.
MR. SMITH: And I think Robin and his team have done a great job of meeting the targeted goals of buy backs, and so, you know, that would be worthy of an update sometime from Robin on that buy back program, because those goals, at least on the shrimp license buy back program, you know, we’ve pretty much met them in terms of our initial targets. So that’s very positive.
COMMISSIONER HUGHES: Carter, one more question while we’re talking about it, what do we ‑‑ what does it cost to buy back a license? Is there a set fee?
MR. SMITH: There’s not a set fee. Essentially shrimpers will come forward and submit bids to our coastal fisheries team as to what they’re willing to sell their license for, and then Robin and his team will look at how much money that they have available in a given cycle and then will make recommendations about what bids to accept. And my recollection it’s anywhere between 6- to $10,000 a license.
Is that more or less ‑‑
MR. RIECHERS: Yes, right on the money.
MR. McCARTY: The average is 78?
MR. RIECHERS: Yes, in the 8,000 range.
MR. McCARTY: Yes, I think the average of all of them this last go round was about $7800. I think when we started back in ’95 or so it averaged about $3,000. So it’s steadily gone up over time.
COMMISSIONER HUGHES: I think it’d be good ‑‑ I know the state ‑‑ not today but maybe get a little bit of update on that at some meeting in the future ‑‑
MR. SMITH: Good.
COMMISSIONER HUGHES: ‑‑ where we stand, and I think that’d be interesting.
MR. SMITH: I think it’s been a very successful program. I think coastal fisheries has done an excellent job on that, and a lot of private dollars have gone into it. You know, I think CCA has been very, very pleased with it. So let us do that, I think that would be fitting.
MR. BASS: Just a rough number, the percentage of total licenses that were outstanding when the program started versus now is what, 50 percent?
MR. RIECHERS: It’s less than that. We ‑‑ I’m sorry.
MR. BASS: I didn’t mean to divert, just a data point.
MR. RIECHERS: Yes. Robin Riechers, Director of Coastal Fisheries. We’re at about 800 licenses, or 900 overall bay and bait, and we started out with about 3200, 32- to 3300, so ‑‑
MR. BASS: So we’re down to 25 percent.
MR. RIECHERS: Yes, we’re in that 25 to 30 percent kind of frame, closer to that, yes, sir.
MR. BASS: I lost track of where ‑‑
COMMISSIONER DUGGINS: Good question.
MR. SMITH: Made a lot of progress obviously, so.
COMMISSIONER HUGHES: Sure have.
MR. SMITH: Thanks, Robin.
The next one is a program that, you know, this Commission has been keenly interested in in terms of the aquatic exotic vegetation control, particularly east of I-35, and just funds to help partner with river authorities, and lake managers around the state to address just the proliferation of giant salvinia and hydrilla and hyacinth. Last session, as you will recall, we had received an appropriation of three-quarters of a million dollars a year in general revenue to help support the exotic aquatic vegetation program. Those funds have gone away. So we no longer have that appropriation to help support it. And, again, let me assure you, the problem isn’t going away. And so I think we just discovered giant salvinia in Lake Livingston, Gary, last week or the week before, so we’re seeing those infestations increase.
We certainly will do what we can to help obviate this with any boating access dollars that we may choose to allocate this, and federal grant dollars to provide some funding. But we’re not going to have the capacity to address some of the big outbreaks that we’ve seen in the past, whether it’s Toledo Bend or Lake Conroe, et cetera. So our capacity here is going to be significantly diminished.
MR. BASS: What was the LAR number on that?
MR. SMITH: We had asked for full funding of that, so a million and a half over the biennium, yes. Yes. So that was essentially zeroed out.
Local parks grants. We’ve talked a lot about that that. Essentially $30 million in local park grants that you all have been in a position to award on deserving communities for the acquisition and development of local parks around the state. Those funds have been eliminated from the budget entirely. There are funds that were appropriated that would basically cover the cost of roughly half of the staff that administer those important programs.
As you will recall, there’s kind of a five-year life cycle on those grants as the community goes through the same kind of things we go through in terms of planning and design and construction, and so we need grant-related management through the entirety of that for these grants. And we’re still going to have some colleagues that will help administer that important program.
The only new funds that will be available for disbursement for this will be whatever federal dollars we receive through the Land and Water Conservation fund, and also the Recreational Trails programs. And so there will be some federal dollars there, but just no state dollars.
COMMISSIONER DUGGINS: Did we get the funds to carry out prior grants that have already been approved and ‑‑
MR. SMITH: Yes.
COMMISSIONER DUGGINS: Yes.
MR. SMITH: Yes. So any commitments that we’d already made and any grants that you all have approved, those dollars are still there for us to be able to carry forward to fulfill those obligations. So those commitments will be honored, unless something happens with the project and the community can’t go forward.
MR. BASS: And the federal funds are still viable because the local community funds serve as the match component?
MR. SMITH: Yes, the local community can serve as the match, and to the extent there are federal appropriations, yes, then they’ll be viable. Exactly. Good question.
MR. BASS: And approximately how much money of the federal money will be available?
MR. SMITH: Maybe 1.8, 2 million a year.
MR. BASS: Two million.
MR. SMITH: Maybe.
MR. McCARTY: Yes, and I think an additional little over two million for recreational trail grants in addition to the land and water funds.
COMMISSIONER MORIAN: Two and two?
MR. McCARTY: Yes, sir.
MR. BASS: More or less.
MR. McCARTY: It’s not quite ‑‑ I don’t think land and water is going to be up to two million. I think it’s going to be less.
MALE VOICE: It’ll be less, I’m sure.
MR. BASS: So ‑‑
MR. SMITH: And we also, just ‑‑
MR. BASS: ‑‑ three and a half, and the LAR was 40 ‑‑ 39.
MR. McCARTY: Yes, sir. So it’s ‑‑
MR. BASS: It’s a 90 percent cut.
MR. SMITH: Yes. And I guess just as a reminder too, on those land and water funds, again, we will sometimes use those to help affect strategic land acquisitions that the Commission wants us to pursue. And so those are not disbursed entirely to local communities for local park acquisition and development.
And so Scott and Ted and Corky and that team may have a project and want to come to the Commission and we get direction from you all to pursue, those dollars are available to use for that purpose as well, and we have used them for that. So, again, we don’t have any state dollars for land acquisition, so that pot is available.
The Parks and Wildlife magazine, and, by the way, a number of you really gave some glowing remarks about the last water issue, and I want to compliment Lydia and her team, Randy, and Louie and Russell, and all of the team that put together that 10-year anniversary of the water series. I mean just, I think, an extraordinary piece, and thank you for those that commented so favorably on it. I know Commissioner Morian and I were talking about that this morning.
The legislature has directed that we make specific cuts in the Parks and Wildlife magazine. We feel like, you know, that’s a flagship communication tool for this Agency. I mean of all things it is the one communication piece that absolutely and unequivocally tells the entire story about the Agency and the full breadth and depth of the work that we do. And it is so important that we absolutely want to keep the magazine going in as high a quality as we possibly can. We are going to have to make some deep cuts.
COMMISSIONER MORIAN: What did they direct you to do?
MR. SMITH: They directed us to cut about $430,000 from the magazine. Originally, you may recall, they had proposed, with the magazine, that essentially we suspend it for a period of six months. And so essentially starting September 1 through March we just don’t have a magazine. You can imagine the obvious complications for a subscriber. And so we went back to the legislature to talk about, you know, maybe there’s another way from a business perspective to manage down to a new budget there. And so Lydia and her team have kind of put together another business model for the magazine, but it’s going to require some changes, and I want to talk about those.
COMMISSIONER MARTIN: What’s the budget right now, as far as the magazine?
MS. SALDAÑA: Lydia Saldaña, Communications Director. The budget this year is 2.4 million and we bring in 1.7 million in appropriated receipts through subscriptions and advertising.
COMMISSIONER MARTIN: And so we’ll be cutting ‑‑
MR. SMITH: Do you know the thought ‑‑ what’s the ‑‑ because actually what we are going to do ‑‑ you know, and, again, this is some of the flexibility, and this is some of the things we asked of our division directors, you know, you need to look across the suite of programs and then you need to make decisions about where you’re going to prioritize your cuts, and you may choose to take cuts that are greater in some areas than others.
And so for example the magazine, you know, we’re looking at a little bit deeper cuts here, but still retaining what we think is going to be a high quality magazine. So we’re going to go from 12 issues to 10 issues over the course of a year. We’re going to keep the same quality of paper on the front and back cover, but we are going to decrease the quality of the paper inside the magazine, which, again, you can imagine the paper costs are expensive there.
But also as part of this we’re going to have to rely more heavily on our talent inside the Agency. I mean we have some extraordinary writers and photographers that we have been able to call upon and contract out for stories. We’re not going to have the latitude to do that as much going forward. Fortunately, again, we have some very capable people to do that. Lydia is one of them, Tom Harvey, but we’ve got them throughout all the divisions. So we’re going to be asking division support for that. So we will see some changes there.
COMMISSIONER HUGHES: Can we increase the subscription price a little bit and the advertising price to offset some of this?
MS. SALDAÑA: Well, it’s ‑‑ when you’re reducing the number of issues, that’s probably not the best idea. I mean I think the business model ‑‑ it’s a very fine line on what you can do. One of the things that we’re going to be doing, and if you look online now, the July issue is the first digital issue that we’ve put up.
So what you’re also going to see as part of this new business model is an increased presence on the web of our magazine, an opportunity to sell some advertising on the web. I think there’s some opportunities there. But raising advertising rates and subscription rates at this time is not something that we would do ‑‑ something we could potentially look at in the future.
We are in a good position right now with the magazine because our circulation has actually increased. So we have a good story to tell whereas you might be concerned if you reduce issues of the magazine, that that might be a negative for advertisers. We are in a very good position right now because we have been increasing circulation over the last two years.
COMMISSIONER MARTIN: Beautiful. And great work in every ‑‑ I have so many people that can’t wait for me to bring them that magazine, and they said if it is in the lobby of their law firm or in their business, it’s the first one that disappears, and all the others stay on for years.
So, really, kudos to you and your team and everybody that’s part of it. And the part for children too. I mean it’s a great way ‑‑ and that has really introduced the kids into and about ‑‑
COMMISSIONER FALCON: How is it that you’re going to go from the 10 to 12?
MS. SALDAÑA: What we will be doing is the first combined issue will be January-February of 2012.
Is that right, Tom? January-February of 2012?
We had to make the decision similar to the state park regional office, because issue planning goes out so far ahead, we had to make that call and we made that final decision back in May. So it’ll be January-February, and then August-September of the following year. Those issues will be combined. Those are the issues that have the least advertising and those are the issues that we felt like we could combine with the least impact to our subscribers.
MR. SMITH: Do you have questions on that?
MR. SMITH: Okay. Thank you, Lydia. Appreciate it.
The next area that the legislature specifically directed a cut, it was in our golden algae program, and directed a cut of approximately $1.4 million over the biennium. That essentially exhausts all of the state appropriation for that funding.
Remember the golden algae issue is a huge issue for us in our inland fish hatchery program. And so when we see the eruptions of golden algae there at Dundee and Electra or Possum Kingdom, it has, you know, an extraordinarily detrimental impact on our production. And so our inland fisheries team has been working on research, working on investments to try to understand that and combat it, but it’s a big issue for us. And so under the legislative direction essentially those state funds for golden algae are being eliminated.
Conservation plates, and actually this is ‑‑ we’ve had a little change here for the better. As you know, you’ve got ‑‑ all of us have the option to buy a horned lizard plate, which 22 out of those $30 will go to support our wildlife diversity program. You can buy a bass plate to support our freshwater fishing program, you can buy a red fish to support our coastal fisheries effort, you can buy a white tailed deer plate to support big game research, bluebonnet to support our state parks. But also you have other plates that go to support other organizations like Big Bend National Park support group, Friends of the Big Bend National Park.
Originally the bill had proposed to essentially only appropriate half of the revenue that was generated from the sales of the plates, so if we generated $200,000 in funding for the wildlife diversity program through the sale of the horned lizard plate, they were proposing to only appropriate $100,000 of those funds.
So a lot of discussion about that at the end of the session, and I believe in the final bill that was remedied to where the entirety of the amount that is generated will ultimately be appropriated to the Agency and/or our NGO partners to use.
So is that a fair encapsulation of that, Gene?
MR. McCARTY: It doesn’t become available to us until we earn it though.
MR. SMITH: Yes. Yes.
MR. McCARTY: It’s one of those things that we will have to budget it as it becomes earned, because it’s not ‑‑ the way the bill kind of was written it’s a little strange.
COMMISSIONER DUGGINS: But now does this money go into a fund where we then have to go get further appropriation ‑‑ I mean expenditure authority ‑‑ like we keep getting a chorus of complaints about how these fund balances for things like the stamps are increasing and we’re not getting the ability to spend it, are we going to have the ability to spend this money if we earn it?
MR. McCARTY: What the appropriations bill ‑‑ I guess I would say it’s a special session appropriation bill did was it appropriates the revenue generated from the sale during the particular FY. So during fiscal year ’12 you are appropriated the revenue that is generated from the sale of the license plates. You cannot use any fund balances that are sitting there, so prior year fund balance are not appropriated, but any revenue generated during that year is appropriated.
COMMISSIONER DUGGINS: But we can spend currently generated revenue.
MR. McCARTY: The revenue that is generated during FY ’12 can be, and FY ’13. So any revenue in excess of appropriation that’s generated in FY ’11, this year, which would ‑‑ it will become fund balances.
COMMISSIONER DUGGINS: Okay.
MR. SMITH: Make sense?
COMMISSIONER DUGGINS: Yes.
MR. BASS: What about the revenue that’s generated in FY ’13?
MR. McCARTY: It is appropriated.
MR. BASS: So you can spend it in ‑‑
MR. McCARTY: In ’13.
MR. BASS: In ’13. So in ’13 you can spend everything that’s generated in ’12 and ’13.
MR. McCARTY: Yes, sir, but only because we have UB authority between ’12 and ’13. Certain agencies don’t have that. We got that this session, so it will help us be able to UB those funds ‑‑
MR. BASS: Got it.
MR. McCARTY: ‑‑ forward.
COMMISSIONER DUGGINS: So we’d have every reason to want to promote these things, these plates during the upcoming biennium.
MR. SMITH: And our communications team does that. You know, they ‑‑ you know, you’ll see ads that are in Texas Monthly, you’ll see a lot of web-based banners and advertisements on that, our marketing team works very closely with kind of NGOs that would have an aptitude to buying these. And so we certainly try to promote those to the extent we’ve got dollars and people and resources to do that.
MR. BASS: How many dollars are we talking about?
MR. SMITH: In terms of how much it generates on an annual basis?
MR. BASS: Yes ‑‑
MR. McCARTY: We were cut 785,000, so that was 50 percent of the total revenue for the biennium.
MR. BASS: It’s about a million and a half.
MR. McCARTY: So it’s a million and a half over the biennium, about 700,000 per year.
COMMISSIONER DUGGINS: It seems to me when we get with the county tax offices on this registration ‑‑
MR. SMITH: [inaudible]
COMMISSIONER DUGGINS: ‑‑ fee, that we ought to be combine their willingness to market that with an urge that they market plates at the same time, at least in Tarrant County our collector has told me he is willing to do both. So I would urge us to keep that in mind as we roll out whatever we’re going to do with these tax collector offices, that we try to promote both.
MR. SMITH: I think that’s going to be essential, because what you have also seen in the last couple of years is the proliferation of all these other specialty vanity plates, and so there’s a lot more opportunities to buy other plates out there.
And so to the extent that we are able to have, you know, kind of a marketing advantage there in terms of helping to promote, you know, our plates and also the important conservation programs that they’re going to support, that’s an important message obviously we want to share, and we would ‑‑ any help we can get on that front would be most welcome.
COMMISSIONER DUGGINS: Another thought on that, do we have any kind of handout at state parks that gives people a link or a ‑‑
MR. BORUFF: Yes.
MR. SMITH: Yes. Yes.
You may want to tell them about the whole program.
MS. SALDAÑA: Lydia Saldaña, Communications Director. Yes, we do have material. We are also distributing some material through Gulf States Toyota. They’ve been a sponsor of the program, a great fit there. So that sponsorship, again, has helped us get that word out even more.
COMMISSIONER DUGGINS: Very good.
MR. SMITH: But, you know ‑‑ and we’ll talk about this at the end, but, you know, clearly, again, kind of going back on the state park side and the donations that we’re going to need to realize the $1,600,000 in revenue that’s been appropriated to us, we’re going to need help from the automobile dealers and county tax assessor-collectors and others to really market that if we’re going to have any hope of realizing some approximation of that revenue.
COMMISSIONER DUGGINS: The bill just assumes we’re going to have it. Correct?
MR. SMITH: Yes. The bill has built in an assumption that there will be $1,600,000 in revenue that will be collected from these donations when folks are registering their vehicle. Thank you, Lydia.
We have talked previously about the state park regional offices, essentially going from eight to six. Our state parks team has executed on that already, and so that is now in effect, resulted in savings of about 550,000 going forward in the next year. And so that decision has been made and already done, and we’ve gone forward on it.
The legislature also directed the 15 percent across the board administrative reductions that was expected of the Agency. Also because there were concerns about the Employees Retirement System as a whole for the state not being appropriately funded, in order to account for that the agencies were asked to help fund that with essentially 1 percent of all of our salary costs. And so that’s about a $2.6 million additional directed expense that comes from the Agency in order to help keep ERS whole. So another legislatively directed cut.
And then also when we talked about this last time, on one hand very grateful that we got the $32 million in bond authority for our infrastructure team to help support specific needs. But we did have specific authority in Fund 9 of about $3 million a year to help go to support our fish hatcheries, wildlife management areas, law enforcement offices, et cetera. And only $750,000 in funds were appropriated in unexpended balances going forward for specific Fund 9 capital construction projects.
So, you know, one of the issues that certainly, you know, we all need to be mindful of, you know, we were very pleased with the passage of the bill that essentially removed the expiration date of the freshwater fish stamp that was scheduled to expire on September 1 of 2014. But in the next two years there are no funds that are appropriated from the collection of those fees for that stamp to be used specifically for hatchery maintenance and repair and construction.
And so that’s something where we will see those fund balances grow over the next couple of years, and hopefully a case can then be made for us to be able to utilize those, because certainly we have hatcheries that are in dire need of those investments.
MR. BASS: Carter, a question.
MR. SMITH: Yes.
MR. BASS: The 1 percent salary transfer to retirement, is that just this Agency, or was that done ‑‑
MR. SMITH: Across the board.
MR. BASS: Across the board basis.
MR. SMITH: Yes.
MR. BASS: And, I’m sorry, tell me again the 15 percent across the board administrative ‑‑
MR. SMITH: Reduction, yes. That was a directive that legislature really gave almost all agencies in terms of reducing administrative expenses by 15 percent.
MR. BASS: And that’s including salary?
MR. SMITH: Yes. Salary, operating, all that, yes.
MR. BASS: But some flexibility in how you achieve that, salary ‑‑
MR. SMITH: Yes.
MR. BASS: ‑‑ versus operating versus transportation, et cetera.
MR. SMITH: Yes, to the extent we have any flexibility in that, yes.
MR. BASS: Right.
MR. SMITH: Yes. Yes.
Do you want to say anything more, Gene, on that? Okay. You know, we talked a lot obviously, too, about ‑‑ again, so we got these specific legislatively directed cuts, at the same time we’ve also got some flexibility about how we prioritize those cuts, and, you know, what are some areas in which we have made specific decisions that, you know, maybe depart a bit from that specific legislative ‑‑ or LBB perspective on things. And so I thought we’d talk about a few of those. And so let’s talk about information technology.
You know, we’re a field-based agency. We are highly dispersed, 75, 80 percent of us work outside of Austin. And so our colleagues rely heavily on having computers and cell phones and Blackberries that work and function. But they need support for that, telephones, printers, computers.
And so the budget cuts that were proposed to IT were, you know, to be fair, initially fairly draconian. We were very concerned about how we were going to even be able to support just sort of basic core support of folks to do their jobs. And so with the flexibility that we got on the transferability issue, and then also some strategic decisions that the leadership team made to try to lessen some of the impacts to IT, you know, that’s an area that we are trying to keep funding.
And there are other very good reasons for that as well. We’ve got business-critical major technology programs that are underway right now, TxParks, our automated revenue and registration system, BIS, which is the financial system for the Agency that we continue to work on.
We’ve got TWIMS, the wildlife information management system program, which we need to continue building up for all of our deer-related permits program in support of our private land owners. Boat registration and titling, that we need our BRITS program that we need to maintain.
Also, it’s, you know, some bit of challenging news that we just received that I need to share with you. Verizon has been our long-standing vendor and contractor in terms of managing the sale of our hunting and fishing license system. And so they’ve had the web-based platform, they’ve supported the sale of licenses in our 1600 outlets around the state. Verizon has made a decision to discontinue that line of business. And so they have told us that when their contract expires September 1 of 2013, that they’re not interested in renewing that contract.
And so, you know, so that has huge implications for us in terms of hunting and fishing license sales. You know, we do $90 million of non-commercial license sales alone, and our goal is to have a seamless system for our hunters and anglers to go in and buy this simply without a lot of problems.
So we’re going to have to go through a process now to go out for an RFP and to find another vendor that could come in and help build essentially a new license system, and that’s going to be a huge challenge with over 200 licenses that we sell, all of the complexities with our point of sale opportunities, and the tagging system and so forth. So, again, just speaks to the reason why it’s essential that we have a strong IT team going forward to help support the business needs.
MR. BASS: Is there a way a new vendor could possibly just buy this system Verizon has, rather than start from scratch?
MR. SMITH: That’s a great question, Mr. Bass. We have asked that specifically of Verizon, and asked if they would be willing to contemplate a sale of their system to someone else. We have not seemed to get a very favorable response from that. They seemed to be concerned about a business liability perspective in terms of selling that business. And so that is not looking viable, although we pushed on that initially when we got the news, thinking that that could affect a smoother transition here.
COMMISSIONER DUGGINS: I don’t understand. What do you mean ‑‑ what did they say when they said a business liability?
MR. SMITH: I think they were concerned about the liability of something happening to that system after they’ve sold it, plus I think their system was built around supporting not only our hunting and fishing license system and New York’s system, but also they had some clean air and emissions programs I think in other states that were tied to the architecture of their system. And trying to decouple all of that, at least as I understood it, they thought was going to be very problematic.
So, Gene, you want to elaborate?
MR. McCARTY: I’ll probably ask Ann to come up here, because she was in discussions with their lawyer. But their lawyer seemed to be very concerned about what they couched as frivolous lawsuits and their cost to defend against frivolous lawsuits, and they’re doing everything they possibly can as a business entity to shield themselves from their frivolous lawsuits.
MS. BRIGHT: Yes, this is Ann Bright, General Counsel. We’re still ‑‑ we’re continuing to work with Verizon and still holding out some hope that they would at least provide the code, or the system, to us, to Parks and Wildlife, and then we might be able to do something.
You know, they did indicate very clearly that they were not going to look for somebody on our behalf to sell the system to. I suppose there is a possibility if we found somebody and we could somehow draft around the liability concerns, then, you know ‑‑ I think it’s remote though. I mean I think it’s really a remote possibility that they’re going to be willing to do that.
This is ‑‑ one of the things that we’re running into is that this is something Verizon doesn’t normally do. And so staff are, within Verizon, are really reluctant to do a lot of things, I think mainly just because this is something that doesn’t normally happen. I think going out of a line of business is really new for them.
COMMISSIONER DUGGINS: But if they’re going to shut down this line of business, why would not want to get something for it and sell it to us, if they could sell it to us, and then they won’t have any liability issues other than under the agreement, the sale agreement with us?
MS. BRIGHT: And I think it’s ‑‑ we haven’t gotten a final answer on that, I should say. I’m still somewhat optimistic. I’m not convinced that they’ll do that, but I think it’s just getting them over the hurdle of asking them to do something that they don’t normally do.
And I agree with you, and I think that ‑‑ and I’m just ‑‑ we’re getting kind of mixed messages from them in terms of what they’re wanting to do.
MR. BASS: Do we have any idea what they make off of this contract?
MR. McCARTY: No, not really. All they’ve really shared with us is that it’s not profitable enough for them in comparison to their other ventures for them to continue in any of their government services. So all of their government services, including their work in emission testing and registrations and certifications, they’re getting out of that business everywhere.
MS. BRIGHT: And they get a transaction fee of, what, like 76 cents?
MR. McCARTY: Point 76, yes, 76 cents a transaction.
MR. BASS: Point 76 cents. And how many transactions?
MR. McCARTY: We pay Verizon a little less than $3 million a year, and we’ve paid them that, you know, since the beginning of this contract. So I mean they’re cut on it’s about three ‑‑ a little less than $3 million a year.
MR. BASS: The margin’s probably ‑‑
MS. BRIGHT: Small.
MR. McCARTY: Compared to cell phone service, it’s not ‑‑ it’s a drop in the bucket.
MR. BASS: Yes. Exactly.
MR. SMITH: So I think it’s important just to have that conversation so you all are aware of that because ‑‑
MR. BASS: They can sell it for 10 and it’s just doesn’t move the needle.
MR. SMITH: That’s a big issue for us going forward. And so George and his team and Mike and Gene are going to be very, very preoccupied with trying to find a new vendor to do that and to help develop a system that we can get rolled out in a timely fashion, particularly with all the testing that’s going to have to happen.
MR. BASS: Yes. You mentioned they do license sales for New York state?
MR. SMITH: New York state.
MR. BASS: Do we know of any other states they do it for?
MR. SMITH: That’s it. Just New York and Texas, at least on the hunting and fishing license side. It’s a pretty small universe.
COMMISSIONER HUGHES: But other states probably have some type of online system, so I’m sure you will, look around at what other states are doing and there may be a better system out there.
MR. McCARTY: We’re currently preparing an RFP to go out to see what proposals we get back from other vendors. We do ‑‑ we know that, you know, one of the ‑‑ Active is doing about 17 states; there’s a company, NIC, that’s doing, I think it was six or seven states; there’s another company out there that’s just now developing a new system for Florida. So there’s other systems out there, and that’s what we’re looking at right now is how can we adapt their system to our system or our system to their system, or some hybrid in between.
COMMISSIONER DUGGINS: Do you know who services Florida and California, which would seem to me to be two states with extensive license ‑‑
MR. McCARTY: Florida used to be Active, Florida did not like Active and they have now entered into a contract with another company called Brandt Information Services. Brandt Information Services is currently in the process of building a system for Florida, and it’s supposed to go online within this year.
COMMISSIONER DUGGINS: What about California?
MR. McCARTY: I do not know about California.
MR. SMITH: It’s Active ‑‑ Scott ‑‑ okay, Active has California.
COMMISSIONER FALCON: Gene, how much do we have?
MR. McCARTY: We have until August 31, 2013. We are going to ask ‑‑ we have asked Verizon for an extension of the existing contract to the full extent of the contract terms, which would have been until 2016, which they have turned us down. They said they want to get out of the business on December 31, 2013. So we’re going to ask them for a contingency extension to at least cover us until December 31, 2013. I don’t like doing a mid-year license change over, but if we ‑‑ but I’d also like to have that four or five months of cushion in there in development of a new system.
COMMISSIONER MORIAN: I’d look at it as an opportunity. Verizon probably doesn’t support our current system if it’s just two states. I’m familiar with getting licenses in other locations, and they seem to very seamless, so you’re not going to have reinvent the wheel.
MR. McCARTY: I don’t think so. I don’t ‑‑
COMMISSIONER MORIAN: Yes.
MR. McCARTY: ‑‑ think we’re going to have reinvent the wheel. We have some ‑‑
COMMISSIONER MORIAN: Maybe you’ll get something better, or you should get something better.
MR. McCARTY: You know, Texas’s license system, we’re probably one of the biggest in terms of the number of licenses. I was surprised to find out that Florida had 200 licenses. We’ve got 226 licenses. So Florida’s system is almost as big as us in terms of the total number of licenses, and the business rules on our licenses are kind of strange too. So, you know, we’re fairly complex in comparison to some of these others. But I think we can adapt. I know we can adapt some of these systems.
COMMISSIONER MORIAN: I would think so.
MR. BASS: Is this an opportunity to maybe simplify our suite of licenses and ‑‑
MR. McCARTY: Well, we were hoping that was to be the case. What we were really looking at is between now and 2016, really simplifying and doing some real significant changes and moving into the 21st Century.
The problem that we got when we got this notification from Verizon with little advance warning, is it throws us into a situation where it’s going to be very difficult for us to make some significant changes in our business rules in the next two and a half months, which is when I’ve got to have my business rules kind of prepared to get ‑‑ to move into a contract with somebody. It’ll be very hard for me to make that kind of a wholesale change in the culture of Texas Parks and Wildlife in the next two and a half months.
COMMISSIONER DUGGINS: Why in two and a half months though? You thought the contract wasn’t up till 2013.
MR. McCARTY: 2013 we’ve got to have the development time, we’ve got the get the business rules out there so that they can begin to develop the system.
MR. SMITH: The new vendor.
MR. McCARTY: The new vendor.
MR. SMITH: We’ve got a contract with a new vendor now to start with the development in anticipation of the ‑‑
MR. BASS: Because ideally you’d like the new vendor to come online September 1 of ‑‑ or actually ‑‑
MR. McCARTY: August 31 or August 15 ‑‑
MR. SMITH: Fifteenth.
MR. McCARTY: ‑‑ of 2013.
MR. SMITH: Yes, we start selling licenses August 15, so.
MR. McCARTY: It’s an extremely, extremely short development period for something of this magnitude.
MR. SMITH: And remember, we’d be rolling out with a new vendor immediately before open day of dove season, which is obviously when we’ve got a big, big peak. So we need to get it right. Obviously we’ll keep you apprised of the significant implications here, but felt like it was important to share that.
The next bullet item, wildlife diversity, the legislature had proposed some pretty deep cuts in our wildlife diversity program. As all of you know, we’ve got the statutory responsibility for all the fish and wildlife in the state, except for those that are, you know, declared threatened or endangered and under the auspices of the federal government, U.S. Fish and Wildlife Service.
We have elected to not make those cuts quite as deep as what the legislature has suggested. I think they were looking at, you know, well over a 50 percent cut. We’re looking at something that’s a little bit over 30 percent. And there are some real reasons for that.
You know, we are in the throes right now of some very significant issues in the state, some very contentious related things happening with proposed listings of species from the lesser prairie chicken to the dune sagebrush lizard out in far West Texas, and we have private landowners and industry and others looking to Texas Parks and Wildlife for scientific acumen and expertise on that.
And so we’ve got to have some taxonomic specialists that have got expertise in some of these species and [inaudible] species for us to be able to position the state from a wildlife management perspective as well as we can. And so we’re trying to balance that with what was proposed by the legislature, but also by what we feel has been strongly expected of us and really been asked for us, particularly of late with a lot of these rare and imperiled species issues in the state.
Public hunting. You recall a lot of discussion on that front. The legislature, again, not unlike the magazine, had proposed ‑‑ or the LBB, I’m sorry ‑‑ had proposed that we essentially shut down our public hunting program on the opening day of dove season for six months. We were able to explain, again, the complications of that to be fair. But they essentially did call for a 25 percent budget reduction in public hunting. I think Clayton and his team have reduced that to about a 15 percent reduction, so about $100,000 that would not be available for lease fees to lease public hunting lands.
I do want to compliment Linda Campbell in Wildlife, Tim Birdsong in Inland Fisheries, they have secured a major new grant through USDA to help provide public access to additional private lands for hunting and fishing. It’s a three-year grant, although only the first year of the grant is certainly approved, but a little over $800,000 available to help secure additional public access to additional leasing.
We’re very excited about that. So at least in the short-term I think we’ve got the ability to help attenuate the impact. I’m pretty excited about actually then being able to go out and contract with some other staff on the wildlife side to put around the state to work on leasing additional lands.
And then Tim and his team on the Inland Fisheries side are looking for places around the state, river basins in which they can provide some additional fishing access that they can secure for anglers. And also couple that with some habitat enhancement treatments in the watershed consistent with that program. So a nice nexus there on the fisheries and wildlife side. And kudos to them for securing such an important grant in this climate.
COMMISSIONER MORIAN: Where did the grant come from?
MR. SMITH: USDA.
COMMISSIONER MORIAN: USDA.
MR. SMITH: Yes. We don’t have any guarantees after this first year. It was a three-year grant proposal, so we’ve got a little over 800,000 secured in the first year.
The next bullet has to do with our Inland Fisheries Division. And Gary and his leadership team have been dealing with, you know, the challenge of having a very difficult operations-to-salary ratio inside the division where a large percentage of that budget was really directed at salaries and with a very relatively small amount directed to operations.
And so in that case, you know, we’re looking at some additional cuts inside Inland Fisheries to help try to have some modicum of improvement in the salary-to-operations ratio. And again, that’s the kind of flexibility that we feel like we need to give our division directors like Gary to decide strategically what does he need to do with respect to balancing and budget, setting those priorities, and he needs more operations dollars to help support our folks in the field, then Gary needs to make some decisions about that. So it’s an example, again, that we’re making some adjustments there.
State park closures. That is obviously a big issue for us. You know, Brent and his team I think have done everything possible to try to avoid the direct closures of any parks that are now open. You will recall that we are moving forward with the transfer of the historic site in Sabine at Sebastopol.
And we will be making operational changes in roughly 23 parks or so, some of which will have reduced days of operations, others will have certain operations and programs that are cut in their nature, but at least for the time being we’re not proposing to close any state parks that are now open. Now, I don’t think we can make that 100 percent guaranteed going forward if our revenue projections don’t go forward.
What I want to do is ask Scott to come forward. Yesterday Scott and Brent presented our state parks plans to our State Parks Advisory Committee, and I think it was well received, and I want to ask Scott to talk a little bit about that.
MR. BORUFF: Scott Boruff, Deputy Executive Director of Operations. The meeting was actually the day before yesterday. The State Parks Advisory Board met here in this room.
Brent and myself laid out the process that we went through to kind of look at the division’s budget cuts and how to minimize impacts to state parks consistent with the Commission’s directives, which were to try to minimize any closures, to try to continue to make sure that we have recreational opportunities for folks out there to get them out into the out-of-doors, and that we protect the natural and cultural resources of those parks.
The State Parks Division had gone through a quite comprehensive and robust exercise of looking at the things you would suspect that they would look at as they contemplated these kinds of budget cuts. They looked at the natural and cultural resources of the state parks and how to protect those, they looked at things like visitation and amenities that allowed people to get into the out-of-doors.
They looked at the business implications regarding, you know, return on investment and expenses, they looked at capital investments in the parks that were fairly recent. Some of our parks we spent a lot of money in capital recently. And they developed really a complex matrix that looked at and quantified all those metrics related to those kinds of issues.
They then spent a lot of time with senior leadership in the division talking through those metrics and talking through those impacts, and came up with a model that they used then to try to define the least harmful way to effectuate budget cuts across the state park system.
So we spent several hours showing the State Parks Advisory Board that methodology and that process. They took a formal vote and asked me today to convey to the Commission that they think that the State Parks Division did a very good job with putting together a matrix that made sense, and went through a very thoughtful and deliberative process, and that they fully endorse the State Parks’ proposals to make these budget cuts that are on the table.
They also recognize the inherent risk that we have decided to take relative to budgeting ‑‑ pre-budgeting the $3 million from Rider 27 and the restoration of the 60 FTEs based on that $3 million, and the $1.6 million in assumed income under House Bill 1301. But having said that, they recognize that what we have done is come up with a model here, at least for now, that does not envision any total closures of any parks.
Now there will be, as Executive Director Smith said, 23 parks that are impacted, some of those may have partial closures, Tuesday, Wednesday, Thursday closures or those kinds of things, a handful may have that kind of impact. Others may have impacts that are related to just closing the office for a couple of days a week, or not operating amenities like swimming pools, transferring that operation to local entities.
So the State Parks Advisory Board wanted to be sure you got that feedback today. I’ll be glad to answer any questions.
MR. BASS: Scott, obviously, since you’re building into the budget the $3 million and the 60 positions, how quickly are you going to be able to gauge whether or not that’s realistic and be able to adapt? You know, having a longer time to adapt rather than getting caught short-handed.
MR. BORUFF: Well, I don’t know that I can put a time line on it, Commissioner. I think the reality is we’re going to have to keep our eye on this ball all the way through this next biennium. We will probably early on take a very conservative approach in terms of filling positions for example in state parks. Obviously we will have some positions that have to be filled because they’re critical, but we will not just open all the positions immediately because we’re going to be very cognizant of the fact that we have to watch this budget issue as we go forward.
A lot of it is going to depend on things we can’t predict, weather, I mean, you know, a lot of revenues that come into the state parks are weather dependent, and if there’s bad weather out there at key times, you may have significant revenue dimunition. You know, natural disaster events, tornados and hurricanes. We’re just now going into the hurricane season. If a hurricane wipes out some our parks, like it has done in the past, there could be significant revenue impacts.
So I think we’re just going to have to be conservative as we go forward. We’re going to have to recognize the fact that we have a razor-thin budget in parks that if something goes wrong from a revenue perspective based on weather or natural disasters or those kinds of things, we will have to come back to the table and determine how we’re going to manage that in the face of really no reserves. Every penny is budgeted right now to try to keep us from having to close parks.
So I’m sorry I don’t have a better answer other than we’re going to keep our eye on this and we’re going to have to look at it frequently and be very cautious.
MR. McCARTY: Chairman Bass, we look at revenues monthly. We look at revenues monthly, we do comparisons of revenue to the prior year every month, and we report that to the Commission at every Commission meeting. So we’ll be able to ‑‑ and we’ll be tracking our performance, and if our performance is not, at least compared to the prior year, getting to that level that we need on a month-to-month basis, we’ll be reporting it to the Commission ‑‑
MR. BASS: Okay.
MR. McCARTY: ‑‑ at each one of the Commission meetings and then adjusting accordingly.
MR. SMITH: I think in addition that if we are in the unfortunate position in which our revenue projections don’t meet our budgeted needs and we are compelled to look at park closures, Scott and Brent and the management team of State Parks have outlined a process that we would go through, including ultimately coming back to the Commission for the final decision about what parks would be closed. And that would obviously include opportunities for appropriate legislators to provide input and comment on, and the public to provide comment on that.
So rest assured we will be giving you notice and advance warning if it looks like that that’s a possibility out there. Obviously we hope it’s not. We’re planning for it, but as Scott said, there are some real calculated risks inside this budget, and if our assumptions aren’t met, unquestionably we will have to come back to you.
COMMISSIONER DUGGINS: Where do we have ‑‑ where do we operate swimming pools in state parks?
MR. SMITH: We have at Abilene, at Bastrop ‑‑
Brent, and in ‑‑
MR. LEISURE: Balmorhea.
MR. SMITH: ‑‑ Balmorhea is the big one.
COMMISSIONER MORIAN: What’s Balmorhea?
MR. SMITH: Okay. You take that one.
MR. LEISURE: Brent Leisure, Director of State Parks. Commissioner, let’s see off the top of my head, was it’s Abilene, Bastrop, Balmorhea State Park, although that’s not a staffed operation where we have live guards where we ‑‑ they do in our other sites, Lake Livingston and LBJ.
MR. McCARTY: Lockhart.
MR. LEISURE: And Lockhart.
COMMISSIONER DUGGINS: I mean I ‑‑ as the proud owner of a pool, I know how expensive they are. But it seems like a pool, a swimming pool is a little bit outside of our core ‑‑ the core opportunities that we strive to perform, and it’s a huge expense. And I would think we might give a hard look to whether we need to continue to do the swimming operations, or turn those over to more local ‑‑ I mean that’s just a little bit inconsistent with ‑‑
MR. LEISURE: It is.
COMMISSIONER DUGGINS: ‑‑ getting kids outdoors and families outdoors, to me.
MR. LEISURE: It is, and it’s not something that we would typically see in any development project moving forward. We’ve since ‑‑ have long ago identified that we’re not in the swimming pool business and we typically don’t build those.
I will say that we’ve explored opportunities to partner with local communities and share in the cost of those operations. We do that at Goliad State Park and we also ‑‑ at Bastrop we’re hopeful, on the verge of an agreement where the YMCA and the city of Bastrop might operate that pool and realizing significant savings to us.
If I could, Carter?
I would like to go back to just one thing, Commissioner. In looking forward and when might we know whether we’re on track, one thing that’s really important in projecting our revenues is that we implement fee strategies, and as soon as possible, to realize the growth that we expect, and we’ve projected some growth in revenue.
And our intent is to implement those fee adjustments as soon as possible as when you consider ‑‑ and how we go about making these, we do basically a market-based analysis at each of our parks, understanding what our competition is out there and what is a reasonable fee to charge. And so we’re moving forward on that.
It is important to say, however, that the bulk of our revenue in state parks happens late in the year. And so we will be tuned in early on, month-to-month as Gene said, to identify whether or not we’re experiencing the growth that we project.
But the bulk of our revenue happens late. And we are taking reservations up to 11 months in advance. And so it’s possible that we’re taking reservations right now for the fall, and so those reservations would honor existing fees. So as soon as we make those fee adjustments we’re able to capture that revenue in the next biennium.
COMMISSIONER DUGGINS: If you honor the fee ‑‑ if they back out, is there any cancellation fee, I mean any ‑‑
MR. LEISURE: There is. There are fees associated with changing their reservations if a fee ‑‑ for example, if they cancel and then make a new reservation, it would be with the new fee.
COMMISSIONER DUGGINS: What if they just don’t show?
MR. LEISURE: If they don’t show, then they lose their deposit for the reservation and we keep that, and they’ll try to then sell that campsite or facility, whatever they have reserved to a walk-in.
COMMISSIONER DUGGINS: But how often are we able to do that if you don’t know ‑‑ they don’t show till the last minute, how are you able to ‑‑
MR. LEISURE: We’re pretty successful, particularly in the busy season. Because of the reservation system, it’s one of the advantages of having a central reservation system is that referrals that can occur, for example, if someone calls to make a reservation, they understand that the site that they’re looking for in a park is booked, our agents will then refer them to other parks that are nearby or meet their needs and try to fill our facilities.
If you’re going to cancel a reservation, you have to do it three days in advance if you hope to get your deposit back. If it’s less than three days, then you’ll lose that deposit.
COMMISSIONER DUGGINS: Seems to me you might look at that because it’s one thing to cancel it 30 days out or even two weeks out, but if you’re inside two weeks, it’d be difficult for us to rebook that, I would think, even in the busy season.
MR. LEISURE: Right.
COMMISSIONER DUGGINS: And maybe we ought to look at adjusting that cancellation fee depending on when the cancellation or no-show occurs.
MR. LEISURE: Sure. And we have group facilities that come with a much higher fee than with ‑‑ and I can’t recall the number of days in advance they have to call to cancel their reservation, but it is a much longer period of time because we have a hard time booking group facilities on short notice.
MR. BASS: You know, even some ‑‑ perhaps some kind of tiered deposit could be, you know, if you cancelled two weeks out it costs nothing, you cancel five days out it costs something and if you just no-show it costs even more.
MR. LEISURE: That’s a good suggestion.
COMMISSIONER DUGGINS: That’s what I’m ‑‑
MR. LEISURE: We’ll look into that.
COMMISSIONER DUGGINS: ‑‑ talking about because when you’re talking ‑‑ when you’re saying ‑‑
MR. BASS: I’m already in three days, I know I’ve lost my deposit ‑‑
MR. LEISURE: sure.
MR. BASS: ‑‑ well, you know, there’s no upside to me to call you.
MR. LEISURE: That’s a very good suggestion. Scott mentioned this a minute ago, but as we move forward it’s a very tenuous situation with our budget, and so we want to apply adaptive strategies as we go. And we see for example that we have an opportunity to adjust a business rule and realize greater revenue, then that’s what we want to be able to do all in an effort to keep parks open.
MR. BASS: We seem to have a better approach than California. I have a friend out there who told me that the park that he was trying to put together a trip to had decided that they were cutting back, they were closing from noon on Friday until noon on Monday or something like that. So they just ‑‑
MR. BASS: They took the weekend out.
MR. LEISURE: Yes, we’re trying to avoid that.
MR. BASS: It seemed a little backwards.
MR. SMITH: Yes. Yes. Yes.
Thank you, Brent. Thank you, Scott.
Last two items on here that I’ll just mention. And we talked about, you know, certainly I think both of them at some level. One, the vacancies versus a reduction in force. You know, the legislature has called for a reduction of 231.5 FTEs. We’ve been able to manage through that to the extent we can where we’re looking at, you know, slightly more than about 100 filled positions right now that we’ll be reducing going forward.
The last bullet item with respect to the reinstatement of federal authority, in the original budget proposed by the LBB to reduce federal grant funds like state wildlife grant funding, which comes through the U.S. Fish and Wildlife Service, and so appropriations that we have in that area we’ve restored to the budget, and have then allocated those out to the appropriate divisions, again, to help obviate the impact just a little bit.
So I think what I’m going to do now is have Gene kind of go through the real specifics in the coming year budget, and take a look at some of the numbers by division.
MR. McCARTY: Thank you, Carter.
As Carter’s outlined, when we put together the budget you start with the Appropriation Act. And then you look at a large number of impacts to the actual Appropriation Act, which are mostly found in riders. They’re either riders within your article, so we’re in Article VI, so there’s a number of riders within Article VI that either tell us to add money or deduct money from the actual Appropriation Act, and then there are riders within Article IX that do the same thing. Article IX is the general provisions article.
And Carter’s gone through some of these, for example contingency rider for 1301. House Bill 1301 built in additional appropriation authority of 3.2 million over the bi, or $1.6 million per year for state parks. That is revenue expected to be received from the donations that’s executed at the registration of motor vehicles.
Another one is Rider 27, which built in an additional $3 million in Fund 64, if it’s ‑‑ of revenue above the biennial revenue estimate, and another $3 million per year in Fund 9.
Another one of those little deals is in Article IX, it’s that 1 percent reduction of salaries that we have to transfer from our appropriation to ERS appropriation.
So there’s a number of those sort of things that are impacting and kind of crosswalk us from the actual Appropriation Act, which is the first slide you saw, to the series of slides that you’re going to see now, which is the actual implementation of the budget for the FY ’12 fiscal year.
The first slide I’m going to go over is taking the FY ’12 budget by object of expense, and looking at that compared to FY ’11. So for ‑‑ your first line there is our salaries and operating. You see, we take a $23 million cut in FY ’12, or about 9.5 percent of our agency-wide operating and salaries is reduced.
Capital equipment reduced by 100 percent. Data Center consolidation. You see Data Center ‑‑ our Data Center contract continues to grow, our costs continue to grow. That’s one of the areas within our budget that is not negative; it is a plus 4.7 percent. That’s about the growth rate which we’ve had every year since we got into this contract.
Capital construction, 74 percent reduction. That’s basically the result of not having ‑‑ of having the actual Fund 9 capital construction lined out and having a significant reduction in bonds. There’s $32 million ‑‑ no, I’m sorry, the 32 million’s not in here. It comes in in another location. So this is really the result of looking at prior year bonds against the UB ‑‑ what we’ve got in bonds in UB plus the cut, the actual cut in Fund 9.
Local park grants, an 84 percent cut. Basically all you’re looking at there in that $2.96 million in local park grants is your grant funds for recreational trail grants. New bond authority. We did get, at the end of process, additional bond authority of $32 million, so that’s a significant increase.
Off-highway rider, again, this is something that came in at the end where we did pick up another $170,000 in off-highway vehicle funding, but that funding is only available to us if we increase the cost of that sticker to generate those revenues. That sticker is currently required of ‑‑ any off-road vehicle that is operated on public lands is required to have an off-road vehicle sticker.
Land acquisition was zeroed out, 100 percent cut. Again, we add back into the budget two items, House Bill 1301, that’s the $1.6 million that we’ve been talking about, and we add back in through Rider 27 $6.03 million. That is 3 million in Fund 64 and 3.03 million in Fund 9.
Then we take that ‑‑ that’s kind of a high level overview by object of expense, and then we’re going to look at how we take that $287 million that we have in our FY ’12 budget and apply it per division.
So starting off with administrative resources, you see we get a 15 percent cut, or 1.2 million, and you can see, as you look down that list, you know, we range in our cuts from 5.5 percent in inland fisheries, 5.6 percent law enforcement, all the way up to 16 percent in the executive office. You’ll notice that D-wide, our D-wide budget grew, and I’m going to go over that here. That’s the only budget in the Agency that grew, but I’m going to go over where that growth is here in just a minute.
And then the next page shows you just some additional divisions, and some other objects of expense. You can see local park grants, 81 percent cut to that division, the Local Park Division. You see the only thing in there is 3.89 million, that is an addition of what we have in grants of 2.9 million, plus about ‑‑ a little less than 800,700 and some change for actually operating the division. That’s the six ‑‑ the eight ‑‑ the ten FTEs, the ten FTEs that are left in that division. The division did have 17 FTEs and we cut six and a half, so there’s ten and a half left.
Capital construction, again, the actual capital construction budget we add back in the 32 million, so you come back ‑‑ we have 51 million in capital construction, including the 32 million in new bonds, plus UB. So that gives us about a 30 percent cut. And you can see land acquisition is cut by 100 percent. So the total cut here at the division level, also as compared back to the object of expense level, is about a $65 million cut for the Agency for FY ’12 as compared to FY ’13, about 18 percent of our budget.
COMMISSIONER DUGGINS: What is meant by GLO transfer?
MR. McCARTY: We are required to transfer $11 million per year. $11.9 million ‑‑ or 11.23 this time to GLO for coastal erosion projects. It is a funding mechanism for GLO to ‑‑ and the utilization of sporting goods sales tax. So what they do is they take sporting goods sales tax, which can only be appropriated to Texas Parks and Wildlife, appropriate to Texas Parks and Wildlife, but then with a rider they require us to transfer it to GLO for the purposes of doing coastal erosion projects. And that’s in a direct rider.
MR. SMITH: So examples of that might be beach nourishment at Galveston, shoreline stabilization, those kind of things, in which they are either making efforts to try to help restore beaches that have been degraded and have eroded over time, or to help stabilize a situation to try to help arrest further erosion and loss of kind of beach surface.
COMMISSIONER DUGGINS: Do we have any follow through or is there any kind of report that GLO provides to us to make sure that 11.23 million is spent on that?
MR. SMITH: No, we are in essence simply a pass-through vehicle to provide those funds to GLO and then whatever reporting they have is directly with the legislature.
COMMISSIONER DUGGINS: And this occurs every two years because someone attaches this rider, essentially circumventing the restrictions on the use of the sporting goods sales tax?
MR. SMITH: Well, a couple of sessions ago when the legislature was working on how to fund key priorities and including parks, you know, there was a decision about the bill that was passed that allocated a portion of the sporting goods sales tax to us subject to appropriation. So that caveat was always there.
But also, as part of it, there was a decision made by the legislature to use those funds attributable to the collection of the sporting goods portion of the sales tax to help fund the GLO’s coastal erosion program needs. And those have been long-standing needs inside GLO. And so this is essentially a method of finance by which they take that portion of the sales tax, pass it through Texas Parks and Wildlife, who then is required by budget rider then to then transfer that to the General Land Office.
COMMISSIONER DUGGINS: But this has to occur every two ‑‑ someone has to do this every two years or it would end. Correct?
MR. SMITH: Yes.
MR. McCARTY: That’s correct.
MR. SMITH: Yes, you have to have a rider. Yes.
MR. McCARTY: They have to renew the rider ever two years, yes.
I do want to call your attention to state parks where you look at ‑‑ you know, state parks has taken a 10 percent, 10.8 percent budget cut. However, you’ve got to remember in that 69.26 million that is being budgeted to state parks, 3 million of it is Rider 27 funds. So that’s funds that we are generating or expected to generate above the BRE, which must be certified by the Comptroller.
We are in the process of trying ‑‑ of getting a letter to send to the Comptroller for certification and hopefully, you know, that will occur and that appropriation authority will materialize and we’ll be able to continue to support this element of the budget. $1.6 million of that is associated with the contingency rider for House Bill 1301. Again, this is the money that we’re expected to raise associated with the donation opportunity at the vehicle registration form. So there’s 4.6 million in that budget that is contingent revenue.
All right. Any questions?
MR. McCARTY: Let me give you a kind of an overview of D-wide. Like I said, D-wide grew, but there’s a couple of reasons for that. D-wide carries a lot of different things within the Agency that are expenses that are covered for the entire Agency. Debt service. Debt service on all existing bonds, prior year bonds, and future bonds is held in D-wide. We pay for debt service out of D-wide.
D-wide also has our payments to our license agents. We pay about $3.6 million a year to Walmart, Academy, mom and pop out there to execute our license sales. Our license sales systems, $3 million, just we actually spend a little less than $3 million. This is our fee that we pay to Verizon every year for the management of our license system.
Our State Office of Risk Management. We have to pay ‑‑ we’re paying for ‑‑ I guess that’s ‑‑ what is that, workman’s comp. That is our basic workman’s comp payments.
Airport Commerce Park, this is rental fee that we pay for the Agency for additional office space additional to this building at Airport Commerce Park, which is approximately a mile from here, a little over a mile from here.
Rider 27, uncertified authority. If you’ll remember, Rider 27 for Fund 9 gave us authority for $3.03 million. We really don’t believe ‑‑ right now our estimates are that we’re only going to be able to realize about 750,000 of that with increased license sales revenue. So we have budgeted 750,000 of it into the divisions’ budgets, and we’re holding the remaining authority in D-wide.
So that is one element that is authority without cash, it is $2.28 million of authority associated with Rider 27 that currently doesn’t have cash to support it. If that cash were to be realized by significant increases in hunting and fishing license sales or by some increases in oil and gas revenue or something like that, then we would be able to utilize that authority to then budget back out to the divisions. So that’s one area in which you see growth in D-wide, because we’re holding all that authority there.
Just the rest of it is just some basic bureaucratic processes. But I do want to call attention to sport fish restoration, boating access funds. These funds are generally funds that we would have budgeted out to local park grants, for the purpose of doing boating access, boat ramp type projects.
We’re currently holding it in D-wide and assessing what needs we have in the Agency to deal with internal Agency needs first before we then move to the process of passing that money through to local communities or other things, because we have some internal needs.
For example, we could use some of that money to offset our loss in aquatic vegetation control funding, so we may be using some of that money there, and so we’re assessing that before we then pass it out, because we feel like it’s important that we cover our internal operational needs first before we pass money through to local communities.
And then, lastly, this whole budget is built on pre-budgeting some lapse. Lapses generate ‑‑ and each division budgets their salaries at 100 percent. So if they assume that they’re going to have 100 FTEs, they budget all 100 FTEs at 100 percent of their salary. Now we know that’s not realistic, we know that we generate 5, 6, 7 percent turnover, and so we’re going to be generating that much lapse.
Now that much lapse is usually swept from the divisions and used to do mid-year strategic budgeting initiatives. This year, to try to minimize the impact to the divisions up front, we did do ‑‑ we did budget some lapse up front to avoid having to RIF more people. So we did budget $990,000 of lapse up front to try to minimize the impact to each one of the divisions.
We don’t believe ‑‑ we believe that’s very conservative, we generally will generate 3- to $4 million in lapse every year. We’ve used that for strategic funding mid-year to address just ongoing needs. So we do believe that’s conservative, we do believe that we’ll be able to reach that lapse goal in budgeting up front. It’s not something we like to do, but it’s something that we had to do to try to minimize the impacts and not have to lay more people off than what we currently have.
Any questions on that?
MR. McCARTY: I’ve already gone over this Rider 27 issue. As I said, this is Fund 9 Rider 27. We don’t believe we’re going to generate, at least through basic license sales, more than $750,000, so we do have a lot of uncertified authority out there that hopefully we’ll be able to use to address strategic budgeting needs as ‑‑ if we realize some additional revenue. Hopefully that’s oil and gas or hopefully that’s additional license sales.
COMMISSIONER DUGGINS: Are you saying ‑‑ I’m sorry, Gene ‑‑ are you saying that the Comptroller is not expected to certify the full 3.3 ‑‑
MR. McCARTY: We cannot ‑‑ the Comptroller looks at historic license trends that we provide to her, and they ‑‑ she looks at changes in license structure or changes in revenue structure. So if we tell her that we’re going to increase license fees by a certain amount, and then we give her a projection of how that’s going to generate revenue, she will certify that.
In this particular case, we’re not increasing any fees, all we’re doing is showing her a projection of what we expect to be a nominal growth in license sales. We’ve been growing in license sales the last couple of years, and we expect that to proceed ‑‑ to project forward. And she did not project that much into her biennial revenue estimate. So she can only certify what we show her, and what we believe to be current trends.
And this is all we feel comfortable with, you know, projecting for her to look at. I think if we go beyond that, we’re risking not being able to ‑‑ we’re risking authority that we can’t meet, and that will make ‑‑ that would create some problems with credibility over there in the Comptroller’s office.
So although the certifications can occur at any time, so once we ‑‑ if we see a change in trends, we can go back and ask the Comptroller to give us an adjusted certification.
I guess at one point I said we ‑‑ the special session did ultimately end up giving some additional revenue to the state ‑‑ to the Agency. Within the special session we picked up about $501,000 of additional funding for two safe boats for law enforcement. We picked up about $77,000 of additional appropriation for weapons and ammunition associated with those safe boats. We picked up about $330,000 of operations directly related to those safe boats. That’s over the ‑‑ that’s for the biennium, for the next ‑‑ for this upcoming biennium.
All of this ‑‑ all of that funding right there is general revenue, and it’s all directed specifically for border security initiatives that Texas Parks and Wildlife game wardens are involved in as the force multiplier and working with DPS and Homeland Security. So that really improves our fleet in terms of Homeland Security and our border security initiatives. So those are really ‑‑ that’s really good, and it’s all paid out of GR.
And then additionally we picked up this $785,000, which is 50 percent of the conservation license plate funding was reinstated very late in the session, two days ago actually. And then ‑‑ and so you will ‑‑ these things are not in this budget, these are not in the budget numbers that you’re seeing right now. They will be in the budget that you see in August. So I wanted to call attention to these are special session add-ons.
COMMISSIONER MORIAN: They’re just direct pass-throughs, is that ‑‑
MR. McCARTY: Not all of it. Of this ‑‑ these ‑‑ all of these boats and this ammunition and weapons is all Texas Parks and Wildlife Department. We will buy the boats, we will operate the boats ‑‑
COMMISSIONER MORIAN: General revenue allocated to you too for those specific ‑‑
MR. McCARTY: Yes, sir, general revenues allocated for that purpose. They’re not utilizing Fund 9.
Of the conservation license plates, probably about three-quarters of it is internal. It’s generated by our license plates. The other 25 percent is generated by the license plates that we pass-through, which is Big Bend, Ducks Unlimited, Coastal Conservation, Lions Camp and Marine Mammal Stranding Network.
So let me give you real quick recap on FTEs. Within FY ’12, as we’ve said, we are utilizing Rider 27, and Rider 27 authority in these numbers. So, as Carter said, we had an overall cut of 231 FTEs, our new cap is ‑‑ our new FTE cap is 3,006, which is a reduction of 169.1 FTEs after you add back in the 60 FTEs that we get from Rider 27, and the two FTEs that we get from the rider associated with off-road vehicles. So that gives us a ‑‑
MR. BASS: And that’s including adding those back.
MR. McCARTY: Yes, sir, that’s including ‑‑
MR. BASS: That does not include interns?
MR. McCARTY: It does not ‑‑ we never ‑‑
MR. BASS: They’re not counted as an FTE.
MR. McCARTY: Right. They’re not counted as an FTE cap. So our new FTE cap is 169.1 less than prior year. As I said, we have always over-budgeted FTEs. We have budgeted at about 4 percent over because we know we have turnover, and it allows us to maintain more people than we actually have the cap for and adjust for the FTEs that we would lapse when we have turnover.
So we ‑‑ if you look at the cut in actual budgeted FTEs, it’s 185. We’re going to be budgeting FTEs in this budget at 3.5 percent over as opposed to prior years where we were budgeting at 4 percent over. So we’re trying to adjust for what we assume to be a little lower turnover rate than what we’ve had in the past.
And then if you look at FTE allocations by division and where your FTE cuts occurred, you can see on this particular slide it goes from 2.5 percent of your FTEs all the way up to about 16 percent of the FTEs within a given division are being reduced. You can see it by division there.
And then the following slide you see the remainder of the divisions with ‑‑ ranging from a 38 percent cut in local parks. As I said, they were originally cut 50 percent of their FTEs and then we got two FTEs added back in, so their actual cut is 38 percent, on down to zero cut in law enforcement and legal.
COMMISSIONER HUGHES: Are these cuts ‑‑ Gene, are these department cuts or are these legislative?
MR. McCARTY: They’re a combination of the two. They’re a combination of all of the things that we’ve gotten. We’ve taken the legislatively directed cuts, we’ve taken the adjustments associated with the riders and flexibility, we’ve taken some executive initiative to address some things. For example, IT cut was significantly more FTEs than we actually ended up cutting in IT, but we took that initiative not to cut them there because we felt like we needed those bodies to do the work that we had to do. So it’s a ‑‑
COMMISSIONER HUGHES: We had some discretion on ‑‑
MR. McCARTY: Yes, sir. Yes, sir.
COMMISSIONER HUGHES: ‑‑ who we were going to cut.
MR. McCARTY: It’s a combination of all three. It’s a combination of the original legislative directive, some of the ‑‑ utilizing some of the rider flexibility, and then taking some executive initiative. So between those three things, that’s what drives these cuts.
COMMISSIONER DUGGINS: Under local parks, is that strictly our people who administer the park grants?
MR. SMITH: Yes.
MR. McCARTY: Yes, sir.
COMMISSIONER DUGGINS: Well, I know everybody’s disappointed we don’t have the funding to basically to continue or make new grants over the next two years. As I understand it, you’re saying what we do with those folks is go ahead and administer outstanding grants.
MR. SMITH: That’s correct. Yes, we have a long, you know, list of projects that are still underway, have not actually been formally closed out. And so, you know, we need our colleagues to administer those grants. Plus, to be fair, you know, we are going to get federal funding for recreational trails grants and some amount of land and water funding that we’ll probably likely allocate out to some local communities. So we’ll need a core team that can administer those legacy grants.
MR. McCARTY: And some boating access.
MR. SMITH: And some boating access grants as well.
COMMISSIONER DUGGINS: And we think we need ‑‑ I know nobody likes to see their group cut, but do we think we need 10 people for that?
MR. SMITH: Well, and remember too, we’re restored back to help with the off-road vehicle program, and so we’re specifically budgeted by the legislature. I think our team has taken a look at it and that’s their recommendation back to us. And so it’s certainly something we can look at further.
MR. McCARTY: You basically will have 8.5 FTEs working in terms of administering existing grants, and what little new grants, federal grants that we have, and then you’ll have two people working specifically on the recreational trail grant program. And those are directed by rider.
MR. BASS: Gene, are there places that the legislature through one form or another directed us to make cuts?
MR. McCARTY: Yes, sir.
MR. BASS: Are there places that they forbid us to make cuts? Or stipulated that certain things should not be cut in terms of personnel?
MR. SMITH: Yes.
MR. McCARTY: Yes, I would say ‑‑ I wouldn’t ‑‑ I guess it is forbid, yes, because in Article IX they reinstated ‑‑
MR. BASS: Maybe it’s the wrong word, but you know what I mean.
MR. McCARTY: We took cuts in law enforcement, we took cuts in the general bill of about 28 FTEs. But in Article IX they reinstated all 28 of those FTEs. My read of that is that their intention was that there would be zero cuts in law enforcement.
MR. BASS: Just as they reinstated two people in the ‑‑
MR. McCARTY: Yes, sir.
MR. BASS: ‑‑ off-road program.
MR. McCARTY: Right.
MR. SMITH: I want to be fair to Gene, I think it’s more than a read of their intent. I mean it’s very, very, very clear what the expectation that was told to us, what was expected with the restoration in Article IX, so.
COMMISSIONER DUGGINS: Yes, I don’t know that I view it as discretionary. I think my take on it is mandatory.
MR. BASS: So this whole process is a mishmash of places that they have directed us to cut, or not cut, and then areas where they’ve granted us ‑‑ or directed, You make the cuts, but you figure out where.
MR. SMITH: That’s right, yes. Yes. It’s a hybrid, and I think that’s a good description of it. Yes. Yes.
MR. McCARTY: Lastly, I’m going to hand it back over to Carter to talk about some ‑‑ after the execution of this budget, some of the key issues associated with the budget. We’ve touched on all of them, but I think we want to delve into a few of them in greater detail so that we all have a real clear understanding of what it is, what some of our risks and liabilities are.
MR. SMITH: Yes. Thank you, Gene.
And there are really two of these that I just want to spend a little bit more time. As Gene said, we have absolutely touched on all of them. But the Rider 27 issue and the linkage there to state park closures, you know, Brent talked about the market-based analysis that he and his team did to look at our fees in state parks.
Now that’s something they do on an annual basis anyway to make sure that we have comparable fees to other facilities in close proximity to our existing state parks. And so, you know, we’re looking at that on an annual basis and making adjustments upwards or downwards of our state park fees to make sure that we are competitive with others in the area.
But we will have a formal certification going to the Comptroller requesting that she certify the estimated revenue that’s going to be generated from those adjustments, and that’s an area that we absolutely need that certification so that we can have the confidence of budgeting those FTEs and keeping those state parks open. So I just want to highlight that, that this is an area of great importance to us in the budget.
Another element, number four, Fund 9 balances. Commissioner Morian, I think you had touched on that. You know, this is going to be the accumulation of funds that are not appropriated from the sale of hunting and fishing license fees, migratory game bird stamp, freshwater fish stamp, saltwater stamp, upland game bird stamp.
And I think it’s probably important for the Commission to understand that we are estimating, at least now, that at the end of the upcoming biennium, you know, we will have upwards of 60- to $65 million of unappropriated funds in those fund balances.
COMMISSIONER MORIAN: In all of our fund balances ‑‑
MR. SMITH: In all of our fund balances.
COMMISSIONER MORIAN: Just Fund 9.
MR. SMITH: Fund 9.
COMMISSIONER MORIAN: Just Fund 9.
MR. SMITH: Yes.
MR. BASS: And for comparison, how much would that number have been at the end of this current biennium?
MR. SMITH: Well, so we’re estimating it’s going to grow by 15-, 17-, $20 million a year.
MR. McCARTY: We will end this biennium with an estimated $30 million in fund balances.
MR. BASS: And we’re speaking only of Fund 9?
MR. McCARTY: Yes, sir. Just in Fund 9.
MR. BASS: And two years ago that number would have been about the same or is it steadily growing.
MR. McCARTY: Our fund balances have been declining over time. So a couple of years ago we were probably up in the 40- to $50 million range and we probably are dropping down to a low of about 30 million in 2011, at the end of 2011. Then we’re building back up to in excess of 65 million.
I think the high, at least in my tenure here, I think the high was about 75 million, and that was about 2003. Yes, about 2003.
COMMISSIONER DUGGINS: When he was chair?
MR. McCARTY: 2003, 2005 somewhere in that range. We had gotten up to a high of about 75 million.
MR. SMITH: This is not a situation that’s unique to Texas Parks and Wildlife in terms of fees that had been collected and then, you know, were not entirely appropriated this biennium.
We have, and are beginning to hear with increased frequency from our constituents, hunting and angling constituents about concerns about this, and we just want to make sure that you all were aware of this issue and we’re tracking it going forward so you’d be in a position to answer questions about it.
So just an important artifact of the funding mechanism for the state as a whole going forward, and certainly some implications for us with the funds that we manage on behalf of our hunters and anglers.
COMMISSIONER MORIAN: Can the purpose of those funds be certified as funds available, even though they’re not available?
MR. SMITH: Yes, there was ‑‑ yes, that’s right. They’re used to essentially keep in reserve, if you will, to certify the state budget as a whole. Ultimately those funds are, you know, restricted for use for the intended purpose and so, you know, at some hypothetical point in the future, you know, obviously we hope that then they would be appropriated with cash then that we could expend for the purpose for which they are restricted and expected to be used at some time.
COMMISSIONER MORIAN: After the next session then?
MR. SMITH: Right.
COMMISSIONER DUGGINS: But one of the important points you’re raising though is that a lot of our constituents are under mis-impression that this Commission, or that the Department and Commission are the ones who are not spending the stamp money, when, in fact, we have no discretion to spend it because it has not been appropriated.
MR. SMITH: Well, and I wouldn’t say we have no discretion. I don’t think that’s entirely a full characterization. I mean we have to make decisions, you know, we’re given an appropriation amount and then we have a variety of ways in which we can help fund, for instance, Fund 9 programs through unrestricted hunting and fishing license fees and then stamp funds, but we can’t, you know, supercede the authority we’ve gotten above and beyond Rider 27.
But we don’t have the flexibility for instance to be able to appropriate and utilize all of these stamp fund balances that have been accumulated over time. And so, you know, the issue is mostly one of appropriation, but I don’t think it’s fair to say it’s entirely one of appropriation. So, you know, but we have to be able to utilize those funds in a manner, again, that’s consistent with the direction. And so we’ve got to balance all the needs across the Agency.
COMMISSIONER DUGGINS: But my point is, at the end of day, we’ll finish the current biennium with $30 million in these fund balances, and the fact that we were not able to spend that money is not due to Department or Commission action or inaction.
MR. SMITH: That’s mostly correct, yes.
MR. BASS: Let me ask if my understanding of what you tried to say is accurate. Within Fund 9 there are a number of buckets. There’s, you know, a this stamp bucket, a that stamp bucket, you know, license fee bucket, et cetera. They appropriate a certain amount for us, and then within our strategies of how to best spend that overall number, we decide ‑‑ we really have the discretion of which bucket some of those dollars are coming from.
MR. SMITH: Within the authority of those budgets and within the over-arching ‑‑
MR. BASS: Okay.
MR. SMITH: Yes, specific buckets. Yes.
MR. BASS: So but they do have some budget that directs, you know, you’ll spend so much out of this bucket versus that bucket?
MR. SMITH: Well, for instance, like in ‑‑ Gene ‑‑ like the freshwater fish stamp. I mean we don’t have the ability ‑‑ we won’t have capital construction authority to be able to use the funding from the stamp dollars for hatcheries.
MR. BASS: Hatcheries. I got it.
MR. SMITH: Yes. Yes. Yes. So again, a little bit of a mixture.
MR. McCARTY: Within the statutory limitations of each stamp.
MR. BASS: Right.
MR. McCARTY: So for example ‑‑
MR. BASS: This bucket’s restricted to hatcheries and you can’t spend it on ‑‑
MR. McCARTY: That’s correct. Yes, or game birds is for game birds is for game birds management only and you can’t spend it on ‑‑
MR. BASS: To the degree that we’re spending money on game bird stuff, we can go into that bucket for a dollar or ten dollars.
MR. McCARTY: That is correct. That is correct.
MR. BASS: So there is ‑‑
MR. SMITH: Yes, so there is some discretion.
MR. BASS: ‑‑ some discretion.
MR. SMITH: And that’s what I wanted to point out, just make sure that ‑‑
MR. BASS: But it’s constrained discretion.
MR. McCARTY: Well, it’s constrained by our strategic goal to manage the resources holistically and look at all elements. If we just wanted to start doing nothing but game bird management, we could spend all the game bird management funds.
MR. BASS: So if there’s a constituent who says, I don’t care what you do on any of this other stuff, all I care about is game bird, and you could have spent more from the game bird bucket, to some degree they’re accurate.
MR. McCARTY: Some degree they’re accurate, but somebody else ‑‑ but that ‑‑
MR. BASS: Yes. Yes, the guy sitting next to him cares about freshwater fish or something else that’s ‑‑
MR. SMITH: Right.
MR. McCARTY: That’s correct. Because you have a limited cap. You have a limited ‑‑ the big bucket is limited ‑‑
MR. BASS: Right.
MR. McCARTY: ‑‑ each ‑‑ it’s at the discretion of the Agency and the Commission how we allocate between the little buckets.
MR. SMITH: I think this is probably worthy of ‑‑
MR. BASS: Well, to me ‑‑ I don’t know if I confused everyone else, but it helps me ‑‑
MR. SMITH: Probably worthy of some more discussion with the Commission as we go on, and watch this over time and just check back in on the Commission guidance and priorities that we’ve received from you in the past, and additional areas that you want us to focus on. We mainly wanted you to be aware of kind of the accumulation of the buckets, if you will, and what that is looking that.
COMMISSIONER MORIAN: A total cap was imposed, the upper cap was imposed.
MR. SMITH: Part of the appropriations process.
COMMISSIONER MORIAN: So you can spend more as long as we don’t spend more than the overall cap.
MR. SMITH: That’s right. Yes.
MR. McCARTY: The total cap.
MR. SMITH: Yes. Yes.
MR. BASS: Gene, let me ask you, the rider allows us to spend ‑‑ the entrepreneurial rider, an additional 6 million out of Fund 9 and an additional 6 million out of 64 if we earn it.
MR. McCARTY: Yes, sir. Yes, sir.
MR. BASS: The current biennium we had a similar rider. Do you recall what those caps were?
MR. McCARTY: It was about ‑‑ for Fund 9 in this prior it was about $11 million over the biennium. And it was directly tied to the fee increase that we implemented in 2009. Yes. And then within Fund 64 it was very limited, it was only about $300,000 a year, 700,000 over the biennium.
MR. BASS: So overall it’s about the same the coming biennium, but it’s split 50-50 rather than being Fund 9 ‑‑
MR. McCARTY: Yes, sir. Yes, sir.
MR. BASS: ‑‑ heavy.
MR. SMITH: And, Mr. Bass, you’ll recall too on the Fund 9 side, you know, those funds were also restricted to going to help support our compensation plan for our, you know, biologists and technicians and so forth. So that was the mechanism for which we paid for that.
So I think those are kind of the key issues that we wanted to come back and settle on and make sure that you were aware of these. I think that’s a fairly ‑‑
MR. McCARTY: RIFs. RIFs.
MR. SMITH: Gene wanted me to just come back in a little bit of a reminder again. I think we’ve talked extensively about the RIF process, but, again, a very difficult and unfortunate reality of this is, you know, us needing to go forward on the reduction in force, and we need to do that in order to give our colleagues whose jobs are being eliminated because of the resource constraints tied to this budget as much flexibility as possible to look for other jobs, and then also put us in a position to where from a business perspective we can be prepared for next fiscal year.
So our plan from the leadership team perspective is to move forward next week with the reduction in force. And so we want to just make sure that you’re aware of that, and certainly if you have any more questions about that, please, please let me know.
Anything else on that, Gene?
MR. McCARTY: That’s all I have.
MR. SMITH: Okay. I think that certainly concludes our budget presentation. I know there was a lot there in terms of talking about the Appropriations Bill and then also then the crosswalk and the specific execution of the budget next fiscal year. As a reminder, we’ll be coming back at the August Commission meeting, as we customarily do, for final approval on that budget for the next fiscal year. I suspect some of these things you’re going to want to reflect on, and you’ll probably have some further questions on, and if you’ll just let Gene or I know, I’m happy to talk about things in more detail.
But is there any other questions on this, or anything that you’d ask us to look into further or anything that you feel merits additional discussion?
MR. SMITH: Okay. Hearing none, I think we will move on. And so, Mr. Chairman, I think that concludes Gene and my presentation. So thank you.
COMMISSIONER FALCON: Thank you. You want to go ahead and have Ann do this thing?.
MR. SMITH: I think so. I think we can do this fairly quickly before lunch, and she’s here, and if that’s okay with the Commission, just get that done before you all conclude.
COMMISSIONER FALCON: Committee Item 2, brief and discussion regarding a contested case hearing decision process, SOAH Docket Number 802094552, application of Joe B. Long and Mark Stephenson for a sand and gravel permit. Ms. Ann Bright.
MS. BRIGHT: Good morning, Commissioners. For the record my name is Ann Bright, I’m General Counsel.
We wanted to make this presentation to you today because originally we were thinking that we would present the actual arguments to you in August. The August Commission meeting, well, fortunately or unfortunately is becoming pretty full as a result of the implementation of legislation, so, but we did want to go ahead and just sort of give you a heads up about this.
And there are a few topics I’m going to cover. I don’t really think it’s going to take that long, just the sand and gravel permit process, the contested case hearing process, the recommendations for handling a pending sand and gravel permit matter, and ex parte communications.
If a person wants to take ‑‑ and I should also say as a caveat, some of these things are going to be generalizations, but generally if a person wants to remove marl, sand, gravel or shell from a state-owned river bed, they have to get a permit from the Parks and Wildlife Department. These permits, these sand and gravel permits are governed by the Parks and Wildlife Code, and there are also some rules on the permitting process and the criteria.
They have to submit an application, the notice is published in the Texas Register, and the public is given 30 days to comment on the application. Now if someone objects to the permit, they can request a contested case hearing. And a contested case hearing is much like a trial. It’s conducted at the State Office of Administrative Hearings, which is separate state agency that consists almost entirely of administrative law judges, and that’s what they do, they hear cases. Sort of I guess the judiciary of the state agencies.
It’s conducted pursuant to the Administrative Procedure Act, and those are kind of the rules of procedure, and the SOAH also has their own rules of procedure, and those of you who are familiar with litigation, very similar to the Texas Rules of Civil Procedure.
At the end of the hearing, the administrative law judge issues a proposal for decision, and it’s going to include some findings of fact and conclusions of law, and basically a recommendation as to what the ALJ believes the decision should be. Then it’s submitted to the Commission, or the governing body. I mean this happens all over state government. If it was the TCEQ, then it would go to the TCEQ, or the PUC it would go to the Public Utility Commission. But in Parks and Wildlife contested cases, it would actually ‑‑ the proposal for decision is submitted to the Commission.
And then each party gets a chance to submit written arguments either for or against the proposal for decision. The arguments against it are called exceptions, then the parties are authorized to provide responses to those exceptions. And then ultimately it will be presented to the Commission for a final decision.
And then the Commission, once they get it, hear arguments, consider it, they have authority to change or modify the ALJ’s decision in a few instances. If they find that the ALJ didn’t properly apply the law or policy or rules, that they relied on something that was incorrect, there’s a technical error. And then the Commission is required to state in writing the reasons for the ‑‑ and the legal basis for the change.
After the Commission renders a decision, any party who’s unhappy with that decision can appeal into Travis County District Court and there’s a process there, it’s a substantial evidence review, again, much like an appeal.
In 2009 ‑‑ and that is really kind of just sort of the basic process. And this is the specific matter, and I’m not going to get into ‑‑ intentionally not get into any of the details of the substance of this matter. I just really want to kind of give you a heads up about it.
In 2009, Parks and Wildlife received an application for a sand and gravel permit. There were some objections, a contested case hearing was held on the merits in January. The ALJ was Michael O’Malley. Judge O’Malley issued a proposal for decision in May, the parties had filed exceptions to the PFD ‑‑ and PFD does not mean personal flotation device, I think we tend to get confused here at Parks and Wildlife ‑‑ but a proposal for decision, and then the Commission is required to render a final decision in this case.
And what I really ‑‑ the main reason to talk to you today is just to get some feedback on the process. Like I said, we thought about trying to do this in August. The August Commission meeting has really become very full.
One option is to schedule a special meeting of the Commission. I’ve talked to Judge O’Malley, he’s available ‑‑ if available, he’s willing to come over and actually present the proposal for decision, and then allow each party to make a brief argument to the Commission. This is very similar to what they do in other agencies. Those are usually time limited, five minutes or longer, and then at that meeting or a subsequent meeting, the Commission could deliberate and render a decision.
And then of course prior to the meeting we’d make sure that you got the proposal for decision, the exceptions and any other requested information. I have the entire record in a box in my office if anybody’s interested in reading any of that.
I also want to talk about ex parte communications. I think back in July of 2009 I sent the Commissioners, each of you, a memo about this particular matter. I think all of you were on the Commission, except I don’t think Commissioner Scott, who’s not here today, was on the Commission.
In these cases, the Commission acts in a judicial capacity. You’re the judges. As a general matter, in any kind of judicial matter, there are ‑‑ there is a prohibition against the judges, a judge, talking to a party outside the presence of another party about the case. These one-sided communications are called ex parte communications, they’re prohibited by the Administrative Procedure Act, and they’re prohibited in almost all litigation. There are a few exceptions.
In this case, since the Commission is the decision maker, the Commission should not be communicating, or individual Commissioners, with parties to this case outside the presence of the other parties. What we’ve done to facilitate this and to make sure we do not violate the prohibitions against ex parte communication, is we’ve actually created a screen, often referred to as a Chinese wall, so that Gene McCarty and I are ‑‑ have no participated in any of the case, so that we may advise and assist the Commission in making a decision in this matter.
In order to ensure that we do not run afoul of the ex parte restrictions, I’m just going to quickly go through the parties in this case so that you will know if they contact you about this just to refer them ‑‑ actually ‑‑ and I’ll tell you who to refer them to in a minute, it’s going to be one of our staff attorneys.
The applicants are Joe Long and Mark Stephenson. They’re represented by Dick Terrell Brown and his partner at Brown and Lacallade. I’m so afraid I’m going to mispronounce that. I probably did. The protestants are Leo Perron, John Robinson, Seawillow Kathleen Schmidt, Charles Shepard, III, Seawillow Gay Kelley, and Azar Minerals, and they’re represented by Brad Rockwell at the Lowerre Law Firm.
LCRA is also a party. They’re represented by Vic Ramirez. And TPWD is a party. Bob Sweeney is the TPWD ‑‑ he’s one of our senior staff attorneys, who’s taken the lead on this, and I should also clarify that Kaye Schultz assisted him in the hearing. For purposes of this case, I am not supervising Bob or Kaye. Bob is reporting directly to Carter in terms of parties.
Tom Hegar in Inland Fisheries Division, other staff that have been involved are Gary Saul, Ross Melinchuk, and then Carter Smith, who’s really kind of been the ultimate client for Bob. So he, Carter, is a party in this case.
And so with that, I guess I would like to just get a little bit of input in terms of just scheduling. If you would like us to try to do this at a regular meeting, whether we should try to squeeze it in at the August Commission meeting, or if you’ve got other thoughts on how to do this and get this presented to you so that you can make a decision.
COMMISSIONER HUGHES: Is there a hurry? Is there a reason we couldn’t wait till the November meeting?
MS. BRIGHT: You know, there is a requirement in the APA that decisions be rendered within ‑‑ it says 60 days from the time the hearing closes, and we’ve already passed that, but there’s also a good bit of case law that says it’s not mandatory. So I guess the answer is there’s not a mandatory deadline. So I mean one option would of course be to consider it at the November meeting.
COMMISSIONER DUGGINS: The last time that you had one, what did the Commission do? Did they have a special meeting ‑‑ several questions ‑‑ did they have a special meeting; two, how much time was allocated?
MS. BRIGHT: I’ve been at the Parks and Wildlife Commission for almost nine years, and we’ve never had one.
COMMISSIONER DUGGINS: So the next question ‑‑
MR. BASS: Between 1989 and 2001 I never recall one.
COMMISSIONER DUGGINS: Well, so will we decide ‑‑
MS. BRIGHT: That covers us, yes.
MR. BASS: Between the two of us, probably ‑‑ yes.
COMMISSIONER DUGGINS: Before we ‑‑
MR. BASS: Twenty-five years.
COMMISSIONER DUGGINS: ‑‑ decide whether to ‑‑
MS. BRIGHT: I would estimate that it would probably take at least a couple of hours. By the time you ‑‑ there are, you know, let’s see, about four or five parties, by the time you allow all of them to make any kind of comments, respond to your questions, the ALJ to present the ‑‑ make the presentation, and then the Commission to deliberate.
COMMISSIONER DUGGINS: Well, in a proceeding in the Supreme Court of Texas, each side gets 20 minutes. Not each party, each side. And so I don’t know that we have to ‑‑ I mean everybody’s entitled to their own viewpoint, but I don’t know that we have to have a two- or three-hour proceeding on it. I would think it’d be more appropriate to consider something along the lines of 30 minutes, 30 minutes and maybe 10 or 15 minutes for rebuttal for the applicant, who presumably has the burden of proof.
MS. BRIGHT: And, you know, I mean just to let you know, looking at the rules of some of these other commissions, they give them like five minutes. I mean they’ve had a whole hearing. And so you will have the proposal for decision, the exceptions and the responses. I mean you will have it all summarized for you. So I don’t even know that we need to give them 30 minutes. I mean we can, but we could probably do with less than that.
COMMISSIONER DUGGINS: In this meeting today, I mean since you can advice us, as I understand it, can you discuss how you see the breakdown of the ‑‑ whether there are actually three sides, if you will, as opposed to parties?
MS. BRIGHT: There are ‑‑ as I see it there are two ‑‑ there are clearly ‑‑ there are two sides. There’s the for and against. The LCRA is in there as well and, you know, I have intentionally not studied this so that I wouldn’t accidentally get into the merits, although I have read the proposal for decision. And I guess it could probably break down to two sides, one for, one against.
COMMISSIONER DUGGINS: Well, then why would we not want to have ‑‑ allocate no more than 30 minutes per side, or 20 minutes per side and let them, amongst themselves, which is the way it works in the Supreme Court, determine who’s going to argue and what points they wish to make by oral argument. I would like to read the written presentations long before we have that oral argument or oral presentation.
MS. BRIGHT: We can definitely do that. We can definitely do that. And, you know, we can just talk about how much time they need.
COMMISSIONER DUGGINS: Well, if you guys, and Margaret’s not here, but if you all think 20 or 30 minutes per side should be sufficient, then I come back to your point is, can we ‑‑ should we take it up ‑‑ do we have time to take it up at August in the interest of trying to get a prompt decision out, or should we move it to November. I don’t know that we have to have a special meeting on it.
MS. BRIGHT: We could probably ‑‑ I mean we may be able to do it in August if you’re willing to hang around. I mean, you know, we’ve got the annual public meeting in August where, you know, anybody can address the Commission on any topic. And so the ‑‑ I mean, yes, I mean we could definitely try to ‑‑ we could try to squeeze it in August. I mean if the Commission was interested in getting here early, we could do it like at eight o’clock one morning before we even get started.
COMMISSIONER MORIAN: That last question, we can only overturn this from our side under very limited, according to your ‑‑ what ‑‑ I mean this isn’t ‑‑ we’re not going to retry it or rehear it or new evidence. So why couldn’t we do it fairly ‑‑
MS. BRIGHT: Just quickly. You could. I mean we could provide ‑‑ we could limit the time and provide ‑‑ if the ALJ is able to come over and present it, he gets like, you know, 15 minutes. Rather than splitting it, you know, 30 minutes, we could say each side gets 15 minutes for example. And maybe get this ‑‑ you know, so that’s, you know, that’s half an hour, that gives you half an hour to deliberate and we’ve done it in an hour.
COMMISSIONER DUGGINS: Is it customary for an ALJ to advocate for his or her findings? I’m not familiar with that.
MS. BRIGHT: IT’s really ‑‑ they just present it. I mean some agencies do it and some don’t. You know, I mean we could even forego that. I mean you will have the written materials, you will have the ALJ’s decision.
COMMISSIONER DUGGINS: Then I don’t know that that’s necessary. My experience has been that they write basically an opinion which ‑‑ setting forth their findings of fact and ‑‑ proposed findings of fact and proposed conclusions of law, and it’s up to us to look at that under the standards of review, which are, to Reed’s point, they’re limited. I’m not sure they’re quite as limited as you said. I think there may be ‑‑
MS. BRIGHT: Well, just limited ‑‑
COMMISSIONER DUGGINS: ‑‑ and it’s something that’s against a great weight of the evidence, I don’t think we’re bound by a finding he makes that’s against the great weight of the evidence.
MS. BRIGHT: And I’ll tell you what we would probably do, if there was a situation where you thought that the facts really weren’t what they ought to be, is we would send that back to ‑‑ my recommendation would be that you send it back to SOAH for additional fact finding. So, and I should say, while there are very ‑‑ there are many, many similarities here to sort of traditional courthouse litigation, there are some things that are different. And the whole relationship between the Agency and the administrative law judge is one of those things that is a little bit different than I think you get in some other cases.
But you’re right, I mean there are not very many reasons that it can be overturned. We could probably ‑‑ I mean you could probably do it in an hour.
COMMISSIONER DUGGINS: What do you guys think about allowing each side 20 minutes and the applicant maybe an additional five minutes for rebuttal.
MS. BRIGHT: And then foregoing the presentation by the administrative law judge?
COMMISSIONER DUGGINS: That would be my ‑‑
MS. BRIGHT: Okay.
COMMISSIONER DUGGINS: ‑‑ suggestion.
MS. BRIGHT: We could definitely do that.
COMMISSIONER MORIAN: You know, I like to hear in a capsule form what his position was. And I will read it, but ‑‑
COMMISSIONER FALCON: Sorry, Reed, you’d like to hear what now?
COMMISSIONER MORIAN: What the ALJ, what he said.
COMMISSIONER FALCON: Okay.
MS. BRIGHT: You’d like to hear that presentation.
COMMISSIONER MORIAN: I would, but it’s not ‑‑ I mean, you know ‑‑
COMMISSIONER DUGGINS: I don’t feel strongly about it. Do you think that ‑‑
COMMISSIONER MORIAN: And hear our ‑‑
COMMISSIONER DUGGINS: ‑‑ you would like to hear it, that’s fine.
COMMISSIONER MORIAN: ‑‑ counselor over here, but ‑‑
COMMISSIONER DUGGINS: I just think it’s a little unusual to have the state administrative law judge advocate ‑‑
MS. BRIGHT: And I’m not so sure ‑‑
COMMISSIONER DUGGINS: ‑‑ for his or her findings. I don’t think ‑‑
MS. BRIGHT: ‑‑ I mean I guess it depends on what you say ‑‑ I’m not sure I would use the word advocate. I mean really it’s just, I heard this evidence, you know, my findings of fact were basically this, my conclusions of law were basically this, this is the proposal for decision. And it really is, I think, for the purposes that you’ve articulated, which is to really just sort of encapsulate what the case is and what it’s about.
COMMISSIONER DUGGINS: Well, if I were representing a party in that case, I’d say, now, which is your proposed ‑‑ which are your proposed findings and conclusions, those that are in writing that make up the record, or those that you made orally today? And I think he can’t ‑‑ I don’t think the person should ‑‑
MS. BRIGHT: Well, I will tell you, I’m very ‑‑
COMMISSIONER DUGGINS: Let me finish, please.
MS. BRIGHT: I’m sorry.
COMMISSIONER DUGGINS: I don’t think they can vary from the writing, so the extent they’re here, they’re trying to explain or elaborate that. I think that could create some danger in the process. That’s the reason I’m hesitant on it.
MS. BRIGHT: That’s definitely your ‑‑
COMMISSIONER MORIAN: Good point.
MS. BRIGHT: ‑‑ choice. I mean if you all don’t want that to happen. I do not anticipate that the administrative law judge would vary from what was in the opinion.
COMMISSIONER DUGGINS: Well ‑‑
MS. BRIGHT: I mean we could ‑‑
COMMISSIONER DUGGINS: I think that the risks are enhanced, Ann, if you have ‑‑
MS. BRIGHT: Okay.
COMMISSIONER DUGGINS: ‑‑ the ability to question it, or somebody has the ability to ‑‑
COMMISSIONER MORIAN: We could have decided it by now.
MS. BRIGHT: Okay. Then I mean that will definitely, in terms of just getting this handled, yes, we could probably just, yes, not ‑‑ just forego that, and then the parties can explain the facts. We’ll assume that everybody will have read all the documents before ‑‑
COMMISSIONER DUGGINS: How about this ‑‑
MS. BRIGHT: ‑‑ arguments.
COMMISSIONER DUGGINS: ‑‑ as a suggestion, how about we select whatever the amount of time is that you all think is appropriate, I would say if it’s 20 minutes is good enough for Supreme Court, it ought to be good enough here, per side and ask the ALJ to appear and be available should any member of the Commission have a question, or there be some issue raised about something involving the process ‑‑
MS. BRIGHT: We can do that.
COMMISSIONER DUGGINS: ‑‑ if he’s willing to do that, and then try to take it up at the August meeting, and I don’t care when we do it, whatever is most acceptable to ‑‑
MS. BRIGHT: Okay.
COMMISSIONER DUGGINS: ‑‑ everybody here. Does that sound okay?
MS. BRIGHT: That would be great. Get it all done.
COMMISSIONER FALCON: I agree with you. I think if we’re going to act as judges, we need to keep it as clean as possible from any other ‑‑ 20 minutes and 20 minutes would be enough ‑‑ I guess that’s enough time for an attorney to give the bottom line on ‑‑
MS. BRIGHT: Okay.
COMMISSIONER DUGGINS: It is in the Supreme Court. It’s 20, 20 and then ‑‑
MS. BRIGHT: Okay.
COMMISSIONER DUGGINS: ‑‑ the party with the burden of proof gets some rebuttal time, we could say five minutes rebuttal.
MS. BRIGHT: Okay. Would you all ‑‑
COMMISSIONER DUGGINS: One other ‑‑ sorry ‑‑ one other thought I had was because you raised questions, I don’t remember whether Dick came directly from the LCRA board, but I think he did, and if so, we may ‑‑ he may be in a position where he needs to recuse on this.
MS. BRIGHT: And that’s ‑‑ absolutely, and that’s definitely a discussion I was hoping to have with him today, but, you know, I can’t.
COMMISSIONER DUGGINS: And I don’t ‑‑ I’m not ‑‑ it’s not a criticism, I just wanted to certainly not blind side it, I think he would ‑‑
MS. BRIGHT: Absolutely. No, that is a discussion I’ll definitely need to have with him before that meeting.
COMMISSIONER DUGGINS: Do we need some sort of formal ‑‑ can we take any action, formal action on this, or is it just ‑‑
MS. BRIGHT: Really the main purpose of today was just getting your input on the process. And I think I’m hearing you that we want to limit the ‑‑ we’re not going to ‑‑ we’re going to have the ALJ there, not make a presentation, limit the presentations to about 20 minutes a side. I’ll make sure that before the meeting you have all the written materials. If you want to look at anything from the record, I can definitely make that available to you. I will talk to Commissioner Scott about the LCRA issue.
In terms of the August meeting, one option would be to just hold the sort of hearing after the Thursday meeting so that ‑‑ because the Wednesday one is what’s really going to be full, and then August just go a little later. Would that ‑‑
COMMISSIONER MORIAN: Thursday morning?
MS. BRIGHT: It’ll probably be Thursday afternoon. It would be after the rest of the Thursday Commission meeting.
COMMISSIONER HUGHES: I’d prefer to do it in the afternoon than in the morning, because ‑‑
MS. BRIGHT: You’d prefer to do it in the afternoon.
COMMISSIONER HUGHES: Yes, in the afternoon as opposed to the morning.
MS. BRIGHT: Okay. We can do that.
COMMISSIONER DUGGINS: All that’s fine with me. I guess the only other suggestion I’d make is somebody ought to check with Peter and Dan to make sure they’re okay with what ‑‑
MS. BRIGHT: Okay. I’ll definitely ‑‑
COMMISSIONER DUGGINS: ‑‑ we’ve given as our feedback.
MS. BRIGHT: Okay. I will have a discussion ‑‑
COMMISSIONER DUGGINS: I think that’s fair to the parties to say 20 minutes per side with the applicant, who I assume has the burden of proof in this, maybe give them five minutes in rebuttal.
MS. BRIGHT: Okay.
COMMISSIONER DUGGINS: And then you are limited to a 45 minute proceeding, plus any questions that you may want to ‑‑ you know, not stuck with that, but they know in advance you better focus on the important points and the errors in the ‑‑ that they ‑‑ either side sees in the PFD.
MS. BRIGHT: Okay. We will move forward with that direction and we will set this up for the August Commission meeting. All right. Thank you all.
COMMISSIONER FALCON: Any other comments from the Commission?
COMMISSIONER FALCON: Mr. Smith, this Commission has completed its business, and I declare it adjourned.
MR. SMITH: Thank you, Mr. Chairman.
(Whereupon, at 12:55 p.m., the meeting was concluded.)
C E R T I F I C A T E
MEETING OF: Texas Parks and Wildlife Commission
Finance Committee Budget Workshop
LOCATION: Austin, Texas
DATE: June 30, 2011
I do hereby certify that the foregoing pages, numbers 1 through 119, inclusive, are the true, accurate, and complete transcript prepared from the verbal recording made by electronic recording by Elizabeth Stoddard before the Texas Parks and Wildlife Commission.
On the Record Reporting, Inc.
3307 Northland, Suite 315
Austin, Texas 78731