Texas Parks and Wildlife Commission
Finance Committee
Budget Workshop

July 24, 2003

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

BE IT REMEMBERED that heretofore on the 24th day of July 2003, there came on to be heard matters under the regulatory authority of the Parks and Wildlife Commission of Texas, in the Commission Hearing Room of Texas Parks and Wildlife Headquarters Complex, Austin, Travis County, Texas, beginning at 10:25 a.m., to wit:

APPEARANCES:

THE TEXAS PARKS AND WILDLIFE COMMISSION
Ernest Angelo, Jr., Committee Chairman
Katharine Armstrong, Chairman
Philip Montgomery
Donato D. Ramos
Kelly W. Rising, M.D.
Ned S. Holmes

THE TEXAS PARKS AND WILDLIFE DEPARTMENT
Robert L. Cook, Executive Director
Other personnel of the Texas Parks and Wildlife Department


FINANCE COMMITTEE
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BUDGET WORKSHOP
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JULY 24, 2003
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10:25 A.M.
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CHAIRMAN ARMSTRONG: This meeting has been called to order. I believe Mr. Cook has a statement to make.

MR. COOK: Thank you Chairman. A public notice of this meeting and all items on the proposed agenda has been filed in the office of the Secretary of State as required by Chapter 551 of the Government Code referred to as the Open Meetings Law. I would like for this action to be noted in the official record of this meeting.

CHAIRMAN ARMSTRONG: Thank you Mr. Cook. I do want to mention here, although this is a public meeting there will be no public testimony today. The first order of business is the approval of the agenda you have before you. Modifications to the agenda – please note that Item 2, the Stamp Fund Allocation, has been removed from the public’s agenda. Is there a motion for approval?

COMMISSIONER RAMOS: So moved.

COMMISSIONER MONTGOMERY: Second.

COMMISSIONER ARMSTRONG: I have a motion from Commissioner Ramos and a second from Commissioner Montgomery. All in favor?

(chorus of ayes)

CHAIRMAN ARMSTRONG: Opposed?

(no response)

CHAIRMAN ARMSTRONG: Motion carries. We will begin today by turning the gavel over to Commissioner Angelo. Commissioner Angelo will you start the Committee?

COMMISSIONER ANGELO: Thank you madam Chairman. First time, I am very pleased that we have a quorum today for this most important meeting and discussion of the budget and finance of the Department. The agenda item that we will begin with – there are two of them that we are going to combine -- the discussion of those two being the fiscal year 2004 budget review and a revenue estimating methodology. And I believe that Bob would like to make some comments to begin this.

MR. COOK: Thank you sir. First of all I want to welcome each of you and express to you our appreciation. This is very unusual. We have had budget workshops for all these years, and typically we are lucky to get two or three out because of everything going on, summer vacations, and all of that. I know that you have made a sacrifice to be here and we acknowledge that and sincerely appreciate it. Likewise, I would be remiss not to express our appreciation to each and every one of you for your service – and especially for your service during the legislative session. It was an interesting session. We had a good session. It was, from a conservation standpoint, we made several very positive, good steps. From a financial standpoint, we went through some very interesting processes and some difficult decisions had to be made. I think the legislature treated us fairly. We are an agency that has a tremendous amount of support downtown and that came through very clearly. Again, I appreciate your participation here. Likewise, to our division directors for their work during the session and all that they have done. I should note to you, and I apologize for my glasses here today, but my broken nose is almost recovered. We had a division directors’ retreat immediately after the session to begin to really kick this process in gear – at least that was our intent. On the way to the retreat Mr. Durocher made his contribution to reducing our number of vehicles in the Austin headquarters by one. Fortunately, I am pleased to report; we had six of our top people in that vehicle. It was totaled. They were all able to walk away, and with another vehicle – just a terrible accident. It scared us all to death. They absolutely had to get Mr. Durocher out of the vehicle with the Jaws of Life. He is just about through limping as it is; and my scar, as you can see, is almost healed. So we had an interesting meeting at Mason Mountain and, as I said, begin this process.

CHAIRMAN ARMSTRONG: I noticed that Mr. Cook was happy to tell how Phil had his accident.

(laughter)

CHAIRMAN ARMSTRONG: Still forthcoming on the circumstances surrounding his accident.

(laughter)

COMMISSIONER MONTGOMERY: For the record we need to disconnect Phil Durocher as the cause of the ailment of Bob Cook’s accident.

CHAIRMAN ARMSTRONG: I love that Jaws of Life.

(laughter)

COMMISSIONER MONTGOMERY: It sounded like there was a connection there didn’t it?

MR. COOK: As I said, this is a work session that we --

MR. MCCARTY: We worked it out.

(simultaneous discussion)

MR. COOK: I think you know how much I appreciate these folks who have contributed to the information that you are going to look at today. These DD’s and folks involved in this are great people and we are very fortunate to have them. In that vein I want to introduce our new division director in the Wildlife Division, Mike Berger. You all have met Mike, I think, and heard Mike before, I hope, and if not I hope you will welcome him. We are very, very fortunate to have Mike Berger, the quality of people that he is, the background that he comes from, and his understanding of our agency and the people we serve. Mike we appreciate you.

MR. BERGER Thank you very much.

MR. COOK: This budget process has been an interesting and difficult process. We have carefully and thoroughly evaluated what we have been spending our dollars on and what we are proposing to you that we spend our dollars on in the future. We started this process with a bottom-up review of each division and the activities and workgroups within that division throughout the agency. Most of the presentations today will be made by Drew and Mary. It will be at a fairly high level, but the division directors, as you can see, are here and their budget managers are here with them in most cases and will be available to help any questions that you have. I sincerely appreciate the long hours, the late nights and the weekends that Mary, Drew and our division folks have spent in preparation for this meeting. We typically start the budget process each year in early April but with the State budget shortfall that we all became aware of fairly early in the session, and many other factors that we had going on in the legislature and the legislature had to deal with this spring, we could not effectively start this process until June 3. We have followed the direction mandated by the legislature. We have budgeted to fulfill our core responsibilities to the extent that we literally got the statute book out, as we do each year in this process, and went back over what those items are that are in the statute book. We have followed the direction of the Commission closely in this process. For example, within this process, I am pleased to inform you that we have created a Legal Division within the agency by combining the agencies existing ten attorneys into one coordinated shop under the direction of Ann Bright, our General Counsel, who again, we are very fortunate to have. This is a tight budget. The proposed FY04 draft budget reductions that you are going to hear about today are approximately $29 million and 103 FTEs less than the current annual budget. I am proposing to you a conservative approach. We will not, should not, must not, over spend. We will be certain that the anticipated revenues, including that from our much needed fee increases, are coming in before fully allocating the appropriations. Therefore, you will see that we have held in reserve $2.5 million, which is 15 percent of the anticipated fee increase revenue. Just of that component of the fee increase – we are only budgeting 85 percent of that. I am going to make sure it comes in before we allocate. Finally, it is really important that this process is not a complete process at this point. This is a workshop. We do not have all the numbers. For example, we do not know how many employees will take advantage of the retirement incentive or how much that will cost the agency. There is a real cost with each retirement. With each person that takes that retirement incentive their annual leave, sick leave -- many of those factors build into the number of years of service -- their salary, build into what we have to pay. What we write a check for to each of those employees. We do not know how many employees will take advantage of that incentive at this time. We will be revising those numbers as we approach September 1, and as employees retire in FY04 -- as they become eligible to retire. So we will continue to refine and improve all of our numbers and data over the next 30 days. Our purpose today is to continue the process of informing you and getting your guidance and input. There is an abundance of detail in your briefing book that we will not attempt to cover today, but that we will be pleased to discuss with you individually or as a group at your convenience. We will be asking for your final decision and approval of the FY04 budget at our August 27-28 Commission meeting. Finally, since it is so closely tied to our revenues and our budget, I want to call your attention because it will happen before we get together in August, that all important annual date of August 15 in our switch over to the new license for the coming FY04 year and the ongoing saga with MCI WorldCom continues. I have spent quite a bit of time; Ann has spent an incredible amount of time as has Jack Branham in our Contracting group in negotiations with and working with these folks on our settlement agreement, our contract amendment that is needed, the assumption of that contract by MCI WorldCom if and when they come out of bankruptcy and we are talking to them about a contract extension. We are fixing to start, on August 15, the third year of that five year contract. So I need to know if that opportunity is available -- at what cost that it might be available and what are the conditions. Where we are right now is MCI WorldCom has offered us a two-year extension for exactly the same price that we are working with them now. I believe it’s an excellent opportunity and we are pursuing that. So, I just wanted you to know about that because it is so important to our revenues and to our budget as we go ahead. Thank you very much.

COMMISSIONER ANGELO: Thank you Bob. Before we get started I wanted to say that I personally appreciate the attitude that you and the whole staff have taken against this extremely difficult budget situation. It could have been entirely different and I think you need to be commended for the way you have approached it and the positive attitude that you have carried out through the whole process. I think it was extremely important to the department that it be the way it was and it didn’t have to be like that and I know that, so –

MR. COOK: Well we have a good outfit and it’s important that we approach these kinds of situations positively. I really do. I think this is an opportunity, quite frankly, for us to do some tuning and do some adjustments that we will benefit from in the long term.

COMMISSIONER ANGELO: My perspective is that I don’t think you could have done it better.

MR. COOK: I appreciate that. Thank you.

COMMISSIONER ANGELO: Drew and Mary, you are on.

MS FIELDS: All right. We have made one change to the agenda. We are going to start off with the Revenue Estimating Methodology. For the record, my name is Mary Fields, Chief Financial Officer. If you will refer to your booklet in the first tab for revenue estimating, since we are a primarily fee-funded agency, revenue estimates are particularly important to us and are used in preparing our Legislative Appropriations Request which is considered during the appropriations process. Because this methodology is critical, it has been recommended that we brief the Commission on an annual basis regarding our approach. We do not plan to deviate from the approach that was used last year. Estimates prepared last summer were the basis for the funding we requested for FY2004-2005, and of course we have prepared estimates regarding the fee increase during the session that will impact the FY04-05 budget. As we progress into the summer of 2004, we will use this approach that I am talking with you about today to prepare our request for FY06-07.

So let’s start out and talk about some of the key components. First we collect historical data from the last five years and we analyze that data by Comptroller object code, which is basically by type of revenue within each fund. Then we conduct a trend analysis by calculating historical average changes in each of the revenue types. Unusual occurrences are factored out and fee changes are taken into consideration. From this analysis we come up with the first cut at the revenue projection. We then take it to the division directors for input and determine if there are any future events that may occur that will invalidate our trends. If so, we want to quantify those events and adjust our revenue estimates. We then share our revenue estimate with the Comptroller’s revenue estimators that have been recommended and we discuss our rationale with them. Then we come back with final projections that we take back to the division directors and then we take it on to the executive director for final approval. What happens next is that those final revenue estimates, as I mentioned, end up in our Legislative Appropriations Request and we send it over to LBB and the Governor’s Office and they use it, along with the oversight agencies in recommending our future appropriations. The Comptroller’s Office publishes a biennial revenue estimate which usually comes out right before the session. These numbers are the official revenue projections and must be used to certify the State’s budget. It is my understanding that last session our revenue estimates were within one percent of the Comptroller’s revenue estimates. The accuracy of our estimates are important, because as I mentioned the legislature grants budget authority based on the Comptroller’s estimates. Our annual operating budgets are also driven by a combination of appropriation authority, cash balances and revenue estimates. Business decisions are largely impacted by how much money we have to spend on our programs. Finally, credibility with oversight agencies and legislature can be impacted if we over or under estimate our revenue.

Here is the timeline that we use for this exercise. For the preparation of our FY06-07 LAR, we will begin the development of these numbers in June 2004. We will plan to obtain approval in July. We will share those estimates in the July and August timeframe in our official LAR that we submit in August and then we will hold hearings with LBB and the Governor’s Office. Those usually begin in the fall. The Comptroller’s estimates come out in January and then the session begins. I’ll just close this by saying that I know it’s hard to imagine thinking about the next legislative cycle – it is for me anyway – we are still getting through the FY04-05 cycle. I think for us, this year, it’s important to note that the estimates that we did in the Summer of 2002 are what we are working with for FY04-05 and as Bob mentioned, we will be watching those revenues closely this year to make sure that we are coming up to the estimates that we have within our budget. Are there any questions regarding this methodology? It’s pretty much the same one as last year.

COMMISSIONER ANGELO: Ned.

COMMISSIONER HOLMES: Mary, do you do a monthly revenue estimate or do you break it into periods of time within the year?

MS. FIELDS: We do monitor our revenues monthly. We look at how much we have collected and we look at our trends to estimate whether we think we are going to be doing okay throughout the year. Typically, what you will see in the presentations that I have seen so far and what I have looked at is were 75 percent through the year and it looks like we have collected 75 percent of our revenue and we look at that every month.

COMMISSIONER HOLMES: You have peeks and valleys throughout the year.

MS. FIELDS: Yes.

COMMISSIONER HOLMES: And those are historical trends that you can measure and track. For instance, this year we are fairly close to a month-by-month comparison to years past and to the estimates that you made earlier.

MS. FIELDS: That’s correct.

MR. COOK: We are right on Commissioner. Particularly during September, October, November, Mary will typically bring in a spreadsheet of all of our license and permit sales on the last year column by that date, this year by that date, and we follow it through the year. At each Commission meeting, also, Mary will bring the Commission a full summarized update again comparing those main revenue sources to where we were at this point last year -- are we up a percent, down a percent in percentage and in dollars.

COMMISSIONER HOLMES: But the revenue increases projected from the fee increase, I suspect, within the first 90 to 120 days we are going to pretty much know where we are.

MR. COOK: By the first of December we will know a lot. Yes sir.

COMMISSIONER ANGELO: We are very fortunate that the fee increases are coming in what looks like one of the better years for hunting.

MR. COOK: Yep.

COMMISSIONER ANGELO: That’s going to help, should help.

MR. COOK: Then again, along this line I think it’s worthwhile noting that on the fee increase issue, there have been a number of us that have been around this a long time. We have received more support by far than opposition. It will be interesting to see how this one shakes out. Typically, we would see a fall out of about three, four, five percent decline in actual number of licenses sold, so it will be interesting. I think for a whole lot of reasons that people were with us on this one.

COMMISSIONER HOLMES: We projected a four percent decrease in the number of licenses.

MR. COOK: Our anticipated revenue, and Gene you might help me a little bit on this, incorporated that expected decline in numbers.

MR. MCCARTY: When we ran our revenue projections off of the proposed fee increases we included a four percent reduction in sales over the year.

MR. COOK: Okay.

COMMISSIONER ANGELO: Any other questions or comments?

MS. FIELDS: I’ll hand it over to Drew.

COMMISSIONER ANGELO: Okay.

MR. THIGPEN: Good morning. Fore the record, my name is Drew Thigpen. I am the Deputy Executive Director for Administration and Mary and I are going to tag team the presentation of the budget information. As Bob mentioned earlier, this is a draft overview of our proposed fiscal year 2004 budget. At this point in time it is not finalized. We are going to continue to work behind the scenes. We are going through, for example, federal funds and looking at every grant that we have included in here. What we want to include this year are those that it appears that we are certain to receive. If it is questionable, then we would like to hold that off until we actually receive those funds and come back during the year and come back to you and say that we increased our operating budget by “x” amount for this particular grant, just so we keep you informed as we go along as to what the budget changes are. We also think it is very important for our staff to go through a very detailed, quality assurance process. We have been under a very tight timeframe up to this point and so the probability of errors is in there and we want to make sure that all of our funds, to use Mary’s word, “tick and tie”. Which means that we know that we have allocated the correct amount of our fund balances as far as our appropriations are concerned to each of the areas. It is likely that you will see some changes as a result of this process as we come back to you for adoption of the budget at the August work session. Mary has been with us now for four months and she has really gone through a trial by fire. She came on April Fool’s day and we are very pleased to have her. We also have Danny Mask and Reggie Pegues with us today who have done a great deal of the work. Danny has done the bulk of the work on this particular operating budget so we really appreciate having him here. They are here not for if you stump us, but for when you stump us with questions. A copy of the slide presentation is included in your booklet behind the second tab if you would like to follow and make notes or anything. With that, the agenda for today – we would like to start by talking just a little bit about how we finance our 2004 operating budget and then we will touch on the budget process just a little bit to give you a since of how we go about developing these budgets. Mary is then going to present the 2004 budget summary by strategy. I think it is important for us to begin thinking about our budget, not only the way the legislature thinks about it which is from a strategy perspective. During the session they really don’t talk about the divisions at all. They talk about strategies and funding strategies. Then we will move back into how we think about our operating budget; which is the divisional presentations. That is pretty much what everyone recognizes. Then we will describe some of the impacts that we have gone through so far as we look at each of the divisions and how they are impacted. We will talk some about providing position recap so that you can see exactly what the impact is on the agency as a whole and by the field vs. Austin. We are going to cover a few of the rider restrictions. The legislature always provides us a little direction to go along with the dollars that they give us. Then we will close out with just a discussion of a few of the budget issues that you probably need to be aware of.

I would like to start with just a recap of the 2004 Method of Finance within the GAA which is the General Appropriations Act. We use the acronym just for brevity here. The largest source of funding for the agency is Account 9, which is of course, our hunting, fishing, license, and boat revenues. The next largest, surprisingly, is General Revenue at 21 percent. That includes $16.5 million of the Sporting Goods Sales Tax that goes into Fund 64. It is truly General Revenue, but it moves into Fund 64. The third largest source is Federal Funds. We get about 18 percent of our funds from the Feds. Bonds represent 17 percent of our 2004 operating budget. Account 64 makes up seven percent, and you can see the other percentages there as well. This session, the legislature departed from something that they have been doing from the last couple of sessions which is trying to get the agency to spend down balances. There was a perception at one point that the agency’s fund balances were a little too high, so the agency over the last couple of years has been spending into those balances. All of a sudden during the session we got a little bit of a rude awakening when the House Appropriations Sub Committee they arbitrarily cut – by the way we need to cut $11 million out of your budget. After everything that they had looked at that they had wanted to cut in order to balance back to the Comptroller’s revenue estimate. It took us back just a little bit because there was no science behind that. It was just simply a numbers cut to make the numbers balance. Now, on the other hand that was a real good thing. We think that this serves the agency well in the long term because the last thing we want to be in is a cash crunch where we don’t have enough cash in our funds to fund our operation. Here are a few highlights of the 2004 appropriations for the department.

CHAIRMAN ARMSTRONG: Are we on the right page on the screen?

MR. THIGPEN: Yes ma’am. There are actually two pages of this is the reason it was confusing. It was a tough session going in and all of the agencies were being scrutinized very carefully, we were no exception. There was a $10 million deficit and the mood in the legislature was we were going to balance the State budget without any tax increases and the legislature was successful in that strategy.

The Prop 8 bonds, we were scheduled to have three issuances of it I guess. The first issuance we received in 2002-2003, about $34 million roughly. The second issue that we went forward with, the plan was for us to receive another $34 million or so for 2004-2005 and then another similar amount in the following biennium. Unfortunately, the legislature right off the bat said we can’t afford to do this and we would like you to use Prop 8 bonds that you have and finish out the projects in the current biennium. So this $34 million is a biennial reduction.

In the Local Park Grant program, as many of you are already aware, that was one of the places where the agency gets General Revenue. Most of the other General Revenue that we get is related to the operation of the state parks or used as an allocation to Fund 64 for the support divisions. So, this was one of the few places where the legislatures could grab a good portion of General Revenue funds and they did in fact cut $7.7 million. We do hope this is only a two-year cut. It was a 49 percent cut of the General Revenue and about 38 percent of the total budget for that program. They also cut $1.1 million in GR for our Minor Repair program. They asked us to try to not cut the service, but to figure out another way of funding it. In the Outreach and Public Awareness strategy they cut about $1.4 million and cut another $900,000 in Information Resources technology. Again, these were cuts that were made because they were generally looking for funds to help balance the budget.

When you look at it by method of finance, we took about an $11 million reduction in General Revenue. We took -- actually we ended up after Rider 18 allowing us to appropriate the fee increase, about a $200,000 increase in our General Revenue Dedicated funding. We had about a $2 million reduction in federal funds related to acquisition of properties and then the remaining $16 million or so was in bond funds. On the plus side, the legislature not only helped us out, but they allowed us to help ourselves out. They gave us the Fee Increase Rider, Rider #18, which allows us to restore $15.8 million of reductions that we would have had to taken. So your action in May to adopt those higher fees was very important to this agency. They also directed that $600,000 of those fee increases be used for the Golden Algae – try to do some research and get a handle on that.

MR. COOK: Drew, excuse me for interrupting. Note that that $600,000 is this year’s.

MR. THIGPEN: That’s correct.

MR. COOK: They directed a total of $1.2 million over the biennium towards Golden Algae.

MR THIGPEN: That’s correct. They also directed $250,000 each year to the aquatic vegetation control, which we believe is a good thing. They also passed some legislation relating to the licensing and regulation of the marine dealers and distributors and then provided $299,000 to implement that legislation. I believe you will be seeing some rules related to that in the August meeting.

I would like to briefly describe to you the 2004 operating budget process. What we did this time that was a little bit of a departure from prior years was that we are actually using the Legislative Appropriations for each division as a starting point of our allocations. In prior years I believe it was using a percentage of the division’s prior year operating budget as a starting point. By moving in this direction, what it allows us to do is more closely reflect what the legislature intended. If the legislature increases a program then the funding ought to flow to the program. If they decrease a program then the funding ought to come out of that program as opposed to being generally absorbed. Everybody, with the exception of State Parks, took some reductions this biennium. The four divisions that had the largest impact from a Reduction-In-Force perspective were Communications that had eight RIFs then Infrastructure, Administrative Resources and Wildlife each had five RIFs. When we did our allocations to the divisions we only allocated 85 percent of the available fee increase. The other 15 percent is reserved and you will see it in our Departmentwide budget. As Bob said, we really want to be conservative about this and make sure that we collect those revenues before we start spending them.

The process starts out with the divisions. Each of the divisions were asked to review and prioritize their programs from the ground up; really take a hard look at what they’re doing and what they ought to be doing. Then we require them to submit 90 percent, 95 percent and 100 percent funding requests and describe at each incremental level what could be funded if they received that level of funding. They can also submit requests for supplemental items above 100 percent funding, because 100 percent funding represents the amount that the legislature actually funded for them, but it does not necessarily recommend their current level of funding. As a matter of fact, a 100 percent for almost every division was below their current funding levels. We also then go through a very structured process where we require the division directors to come in and sit down in front of Bob, the deputy directors, Gene and the budget staff and present what exactly i’s included in their request -- describe it for us, tell us what could be accomplished, what couldn’t be accomplished, what the impact would be if they got funded at various levels. It’s a very good process for us to understand a little bit better what is included in their budgets. The next step of the process is, of course, for Bob and the budget staff and the executive staff to sit down and talk about core responsibilities for the agency as a whole. What you see is the supplementals that got funded pretty much represent funding for core responsibilities. The rest of our presentation is going to focus on the operating budget. What this slide really shows is a crosswalk from the General Appropriations Act to the operating budget amount which you can see at the bottom of the page is significantly higher. The General Appropriation Act, if you look at the bill its self, and we have a copy of the appropriation bill included behind the last tab in your booklet, has $253.9 million that is appropriated to the agency in the line items in the strategies. As we go through this process, what we look at are additional adjustments that need to be made. For example, the divisions identified that they can collect $1.2 million more than the legislature estimated from appropriated receipts. Not only do they collect the cash, but there is other appropriation authority that if we collect it, it is appropriated to us and we can spend it. The $21.5 million in Federal Funds also represents cash and appropriations. This, as I mentioned at the start of my presentation, is a number that we are going to scrutinize in great detail. I will just be shocked when we come back to you in August if this number hasn’t been reduced by $10 million. I’m not sure of the amount. Then we will come back through the year as some of those grants are received and recommend budget adjustments at that point.

Benefit Replacement Pay is an appropriation that is made to the Comptroller and once we identify how much Benefit Replacement Pay we need then they transfer those funds to us along with the appropriation authority. And finally, benefits of $29.4 million are not included in our normal operating budget, but what they do represent is our fair share of the benefits that relate to each of our dedicated funds and dedicated accounts, as well as federal funding. So, we go from $253.9 million to $307.5 million. Our intent is to bring everything forward to you and present it to you. Put it on the table and track it in one place so we aren’t worrying what is off the books that we are trying to keep track of. We want it all, as much as possible, to be in front of you so that everyone is at the same place.

At this point I will turn it over to …..

COMMISSIONER MONTGOMERY: Let me ask you a question so that I can make sure I understand something.

MR. THIGPEN: Yes.

COMMISSIONER MONTGOMERY: I agree with the conservative methodology of not budgeting advance fee increase receipts or other revenues that may have a lower than 100 percent of probability of occurring. The Entrepreneurial Rider allows us to spend the money when we get it though, does that hinder ourselves the way we are budgeting?

MR. THIGPEN: In prior years we did have that Entrepreneurial Rider that allowed us to – if we collect it we could spend it. That rider does not appear in our budget any longer.

COMMISSIONER MONTGOMERY: I thought it got back in there.

MR. COOK: Let me make sure that I and you understand the meaning of that. We anticipate additional revenue as a result of the fee increase another $2.5 million that were, as I said, going to hold in reserve and we have already started talking to folks about key programs or what we might do with that. Let’s just say that revenue is $3.5 million, that we exceed our projection and we don’t miss that four percent in sales. We do not have the appropriation authority to spend that additional million.

COMMISSIONER MONTGOMERY: The way we budget no way limits our ability; we are capped by appropriations.

MR. COOK: We are capped. You know, there are even cases where depending upon the sources of money, funding available that we may not be able to use. One of the interesting points, for instance, for the federal funds, often times, not always, but often times those are grants of some kind and they bring their appropriation with them in most cases – it kind of depends. But most of the time those federal grants bring their appropriations. Often times they also require a match of some kind of our money, or somebody’s money. So, as we go through the next 30 days, next 60 days and the feds are doing their things and getting their budgets all lined up we will know more. This reserve that we have may be very wise to hold some of that to do match granting with federal money because we strongly encourage, and with your support have done so and I hope to continue to encourage our folks to go out and get these grants. It is good money. Its money that often times we only have to spend $1 to do $5 worth of conservation work. Of course that’s the case with many of our programs. Many of our programs are supplemented with federal money. So, our money only goes so far and it is important that we look at every one of them, and again our goal is to do as much conservation as we can with whosever’s dollars we can come up with. But, a number of the division, Dr. McKinney, the Wildlife Division, Inland Fisheries, all the guys, Coastal, they really do a good job of going out and hustling grant money from all different directions and with your support we are going to continue to do that. Yes sir.

COMMISSIONER RAMOS: In line with that, does our current budget include any matching funds that would be used for matching purposes?

MR. COOK: Yes. Yes. Well I mean the budget as built includes match and federal money, yes it’s in this number.

COMMISSIONER HOLMES: Well, we’re not strapped if in fact we need some matching funds. Right? There are some funds available.

MR. COOK: At this point we have the match. We have some programs that we will not be able to fund. I can tell you right now. We have been doing some things with match money and additional money that we aren’t going to be able to do. Again, it’s not been an easy process.

COMMISSIONER HOLMES: May I ask one additional question? Drew, you said on the benefits of $29.4 million that that represents our fair share of benefits. Could you expand on that a little bit more?

MR. THIGPEN: Okay. The Employees Retirement System of Texas typically receives appropriations for employees who are funded by General Revenue funds, so depending on the source of funding for that employee’s salary. If it is the States General Revenue fund then the state directly appropriates the benefit funding to ERS to cover those benefit costs. However, if an employee is a Fund 9 employee, then the state does not appropriate those funds to ERS. What they do is they require those funds to come from Fund 9 to cover the costs and it is intended to be proportionate by source of funding.

COMMISSIONER HOLMES: Is it proportionate or is it all employees other than Fund 9:

MR. THIGPEN: It’s actually proportionate. There are some legal restrictions that require salaries and benefits to be proportionate by fund so that we can…

COMMISSIONER HOLMES: So it doesn’t necessarily tie to the benefits paid by other than Fund 9 employees.

MR. THIGPEN: I’m not sure I am following that question. I’m sorry.

COMMISSIONER HOLMES: I’m not sure I am following you either. That’s why I keep asking this.

(laughter)

MR. THIGPEN: Let me see if I can make it any clearer. Basically, state employees, in addition to their salaries, the agencies receive funding and pay salaries directly regardless of where that money comes from for the salaries. However, when it comes to the benefits, agencies don’t pay those benefits so the insurance, social security match, the retirement match, those are paid by the state’s Employee Retirement System. Depending on the source of how that employee is paid, if Mary’s paid out of Fund 9 and I am paid out of the General Revenue fund, ERS and say Mary’s benefits cost $1,000 and mine are $1,000, Employees Retirement System will get a direct appropriation of $1,000 for my benefits. They receive nothing for Mary’s benefits, so we have to pay the cost of Mary’s benefits. We transfer those funds over to the Employees Retirement System to cover those costs. And that’s….

COMMISSIONER HOLMES: And my question was -- is it a direct calculation by employee?

MR. THIGPEN: Yes it is. Sorry, and I am sorry I went that long around about way to answer a very simple question.

MR. COOK: Actually, Commissioner, because it’s one of those things like if you’re a self-funded agency, it is one of those interesting things that we get into at the legislature. If you’re General Revenue you walk in, layout your budget and walk in and they fund it at whatever level. If you are a revenue agency like we are there are a lot of assumptions made that are oh well we don’t have to provide that funding for them. It sometimes happens in pay raises. The last time the legislature granted state employees a, whatever it was, a 2.3 percent pay raise; they did not fund any of the pay raises at Parks and Wildlife basically. There were a few, one or two something numbers. But that funding basically came out of our hide. We did not receive additional appropriation or funding to do it.

COMMISSIONER HOLMES: So it came out of the Fund 9 revenues primarily?

MR. COOK: And Fund 64 and were ever – in State Parks.

COMMISSIONER ANGELO: No General Revenue for us.

MR. COOK: No additional revenue of any variety was provided for it. So, it’s one of those things that is difficult and the reason I am pointing that one out is because we have friends and supporters down there who would have no way, that particular piece of legislation, done that had they realized that it was going to hurt us. But the impact of it was significant and they would have provided funding to cover it which they do some times, but it slipped by them that time. It happened one of those timeframes where we couldn’t get in there and go…

COMMISSIONER HOLMES: That wasn’t in this session; it was in a prior session?

MR. COOK: That is correct.

COMMISSIONER ANGELO: Any other questions at this point?

MR. THIGPEN: Well if not then we’ll turn it over to Mary to let her walk you through the 2004 budget summary by strategy.

MS. FIELDS: Thank you Drew. This slide summarizes our FY2004 operating budget by strategy and as we’ve mentioned when we communicate our budget with oversight and leadership offices this is the format we will typically use. Most of the budgeted strategy amounts are relatively close to the amounts that are appropriated to us in the Act. The largest variance that I will mention is a $26 million increase in the Manage Fish and Wildlife strategy. The majority of that increase results from the additional federal funds that the agency anticipates receiving, but again as Bob mentioned we will be looking at those federal funds and we only want to put in the budget right now those federal funds that we are sure that we will receive so that number may go down some.

The method of finance for the operating budget has been updated to reflect the $53.6 million that we added to the budget. As reflected in the crosswalk that Drew discussed with you guys earlier we added federal funds, appropriated receipts and funds for benefits and benefits replacement pay so this just recaps our method of finance for the budget with those additions.

I’d like to move on now to just summarizing our budget by division. The next couple of slides detail the amounts allocated to each division. The budgets by the division will not easily compare to FY2003 budgeted amounts because we started our process with the Appropriations Act instead of with the prior year budget and we followed legislative intent. I think both Bob and Drew have mentioned that and I just want you to know that they are not going to line up and compare real easily. This segment that follows this on budget impacts is really designed to help explain the changes from the FY2003 budgets and the impacts so that you can better understand what is happening. Also, at this point I would like to mention that we have included one page summaries by strategy and by division in the front pocket of your binder and it is just an easier way to view the information than on these slides. So let me just start off here with the first one here on the divisional budgets. This is about half of our divisions showing up on this first slide. Most of the divisions started out with roughly 95 percent of what their base budget was last year. Some started out with much less. As Drew mentioned, Communications started out with about 76 percent of their base budget from last year. The budgets you are seeing here represent the end result after some supplemental requests were approved and federal funds were added in. I do want to highlight the Departmentwide which is about halfway down the slide there, that amount has tripled since last year and I want to explain that. We basically, we have that reserve – the 15 percent of the fee increase – is being held in Departmentwide right now in reserve. We also have a reserve for management costs which relate to Article 9, impacts that I will talk a little bit more about later. Funding for our revenue debt bond service of $5.7 million is in that number on top of the $6 million or so that we typically hold for Departmentwide. Items in Departmentwide really are things like our payment to the State Office of Risk Management, our Statewide Cost Allocation Plan that we have to pay indirect costs to the state for, claims and settlements, interest penalties, those sorts of items are in Departmentwide. Moving on here the rest of the divisions appears on this slide. State Parks Division has the most funding in our Department and that is followed by Wildlife and then Law Enforcement. On this slide you will notice that capital projects are showing up as a separate funding item. The Infrastructure Division handles how these capital funds will be spent and we’ll determine what projects will be done and those funds will eventually be put back up into the divisions. I believe that’s how that works and Steve will talk more about that in the August meeting -- about that funding.

COMMISSIONER MONTGOMERY: On capital projects do we have authority fisheries for the extra money we collect on the stamps.

MS. FIELDS: Yes.

MR. THIGPEN: For next year.

MS. FIELDS: For next year.

COMMISSIONER MONTGOMERY: So we could start doing something.

MS. FIELDS: And I will talk a little bit more about that as well.

COMMISSIONER HOLMES: Mary, before you get away, you have Infrastructure at $5.5 million, but then you also have capital projects with another $47. What is the distinction between those two numbers?

MS. FIELDS: The dollar amount that you are seeing, the $5.5 for Infrastructure really relates to their operating of their division. So they have staff that does project management, vehicle maintenance, and all kinds of different functions and Steve could probably elaborate, but that really represents their operating for their division.

MR. COOK: Especially their employees’ salaries, their vehicles, their equipment and supplies.

COMMISSIONER HOLMES: And the other, the $47 is the actual projects?

MS. FIELDS: It’s the projects, yes.

MR. COOK: The other is the bond funding money from the previous bond and Prop 8 that we have available or scheduled.

COMMISSIONER RISING: I have one other question here.

MR. COOK: Why certainly.

COMMISSIONER RISING: Not to digress here, but under the managing Fish and Wildlife Strategy appropriation of $59 million. Six of that was from federal.

MS. FIELDS: The majority of it was for federal funding and those are additional funds that the division anticipates receiving. And there are several of them. What we are doing right know are analyzing each and every one of those to make sure that we feel that we will actually receive those funds.

COMMISSIONER RISING: So that $10 million we are a little iffy about getting?

MS. FIELDS: Right.

MR. COOK: That ties back to -- correct me if I’m wrong Mary, that ties back to the $21.

MS. FIELDS: Yes.

MR. COOK: That we are scrutinizing and looking at closely – federal funding.

MS. FIELDS: Right. That’s the bulk of the $26 million.

COMMISSIONER RAMOS: How does the State Park funding compare this year to last fiscal year, the 72?

MS. FIELDS: Actually, State Parks, when you take out the local parks component that was reduced, State Parks actually ended up with an increase in their funding. I think they were running about 105 percent of what they were funded last year for operating and when you see the impacts you will see that because of that additional funding they are actually able to bring on some more FTEs this year.

COMMISSIONER RAMOS: And with the capital projects there at the bottom the $47 million, would that relate primarily to parks or not necessarily?

MS. FIELDS: Most of that does relate to parks, yes sir.

COMMISSIONER RAMOS: And how does that compare to this current year? The $47, if you can --

MS. FIELDS: We had about $49 million in 2003 for projects, but what this is is actually bond money that unexpended balances that are pulling forward. We’ll be spending those in FY04 and 05. We didn’t get any new bond money.

COMMISSIONER RAMOS: So I guess from an overall perspective State Parks is really better off next year. Correct?

MR. COOK: Yes, it is. Absolutely. And we heard it in the legislature. I think it is worthwhile to note that as we went through some of those nightmare midnight meetings and sessions we consistently were told – they would say to us – now guys we do not want to cut state park operations. They would say that, but at the same time they didn’t necessarily say and here’s money to do it with. But, clearly they gave us every indication that they wanted us to do everything we could within reason, within the budget available, to try to build back and we have done that.

COMMISSIONER RAMOS: One other question in regards to education and outreach. Did that come directly out of Communications?

MS. FIELDS: The bulk of it did come out of Communications.

COMMISSIONER RAMOS: And Communications, I think you had mentioned, had dropped by 25 percent, more or less.

MS. FIELDS: It did, but when you compare the budgets the outreach program moved into Communications, it wasn’t in Communications in 03. It’s in there now. So if you try to do a one-on-one comparison between the years you have to take into account that outreach was transferred into the division, but then there were reductions that took place for outreach.

COMMISSIONER RAMOS: I’m just trying to figure out from a big picture standpoint did education and outreach – will it be stronger next year or weaker?

MS. FIELDS: It’s weaker.

MR. THIGPEN: Much weaker.

MR. BORUFF: We were instructed to make it weaker by the legislature.

MR. COOK: There is an interest – the message was clear and it came primarily from the senate. And some of it, I will be honest with you. Some of it was, in my opinion, and we struggled and we met and we went back and we visited and the bottom-line message was guys we know this is important, we know you’re within your authority because within that statute book that I refer to there is authority for us to do outreach and education but the feeling from the senate was that wasn’t one of the core things. It was nice to do, good to do; but we feel pretty strongly about it. It was pretty clear.

COMMISSIONER ANGELO: One of the big problems that we have talked about every time outreach has come up is quantifying the results of what you are doing.

MR. COOK: It’s so hard.

COMMISSIONER ANGELO: They can’t see the results in a significant – something you can put your hands around – so that’s an easy area to say you aren’t really accomplishing a lot.

MR. COOK: It was like outreach and education. That’s what our schools do. It was that kind of….

MR. THIGPEN: Well, but I would like to point out that hunter and boater education was not adversely impacted. So those were fully funded and continue along.

MR. COOK: Those are parts of that program that are required.

COMMISSIONER ANGELO: And you can readily see though what is happening with those. That is why when we talk about outreach, and I think that this has been brought up every time it has come up in meetings, we need to find ways to quantify the results that we are obtaining so that we can defend expenditures and protect those parts of the budget the next time around, but it’s hard to do.

MR. COOK: And I think also it’s incumbent upon us which we are actively involved in, I’m going to brag on Dr. Karl Cloninger, we put together a deal with Coca Cola this year out here at Prairie Haynes that’s going to be a wonderful, wonderful asset for us and for conservation education, conservation outreach, with youth especially. So, you know where Coca Cola is going to put $1 million a year into that program. It doesn’t have to go through us. They are going to operate through the summer – I forget Doc the comparison number of kids that we have been able to handle. It was at least double if not more. So, we are looking for ways to do it and I’ve got a letter on my desk right now from Dr. Brown at Texas A&M. We have had a cooperative program with them that we have been putting some money into, about $150,000 per year, in contract to them to do outreach for us – do hunter ed, do some of those types of things, some of the quail outreach programs, bobwhite brigade and that type of stuff. Right now that is cut from our budget and I’m struggling, looking, scratching, and trying to find ways to fund that if I can because I know it’s a good program.

CHAIRMAN ARMSTRONG: Because I stepped out, I don’t know if you covered this, but I think it is an important thing to mention here that we have been struggling with the outreach education issues that are being brought up here about how to quantify results and all that sort of thing and we have an outreach and education advisory board. Scott Boruff and the Communications Division have been trying to get a grip on exactly what we are doing and what the results are. We are still not there, but we are getting there. The outreach and education advisory board is working in tandem with us to try to figure out those areas that are the most effective so that when we do go to the next legislature we’ve got some hard stuff to show them. In fairness to the legislature, we haven’t been able to do that very well in the past and so hopefully, by the time the next session rolls around we’ll know what works and we’ll know where to focus our resources so we can do a better job.

COMMISSIONER RAMOS: And I think in the interim we ought to focus on private enterprising and (inaudible)

CHAIRMAN ARMSTRONG: Exactly.

MR. COOK: You betcha.

CHAIRMAN ARMSTRONG: There is a lot of focus being brought to bear on this issue and how to get the most out of our resources and I hope that you know that the Commission continues to take a very close interest in this issue so that the role we have to play in outreach and education, which is critical, is also being done most effectively.

MS. FIELDS: I’ll go ahead and move onto the budget impacts. We are going to go in alphabetical order here so we will start with the Administrative Resources Division. We ended up eliminating eight positions in that division by streamlining some business processes. Operating expenses were reduced by 17 percent. On the positive side one analyst position was added to improve our financial analysis and reporting. In the Coastal Fisheries Division there were reductions in equipment, shrimp license buybacks, operating expenses, outreach monies and three positions were reclassified to a lower level. In the Communications Division, this touches a little bit on your question Commissioner Ramos, education and outreach was cut by $550,000 including the elimination of six FTEs. The impact will be on aquatic education and regional outreach efforts in cities other than Dallas and Houston. The Texas Cooperative Extension hunting and angling partnership with Texas A&M has been cut. The Texas Conservation Passport program is being phased out. The print design services have been reduced and the quick copy services at the headquarters building have been consolidated.

CHAIRMAN ARMSTRONG: Could I go back to the Administrative Resources Division. Drew can you explain the importance to everyone, maybe they don’t need it explained, but of the analyst position and the financial analysis and reporting area that I think you have been particularly been focused on since you have been here over the last year or so.

MR. THIGPEN: Absolutely. I am very pleased to do that. We had to make some very tough choices and Mary actually is the one who sat down and had to do all the hard work on that, but from a business perspective, one of the things that I have found most troubling at this agency since I have been here is the inability to get routine financial reports and other types of reports that can be shared with members of the Commission, that could be shared with legislators, with other oversight agencies. I think that it is one of the most critical things that we can do to establish and maintain credibility from an external perspective. People will see what our business is, where we stand with our finances. It adds some credibility and some assurances that the agency itself is doing what it needs to do and that we are on top of our business. So, I do believe that this position is very much needed and will add some ability to do some of those things that we currently don’t do.

CHAIRMAN ARMSTRONG: Thank you.

MS. FIELDS: Go back to the Executive Office. We eliminated 3.7 vacant FTEs and increased operating expenses by $15.8 thousand. The reduction in FTEs will reduce the ability to address special projects. The internship program in the Human Resources Division was reduced by approximately $160,000. Twelve positions were eliminated in the Infrastructure Division and six operating positions were converted to capital funded positions. The division was reorganized to accommodate the loss of positions and to provide a stronger project management organization and management to staff ratios were improved.

COMMISSIONER MONTGOMERY: The first one being?

COMMISSIONER ANGELO: The loss of Prop 8 bond money that didn’t affect.

MR. BORUFF: Not yet

MR. COOK: Not at..

COMMISSIONER ANGELO: Not subsequently, but if something doesn’t happen it will.

MR. COOK: It will have a huge impact.

COMMISSIONER ANGELO: Next time.

MR. COOK: In the next biennium if we do not get it.

COMMISSIONER ANGELO: Hopefully by that time things will be better.

COMMISSIONER MONTGOMERY: Does the first point mean that six positions are funded as a cost to the project?

MR. COOK: Yes.

COMMISSIONER MONTGOMERY: That’s the way that cost goes away.

MR. COOK: Yes.

MR. BORUFF: That’s not the only six by the way; it is six more just so you know there is already $1.5 million in staff down there that are funded through capital projects currently. This is just six in addition to that group.

MR. COOK: And it is important to point out that the discussion was had down at the pink building and the direction was pretty clear -- same suggestion toward that minor repair program. You know, were cutting this but you get in there in your bond money and put it in there. Typically, they would not do that. They were trying to figure out ways to save general revenue and with this bond money that was already approved they saw that opportunity. We prefer not to go that way – they prefer not to go that way – to be honest with you and to be fair to them. But, that is where we are.

MS. FIELDS: On Inland Fisheries, 5.5 FTEs were eliminated in the Inland Fisheries Division which will result in reduced levels of fisheries surveys and management as well as production and stocking.

The Law Enforcement Division established a goal of 510 game wardens to enhance state-wide coverage. Due to high rates of retirement the division will reinstate some separated game wardens during the peak hunting season. And finally, some of their operating expenditures were also reduced.

COMMISSIONER ANGELO: Separated, you mean retired?

MS. FIELDS: Yes.

COMMISSIONER ANGELO: Some of the retired game wardens?

MS. FIELDS: Yes.

MR. COOK: I would like to speak.

COMMISSIONER ANGELO: Separated sounds like they ran off.

MS. FIELDS: There are a lot of retirees in this area.

MR. COOK: I would like to speak to this one briefly, particularly to the first point there. The agency has been operating with 485 field wardens as sort of the golden number. To be honest with you with the academy requirement, those fellows have had a difficult time maintaining the 485. With the last three successive classes that we have had, that I have been very supportive of, we have got that number, I think, at the moment today I think we are actually at, and I’m sorry Jim’s not here because he has some regional meetings going on, I think we are actually at 505 or something like that.

MR. THIGPEN: I was thinking it was 498 – was the number.

MR. COOK: We are right at it, but with this retirement incentive we are thinking we’re liable to loose 40 or more.

COMMISSIONER ANGELO: We will be back to where we were.

MR. COOK: So we are going to be below – now we have already started the process of advertising for our next class, but I came into this role with the commitment to do within reason everything that we could do to increase that 485 to a number somewhere in that range of 510. I think that is a pretty good number. Now, I think we need to do that reasonably and responsibly, but it’s a worth while goal, it’s one we will strive towards and we will to the best of our ability assuming our revenue is as anticipated fill that class with 40 cadets and hopefully have those folks out on the ground next summer. Yes sir.

COMMISSIONER HOLMES: What is the cost to run a class?

MR. COOK: Well that’s a good question and I will tell you that typically – and that question has been asked a million times.

COMMISSIONER HOLMES: I’m sure it has.

MR. COOK: The cost to run a class is actually, the way that I look at it, is the basic salary of those cadets. That’s the main one. The instructors – supplies, materials and instructors basically are there. Those folks are on our staff. If they don’t have a class they have a lot of other things they are doing like training, in-service, and those types of things that they are continuing to work with our staff on. So, the real addition is the salaries, equipment, supplies involved with getting that 30, 40 or 35 cadets, whatever it is we settle on and I believe, and I saw Ed Kocian come in a while ago – Ed, I think the number that we would reasonably respond to that is that it is about a $2 million item.

MR. KOCIAN: That’s correct if you fund it for a twelve-month period.

MR. COOK: Yes. Yes.

MR. KOCIAN: What we are looking at is eight months for this process.

MR. COOK: Right.

COMMISSIONER HOLMES: What is the rationale behind the 40 number?

MR. COOK: The facilities restriction. That’s about all we can do. In fact that is double bunking everybody and if you look at the last 7, 8, 10 classes that they’ve had it might not average 30. That would be awful close I imagine.

CHAIRMAN ARMSTRONG: What was the size of the most recent graduation, 40?

MR. COOK: We started with 41 I believe and we graduated 40. Isn’t that correct Ed?

MR. KOCIAN: Correct.

MR. COOK: So we will do the max we can do.

COMMISSIONER HOLMES: Do you typically have a fall off between the number at the start and the number at the end.

MR. COOK: We sometimes loose 1 or 2 or 3. It is a good course.

COMMISSIONER HOLMES: Pretty rigorous.

COMMISSIONER ANGELO: Yes.

MR. COOK: Pretty strenuous, lots of physical requirements.

COMMISSIONER HOLMES: It sounds like their pretty well qualified coming in.

MR. COOK: They are real qualified coming in and better qualified coming out.

COMMISSIONER ANGELO: How difficult would it be to assimilate more than 40 at a time?

MR. COOK: In our current facilities, almost impossible.

COMMISSIONER ANGELO: I mean even if you could train more than that? How easy would it be to get them out into the field and get them actually assimilated?

MR. COOK: Excellent questions. We’ll we are looking at different ways to do that. My thought goes like this. Let’s go through that screening process and select those cadets today and lets put them in the field with a warden – in the vehicle with him. Although he or she cannot be commissioned as a peace officer, they can go with, accompany and work with that warden. By the time they actually get that 40 selected and go into a class, most of them will have some real live field gate opening experience or whatever it may be seeing how those experienced people work with people, hunter, fishermen, guests, whatever it may be. But training wise, instructor wise, we would have to increase our instructors, I believe. We would have to increase our facilities. Now having said that and I didn’t script this, but the Camp Coca Cola thing that we are working on at Prairie Haynes, right up the road here. Facility wise we are right in the middle of that and every building being built, every classroom, and every room for lodging, in fact to the swimming pool that they are going to build. Because the potential is for us to move our cadet classes there in a much better setting, in my opinion, than where we are now on 51st Street in town. The opportunity for a shooting range is of course right there, the pool is right there, just the outdoor experience that opportunity to be able to literally walk those young people outside and get into the outdoors in different types of situations and scenarios. We are hoping that it may evolve. Mr. Stinebaugh and his staff – we have been pretty close in that now for six months or seven months and Infrastructure Division is working very close with them. We have some issues to work out, and funding wise we don’t have a lot of extra money to work with, but it is an excellent opportunity. Frankly, I think if we get where we can go out and find a sponsor or donor or someone who might like to see their name on that facility and get the money needed to complete construction – some of the housing and staff facilities that are needed. Yes sir.

COMMISSIONER RAMOS: Is there such a thing as a game warden academy somewhere in the United States, for example, we have the FBI academy where if we had a large enough class we could farm out 15 or 20?

MR. COOK: Commissioner, I do not believe -- and again, it has been looked at and I’m sorry, if Randy Odom was here today he could absolutely, but I don’t believe there is a cadet class like that that’s available for Texas to put their people into. Part of that situation goes right back to that being a Texas certified peace officer, again I’m not the right person to speak – here is a person who can speak on that. Talk to us. Y’all know Stacy, I hope.

MS. BISHOP: I was a cadet coordinator for several years at the training academy. TCLEOSE, the commission that mandates licensing the peace officers in Texas requires that part of our curriculum which ends up being a huge bulk, almost three and a half months of training, has be to built into that. We are pretty creative in that we take what is mandated, for instance civil process; something that game wardens don’t do too much, we find creative ways and TCLEOSE indulges us to get that incorporated into the training, but it takes some creativity. Unfortunately, other states have not been in a position to address what TCLEOSE requires of us.

MR. COOK: I am going to tell it to you like this. It’s not dissimilar from our science staff. We have an incredibly elite staff. These folks, as they come out of this academy are – it is hard to compare, and I do not say that with not to my credit. I say that to you in all honesty. These men and women that come through this academy, our instructors in this academy, the people who select the candidates the screening that they go through, it would be very, very difficult to find and or duplicate anywhere.

MR. BORUFF: I would also mention Bob that we are looking at two classes next calendar year which will be the first time, this is of course budget allowing. It would span two fiscal years because we usually do this from January to the summer since it is usually a six month class. The current advertisement that is going out is really looking for two classes. One that would go from January to the summer and another that would start in September and go to January. So there is an effort to kind of double up next year and get two classes into one calendar year.

MR. COOK: I support that, but I tell you it will be difficult.

CHAIRMAN ARMSTRONG: This may seem a little bit trivial, but I think it’s worth mentioning that having been on this Commission four years and tried hard to focus on outreach and education issues and the like, that our game wardens are probably our most effective outreach and education tool. So although they are fundamentally a Law Enforcement Division, they are largely the face of Parks and Wildlife to the public and are among our most effective educators as well.

COMMISSIONER RISING: Bob you mentioned that as kind of a premise type program implementing that with the next class, that’s a new thing we haven’t done at all?

MR. COOK: We haven’t done that and there are some reasons not to do it, but I think I would like to give it a try, so I am working on that one. I’m going to have to put a knot on Stinebaugh’s head another words.

(laughter)

MR. COOK: No, it’s a great group, but I think it’s worth looking at, I really do. Put some of those kids in the Gulf, put some on these lakes, put them out there in some different experiences where you know -- as some of us experienced – not everyone is lucky enough to get in the profession that they are made for, that they like. A lot of times, not a lot of times, sometimes we loose a warden just like we loose biologist. Within a few months after we put them out in the field and they realize, whether it’s a park employee, biologist or warden that this is not what I thought it would be. And again, from my perspective, that’s why I really believe in doing everything we can intern wise, that those folks have some knowledge and some experience on the ground with us doing what we do and dealing with the high expectations that we have of our folks across the board.

COMMISSIONER MONTGOMERY: Good.

COMMISSIONER HOLMES: Bob, did I understand you to say that you were looking at taking Camp Coca Cola; I think you called it, and maybe use that as a training ground?

MR. COOK: That’s correct.

COMMISSIONER HOLMES: And would that be consistent with the use restrictions and requirements that Coca Cola would put on there?

MR. COOK: We put it in the agreement. We wrote it into the agreement.

(inaudible)

MR. BORUFF: Camp Coca Cola typically uses those facilities, commissioners, during the summer, so the rest of the year that facility will essentially be sitting there empty.

COMMISSIONER HOLMES: You could do the January to June.

MR. COOK: There will be at least eight months that it will be available to us for our outreach and education purposes and training and we set it up with that thought in mind. Again, I want to thank Doc and Dr. Cloninger for bringing that deal to us. He’s a good guy.

COMMISSIONER ANGELO: Okay.

MS. FIELDS: We will move on. A new Legal Division has been created as Bob mentioned, by transferring attorneys from other divisions and setting up some operating expenses for the division. In Resource Protection, technical assistance to incorporate water issues into wildlife management plans was reduced. Regional water planning will only occur in the highest priority regions. Fish kill and pollution investigations will be eliminated in west Texas and the panhandle, except for Golden Algae, and wetland conservation restoration and mitigation activities will be reduced by 30 percent. In State Parks, 66 of the average of 90 FTEs that have been held vacant for the last three years will be filled.

MR. COOK: That is a real good thing.

MS. FIELDS: Yes, but only $200,000 is budgeted to replace mowers, tractors and vehicles.

MR. COOK: To be honest with you though, I see Walt smiling. That is probably more than he has had in recent years.

MS. FIELDS: And the minor repair budget was reduced by 50 percent or $1.5 million which basically means 125 park projects will not be done and we will have higher capital project costs in the future because of deferring the routine maintenance.

MR. COOK: Here folks is a good example of the unfortunate situation of having the bulk of the General Revenue that the agency gets goes into this wonderful division. Therefore, when it comes time downtown there that they don’t have enough to go around and have to make real dollar cuts – and I’m going to talk about that in a few minutes – I’m going to show you what’s not a real dollar cut, but when they cut GR, bottom-line it’s cutting state parks, and or local park grant program, and or repair program, because that is real GR. Okay.

MS. FIELDS: Wildlife’s minor maintenance and repair budget was also reduced by 50 percent. Outreach was reduced by 25 percent and 8 positions in Austin were eliminated.

MR. COOK: I want to call your attention to that minor and maintenance repair program in Wildlife. It’s a big issue folks. Those Wildlife Management Areas, you know just like our fish hatcheries, the funding for repairs and maintenance for those facilities, whether it’s a Wildlife Management Area – we have 52, or fish hatchery facilities – funding for those types of things were reduced.

COMMISSIONER ANGELO: That funding is funding that we use to not have. We have only had it for how long?

MR. COOK: No.

COMMISSIONER ANGELO: That’s always been there?

MR. COOK: That’s Fund 9 revenue, that’s federal aide mixed in, but when you hit that appropriations cap you have to take some cuts. We’ll be okay.

MS. FIELDS: Throughout the budget impacts we noted that positions were reduced. We would like to recap how our positions were impacted by the 2004 budget process. I will start off with positions eliminated in 2004 and walk you through that. A total of 78.7 vacant positions were eliminated with 62 percent of them being in the field and 38 percent of them from headquarters. A total of 24 filled positions were eliminated with 92 percent of them from headquarters and 8 percent from the field. Pulling these numbers together we reflect a total of 102.7 positions eliminated with 51 percent of them from headquarters and 49 percent from the field.

COMMISSIONER MONTGOMERY: That was a tough decision, but I appreciate the emphasis on field work as opposed to…

MR. COOK: Absolutely, and that will continue.

MS. FIELDS: This leaves us with the funded positions in FY2003 of 3,057.4 – 22 percent of them in Austin and 78 percent in the field. You will note that our FTE cap is at 3,037.5, but we will not exceed this cap because the funded positions represent positions to be funded throughout the year. They will not all be filled at any given time.

MR. COOK: We have, and especially for Mr. Holmes, I think I want to make sure that he understands this. The positions funded, 3,057 is like 20 above our cap, but the fact of the matter is that on any day, at the end of any month, at the end of any quarter when we report these numbers we could easily have 200 to 250 vacancies. Today, Drew, I think we are sitting on about 230 or 240 vacancies today. Just in the normal a person quits, moves on, retires, whatever happens to our employees that leave, it typically takes a minimum of two months, six to eight weeks, to advertise, interview and refill those positions. So average, we would not exceed that cap.

MS. FIELDS: Here is just a recap of the funded positions by division. You see that over a third of our positions are in state parks and law enforcement has picked up some positions to meet their established goal of having their 510 game wardens. This is just an overall recap of those 3,057.

MR. COOK: Let me give you a little bit of a feel there and Walt can help me here a lot, but I can probably get pretty close. I’ll give you an idea, in state parks I will say to you that to really have our state parks staffed just for the real, basic needs of the people who come to those parks, keeping those facilities in shape, doing a little interpretation and storytelling that we try to do at those parks about whatever the cultural story or historical story or conservation story. We could really use 1,250 to 1,300 folks in state parks full-time – FTEs. The number you are looking at looks like a big number, but when you consider that you have 120 parks, some of them with visitations in the range that you see like Garner and San Jacinto and some of those beehive places and you think seven days a week, 365 days a year -- Christmas Day, Thanksgiving Day, Saturday and Sunday, we would not be flush if we had 1,300 employees in state parks. It would be wonderful, so we’ve got some things to do. I also would like to take just a moment to point out in Law Enforcement, although as I said we have had 485, kind of shooting for around that number of 500 officers in the field, there are also a considerable staff in law enforcement in our district and regional offices that handle a lot of our sales of licenses or boat registration and those kinds of things that are very important. Our other divisions are pretty close to where they’ve been, a little bit of a reduction as you heard today, but again, we would glad to answer any particular questions you got there. I wanted to point that out because it looks like a huge number. The fact of it is when you think of that 40 hour week, and 7 days a week, 365 days a year we are on edge.

MS. FIELDS: The next agenda item to discuss is rider restrictions. Start off with the Capital Budget Restriction, Rider 1. Comparing our capital budget to last year’s budget I would like to note here that vehicles and information technology decreased by 60 percent. We had over $4.2 million last year to spend on vehicles vs. the $1.7 that you see here. Equipment is also down by 11 percent. Construction and major repairs is about the same as last year with a one percent variance. The good news is that land acquisition went up by 181 percent. This is primarily because of the federal funding that was budgeted there for land acquisition.

MR. COOK: Mary, go back please. I want to talk about that vehicle thing a little bit. I’ll tell you, it’s going to weaken. We can buy, instead of trading vehicles at say 125,000 or 115,000 depending on the rig and how it is having to be used, but that is typically what we are doing now. We are getting full use of the vehicles that we’ve got. As Mary said, we had $4.5 million or something last year to spend on vehicles and I will tell you that was not enough. This funding level, for example, and you guys correct me if I get too far off. There are a number of the field divisions – Wildlife, Coastal, Inland – that have one vehicle that they are going to be able to replace; one new vehicle that they are going to be able to purchase.

MR. BORUFF: All of them, except Law Enforcement.

MS. FIELDS: That’s right.

MR. COOK: Again, the specific direction from the legislature. They asked us, “How many vehicles do you typically purchase in Law Enforcement annually?” We said well 104, 95, 110, that’s what it takes to keep that staff of wardens out there rolling and going. They said “Okay, cut that to 75.” I think, something like that.

MS. FIELDS: Sixty.

MR. COOK: And the rest of them got five or six more. We’re going to get into a wreck. We can make this biennium by running vehicles 135,000, 150,000, 160,000 – basically by running them as far as we can run them. You know and I know when you do that you’re repair costs and maintenance costs are going to go up. Unless this changes this is like that thing of what is going to happen to us on the bond program. Unless that changes in the next session, we are going to have to really make a major change in the way we do business. It’s a tough one. Okay.

MS. FIELDS: The department has 31 riders in the Appropriations Act. It’s actually in your binder.

MR. COOK: Mary, I want you to say that again.

MS. FIELDS: The department has 31 specific agency riders and those are all detailed in the tab behind the Appropriations Act, if you would like to read each and every one of them. I’m going to highlight just a few here. Rider Number 6 designates $800,000 of the local parks money in Fiscal Year 2004 for partnership projects for underserved populations. This amount is down from $1.25 million that was designated last year. The reduction coincides with the overall reduction of local parks funds for the department.

MR. COOK: I wanted to be sure that Mary mentioned that one because you are liable to hear about it. A reduction of….

MS. FIELDS: From $1.25 million down to $800,000.

MR. COOK: For the underserved, because this is a program where we have been giving community grants for again youth outreach activities with a conservation message, and that program by rider was reduced. We are going to hear about that one.

MS. FIELDS: Rider 14 also designates local park grant funds of $1.275 million over the biennium for the development of indoor recreation facilities. This amount is also down from $2 million designated for this purpose in the prior biennium. Rider 25 directs the department to have no more than 60 vehicles assigned to headquarters. We just talked about that one.

MR. COOK: That one we are legally over that.

MR. BORUFF: We are almost there. If Phil would have one more wreck.

(laughter)

MR. DUROCHER: I’ll just give you a truck.

COMMISSIONER HOLMES: What would it be now?

MR. COOK: We have right now, Scott –

MR. BORUFF: At the beginning of the reduction we had 124 which we knocked down to 112, then in the last couple of months were down to 62.

CHAIRMAN ARMSTRONG: What did we have two years ago?

MR. BORUFF: Two hundred and fifty four on the books.

MR. COOK: When I started two years ago we had over 200.

MR. BORUFF: But a lot of that was not accurate. A lot of those vehicles were listed on headquarters, but were actually being used in the field because the way the bookkeeping was done. So, reality, I think we had about 150 vehicles here two years ago, but it is down to 62 at this point.

COMMISSIONER HOLMES: But you went from 112 to 62 in the last two months.

MR. BORUFF: We have been shipping them out into the field and wrecking them.

COMMISSIONER ANGELO: Poor Phil.

COMMISSIONER HOLMES: Hopefully, more of the shipping out.

MS. FIELDS: Okay, Rider 26 is another local parks designation of $750,000 for grants to metropolitan parks within a city with a population of at least a million.

MR. COOK: That’s what we call our Sylvester Turner Rider.

MS. FIELDS: And Commissioner Montgomery, I think this one here, Rider 28, authorizes the department to issue a freshwater fish stamp and appropriates an amount to not exceed $4.26 million in FY2005, for purchasing fish to stock public waters and repairing, renovating, maintaining the freshwater fish hatcheries. We’re getting a little close to the end here so I will talk a little bit about some budget issues. There are a few I would like to highlight. We have mentioned the 15 percent reserve of the fee increase. While the retirement incentive is a positive bonus for our retirees, we are estimating that those bonuses are going to cost us about $2.8 million this year and that has been factored into our budget. Article 9 also has some riders that will reduce our appropriations. Currently we’ve got about $703,000 set aside in our budget for those reductions. We will see what their estimates actually end up being. We will probably find out around October and we will make adjustments accordingly. Our license plate revenue, estimated at over $500,000 for fiscal year 2004 was not appropriated to us. The Department plans to reorganize and have Information Technology and Records Management report to the Deputy Executive Director for Administration as required by the Texas Government Code.

COMMISSIONER ANGELO: Mary, do we loose that license plate revenue as a result of that or what happens to it?

MS. FIELDS: We earn it but it’s not appropriated to us.

COMMISSIONER ANGELO: So we can’t spend it. So we keep it until we can get it appropriated another year.

MR. COOK: Yes sir. That’s one of those interesting quirts of state funding, I guess I will say.

COMMISSIONER ANGELO: Is that an oversight there?

MR. COOK: No sir. That was not an oversight.

COMMISSIONER ANGELO: They intentionally did not fund that.

MR. COOK: The basic same thing happens to us some time with dedicated funding when they put appropriations cap on you. You may have funds available in the White-wing Dove Stamp Fund that we don’t have enough appropriations to use unless we take it from somewhere else. So, there is a little program that the folks have done great on; a real popular program that’s making us a little money. Good, clean conservation message going out and the revenue will continue to accumulate in those funds. It will probably not be taken away from and we will probably get the ability to access it in the next session, but it will, as they say, take an act of congress.

COMMISSIONER HOLMES: How much money comes in annually on the license plates?

MR. COOK: Oh, it’s not a big amount, a couple of hundred thousand dollars. Something like that. Would that be..

MS. FIELDS: The business plan showed net revenue estimates between $500,000 and $700,000.

CHAIRMAN IDSAL: Annually or biannual?

MS. FIELDS: For this upcoming year.

CHAIRMAN IDSAL: Half a million a year.

MR. COOK: I would be surprised if it was that much, but it’s one of those kind of entrepreneurial ideas coming from our folks and you hate to see it restricted like that because in some cases for instance even the stamp, even the revenue from a particular plate is kind of lined out for particular programs. For instance the little Horned Lizard plate was funding a Non-game Grant Program. It was incredibly popular and a match thing from private money so that you might turn that $50,000 worth of our money into $200,000 worth of conservation out there on the ground.

COMMISSIONER RISING: So the same, like we talked about the Freshwater Fish Stamp, the same principles apply.

MR. COOK: It could happen.

COMMISSIONER RISING: If we exceed the cap of $4.6

MR. COOK: If we…If we…

COMMISSIONER RISING: We can earn it, but we can’t spend it until we get enough appropriation.

MR. COOK: That was popular enough and Durocher has done such a good job of promoting that program I bet we can keep it there and get utilization of it though.

(laughter)

MR. COOK: Phil did us a great job on that one as has the entire staff.

MS. FIELDS: Okay, we talked about revenue estimating at the beginning of our meeting today. Our revenue projections closely match the Comptroller estimates plus the fee increase and we will just monitor those revenues. Drew mentioned earlier and I just want to mention again that the budget information that we are presenting today is still under review and updates will occur prior to the adoption in August and I’ve talked to you about the federal grants and projects that we will be reviewing and we will make budget adjustments throughout the year as new federal grants and contracts are received. That concludes the presentation and we will be happy to answer any questions, any additional questions at this time.

COMMISSIONER ANGELO: Are there any questions at this point?

MR. COOK: Commissioners, there are lots of fine print. We have tried to lay this out to you in a straight forward and honest method as we know how and will continue to do that. I guess I will say that those of you have followed this process for a few years know the budgeting revenue thing at Texas Parks and Wildlife Department is a complex set of hoops that we have to go through, dedicated funds and purposes and that kind of thing, but it is important that you understand and it is important to me that you have this opportunity to work with us and understand the numbers and over the next couple of three weeks we can come to you, have you here individually or at your call. I want you to understand because it is an important time.

COMMISSIONER MONTGOMERY: Are all division budgets, except for parks, less?

MR. COOK: Bottom-line yes. We are okay in enforcement. We are really okay there, but bottom-line everywhere else from top to bottom we are doing less. If I were to put a percentage with it, it would be in that 10 to 15 percent range.

COMMISSIONER MONTGOMERY: And the Commission is not authorized to change allocation by appropriation or allocation by strategy.

MR. COOK: I believe that is correct.

COMMISSIONER MONTGOMERY: So, what I am getting at from a policy standpoint, unless we are going to get into managerial issues there isn’t a whole lot for us to do other than understand it since we can’t make any changes.

MR. COOK: Well, the strategies and how we apply strategies and how we accomplish those strategies there is some flex there.

COMMISSIONER MONTGOMERY: Where I was going with that is the whole issue that really is how effective we are spending our dollars in each category. We aren’t going to be able to decide that between now and the end of August. If you and I had this conversation a couple of times I would. (inaudible) session is next year we would probably come up with some process to kind of in a worldly way, in a patient way, look at areas where are dollars are really buying us, how we measure the achievement of those particular functions and what choices do we really have in allocating fewer dollars because it sure puts the burden on us to be as effective as possible.

MR. COOK: I will support that and would encourage that being one of our Chairman’s Charges in the Finance Committee where we routinely and regularly address that issue, discuss the options and make some – as we go through the year and I think that’s an opportunity. I believe we will get more done doing it that way.

COMMISSIONER MONTGOMERY: I always felt this process –and of course we really can’t get into that.

MR. COOK: Yep.

COMMISSIONER MONTGOMERY: It happens so fast and it is so late and the decisions really are made. But now that you’re here and have had a year and were done with the session we can get really get on that.

MR. COOK: Well, and I hope each of you recognize that every time we have a Commission meeting, every time we have a conversation with you folks individually and as a group, we listen very closely. If you provide direction to us, I hope you are seeing the result of that direction. Sometimes that means we make adjustments in September and October, and those adjustments are reflected here.

COMMISSIONR MONTGOMERY: Since I raised the point I think you have been incredibly responsive and quite quick to adapt the change and I appreciate that.

MR. COOK: It is important.

COMMISSIONER MONTGOMERY: My request that we go through a process is in no way critical other than to continue to formalize what seems to be happening regularly.

MR. COOK: It’s very important. We are with exception of a few really, really, very qualified folks, we’re a bunch of biologists, engineers, wardens, park managers, and fisheries people who – the prospectives and values that you see and can relay to us or help, we do appreciate. And I do mean it.

COMMISSIONER ANGELO: Any other questions or comments? At this point if not we will recess for lunch.

(recessed for lunch)

COMMISSIONER ANGELO: Item Number 4 on our agenda, Master Lease Purchase Program Resolution, Steve is going to explain that to us.

MR. WHISTON: I’m glad I got a hand out. I appreciate you reconvening. I hope my part won’t take too long this afternoon. I guess for the record Mr. Chairman, Chairman Armstrong, and Commissioners, I am Steve Whiston, Director of the Infrastructure Division. Before I get into performance contracting and our Master Lease Program, we wanted to take advantage of the situation today with you sitting in quorum and get your permission to go forward with what I think is a real exciting opportunity for the department. Before I do that, before I jump into that, Bob asked me to give you just a brief update.

COMMISSIONER ANGELO: Steve, if you could go ahead and do the part that we need to take action on because a couple of Commissioners need to leave.

MR. WHISTON: Okay.

COMMISSIONER ANGELO: We have to do that first and then we will go into the discussion.

MR. WHISTON: This will be ten minutes. I want to share with you a little information about Claudette but we will do…

COMMISSIONER ANGELO: If you will do the action item first.

MR. WHISTON: The action item first. Be happy to. If you will follow with me on the handout. The purpose of this morning, Commissioners, is to inform you about an opportunity that SECo provided all state agencies by the legislature to enter into performance contracts through the Texas Public Finance Authority and their Master Lease Purchase Program. That program will allow us to accomplish some much needed utility renovation projects here at this headquarters facility. I will also then be asking you for your approval, your signature, on a bond resolution that is required by TPFA or the Texas Public Finance Authority that allows us the opportunity to participate in that funding and that program and establishes authority for them to seek bond revenues to finance this program. Your second page is just a brief history and a background on what this is all about. In 1997 and in 1999 the 75th and the 76th legislature respectively passed legislation that encouraged local and state government agencies to enter into performance contracts. And as this slide reflects, in the 77th legislature the session passed House Bill 2277 that authorized the Texas Public Finance Authority to provide bond funding necessary to fund energy conservation projects. They also signed into law House Bill 2278 that established the State Energy Conservation Office under the Comptroller as an agency that regulates and monitors energy conservation programs state-wide. In that bill they also – the legislature also required state agencies to implement the extent that we are able energy conservation measures. Most recently, this past session, last spring the 77th legislature in House Bill 1 provided state agencies the direct authority to execute performance contracts. That is a little bit of background.

What is performance contracting? What is this all about? Let me explain how a performance contract works and how it is paid for. This program through TPFA allows Parks and Wildlife to contract with an energy service company, or what is called an ESCO. That contract obligates that company, or contractor, to make the needed repairs to all of our facility systems -- our HV/AC systems or any energy consumpting systems in this building. After they have performed a series of very comprehensive audits that determine what it is we need, what the most efficient way to provide what we need in terms of systems here, what the cost is and more importantly, how much savings we will incur if future utility costs as a result of those improvements. These improvements are paid for through these bonds. They are paid for out of the Master Lease Program managed by the Texas Finance Authority. The performance contract requires the ESCO to guarantee that we will realize as a result of these improvements that are paid for out of these bonds by reducing our energy consumption, by reducing our utility costs. That those savings are sufficient to pay off the loans, so with the savings we incur each year, in the future, those monies will be applied to pay directly the debt service that has incurred against that bond issue. By entering into the contracts Parks and Wildlife will in fact, as I am sure you know, will incur or assume additional bond debt, but it is one of the service providers and the State Energy Conservation Office certifies we will be paid for from future utility costs savings.

Quickly, I’ll outline some of the benefits of this program. First and foremost, performance contracting we believe directly supports the agency’s mission to conserve natural resources. It will reduce the operation, maintenance and utility costs to operate these facilities here at this complex by providing more energy efficient heating and air conditioning systems. It will fulfill the requirements and intent of the legislature in regard to HB 2278 and House Bill 1. It will provide these improvements with no out of pocket expense for this agency. I think it is equally important is by doing so, by entering into these contracts it will allow us to redirect $1.7 million of Prop 8 funds that are currently budgeted to accomplish these projects here at headquarters. We have $1.7 million right now scheduled to replace this 30 year old air-condition and heating system in our building in addition to the HV/AC system at the Warehouse or Building D. That includes replacing the boilers, water towers, all the hot water heating systems throughout the building.

COMMISSIONER ANGELO: Do we know that the savings will be sufficient to do that? I mean is that…

MR. WHISTON: Good question Commissioner. The indication so far is just very much so they will be. Your approval of this resolution does not commit our agency to enter into these contracts. With the additional audits that take place and the certification by a third-party engineer, certification by SECO or the State Energy Conservation Office. We will have some guarantees going into this before we sign a contract to actually perform the work that we will realize sufficient savings.

COMMISSIONER ANGELO: What type of payback time do – is there any flexibility in that?

MR. WHISTON: They’re 15 years.

COMMISSIONER ANGELO: Fifteen years?

MR. WHISTON: Yes sir if I’m not mistaken.

MR. PULICH: Fifteen years.

MR. WHISTON: Right. That’s our recommendation.

COMMISSIONER ANGELO: Phil do you have a question?

COMMISSIONER MONTGOMERY: The question is – is there competition?

MR. WHISTON: Yes, by all means. Yes. We have ESCO’s lining up. Two or three that we have identified that are quite capable, one of which MHMR is using right now.

MR. BORUFF: Basically, you go out and get a contract.

COMMISSIONER MONTGOMERY: That’s all I want to know. Before I break the quorum up maybe we ought to go ahead and do the approval here.

COMMISSIONER ANGELO: Do we have a second?

COMMISSIONER HOLMES: Second.

COMMISSIONER ANGELO: Any further discussion?

(no response)

COMMISSIONER ANGELO: Well when Phil needs to catch a plane things move fast. All in favor say aye.

(a chorus of ayes)

COMMISSIONER HOLMES: This is really standard stuff. This is not rocket science.

(simultaneous discussion)

COMMISSIONER ANGELO: Now if you will give Steve our attention again we are going to get a little run down the hurricane situation.

MR. COOK: There is a fellow in here that I want to introduce you to that you don’t get to see very often, Steve Schroeter. Steve, in the blue shirt there, Steve runs our facility and our crew here that keeps the building and the grounds. Steve we appreciate you and you do a great job and this program will fit right into Steve’s bail wit and we will accomplish some good things. Thank you Commissioner, we appreciate your help.

MR. WHISTON: With that I guess I would also like to introduce Frank Pulis. Both Frank and Steve have been pretty instrumental in supporting the driving force behind the program. They have done all the footwork in putting this together. Frank is our Acting Director right now, and along with Steve they have done a great job in identifying this opportunity so, we appreciate it.

MR. COOK: Good

COMMISSIONER ANGELO: Good.

MR. WHISTON: That was sweet. I appreciate the time. I want to give you a real quick update on Hurricane Claudette. As you well know it – I guess, given the circumstances we feel like we are really fortunate given what could have happened. Ms. Claudette could have lingered a little longer in the Gulf and cranked up a little more intensely. It made landfall last Tuesday at about a level 1 hurricane strength and I think that’s about sustained miles per hour, about 70 to 80 miles per hour. It made landfall in Port O’Conner on our Texas Gulf Coast. Again, I think we were lucky in terms of the damage that we sustained as a result of this storm. Nine counties have so far been identified federally as federal disaster areas as a result of the storm. We incurred damage, as we know right now, at about eight state parks, two coastal fisheries facilities and two Wildlife Management Areas in that region. Our real rough preliminary estimate right now of the total damage caused by the hurricane landfall is about $780,000 and we are still putting a pencil to that. We are still right now in the field trying to calculate and provide harder, more accurate, cost estimates for the actual damage that we did sustain. Fortunately, most of the damage was wind damage. A lot of fallen trees, a lot of debris, and a lot of clean-up will be necessary to come back in her wake. A couple of facilities did sustain some significant repair damage. In particular, and probably the hardest hit was our Perry R. Bass research facility, a coastal fisheries facility on the coast – it alone we estimate is going to cost about $240 to $244,000 to come in and repair. They almost lost 100 percent of the roof there. Of course all doors, windows, ceiling damage to the facility. We are still trying to confirm those costs right now, but that was probably one of our hardest hit along with Matagorda Island, you know right outside of Port O’Conner. Certainly a lot of facilities, a lot of structures on that island that I think Claudette was somewhat a blessing to us for taking away structures that we will in time do away with anyway, she did us some favors there. We are looking at about $230,000 at that particular location to do what we anticipate as needed repairs on buildings we want to save. Total replacement cost on everything that was damaged would be considerably higher. Anyway, recovery efforts are well underway. Much of the credit needs to be given to Coastal Fisheries, State Parks and Wildlife Divisions because they did not waist a minute coming back behind this storm and jumping into start making recovery efforts to stabilize the building, to weather-proof the buildings and begin slowly the clean-up process. We obviously are going to be working through FEMA to try to recover as much reimbursement funds as we can to compensate us for the costs for us to do some of the repairs. That is always an uncertainty. We don’t know yet what FEMA’s going to do for us and what their budgets are going to do, but our efforts are well underway and you know thanks to all the other divisions involved in this.

MR. COOK: Our facilities, our park facilities are all open to some extent.

MR. WHISTON: Except Matagorda.

MR. COOK: If you can claim Matagorda, it’s closed.

(laughter)

MR. BORUFF: We have a lot of visitors out there right now.

MR. WHISTON: Actually, we are open for primitive camping and day use at Matagorda now, but no overnight use and the bunkhouse facilities there are damaged.

MR. COOK: And typically our visitation there is low anyway.

MR. BORUFF: You might point out though from a fiscal perspective in the last three years at least, we have only budgeted about half a million dollars a year in emergency repairs of this nature and we get in this years budget in the presentation you just heard, there is another half million dollars worth in there but obviously one event like this could easily exceed the amount budgeted. We may end up having to dip into Props.

MR. COOK: Yes sir.

MR. WHISTON: Assuming we have our eye on the savings that we are going to incur through performance contracting to set aside some contingency to address some of these disaster needs that we still may face.

MR. COOK: Good.

COMMISSIONER HOLMES: With the 120 parks and facilities all over the state and the state being prone to natural disasters we obviously have some track record of knowing what it costs on an annual basis. That half a million dollars, is it a number that typically occurs.

MR. WHISTON: That is typically low.

COMMISSIONER ANGELO: Yea.

COMMISSIONER HOLMES: Yea. I would have thought.

COMMISSIONER ANGELO: Floods are the biggest problem.

MR. WHISTON: Floods usually generate a considerable more expense.

MR. COOK: I’d say if you looked at it, we’ve never had the luxury, to be very honest, we’ve not had the luxury of having funding available. We have been fortunate the last six or seven years of having bond money that we could fall back on. But, probably $1 million a year easily; if I was thinking of a ten to 15 year average for that kind of an event, easy million.

COMMISSIONER ANGELO: Any kind of significant disaster affects several parks it seems like.

MR. WHISTON: It certainly does, yes sir.

COMMISSIONER ANGELO: Because they are scattered around enough that you can’t have one without that happening.

COMMISSIONER HOLMES: Sure.

MR. COOK: If you get a flood on the Guadalupe you take out three or four parks pretty quick.

COMMISSIONER ANGELO: Several of them, yea.

COMMISSIONER HOLMES: What do we typically budget for that? A half a million?

MR. WHISTON: It ranges from year to year from $300 - $500,000 a year is usually set aside as a contingency for emergency repairs.

COMMISSIONER ANGELO: And that probably takes care of the emergency part but not the …

MR. WHISTON: But not the natural disasters. Not those that are really one of a kind events that really hit us hard.

COMMISSIONER HOLMES: If it runs typically a million, why do we budget half a million?

MR. COOK: Because if I funded at a million then I would have to close a park and I have been directed not to close parks by the legislature.

MR. BORUFF: We have had the luxury over the last five or six years to have bond money to fall back on.

COMMISSIONER ANGELO: So you just change the priority of projects.

MR. BORUFF: We may have to cancel a Prop 8 project to get these things done.

COMMISSIONER HOLMES: Sure. Sure.

MR. COOK: We have actually, probably more honestly, covered most of those kind of disasters with bond money the last six or seven years than our emergency fund has.

COMMISSIONER HOLMES: Sure.

MR. BORUFF: Correct.

MR. COOK: Plus, when something like that hits we immediately go, for instance, to TxDOT. I mean, the last time we had a big flood in Uvalde at Garner, TxDOT probably did several tens of thousands maybe a hundred thousand dollars worth and just went in there and did it because, again, your local engineer, your local guy down there knows how important that is to the community so he’ll put loaders and dozers and crews out there for a week hauling off trash, cleaning off roads and rebuild them for you and we get TDCJ in with a bunch of their guys to do a bunch of that kind of clean up. That’s the first question I asked when I heard about the tree damage at Goliad, because if you put a crew of 50 or 60 inmates in there for ten days then they can do that kind of clean up. We did that at Huntsville last time we had a storm go through Huntsville we had a bunch of down timber, it was horrible. We put TDCJ crews in there and they really, you know… So sometimes we can get it done in that manner for a lot less.

COMMISSIONER ANGELO: Any other questions on that? Bob do you have anything else you’d like to propose?

MR. COOK: I don’t have anything else. Again, I just express my appreciation for you folks for the time. I really do. Please do not hesitate to call us. Look through this information. Call me, call Drew, any of us.

COMMISSIONER ANGELO: The meeting is adjourned.

MR. COOK: Thanks.

COMMISSIONER ANGELO: Thank you.

(Meeting adjourned at 1:13 p.m.)

Notes prepared by: Cidney Sunvison


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