Texas Parks and Wildlife Commission
Finance Committee

Jan. 21, 2009

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

BE IT REMEMBERED, that heretofore on the 21st day of January, 2009, there came to be heard matters under the regulatory authority of the Texas Parks and Wildlife Commission in the Commission Hearing Room of the Texas Parks and Wildlife Department Headquarters Complex, to wit:

APPEARANCES:

THE TEXAS PARKS AND WILDLIFE COMMISSION:

THE TEXAS PARKS AND WILDLIFE DEPARTMENT:

P R O C E E D I N G S

COMMISSIONER FRIEDKIN: We'll now move on to Finance Committee. Commissioner Brown is unable to be here so I'll step in for him.

The first order of business is the approval of the minutes from the previous committee meeting which have already been distributed.

COMMISSIONER DUGGINS: So moved.

COMMISSIONER BIVINS: Second.

COMMISSIONER FRIEDKIN: Moved by Commissioner Duggins, second by Commissioner Bivins. All in favor?

(A chorus of ayes.)

COMMISSIONER FRIEDKIN: Any opposed?

(No response.)

COMMISSIONER FRIEDKIN: Hearing none, motion carries.

Before we proceed with the rest of the briefings, I want to mention that Committee Item Number 4, Department of Information Resources, DIR, Data Center Consolidation Update has been withdrawn at this time.

Committee Item 1, update on progress toward our land and water resources conservation plan, Mr. Smith.

MR. SMITH: Thank you, Mr. Chairman. There are just two quick things. One, I hope that all of you have had a chance to see the new 2008 annual report that Lydia and her team put together.

COMMISSIONER FRIEDKIN: It's nice.

MR. SMITH: It's a wonderful summation of the agency's kind of most salient activities and just a great synopsis of all of the conservation and recreation work that our colleagues around the state are helping to effectuate. So take a look at it. There's some wonderful success stories in there and I think you'll enjoy learning about some things. Again, Lydia and her team did a masterful job of putting that together. We'll be distributing that to all of our major partner interests and constituents and legislators and so forth. If you need extra copies that you want to distribute to folks, please let us know and we'll make sure we can get you those.

COMMISSIONER FRIEDKIN: Great, thanks.

MR. SMITH: Also, just quickly, I want to report that as some of you know, we had our Sunset Commission hearing last week on the 14th. You know, first, I want to say that I appreciate all of you who could make the first hearing. That was a remarkable expression of support from the Commission and we appreciate all of you being there in attendance.

The decision hearing, I think, went as well as could be expected. It ended up with, I think, kind of nine major recommendations affecting the agency. Obviously, the one that's of paramount concern is that we continue forth and that the agency has a reason for existence was promulgated. So, obviously, we're pleased about that.

A bill is being drafted now to take the Sunset Bill. We'll find out soon who's going to carry that in the Senate and the House and we'll go forward there. So we appreciate all the support and all of the good work that the Sunset Commission and their staff did. They really did an excellent job evaluating the agency.

COMMISSIONER DUGGINS: Do you think you could tell those who weren't there about the two new issues that Member Sugg brought up?

MR. SMITH: Yes, excellent point, Commissioner, thank you. There were two new issues that came up. Commissioner Ike Sugg is a rancher from San Angelo and a strong partner with us in the Wildlife Division. One item was to make an item consistent with an item that had already been put in the Department of Agriculture's Sunset Bill, which was encouraging the department to work cooperatively with the Department of Agriculture on pilot programs to use harvested wild venison from ranches for school programs, public health, prisons, and so forth that might have a need for that. And so, we'll certainly explore that and have done a lot of that in the past, in fairness, but we'll work with TDA on that.

The second one was asking the department to undertake a study to look at the feasibility of greater utilization of deer that are harvested from ranches in the wild, and how demands for that meat could be tapped into, and what kind of the pros and cons and impediments to greater utilization and dispensation of that meat. The genesis for that is that if you have ranchers that have got Managed Lands Deer Permits and they have to harvest huge numbers of deer, it is very difficult at times for them to find outlets for those deer. And so, Mr. Sugg, I think, is genuinely interested in us exploring ways to help facilitate that process and he's encouraging us to undertake a study to, again, look at what are the structural and regulatory and legal impediments to that and what are the opportunities.

We've got a deadline of early April to come back with kind of a preliminary draft of that report, just based on what we know. And then, I think we have to finish the rest of the draft by the end of the summer, something like that.

MALE VOICE: September.

MR. SMITH: September, okay, yes, but it's a good point, Commissioner.

That's it for me. Thank you, Mr. Chairman.

COMMISSIONER FRIEDKIN: Thank you. Committee Item 2, financial overview, Mary Fields.

MS. FIELDS: Good afternoon, Commissioners. For the record, I'm Mary Fields, Chief Financial Officer, and I'm here to provide the financial review. The focus of our presentation will be to provide our revenue and budget status for our year-end close for fiscal year 2008 and a revenue and budget status for the first quarter of fiscal year 2009.

So let's begin with the year-end close figures for fiscal year 2008 and we'll start off with the revenues. When comparing state park gross receipts through August of 2008 at $38.08 million, we were up 12.1 percent, or $4.12 million over last year's collections. All of the categories of revenue increased substantially. Most notably, the entrance fees increased by 19.7 percent followed by activities in concessions with a 14 percent increase. All I can say is this was just a dynamite year for state parks. They really had a good year with the revenues and real pleased with where they landed.

Our boat revenue as of August 31st was at $21.2 million. This was down by 1.6 percent or $335,000 when compared to the prior year. Boat registrations were down. The titling was up and sales tax collections were very similar to the prior year. Throughout the year, we basically saw this trend of the registrations being down and we discussed the fact that the even year you know, we have a two-year boat registration and the even year is typically the down year. So we're not necessarily concerned with the trend that we saw here with the boat revenues. We continue to transfer 15 percent of registration and titling revenue to Fund 64 and that totaled $2.8 million for the year.

COMMISSIONER DUGGINS: Mary, before you leave, why is it that it's down in even years?

MS. FIELDS: I don't know if it has to do with when they originally started. I know looking at trends back to 2003, you can just see the number go up and down, you know, with respect to the revenues. The even year is typically the down year. So I don't know when that actually originated, but it's just the trend we see.

COMMISSIONER DUGGINS: Okay.

MS. FIELDS: Our license sales revenue was up as of the end of August, at $91.2 million. We were up $3.1 million in revenues as compared to the prior year, or 3.5 percent. All categories of revenue were higher than the previous year, with the exception of resident hunting. Again, we saw that trend throughout the year. We think there was a buyer preference actually moving possibly to combo licenses.

Our other category came in slightly under. It was just a little less than a 1 percent decline there. I did look; there are numerous licenses that are in the other category and it looks like the resident commercial shrimp boat licenses there's like three or four of them were in decline. That probably is what pushed it, but we're talking about $100,000.

COMMISSIONER DUGGINS: I have another question there. Do you know whether lifetime license sales were up or down?

MS. FIELDS: Lifetime licenses, I would have to look. Hold on one moment.

(Pause.)

MS. FIELDS: Revenue was up only $35,800. And then, there are a couple of other that was for the combo one the other categories seemed to somewhat offset each other. So it looks like maybe we were up by about $35,000 or $36,000 in total.

COMMISSIONER DUGGINS: Would that mean only 35 more licenses were sold?

MS. FIELDS: Well, there is price differences depending on the licenses. The combo is higher than like a hunting or a fishing. I don't know that I have those prices handy with me.

COMMISSIONER DUGGINS: Not much of an increase?

MS. FIELDS: Not much of an increase, pretty close to the same.

COMMISSIONER DUGGINS: Okay.

MR. SMITH: But, to be fair, we have not pushed lifetime licenses. We have not marketed those heavily. Certainly, that is quite a bargain for folks that choose to buy those.

COMMISSIONER PARKER: Will we be getting a compilation like we've had in the past of our license sales, a comparison?

MS. FIELDS: Yes, I actually, I did have a slide. Are you talking about the slide that normally follows this with the number of licenses sold?

COMMISSIONER PARKER: Well

MS. FIELDS: I did.

COMMISSIONER PARKER: hard copy.

MS. FIELDS: Are you talking about the trend, the 20-year trend of licenses?

COMMISSIONER PARKER: Right.

MS. FIELDS: We can update that with the 2008 license sales and send that to you.

COMMISSIONER PARKER: I think we need to have that every year.

MS. FIELDS: See that trend?

COMMISSIONER PARKER: Sure.

MS. FIELDS: We can certainly add that year on and submit that again to the Commission.

Okay, moving ahead here, when comparing our 2008 revenue collections to the annual revenue estimates, we exceeded our estimated revenue in all of the funds that are shown on the slide here. We collected 119 percent of our Fund 009 Game, Fish, and Water Safety Fund, 104.5 percent of our State Park Fund. You can see the Local Park Fund there at 114.3 percent and the Other category is at 211.1. That category is comprised of multiple smaller funds and one fund just far exceeded the estimate.

Our overall budget this is a little busy and I apologize, but I was trying to get the primary adjustments rolled up and on the slide here we did, this slide actually includes budget adjustments for July and August and then the year-end close-out adjustments to the budget. Our adjusted budget is at $357.9 million. The adjustments are summarized there. We did recognize the land sale proceeds from the Game Warden Academy that occurred toward the end of last year. We brought in additional grants, donations, and interagency contracts there for $3 million or $3.1 million.

The remainder of the adjustments relate to closing out the year and basically identifying unexpended balances that can be carried forward into fiscal year 2009. Some of them are already in the 2009 budget, the unexpended balances on bonds, the construction. There are quite a bit of these balances that are already in the budget. When we review the 2009, kind of the first quarter, you'll see some more of these balances coming into the budget and growing.

So the miscellaneous reductions at the end there, really there's a reduction of our fringe estimate, employee fringe estimate that we just take that down to actual. And then, we are reviewing some adjustments to determine if we're going to carry those forward or not. So we're still in the process of some review.

COMMISSIONER DUGGINS: Mary?

MS. FIELDS: Yes?

COMMISSIONER DUGGINS: Would the bottom line be the final number for year end?

MS. FIELDS: That is what the year-end budget is and then we're going to move to looking at kind of how we came out with that in this next slide, the adjusted budget at $357.9 million. I'm then comparing to what's expended and encumbered for the full year. As you can see, we did real well. We've got, I think, 0.4 of a percent. In my tenure here, this is the closest, I think, we've ever got to spending down the budget without going over. So, kudos to all the divisions with their spending down funds. The remainder, as I said, we're looking at carrying forward.

With that, that completes the 2008 financial review. If there aren't any questions on that, I'll go ahead and move into the first quarter of '09.

Now, bear in mind that we had a lot of good news in fiscal year 2008. As I move into the revenues for the first quarter of 2009, you are going to see some declines due to Hurricane Ike, and gas prices, and I think fear of a slowing economy, and all that. So we are seeing some recovery. So let's just jump in and take a look.

We'll start off with our state park receipts. I do want to say here, I am starting this year off and looking at just the continued operations. You'll recall last year we did operate some of the historic sites until January 1st. I pulled that revenue out of the fiscal year '08 total so that we've got comparable totals for this year, moving ahead.

So, when comparing the receipts between the years, you can see we're at $7.8 million, which is down 5.7 percent or $467,000 under last year's collection. Again, this is Ike looking at us here. In reviewing the categories of park receipts, the entrance, facilities, activities, and concessions are down. We are seeing a slight increase in donations of like $59,000 and park pass sales are slightly up by like $1,000. So that's where we're at as of the end of November.

With the boat revenue, as of the end of November, we're at $2.8 million. This is down 17.8 percent or $605,000 compared to last year. All categories are down.

Boat registrations are down by over 15 percent. So, Commissioner Duggins, this is supposed to be the up year and the registrations are at 15 percent down. Titling is down by almost 14 percent and boat sales tax is down by 32 percent; people aren't out there buying boats. Again, this is the period where gas prices are around the $4.00 mark, you know, September through November. This is before the prices dropped. I'm really hoping that with the lower gas prices you'll see some recovery as we move into the rest of the year.

We continue to transfer the 15 percent of registration and titling revenue to Fund 64 again. That amounts to almost $364,000 as of the end of November.

License sales, we're also seeing the impact here of Ike, at $57.5 million. We're down $3.2 million in revenues as compared to last year, or 5.3 percent. All categories of revenue are lower than the previous year except for resident hunting and that's up by 1.6, but you all recall, we saw that trending low all of last year. So I think it's kind of leveling back out.

I will say that we are seeing some recovery with our license sales. At the beginning of the year, we get daily reports on where we're at. And then, we kind of move into weekly reports, and then to monthly reports. In looking at weekly sales, at one point, we were down as much as 16.8 percent when compared to the prior year. Right here, you're seeing 5.3. The January 14th report, weekly report, we were at 3.9. So we are seeing recovery.

I think we've probably sold the majority of the combo licenses and our hunting licenses. There will be a few, I guess, that will do some turkey hunting, but we're showing, I'd say, about 1.5 percent behind on the hunting and combo sales, if you kind of look at it together.

We still have fishing. Fishing, you know, we'll be moving into the spring and summer. We'll see that. Again, it was down as much as, I'm wanting to say about 25 percent, and it's now at about 15 percent, and we still have a lot of licenses to sell there.

When we're looking overall at the revenue, and doing our projections, and where we think we might be, I'm projecting probably a 2 percent decline from the prior year overall. We'll see if that prediction, or projection, is correct. You all can call me and tell me later. Anyway, that's what I'm thinking and staff has been real helpful in providing projections.

MR. SMITH: Mary, we're going to expect you to sell a lot of licenses at Health and Human Services. So we're going to be monitoring that. It will be part of the license report.

MS. FIELDS: State Health Services, yes, I will be able to push those license sales. Everybody needs to recreate, even those guys.

COMMISSIONER MARTIN: It's healthy, you know.

COMMISSIONER PARKER: Are you going to change your phone number?

MS. FIELDS: Probably. I'll give a few key people my phone number.

COMMISSIONER PARKER: Okay.

MS. FIELDS: So, just reviewing here the number of licenses sold, it's correlating pretty much with the revenue. At $1.83 million, we're down 3 percent as of the end of November. You can see, just on the slide there, the hunting was down 0.6. Jump down to the bottom; combo ended up at 1.1, and we're at 14.5 percent with fishing. But again, we'll see that pick up.

So when comparing our 2009 revenue collections to the annual revenue estimates and these are actually the estimates from the Controller's biennial revenue estimates with 25 percent of the year elapsed, we've collected 45.2 percent of our Game, Fish, and Water Safety Funds. That is running a little bit behind, which is no surprise with the numbers we just looked at.

We're at 26.6 percent of our State Parks Fund. Actually, that Fund's looking pretty good. Even though it's trailing when looking at the prior year, it's actually still, the park fees will still exceed the biennial revenue estimate, we believe.

And then, you've got your gas royalties, and those, as of this point in time, had already exceeded the estimate by like $1.2 million. It was looking pretty good.

The Local Park Fund is at 17 percent and the Other category is at 53.2 percent. Again, that's multiple funds and there are a couple of them that are doing real well.

In looking at our budget, we have increased the budget by $43.4 million since September 1. So that takes our budget to $446.3 million. Budget adjustments made during September, October, and November are summarized on this slide. I'm just going to highlight a few of the larger ones.

You can see the 32.5 in the unexpended balances from fiscal year 2008 coming into the budget. These are really our larger a large part of this total are grants. There are some local park grant funds that we're carrying forward as well as the Balcones Reserve. There's just a couple of really big ones in there.

We've got donations of $4.6 million and grants of $3.1 million are being added as they're approved. So that's just kind of a high level summary of where we're at there.

In reviewing our 2009 budget versus expense, we have 77.7 percent of the budget remaining with 25 percent of the year elapsed. You can see the operational categories are basically on track. Operating and equipment is showing a little bit low and that's because we pay a lot of our rent and lease-type things at the beginning of the year. So that will level out. The capital projects and the grants are looking good and they'll continue to catch up as the year progresses.

Basically, in concluding my presentation, I would like to note that you've received a financial overview document that looks like this. I think it's in your stack of documents. We update this document every other year prior to the legislative session coming into play. We hand this out to legislators as we talk with them, but it's also a really good refresher course for some of the Commissioners on our funding stream. Some of it is fairly complicated. It does highlight our exceptional items. It's just a really good document. It's up-to-date and you might want to take a look at it, you know, as you're meeting with legislators. If you get questions about funding, I think this might be helpful for you.

That concludes my presentation.

COMMISSIONER FRIEDKIN: Commissioner Bivins?

COMMISSIONER BIVINS: The local park funds, can you refresh my memory on the funding sources that go into that?

MS. FIELDS: The Local Park Fund has primarily sporting goods sales tax funding. There are some other grant funds that are deposited into that fund. And then, there's interest earnings.

COMMISSIONER BIVINS: But it's primarily the sales tax from sporting goods?

MS. FIELDS: Primarily the sales tax.

COMMISSIONER BIVINS: Yes, okay, that's what I thought. I just couldn't remember.

COMMISSIONER FRIEDKIN: Any other questions?

COMMISSIONER PARKER: The Local Park Fund is primarily sales tax?

MS. FIELDS: Sporting goods sales tax, that is correct. And then, there's some federal dollars in there as well.

COMMISSIONER FRIEDKIN: Commissioner Martin?

COMMISSIONER MARTIN: Not a question. It's a comment, and I know we have tomorrow, but I wanted to thank you for making all these numbers easy for me to understand, which anyone that's from an accounting or economics firm would applaud you. I appreciate your dedication and, just the short period of time I've been here, to work with you, it's been great.

MS. FIELDS: Thank you.

COMMISSIONER MARTIN: I wish you all the best. We're all going to be holding onto your ankles. So if you feel a little tug while you're leaving, I just wanted to make a comment. I know we have tomorrow, but I just wanted to comment.

MS. FIELDS: Thank you, Commissioner, I appreciate that. It was a really hard decision to make this move, but it is a really good opportunity. I will be available via phone call.

COMMISSIONER MARTIN: As you know, we will be watching to see all the new licenses coming that you will sell.

MS. FIELDS: Well, they have 12,000 employees. I'll put the word out.

COMMISSIONER FRIEDKIN: Thank you, Mary, appreciate it.

MS. FIELDS: Thank you.

COMMISSIONER MARTIN: Thanks.

COMMISSIONER FRIEDKIN: Okay, Item Number 3, briefing on recently concluded and ongoing internal audit activities and reports, Carlos.

MR. CONTRERAS: Good afternoon, Commissioners. For the record, my name is Carlos Contreras. I'm the Director of Internal Audit. I'd like to thank you for the opportunity to update you on our office's activities.

We'll start off with the 2008 audit plan. We completed the 2008 audit plan in rounds 7 and 8. For round 7 for the park audits, we had six of the parks were compliant. The testing period for the round of audits was in June, or about nine months following the training sessions. The details for round 7, we found six of the 13 parks were compliant; four were least severe; three were moderately severe; and I'm happy to report we had none in the most severe category.

Round 8, we had eight of the parks that were compliant. What we're showing is a trend in the last two rounds of 2008 of improvement with the compliance to the fiscal control plan and the revenue and visitation plans for the parks. The testing period for the round 8 was in July and that was 10 months following the workshop and training session.

As you can see in round 8, four of the 13 parks that we went to were re-audits. We had spoken with executive management and chosen the four parks from rounds 1 and 3 to go back and do some work on those that had exhibited some problems from the previous rounds. One of the re-audited parks was compliant. Here, you can see, we just had one that was in the most severe category.

Moving onto the 2009 audit plan, we've conducted rounds 1 and 2 of park audits. That was in September and October. Now, we went ahead and combined that into one report for rounds 1 and 2 that you'll see here, probably at the end of this month, the beginning of February. Both rounds, the total was only 11 parks. The response letters have been issued. Like I said, the report will be coming out toward the end of the month or in early February.

We're also working on the lease/concession audits that were part of this audit plan. Those are in the reporting phase currently.

Now, we also conducted rounds 3 and 4 of park audits in November and December. Now, in round 3, we went to 10 parks and the review for those 10 parks is currently ongoing. We just kicked off the field work, and as a matter of fact, we just made a decision today to go to five parks in round 4. So this slide is a little dated. We're going to go ahead and pick up five parks at the request of one of the regional directors in State Parks.

Other audits that we've been working on I know you received the report for the Cedar Hill State Park, the lease/concession audit. Probably, again in early February, we'll release the Eisenhower State Park audit. Other audits that you can expect to see are Sand and Gravel. We're writing that report. We've kicked off, and are in the field work process, for cash handling and Law Enforcement offices. Finally, we're taking a look at the key performance measures as they were reported for 2008 and that's currently in our planning process.

As far as administration of our activity, we had a request for updating the current open State Auditor Office recommendations. We were able to do that and get it in before the 12/31 deadline. I'd like to thank Brenda Dille and Larry Sieck for their contributions in completing that.

That concludes my update.

COMMISSIONER FRIEDKIN: Commissioner Duggins had a question on that.

COMMISSIONER DUGGINS: First of all, I got a copy of a letter dated January 8th, from Carter, concerning a directive to audit the actual projected costs on Ike?

MR. CONTRERAS: From the SAO, sir?

COMMISSIONER DUGGINS: Yes.

MR. CONTRERAS: Yes, sir?

COMMISSIONER DUGGINS: Where does that fall in your plans here?

MR. CONTRERAS: Well, we have a large number of hours, given that it's a legislative session, for special projects, for peer review that we're going to do, and also for liaison activities with external auditors, such as the IG auditors or the SAO. We've come in, I've coordinated with Infrastructure, Administrative Resources, and Law Enforcement to update the report that was originally sent into the LBB as a survey a couple of months ago. So what they're doing is a review and compilation-type project, to get the most current expenses and projected costs for Hurricane Ike, so that they can report that to the legislature.

MR. SMITH: Commissioners, if I can clarify just a little bit. I mean, we have been working with the Infrastructure team and FEMA on trying to evaluate what are our ultimate costs to recover from the impacts to state parks and our wildlife management areas. We're estimating somewhere close to $100 million. And so, we are now having conversations with the legislature about strategies to help pay for that. And so, as the legislature is evaluating all of the many requests to help fund repairs and recovery from Hurricane Ike, they've asked the State Auditor's Office to look into and vet all of these requests.

As we speak now, today, the State Auditor's Office is out at Galveston Island State Park and Sea Rim State Park on the ground. So I think this is a positive step in terms of them evaluating that request.

COMMISSIONER DUGGINS: Thank you. The other question I have is, if I understood you, you said, in round 7, you audited parks that had gone through the training

MR. CONTRERAS: Yes?

COMMISSIONER DUGGINS: which presumably says you do this and you don't do that. I'm just curious, if they've been, why are we still getting three with moderately severe classifications, if they've already been through the training process, or am I missing something?

MR. CONTRERAS: No, sir, no. You know, based on the request of the Commission previously, you know, to take a look at the more severe findings, that's what we've been doing, and compiling these. Unfortunately, we haven't had compliance in a great number of parks, a lot less than I expected. To be quite honest with you, I think it might be the fact that State Parks believes the fiscal control plan might be too onerous and there's a lack of personnel to conduct some of these, or implement some of the controls that require more than one person, such as signatures, getting people to do separation of duties. I think a lot of that is the reason for the noncompliance.

COMMISSIONER DUGGINS: Would you give the same answer about round 8, where four were re-audited and only one of the four was compliant?

MR. CONTRERAS: Yes, sir. Yes, we had discussed, like I said, from rounds 1 and 3, some of the parks that had the biggest problems, and we went ahead and made a judgment to go back to those parks, but, again, like I said, only one of those that we re-audited was compliant, one of the four.

COMMISSIONER DUGGINS: I mean, I assume you've talked with Walt and are working on fixing that problem already?

MR. CONTRERAS: Yes, sir. As I recognize, you know, parks that are problematic, I collect that information, I gather it, and I provide it, through Carter, to Scott and Walt. That way, they can use that information to direct their personnel to train the Parks on the fiscal control plan, report and visitation requirements, that type of thing.

I know that they've been working with me now for I guess it's been the last probably four to five months. We relay that information, including specifically the types of findings that we consider extremely severe, such as everybody working out of one cash drawer, you know, not approving voids, refunds, that type of thing.

COMMISSIONER FRIEDKIN: But as Commissioner Duggins mentioned, this is all part of the training before that so

MR. CONTRERAS: Yes, sir.

COMMISSIONER FRIEDKIN: they should know that going into the rounds of audits. Right? Is it a training or a lack of communication? How can we get it right the first time we go through it?

MR. CONTRERAS: Well, I think now State Parks has decided to go ahead and create some positions for individuals that have the responsibility to go to specific regions they're assigned to, and assist the park superintendents with the proper implementation of all the fiscal controls. I think that's going to help. I think that's helped in the seventh and eighth rounds.

I don't know. I think a lot of it might be cultural resistance to some of this change, you know, but that's just speculation on my part. I don't have any definitive proof of that.

COMMISSIONER FRIEDKIN: It seems very inefficient. We've got to get a handle on it, I think.

MR. SMITH: Absolutely. I think, just a couple observations, if I could. I mean, clearly, we've got work to do. I don't think anybody is shying away from that. I think the trends are improving. And so, I think if you step back and look at that objectively, we are seeing that trend line improve.

I would, perhaps, disagree a little bit with what Carlos said about cultural resistance. I mean, I think we've got changes. We've got transitions. We've got education. We've got learning their new practices, with a big staff dispersed throughout the state. Sure, are there, on occasion, going to be folks that are more resistant to change than others? Absolutely, but our State Parks is fully, fully bought into the significance of this. I want to be clear about that.

I think what we're seeing here is, you know, you all asked us to come up with a stratification scheme that would help us identify kind of where we've got the worst problems that need to be addressed. I think Carlos and his team did an excellent job in terms of helping that because it helps Scott and Walt, and their management teams, focus on where we've got real problems.

The other positive step that I see happening is the hiring of these fiscal control specialists inside each region of State Parks so that we can learn from what's happened in the past, past mistakes, what's occurring in other parks that aren't compliant, what are those common mistakes, and how do we improve them. Do we have a long road to go? Absolutely, there's no doubt about it, but I think we also need to be a little bit reasonable in terms of just sort of the time to get full compliance on this.

I'm not sure we're at a point right now where I would expect 100 percent compliance on this, but we need to see more improvement on it, and I think we will.

So, Scott, do you want to add anything to that?

MR. BORUFF: No, very well said, Mr. Smith. You know, I do want to acknowledge the fact that this is in the top tier of our to do list and we are focused on this. We are not satisfied with the progress we've made. We have made progress and I think there is a trend that you would see, if you looked back over time, that we've made progress, and there are more parks coming into full compliance.

I don't want to make any excuses. I mean, this is a far flung empire of 93 parks scattered around the state. There is some significant turnover that has gone on, particularly in the last year. So those are not meant to be excuses. I just did want to signal it from my perspective, and I can assure you from Walt's and the senior staff in State Parks, this is the highest priority we have right now, is to get these audit issues under control.

We realize, going into the session that this is something we have to get under control and we are focusing a lot of man hours and a lot of time on getting it fixed. We have added some new staff, very recently, to do fiscal control training on a site-by-site basis. Kim Dudish and her folks have been helpful in getting out to the field. So we continue to attack this as aggressively as we can, and we're not satisfied where we are by any means.

COMMISSIONER FRIEDKIN: Good.

COMMISSIONER DUGGINS: One of the reasons I asked it is because, at the initial Sunset Commission meeting, which most of you were present for, you remember Lois, Representative Kolkhorst, and others, emphasized how important it was to them that we follow through on these audit matters and so they could have confidence in what we brought over there and told them. I just want to emphasize and I'm not being critical I'm just emphasizing how important I took her comments to be, and I think it was a strong message there that we all need to keep in mind.

MR. SMITH: I think those expectations Commissioner, that's a great point and I think those expectations are abundantly clear. Just so you know, we report pretty regularly to the legislative leadership about progress or lack thereof, and reasons why, to the leadership to let them know what is happening; and, I think, give them a very honest appraisal of what's working well, and what's not, and what needs to continue to be improved.

We've got a lot of new business practices here that are being implemented. There's a lot of changes. Not trying to make excuses for it, we've got a lot of work to do and we'll continue to improve. I think Scott said it well, We're not satisfied. We'll continue to hold ourselves accountable to improve.

COMMISSIONER PARKER: As you know, the best thing about this whole process is that we have now identified the problem areas and we can go right to it. I think the process has been working well.

MR. SMITH: Well, I think the process is working well. I also think, again, this stratification scheme that Carlos and his team had developed helps us focus on where the real problems are, from a management perspective. Carlos is right. I mean, if we have parks that have gone through the process of being audited once, and then come up for review again, and are not compliant, we've got a problem, and we need to fix that. There's no doubt about it. Or we have a park that is showing a high severity level and a high level of risk, we need to fix it; and we get that.

So I agree. I think the process and the communication feedback is good. Carlos and his team are doing their job in making us aware of those. It's incumbent upon us now to get that improved.

COMMISSIONER FRIEDKIN: Thank you. Thanks for all your efforts, appreciate it.

MR. CONTRERAS: Thanks.

COMMISSIONER FRIEDKIN: Okay. Item Number 4, Department of Information Resources Data Center consolidation update has been withdrawn at this time. I think we've completed our business for this committee and we'll now go to Outreach and Education.

(Whereupon, at 3:17 p.m., the meeting was adjourned.)

C E R T I F I C A T E

MEETING OF: Texas Parks and Wildlife Commission, Finance Committee
LOCATION: Austin, Texas
DATE: January 21, 2009

I do hereby certify that the foregoing pages, numbers 1 through 32, inclusive, are the true, accurate, and complete transcript prepared from the verbal recording made by electronic recording by Penny Bynum before the Texas Parks and Wildlife Commission.

02/04/09
(Transcriber) (Date)
On the Record Reporting, Inc.
3307 Northland, Suite 315
Austin, Texas 78731


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