Finance Committee

Wednesday, 9:00 a.m., April 3, 2002

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. Bomer Management Review
Staff: Mr. Elton Bomer
Committee Only
3.

Financial Review and Update
Staff: Suzy Whittenton

Committee Only
4. Foreign Travel
Staff: Suzy Whittenton
Committee Only
5. Texas Recreation and Parks Account Local Parks Grants Update
Staff: Tim Hogsett
Committee Only
6. Urban Park and Recreation Recovery Program (UPARR)
Staff: Tim Hogsett
2
7. Lake Rita Blanca State Park Transfer
Staff: Walt Dabney
3
8. License System Update
Staff: Suzy Whittenton, Terry Lewis
Committee Only
9. License Fees for Commercial Fisheries
Staff: Suzy Whittenton
8
10. Other Business  

Summary of Minutes
Texas Parks and Wildlife Commission
Finance Committee
January 16, 2002

BE IT REMEMBERED that heretofore on the 16th day of January 2002, 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 9:00 a.m., to-wit:

I. FINANCE COMMITTEE:

Ernest Angelo, Jr., Chair
Phillip Montgomery, III
Katharine Armstrong Idsal
John Avila, Jr. (absent)
Joseph Fitzsimons
Alvin L. Henry (absent)
Donato D. Ramos
Mark E. Watson, Jr. (absent)

II. OPENING STATEMENT: Chairman Katharine Armstrong Idsal called the meeting to order.

III. APPROVAL OF MINUTES: Commissioner Ernest Angelo, Jr. asked for a motion to approve the minutes from the November 7, 2001 meeting. The motion was moved by Commissioner Donato D. Ramos and seconded by Commissioner Phillip Montgomery, III. The motion passed unanimously.

IV. THE FOLLOWING ITEMS WERE PRESENTED TO THE COMMITTEE:

1. Chairman’s Charges

Presenter: Mr. Robert L. Cook

Mr. Cook updated the Commission on the status of three Chairman’s Charges for the Finance Committee. The first item is the Sunset Bill (Senate Bill 305) and how we are developing guidelines for employee fundraising above $500, developing best practices and accountability measures for non-profit partners, and determining and defining content that is appropriate for reviewing by youth. He also noted that we will be giving a presentation on the status of our review of all fees to increase revenues and insure a fair fee structure. Finally, we are reviewing and implementing appropriate State Auditor audit recommendations. Mr. Elton Bomer’s management team is assisting us in this process.

Items 4, 5 & 6. License and Permit Fees, Boat Fees and Park Fees

Presenter: Mr. Robert L. Cook

Items 4, 5 and 6 were combined and taken together since they all relate to fees. Mr. Cook briefly provided background for long-range funding strategy and input we receive from our constituents, the legislature and our commissioners. In late spring of 2001 staff initiated the budget planning process for FY02. Initial funding was based on our approved and ongoing programs, duties and land management responsibilities and long-range revenue forecasts for the year ahead. In late May, after the successful passage of our Sunset Bill, we incorporated those needs into our budget planning for FY02. Revenue forecasts indicated approximately the same total available cash as was available in FY01; therefore, we absorbed the state employee pay raise and other related expenses by reducing our operating funds by approximately 4%. We are currently operating in the FY02 budget cycle which was approved by the Commission in August 2001.

Late in 2001 we began to consider the need for a long-range funding strategy to raise user fees to recover the lost operating funds and to create funding of approximately $5 million annually for needed capital projects. We had not raised most of the fees in five or six years and we didn’t want to have to raise them again for another five or six. This funding level would have required approximately a 20% increase in fees across the board. Our leadership and our supportive users urged caution and requested that we review all programs and search for cost-cutting opportunities and higher operating efficiencies.

Since the September 11, 2001, tragedy we are still trying to cope with its impact on us in many different ways. We still do not know how this tragedy will affect TPWD, our sites, our programs, and our conservation in Texas in general. Throughout the summer and fall 2001 the economy in Texas and in our nation continued to decline, unemployment continued to rise. We again, redoubled our financial review efforts looking for ways to save, expenses to reduce, while still providing all needed services.

November 6, 2001, Proposition 8 passed. This will have a major impact on our funding needs over the next six to seven years and was a major factor in this review consideration. Also incorporated into our financial review and thought process that any significant fee increase would result in the loss of users.

In summary, we have thoroughly reviewed our budget and after giving full consideration to the issues and concerns mentioned above, we believe that we can fund TPWD’s FY03 and FY04 operations and programs at or near our current funding and staff levels without fee increases.

In the short term, we do not have any additional funding for new capital projects. Therefore, we recommend to this Committee that other than a few commercial fishing fee increases mandated by statute and included as a rider in our appropriations bill that no additional or new fees be implemented at this time. As opposed to our original long-term funding strategy, this short-term strategy is realistic only for the next one to two years and does not address our long-term needs.

We will monitor the key economic indicators during the coming months when considering future needs and fee increases. The budgets for FY03 and FY04 do not contemplate or include any planned reduction in force; although some additional positions may have to be held vacant to meet anticipated funding needs.

The Management Assessment team which includes Mr. Bomer, Mr. T.C. Mallett and Ms. Sidney Hacker, have studied and reviewed our information and support this recommendation.

Part of the budget decisions were based on Proposition 8. For example, the fish hatchery in Jasper, Texas, isn’t producing at the level it has in the past. At the minimum it needs major repairs, but the better choice from a financial and long-range standpoint would be to rebuild the hatchery. Mr. Durocher is working on that and we have others that are willing to help us do that. Other projects that we are looking include the Sheldon project, World Birding Center, Rivers Center, all of those kinds of projects. Proposition 8 will keep us in operation, let us make some major improvements to some of the old facilities, but not rebuild them.

We are currently holding job vacancies open for longer periods of time so that we can generate some funding. We are also looking at other possibilities to market our facilities and create new opportunities for the public such as create packages that include park entry fees combined with the opportunity to fish in the park for a day. We have also looked at how some of our park sites, RV sites, hotel sites and cabins are under priced and those fees haven’t been changed in some time. There is some indication that the fee we charge for RV hookups may not pay for the electricity that is used.

Ms. Suzy Whittenton and Mr. Hal Osburn presented information relating to the commercial fishing fee increase. A study by the State Auditor’s office which was published in December 2000 determined that our Department did not receive enough revenue from license fees in the commercial fishery program to recoup the costs of managing those programs. That report was the basis of a legislative appropriations rider number 22 which addresses cost recovery from those programs. In order to complete cost recovery we would need to increase all commercial license fees by over 100% , that is in addition to the license fee increase that was adopted by the Commission last year, which was, in some cases, up to a 50% increase. That increase was expected to generate about $600,000; therefore, we are now proposing to do approximately a 20% increase. There are concerns about socioeconomic disruptions to coastal communities from large fee increases. This will be the first step toward balancing the interests of the State and the industries. A 20% increase would generate approximately $600,000 of additional revenue per year. Staff recommends publishing these increased fees in the Texas Register for public comment. The information will be available on our website and we will hold at least one public hearing. We will bring this issue back to the Commission in April with input from the industry for final consideration. Chairman Ernest Angelo, Jr. authorized the staff to publish the item in the Texas Register.

2. Financial Review and Update

Presenter: Ms. Suzy Whittenton

Ms. Whittenton gave a financial review for FY02. In account 9, we sold 2.2 million licenses, stamps, and permits as of December 31, 2001. This is up 2.5% over this time last year. Super combo sales are up 6.6% and there continues to be a shift from the regular combo to the super combo license. We have sold just over a million hunting licenses this year. Fishing license sales are up over 6% when compared to the prior year and we have sold over one million fishing licenses as well. Revenue is up approximately 3.5% or $1.8 million when compared to prior year.

This is mainly due to the super combo sales and the resident fishing sales. The original revenue estimate for FY02 was approximately $900,000 higher than the prior year. We are currently ahead of our revenue projection at this time. The Comptroller’s revenue estimate is the same for these license fees for this year; it’s $64.8 million. As of December 31 we had collected 80% of that revenue estimate and at this time it looks like we’ll meet or exceed the revenue estimate in this category. Boat revenue was up by 4.5% or $93,000 as of December 31 when compared to prior year. We tend to collect most of our boat revenue between March and July. We hope the trend continues since the Comptroller’s revenue estimate for boat registration and titling fees is $900,000 higher than last year’s actual revenue. As of December 31 we collected 16% of our revenue estimate for boat registration and titling which is $14.8 million this year from this source.

State park revenue is estimated at $27.5 million. For the period of September through December we have collected 23% of that estimate. Revenue is up 16.5% over last year as of December 31, 2001, or $882,000. Historically we collect most of our park revenue between March and August.

As of December, which is one-third of the way through our fiscal year, we’ve spent 31% of budgeted funds. This includes both payables and encumbrances, so we’re where we would expect to be in terms of cash flow and spending for the year.

3. License System Update

Presenter: Ms. Jayna Burgdorf & Ms. Terry Lewis

Ms. Burgdorf stated that the license system is in operation, including Hypercom point-of sale units in a vast number of retailers, the PC system for the law enforcement offices that sell both recreational and commercial sales and the call center at Parks and Wildlife headquarters. Internet sales are expected to come on in the spring of 2002. During this transition, Transactive is removing terminals from agent locations and shutting down their operations.

This month we are scheduled to begin audits on both the WorldCom system and the Transactive system. A contract amendment has been signed with WorldCom that reimburses us for the cost of the contingency with Transactive through the fall. There is some funding in that reimbursement for Parks and Wildlife's delayed implementation costs.

The highest priority currently is that one-third of the agents have not sold a license on the new system. We have contacted some of those agents and they have indicated that they either haven't had time to set up the equipment or that sales haven't warranted them setting it up since this is generally a slow license sales period.

Key upcoming dates include internet sales capability and then Phase Two functionality, with all the deliverables from WorldCom due no later than April. The option to change the back of the license paper for use as a log, if approved will be in the field as early as June so that it will be in place by the next license year.

In response to questions, the following information was provided. License agents receive a 5% commission on each transaction, but they feel like they do a lot to earn that 5% especially since they are required to do more of the service of their machines by phone and mail as apposed to having a representative come out as Transactive would do. The MCI WorldCom system is costing us more money than Transactive so we are asking new agents to pay the monthly lease fee of $40 per month on the equipment to minimize the cost. That fee is waived if we have a new agent that will be providing coverage to an area that doesn't have coverage within a 10 mile radius.

The State Auditor noted the audit issue of some lost transactions in the old system. Part of the reason was related to the offline sales capability. In the new WorldCom system we have financial controls that we didn't have in the past and we haven't instituted the off-line capability yet. Soon we will be adding the off-line sales capability to the WorldCom system; however they only get half price for every transaction that is processed off-line. With this control in place it provides an incentive for WorldCom to not operate off-line. We have also implemented a two-phase commit to verify that the sales on the terminal are the same as the sales on the host system.

7. Nonprofit Partners, Employee Fundraising, and Youth-Appropriate Advertising

Presenter: Mr. Gene McCarty

TPW’s Sunset Bill, Senate Bill 305, requires the Commission to adopt guidelines for the solicitation of sponsorships by the official non-profit partner and policies for TPW employee fundraising and rules for youth appropriate advertising. The proposed rules were published in the December 14, 2001 issue of the Texas Register. As of the meeting we received 6 six comments. Those comments recommend amending the proposal to not require an annual audit of all non-profit partners, only the official non-profit partner. Staff concurs with those comments and would amend the proposal accordingly if approved by the Commission. Regarding our outdoor annuals that we produce each year, we will continue to produce a certain number that have youth appropriate advertising and others that have regular advertising. We are just trying to define what we mean by youth appropriate advertising. Commissioner Montgomery asked that we also add a clear statement on how donations are to be handled in the new policy so that we address that audit issue as well. The item was placed on the Commission meeting agenda for public comment and action.

8. Grants

Presenter: Tim Hogsett

Outdoor Recreation Grants
Mr. Hogsett stated that we received 39 applications for the outdoor recreation grants by the July 31, 2001 deadline requesting a total of $16.2 million in matching funds. We will recommend to the Commission tomorrow to approve the top ranked 13 applications for $5,750,962 in matching funds, which is the current amount that is available for granting. In regards to the question of how we determine the percentage we contribute toward the match and how we could use our money more effectively, Mr. Hogsett will prepare a briefing for the Commission and provide background on the selection process. The item will be presented for public comment and action at Thursday’s meeting.

Indoor Recreation Grants
Mr. Hogsett reviewed the grants for indoor recreation facilities that will be funded out of the Texas Recreation and Parks account. We received 22 applications requesting about $13.5 million by the July 31, 2001 deadline. We have approximately $3.3 million available. We will recommend to you tomorrow for funding the top 6 application for $3,325,000.

9. Small Community Grant Projects and Regional Grants

Presenter: Mr. Tim Hogsett

Mr. Hogsett presented information regarding two pilot programs we have been administering. They are the Small Communities Program and Regional Park Grants Program. We have the authority to adopt programs and rules and change how they are administered as stated in Chapter 24 of the Texas Parks and Wildlife Code. We held 6 public hearings on each program and had approximately 200 people attend the 12 meetings in total. The pilot programs have been successful and well received, and we plan on proposing that the Commission adopt the rules to make these permanent programs at Thursday’s meeting.

The Small Communities Program was established due to the small communities seemed to only need one or two facilities and only may need a small amount of money, and typically cannot be competitive in the larger Outdoor Recreation Grant Program. Therefore, we set aside $500,000 for a statewide competition among governments with a population of 50,000 or less. The program would be a 50/50 match with a maximum of $50,000 being our part of the match. We received 64 applications requesting $2.2 million of which we were able to provide matching funds for the top 12 ranked applications. We received suggestions that we should consider acquisition of property as part of the match for the project. The average population from the applications received was 9,000. When we come to the commission tomorrow and ask that the program rules be adopted, we will suggest the following changes be adopted as well: decrease the population from 50,000 to 20,000, allow donated property to be used as part of the sponsor’s match and to give additional priority points to communities with a population of 2,000 or less to assist in evening up the point process. The proposal was posted in the Texas Register and we have received two comments asking that the population cap remain at 50,000.

The Regional Parks Grant Program was established due to a study that was done for the Department by Texas A&M University. The study revealed that there was a need for large regional grants for either conservation-oriented projects and or intensive recreation type projects in the urban areas of the State. We have made two pilot grant awards, both approximately $3 million for projects that are very similar. We propose to make changes from the pilot, and when we adopt the permanent program, to give priority in the evaluation criteria for projects that use publicly-owned non parkland as a portion of their local match.

The Commission proposed that the item be placed on Thursday’s agenda for public comment.

ADJOURNMENT: Commissioner Ernest Angelo, Jr. adjourned the Finance Committee


Committee Agenda Item No. 1

Finance Committee
Chairman's Charges
April 2002

(This item will be an oral presentation.)


Committee Agenda Item No. 2
Presenter: Mr. Elton Bomer

Finance Committee
Bomer Management Review
April 2002

I. Discussion: Mr. Bomer will outline results of the recent Management review.


Committee Agenda Item No. 3
Presenter: Suzy Whittenton

Finance Committee
Financial Review and Update
April 2002

I. Discussion: Staff will present a financial review for the year to date FY2002, including an update on Account 9, Game, Fish and Water Safety and Account 64, State Parks. This presentation will focus on:


Committee Agenda Item No. 4
Presenter: Suzy Whittenton

Finance Committee
Foreign Travel
April 2002

I. Discussion: Article IX of the General Appropriations Act requires that the Commission approve any trip to a foreign country that utilizes appropriated State funds. However, several times per year Texas Parks and Wildlife employees travel to foreign counties with expenses paid by other entities such as the Federal Government or professional associations. Staff seeks Commission guidance on proper procedure on these travel requests.


Committee Agenda Item No. 5
Presenter: Tim Hogsett

Finance Committee
Texas Recreation and Parks Account
Local Parks Grants Update
April 2002

I. Discussion: Staff will present an update and briefing about the Texas Recreation and Parks Account grant program. This presentation will include an administrative overview of the programs, including funding history, program goals and objectives, and the priority ranking systems used to prioritize funding allocations.


Committee Agenda Item No. 6
Presenter: Tim Hogsett

Finance Committee
Urban Park and Recreation Recovery Program (UPARR)
April 2002

(This is Public Hearing Agenda Item No. 2.)


Committee Agenda Item No. 7
Presenter: Walt Dabney

Finance Committee
Lake Rita Blanca State Park Transfer
April 2002

(This is Public Hearing Agenda Item No. 3.)


Committee Agenda Item No. 8
Presenters: Suzy Whittenton, Terry Lewis

Finance Committee
License System Update
April 2002

I. Discussion: Staff will update the Commission on the implementation of the new license system. The update will include information regarding the closeout of the Transactive system and the statistics related to license agents selling via the World Com system. Staff will cover the call center and internet sales capabilities of the system.


Committee Agenda Item No. 9
Presenter: Suzy Whittenton

Finance Committee
Lake Rita Blanca State Park Transfer
April 2002

(This is Public Hearing Agenda Item No. 8.)


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