Finance Committee

Wednesday, 9:00 a.m., August 29, 2001

Commission Hearing Room
4200 Smith School Road
Austin, TX 78744
Item
No.
Subject Public Hearing
Agenda Item No.
  Approval of the Committee Minutes from the previous meeting.  
  Summary of Minutes  
1. Chairman's Charges (Oral Presentation) Committee Only
2. FY02 Operating and Capital Budget and Texas Parks and Wildlife Investment Policy
Staff: Suzy Whittenton
Committee Only
3.

Fee Review
Staff: Suzy Whittenton

Committee Only
4. Grants
- Local Park Fund Outdoor Recreation Grants
- Small Community Grants
- National Recreational Trails Grants
-Target Range Grants
Staff: Tim Hogsett
3
4
5
6
5. Other Business  

Summary of Minutes
Texas Parks and Wildlife Commission
Finance Committee
Finance Committee – May 30, 2001
Budget Workshop – July 10, 2001

BE IT REMEMBERED that heretofore on the 30th day of May 2001, there came to be heard matters under the regulatory authority of the Parks and Wildlife Commission of Texas, in the commission hearing room of the Texas Parks and Wildlife Headquarters complex, Austin, Travis County, Texas beginning at 11:27 a.m., to-wit:

I. FINANCE COMMITTEE:

Ernest Angelo, Jr., Chair
Lee M. Bass
Carol E. Dinkins
John Avila, Jr.
Alvin L. Henry
Katharine Armstrong Idsal
Mark E. Watson, Jr.
Phil Montgomery, III
Joseph Fitzsimons

II. OPENING STATEMENT: Commissioner Ernest Angelo, Jr. called the meeting to order.

III. APPROVAL OF MINUTES: Commissioner Ernest Angelo, Jr. asked for a motion to approve the minutes from the April 4, 2001 meeting. The motion was moved by Commissioner Alvin L. Henry and seconded by Commissioner Avila. The motion passed unanimously.

IV. THE FOLLOWING ITEMS WERE PRESENTED TO THE COMMITTEE:

1. BRIEFING - Chairman’s Charges

Presenter: Mr. Andrew Sansom

Briefings will be given to you today to update you on the status of the outcome of the Sunset legislation, the new Texas Outdoor Connection automated license system, and enhanced marketing and promotion opportunities. We have currently sold over 15,000 Horned Lizard license plates and 351 of the new Bluebonnet license plates.

2. BRIEFING – Financial Overview

Presenter: Ms. Suzy Whittenton

As of May 16 total hunting license sales are up 3.6% compared to September through May of prior year. Resident hunting and special resident hunting sales are down slightly, while nonresident is up slightly. A total of 1,046,000 hunting licenses have been sold to date. Fishing licenses are close to even when compared to the same period as last year. Resident fishing, non-resident fishing and saltwater stamps are currently down, but combo sales are up by 10%. Since our last meeting we have sold an additional 245,000 fishing licenses. We have currently sold 1,385,000 fishing and combination licenses this year. We have currently sold nearly 2.8 million licenses, stamps and permits this year.

Revenue from license sales is up 3.3% or just under $2 million for the same period last year. Part of the increase is due to the continued shift to the supercombo from other types of licenses and approximately $700,000 of it is due to the increase in the saltwater stamp fee. We have currently collected almost 97% of the $62 million we projected in license revenue this year. Boat registration and titling fees were projected at $13.5 million for the current year. As of the end of April, revenue was up $338,000 over the same period last year. As of the end of April we have collected 53% of the budgeted revenue, or about $7.2 million. It is projected that we will have approximately $3 million of unobligated cash in Account 9 Game, Fish, and Water Safety, at the end of the fiscal year.

In Account 64, State Parks, comparing revenue for the period of September through April, revenue is down approximately 10 1/2% or $1.5 million compared to prior year. The weather this year was unstable during the winter and fall months and last year was an especially good year for state parks. Even with the slow start this year our revenue projection of $23 million is not unreasonable. We are currently projecting that we will exceed that and so our current estimate is $23.3 million. We have currently collected $13.3 million or 58% of our projected revenue. Historically we collect the majority of park revenue in the spring and summer months, so we don’t expect to have any trouble collecting the remaining $9.7 million. We estimate that we will have approximately $2.3 million of undedicated money at the end of the fiscal year.

As of the end of April, which is two-thirds through the fiscal year, we have spent 65% of our budgeted funds. This includes all payables and encumbrances and shows that we are about where we should be for cash flow purposes in the year.

We have also begun the FY02 budget process. This year we will use zero-based budgeting. Divisions must submit their requested budgets by June 8 and then do presentations to executive staff in late June. We could also plan a commission budget workshop prior to the August meeting. At the August meeting we will be asking for final approval of the FY02 budget.

3. BRIEFING – License Point of Sale Update

Presenter: Ms. Jayna Burgdorf

Ms. Burgdorf explained that our current system is managed by Transactive, however will soon be managed by WorldCom. We will be selling licenses on two different platforms – P.C. based and point-of-sale terminal. In the PC-based system the license agents will provide their own P.C. and Internet connection while WorldCom will provide the printer. This set up will be used by low volume, less than 100 licenses per year, licensed deputies. The rollout for the P.C. system is as follows: The application will be fully developed and ready for pilot by June 20. The training via computer, video and help desk and equipment deployment will start June 11. Live sales of recreational licenses will start June 30. Then the offices that actually sell commercial licenses will start those sales on July 21. The second application, the Hypercom point-of-sale terminal will be used for high volume retailers. WorldCom has committed to roll out the project on the revised schedule. We have received preliminary indications from our legal counsel that we will need to require Social Security numbers for license sales for child support enforcement purposes since the new system will have the updated DPS driver’s license database. This process will not be noticed in most cases, especially if an individual uses their driver’s license for the transaction. We are still trying to determine how we will handle our juvenile customers.

4. BRIEFING – Legislative Update

Presenter: Mr. Joey Park and Ms. Suzy Whittenton

Ms. Whittenton reviewed the Appropriations Bill and stated that we had a very successful budget session. We asked for our base level funding with the addition of $5 million in new funds per year for park services and 81 additional FTEs. We asked for $8 million a year in new money to set up a scheduled facility repair program. We asked for the authority to spend the money we earn from the saltwater stamp fee on license buy backs. We also asked for our entrepreneurial rider which we lost last session. This is important if we bring in more money than we have the authority to spend. What ended up happening was the Legislative Budget Board cut our base budget by $2.5 million from Account 9 for what they identified were one-time projects. The Legislature gave us new appropriation authority of $5 million for park services of which they granted $4.2 million in new general revenue funds and the authority to hire 81 new full-time employees. As far as facility repairs, they approved general obligation bonds that will be voted on in the November election. They also included our entrepreneurial rider.

Other things the legislature acted on included employee pay raises. The FY02 pay raise is 4% or $100 per month, whichever is greater. However they did not give us revenue to cover the cost and therefore we estimate it will cost us approximately $5 million per year.

We also asked that they make changes to some of our riders so that the Landowner Incentive Program grants are treated the same way construction grants are treated which means that they will carry forward for 5 years or that landowner will have 5 years to complete the program – currently they only have 3 years.

A few other things that will impact us include a new rider on our out-of-state travel that limits us to 75% of what we spent in FY00 and the requirement that our radio systems have to be interoperable with DPS’s radios by January. We also asked for the authority for land sale proceeds to be reappropriated so that we can use the money to buy additional land. One of the most important riders is the commercial fishery license fee change, where we were required to raise fees to cover the cost of the program. We also had some changes to our local parks rider which requires that a certain amount of funds be used for the Hermann Park restoration. They added some reporting requirements to us for Game Wardens, FTEs, capital equipment, which we will have to report to our oversight agencies. Finally, they asked us to request federal funds for the Lake Fort Parker and Lake Casa Blanca restoration and dredging projects.

This was the largest increase in budgetary funds and authority in the Department’s history – nearly $50 million if the bonds pass. The first allocation of bonds would be $36 million, however it wouldn’t be appropriated until 2003.

Mr. Park gave an update regarding the bills that affect the Department. The most important bill that passed this session was SB 305, our Sunset bill. The bill extends the Agency for 12 more years, calls for an increase in public input into the Commission process, removes the reporting requirements for law enforcement related to the racial profiling bill that was passed this session, prohibits advertising of tobacco in any of our publications, increases oversight of employee fundraising, and requires the Department to create land and water resource conservation plan. It also requires us to improve our business oversight for the Department’s commercial ventures, manage our education and outreach efforts better, improve our capital project process, as well as make changes to our private oyster lease program as set forth in the State Auditor’s report. We have basically less than a full biennium to report back to the legislature on implementing all of the new tasks that the Sunset bill has given us. We will have an action plan that will be presented in August that will get those things put into place. That includes things such as creating essentially a master land and water conservation plan for the whole state to change the way that you do business here in the Commission meetings.

SB 2, the water bill, includes the creation of the Texas Water Advisory Council, which will provide guidance on state water issues. It also establishes a joint committee on water resources with an interim study on the appropriate role of environmental and wildlife concerns on water permitting and developing, including the protection of the natural condition of the State-owned river beds.

SB 1173 provides for the issuance of up to $9 million in revenue bonds to be used to finance the repair, renovations, etc. for the Admiral Nimitz Memorial Naval Museum. SB 1194 amends the Parks and Wildlife Code, making it a Class C Parks and Wildlife misdemeanor to hunt, sell, purchase or possess a bat in this state. SB 1410 gives the Parks and Wildlife Commission the authority to establish and make rules governing a closed season for crab traps in public waters. SB 1573 amends the Parks and Wildlife Code by adding Chapter 32, floating cabins. It allows the Department to adopt rules to implement procedures for permitting the placement and maintenance of floating cabins in our coastal waters. HB 63 amends a portion of the Transportation code to include automatic driver’s license suspension for a person on final conviction for boating while intoxicated.

HB 247 amended the Texas Water Code by revising the language exempting permitting requirements for a water impoundment up to 200 acre feet, to include the wildlife management purposes for commercial or non-commercial use. HB 1915 requires a person who is mentally retarded and lives at home with his family members could engage in recreational fishing under the immediate supervision of a volunteer who holds a fishing license and has permission of that person’s family head or legal guardian. HB 3123 requires the Department to cooperate with the Comptroller in developing and adopting new standards for open space land used for wildlife management. HB 3209, if a commercial shrimp boat is legally licensed and the only violation existing is that the owner or operator failed to display the shrimp license or failed to display the documentation or registration numbers as required by law, the catch of shrimp on board the vessel would not be seized or sold and no civil restitution would be sought for the value of the shrimp. A citation would be issued for criminal violations of failure to display.

5. ACTION – Stamp Fee for Disabled Veterans

Presenter: Ms. Frances Stiles

Ms. Stiles presented a proposal to add hunting and fishing stamps to the disabled veterans hunting and fishing license. Currently the license is available to those who qualify under the Veterans Administration at no fee. This request is to also add the stamps to the license for no fee. There were no objections and the item will be placed on the agenda for tomorrow.

6. ACTION – Fleet Policy

Presenter: Mr. Robert Cook

One of the requirements in the 76th session, 2 years ago, was to establish a statewide fleet management plan. One of the rules was to hire a fleet manager and we did in May of last year. The fleet management plan requires an adoption of a plan by each agency. They put a moratorium on all of our vehicles purchases until we submitted a plan and they approved it. At that point we would be able to replace vehicles on a one-to-one basis. Parks and Wildlife’s fleet consists of over 2,100 vehicles of which the average age is almost 8 years and 76,000 miles. The process requests that you adopt two rules in order for us to comply. Each agency vehicle, with the exception of a vehicles assigned to a field employee, shall be assigned to an agency motor pool. An agency may assign a vehicle to an administrative person or an executive employee here on a regular basis only if the agency makes a written documented finding that the assignment is critical to the needs of the agency. There were no objections and the item will be placed on the agenda for tomorrow.

7. ACTION – Local Park Funding

Presenter: Mr. Tim Hogsett

Mr. Hogsett gave background information regarding the Urban Parks and Recreation Recovery Program which is a grant program administered by the U.S. Department of Interior and the National Park Service. It’s based on a national competition and the federal government makes the funding decisions. All parks and recreation departments and communities are eligible to submit applications if they have what is called a recovery action plan that’s been approved by the National Park Service. This is a matching program with a 70% federal share being available and the additional 30% can be made either through a local contribution or a combination of a local and state contribution. If we do make a contribution using the Texas Recreation and Parks account it will make Texas applications more competitive. There is $28 million available for this national competition of which no state is eligible for more than 15%, which is approximately $4.3 million for Texas. In the past we have set aside enough money to match the projects at 10% and therefore we would set aside $432,540 from the Texas Recreation and Parks account, which would be the maximum commitment. The application deadline is June 18 and if they were awarded the money they would have 5 years to complete it. There were no objections and the item will be placed on the agenda for tomorrow.

V. ADJOURNMENT: Commissioner Ernest Angelo, Jr. adjourned the finance committee.

Note: A full transcript of this meeting is on file and available for review. It is located at our web site: www.tpwd.state.tx.us, click on About TPW


SUMMARY OF MINUTES

TEXAS PARKS AND WILDLIFE COMMISSION
FINANCE COMMITTEE
BUDGET WORKSHOP

July 10, 2001

BE IT REMEMBERED that heretofore on the 10th day of July 2001, there came to be heard matters under the regulatory authority of the Parks and Wildlife Commission of Texas, in the commission hearing room of the Texas Parks and Wildlife Headquarters complex, Austin, Travis County, Texas beginning at 9:02 a.m., to-wit:

I. FINANCE COMMITTEE:

Ernest Angelo, Jr., Chair
Phil Montgomery, III, Vice-Chair
Katharine Armstrong Idsal
John Avila, Jr.
Carol E. Dinkins
Joseph Fitzsimons
Alvin L. Henry
Mark E. Watson, Jr.

II. OPENING STATEMENT: Chairman Idsal called the meeting to order and Mr. Sansom read the opening statement.

III. THE FOLLOWING ITEMS WERE PRESENTED TO THE COMMITTEE:

1. BRIEFING – License Sales System Update

Presenter: Ms. Jayna Burgdorf

Ms. Burgdorf explained that we have contracts with two contractors, Transactive and WorldCom. Our main goal is to ensure that our customers are conveniently licensed as we transition from one system to another. The pilot will start the middle of September and continue until the middle of October. Training and equipment deployment will take place from September 17 through October 19. We anticipate a system cutover in the middle of October and the latest licenses will be sold on the Transactive system is November 4, 2001. The week of Labor Day is our peak period and we sell about 10% of our licenses during that time. Therefore we are going to encourage people to purchase their licenses on or before August 25 by entering their name into a drawing for one of three prizes that will be given away. To ensure we do not have problems as we have had in the past, Transactive has added additional disk capacity to ensure that volume isn’t an issue; therefore the license agent impact during the peak time is expected to be minimal.

Because of the delays that we have experienced, WorldCom has agreed to modify their training plan and produce a comprehensive training video. The retailers will be given the option of viewing the video, working with the machine that they get in the training mode and then deciding whether or not they want to attend classroom training as well.

We are currently making amendments to our contracts. We are working with Transactive to amend our contract to continue the system for 2 ½ months (November 4, 2001). We also have a memorandum of understanding that is in draft form that will either stand on its own or will be rolled into this contract agreement that closes out some of our historical problems. As far as WorldCom, we will amend our contract to reflect the new system implementation dates and the contingency. It will also be noted that they will be financially responsible for the contingency.

Mr. Bill Deboard, Sales Director for WorldCom, reassured the Commission that WorldCom is very committed to the project. He noted that WorldCom has been working with TPWD to put together a contingency plan and that are committed to make sure Texas is able to sell licenses.

2. BRIEFING – Fiscal Year ’02 Operating & Capital Budget

Presenter: Ms. Suzy Whittenton

Ms. Whittenton explained that that we have four key funding sources: fund 1, general revenue; account 9, Game, Fish & Water Safety; account 64, State Parks; and account 467, local parks. Those sources make up a majority of our available funds. We expect to have approximately $38 million in general revenue, $132 million in account 9 throughout the year, $52 million in account 64, $28.5 million in local parks account. When you look at the total funds available it is approximately $260 million.

Mr. Sansom stated that he wanted to set the context of where we are now and where we need to be by the August meeting when we consider the budget in the final form. We have historically benefited from having large balances in our accounts this time of year. The last time we had a general fee increase was 1996 so we have been able to accumulate some substantial balances in the two years following the increase. At that time we encouraged the retention of balances; however working with the legislature those balances became a point of contention therefore we have been trying to spend our budgets down. Also, in previous years we have had more cash than appropriation authority. Last operating year we accumulated a substantial amount of money to purchase shrimp boat licenses back, but we didn’t have the authority to do it. This is the first time that our appropriation authority and what we estimate will be our available funds are nearly the same.

Last year the Commission approved a budget of about $260 million. We anticipate that we will have an unexpended balance of approximately $1.6 to $2 million. This year we will experience some increased fixed costs associated with an employee pay increase, benefits, health insurance increases, Sunset legislation recommendations and mandates. We are also required to open up a number of our state parks during the next biennium. There is about $800,000 that we will have to fund from fund 64 since we received appropriation of $5 million, but were only given $4.2 million in cash.

We have also experienced about an 18% increase in our electricity costs, 57% in natural gas and about 30% in gasoline.

We have about $18.5 million and 135 new positions requested in supplemental requests above our current services base budget. The legislature approved 81 new positions – all of which will go into state parks. Therefore the additional 54 positions that are being requested will have to come from other division since they are capped by the legislature. Highlights of our supplemental requests include providing automated technology, World Birding Center staffing, water resources, TPW magazine, outreach and education, aquatic habitat enhancement, and more. The capital budget request is about $19 million includes items such as the Wide Area Network, Sea Center pipeline and the Dundee UV light source improvements. The last portion of our budget is our grant program. This is the most beneficial part of our budget. For example, we give a city 50% of the capital costs to build a park and they pay the remaining capital expenses and 100% of the operating costs.

As far as the Land and Water Conservation Fund, the President has currently asked for $24 million. If Congress approves that program then that portion of our grant budget would significantly increase and could be passed through to the cities as 50/50 matches.

Bottom line, you take our estimated current services of about $196 million, the increases discussed above such as the employee pay raises and others that we must fund in order to operate, add the total supplemental requests and capital requests and grants and we are looking at about $286 million. Our estimated revenue is only $260 million. Therefore, we have a gap of $26 million to deal with. The way it splits by fund is $24 million in fund 9 and $11 million in fund 64. To close the gap we are looking at 3 options: 1) reducing spending by delayed hiring, delaying tier III reclassifications for approximately 6 months or reduce/delay purchasing of vehicles or other non-critical items; 2) enhance revenues by imposing additional fees on various commercial fisheries; 3) and/or shift money between funds.

In the past when we have received unanticipated federal dollars we have a cumbersome process where we work with the Chairman of the Committee and the Chairman of the Commission to make budget changes to accommodate that infusion of federal cash. We will propose to streamline the process if we are gaining revenue.

We will not spend any of our repair bonds this year. We have put all of our repair bonds that the legislature provided us out into the market place. We do have a bond election on the ballot in November and I will be meeting with my peers of other major state agencies that will potentially be affected tomorrow and begin making plans for the election. This bond issue, if it passes, will provide us with the remaining monies we need to finish our maintenance backlog. There would be $8 to $10 million for annual maintenance funds for the next seven years, each year, and it will put some very important historical initiatives into place.

This summer we will recommend changes in our revenue generating programs. For example, Mr. Montgomery recommended we consider an internal venture capital evaluation process. The Sunset Commission basically asked for the same thing. Therefore, we will develop a new methodology for evaluating business proposals.

Mr. Bob Cook provided the history and background regarding stamp allocation. There are two types of stamp programs – dedicated and non-dedicated. Dedicated stamps include the turkey, white wing dove, waterfowl and freshwater trout stamps. We are legislatively mandated to use the revenue collected from stamp sales in a beneficial manner related to the particular species of stamp that was purchased. Undedicated, for example, would be if you are hunting with a bow and arrow during regular season then you don’t need to have an archery stamp. However if you hunt during the special archery season you are required to have the stamp. Revenue from that type of stamp is undedicated. It goes into fund 9, but its not dedicated since the revenue isn’t required to be used for researching the impact of archery hunting or equipment. The revenue generated can be used for any purpose for fund 9. It is allocated within our budget process just like our other revenue.

The supercombo was created in 1996. Prior to the implementation we sold just under 2 stamps per license – only 13% bought 2 stamps or more. At that time the fee for a hunting and fishing combination license was $32. The supercombo included all 7 stamps for $49. It was predicted that it would increase sales since it was considered to be a good investment, especially since you would be covered for all types of hunting and fishing opportunities that arose. Other than the saltwater stamp, no other stamp or license fees have increased since 1996.

At that time it was agreed upon by staff and the Commission that we would allocate a similar amount of money to each stamp fund until the success/failure of the supercombo could be determined. Last year the interest on those accounts were accredited to those funds separately. Prior to the implementation of the supercombo, sales ran about 150,000 and dropped to about half that amount and have held there. Prior to supercombo the white wing dove stamp was increasing primarily due to the expansion of the distribution and home range of the bird in Texas. We are currently trying to develop a new methodology to allocate stamp funds and bring that to the Commission at the August meeting.

The Commissioners discussed that they wanted staff to be fiscally responsible regarding expenses. If we are unable to identify enough savings without cutting services, then we need to look at a fee increase. We need to try to determine an elasticity curve for price increases and figure out how much we could raise fees without discouraging use.

Mr. Sansom noted that he and Ms. Whittenton were looking at preparing a two-year strategy, since we are looking at a two-year allocation, to present at the August meeting so that it would give everyone a better understanding of the financial picture. This would be necessary in order to look at the possibility of fund transfers.

3. BRIEFING – Audit Issues

Presenter: Mr. Andrew Sansom

Mr. Sansom noted that the State Auditor’s Office has been conducting an audit of our Administrative Resources Division for over the past year or so. Although we don’t have the draft audit report at this time, it is believed that they will make a recommendation that management in that area needs to be improved. In addition, they are also looking at the management of our contract with Transactive and will give us guidance on how we could have improved it. Their recommendation will be noted as we move from Transactive to WorldCom. We believe it will relate to tracking and control since this is such as huge system which hundreds of millions of dollars flow. The Auditor’s Office will recommend that we use an Executive Information System that will allow us to monitor the behavior of the Agency through electronic technology. They will also comment on the allocation of stamp funds and the methodology we use for revenue forecasting. It is believed it is a problem of the lack of documentation rather than a lack of error. Then finally, they will identify some areas they believe efficiencies can be created.

ADDITIONAL DISCUSSION

Chairman Idsal appointed Commissioner Angelo to Chair the Finance Committee and asked Commissioner Montgomery to be Vice-Chairman.

IV. ADJOURNMENT: Chairman Idsal adjourned the committee.

Note: A full transcript of this meeting is on file and available for review.


Committee Agenda Item No. 1
Presenter: Andrew Sansom

Finance Committee
Chairman's Charges
August 2001

(This item will be an oral presentation.)


Committee Agenda Item No. 2
Presenter: Suzy Whittenton

Finance Committee
FY02 Operating and Capital Budget and Texas Parks and Wildlife Investment Policy
August 2001

I. Discussion: Staff will present the recommended FY 2002 operating, capital, and grant budget for consideration by the Committee. The presentation will cover appropriation and cash limits as well as program issues and stamp fund allocation considered in development of the budget.

Also, the agency's investment policy will be disucssed and reviewed by the Finance Committee.


Committee Agenda Item No. 3
Presenter: Suzy Whittenton

Finance Committee
Fee Review
August 2001

I. Discussion: Staff will present information regarding agency fees and the possibility of fee increases. The presentation will cover timelines for various fee increases. The presentation will also include a detailed review of boat related fees, focusing on the current fee structure previous fee increases, revenue and transaction trends, and the estimated revenue impact of potential fee increases.


Committee Agenda Item No. 4
Presenter: Tim Hogsett

Finance Committee
Grants
August 2001

Local Park Fund Outdoor Recreation Grants – (This is Public Hearing Agenda Item No. 3.)
Small Community Grants – (This is Public Hearing Agenda Item No. 4.)
National Recreational Trails Grants – (This is Public Hearing Agenda Item No. 5.)
Target Range Grants – (This is Public Hearing Agenda Item No. 6.)


Top of Page
Back to Top
Back to Top