Texas Parks and Wildlife Commission
Finance Committee Meeting
August 24, 2011Commission 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 August 2011, there came to be heard matters under the regulatory authority of the Texas Parks and Wildlife Commission in the Commission Hearing Room of the Texas Parks and Wildlife Department Headquarters Complex, to wit:
THE TEXAS PARKS AND WILDLIFE COMMISSION:
- Antonio Falcon, MD, Rio Grande City, Texas, Committee Chairman
- Peter M. Holt, San Antonio, Texas, Chairman
- Ralph H. Duggins, Fort Worth, Texas
- T. Dan Friedkin, Houston, Texas
- Karen J. Hixon, San Antonio, Texas
- Dan Allen Hughes, Jr., Beeville, Texas
- Margaret Martin, Boerne, Texas
- S. Reed Morian, Houston, Texas
- Dick Scott, Wimberley, Texas
THE TEXAS PARKS AND WILDLIFE DEPARTMENT:
- Carter P. Smith, Executive Director, and other personnel of the Texas Parks and Wildlife Department
P R O C E E D I N G S
COMMISSIONER HOLT: Welcome, everybody. It’s good to be here. Good to be in air conditioning. So good morning everyone. This meeting is called to order, August 24, 2011, at ‑‑ I’m late, I apologize ‑‑ 9:15 a.m. Before proceeding with any business I believe Mr. Smith has a statement to make.
MR. SMITH: I do, Mr. Chairman. Thank you.
A public notice of this meeting containing all items on the proposed agenda has been filed in the office of the Secretary of State as required by Chapter 551, Government Code, referred to as the Open Meetings Act. I’d like for this fact to be noted in the official record of the meeting.
Thank you, Mr. Chairman.
COMMISSIONER HOLT: Okay. We will begin with the Finance Committee this morning.
Chairman Falcon, please.
COMMISSIONER FALCON: Thank you, Chairman Holt.
The first order of business is the approval of the previous committee meeting minutes from May 25, 2011, and June 30, 2011, meetings, which have already been distributed. Is there a motion for approval?
COMMISSIONER FRIEDKIN: So move.
COMMISSIONER HOLT: Second.
COMMISSIONER FALCON: Moved by Commissioner Friedkin, second by Commissioner Holt. All those in favor say aye.
(A chorus of ayes.)
COMMISSIONER FALCON: Okay. Before we get started, I want to mention we have a revised agenda today. The FY 2011 financial update portion of this item has been withdrawn in an effort to save time. So we’ll go to Committee Item Number 1, update on TPWD progress in implementing the TPW Land & Water Resources Conservation and Recreation Plan.
MR. SMITH: Thank you, Mr. Chairman.
I don’t have any official updates from the Land & Water Plan that I’m going to report on this morning, but I will certainly plan on it next meeting.
COMMISSIONER HOLT: There is no water.
(General laughter and simultaneous discussion.)
COMMISSIONER HOLT: I couldn’t resist.
MR. SMITH: Well said.
COMMISSIONER HOLT: I’m sorry, I couldn’t resist.
MR. SMITH: All right. So suspended until rain. All right.
So one thing though that I do want to make sure the Commission is apprised of, I think, as some of you are aware, we were notified by Verizon, which has been our provider of the hunting and fishing license system, that they are discontinuing that line of business, so officially exiting that. They notified us that they are going to discontinue it. It’ll be effective August of 2013. So basically we have two years to find a new vendor then to handle the sale of our hunting and fishing licenses and handle it on the point-of-sale perspective.
So we’ve got a team that is working on that right now, led by Gene, and we’ve put out a request for offer to companies who want to bring proposals forward. We have a team that will evaluate those proposals, and then we’ll invite a couple of finalists back to look at their system in more detail and then ultimately make a decision on that. But two years seems like a lot of time. It’s not. It’s going to go very, very quickly, particularly when you think about a company having to come in and develop a new system from scratch.
So we want make this change as seamless on our license buyers as possible, and that’s our highest priority, is just making sure our hunters and anglers out there don’t see the change. And so we’ll certainly keep you apprised of that process and our progress on it. But just want to let you know this is a big issue for us, and we’ll report back to the Commission as we go through it, so.
COMMISSIONER HOLT: Are there plenty of suppliers ‑‑ I mean vendors?
MR. SMITH: Yes, there ‑‑
COMMISSIONER HOLT: So there are some?
MR. SMITH: Yes, there are a number, so a number of qualified vendors that will have a chance to let them compete, yes.
COMMISSIONER FALCON: Thank you, Mr. Smith.
MR. SMITH: Yes, thank you, Mr. Chair.
COMMISSIONER HOLT: For half the price.
MR. SMITH: Right, Gene? It’s all negotiable. Yes.
COMMISSIONER DUGGINS: He’s having too much fun.
COMMISSIONER MARTIN: I wonder why?
COMMISSIONER HOLT: I’ll make no more comments.
COMMISSIONER FALCON: It’s a heat-related illness.
COMMISSIONER HOLT: I think you’re right, yes, heat stroke.
COMMISSIONER FALCON: Committee Item Number 2, financial overview.
Mr. Mike Jensen.
MR. JENSEN: Good morning, Commissioners. My name is Mike Jensen, I’m the Director of Administrative Resources. This morning we’re going to just address those items that will require action tomorrow at tomorrow’s meeting. So that’s why we removed the to 2011 summary.
I’d also like to recognize on the back row back here, Lance Goodrum, he’s the Budget and County Director. And Justin Halvorsen. At the last meeting, Commissioner Duggins, they were two of the guys in the gray suits and they have two of their staff next to them who helped produced this presentation. They do a good job for the Department.
Today we’re going to provide you a crosswalk to the General Appropriation Act. That’s the first bullet up there, the operating budget for 2012. We’ll provide you a summary by divisions, we’ll go real quickly over the capital budget; the allocation of employees, full-time equivalent employees; and the Conservation Account 5004 projects. Those are projects that are funded by the conservation license plates.
And each year the Commission reviews the budget policy and the investment policy, and this year we have a change to a Legislative Budget Board performance measure. So tomorrow you all will approve a state park list that will be part of that definition, so when we calculate it, that’ll be the base calculation. Every two years they’ll update that list.
On this slide, it’s kind of hard to read, but this kind of tracks where we’re at from the appropriations bill to the $332.17 that we are asking you to approve tomorrow. The first line on there, the General Appropriations Act, Article 6, the Parks and Wildlife Department falls within the natural resources section of the appropriation bill, that is Article 6.
Articles 1 through 8 cover all state agencies and universities in Texas; we fall in six. And Article 9 applies to all state agencies generally, but at the end of each legislative session they will put some contention provisions that are specific to agencies. So as we track down this, you’ll see some items from Articles 6 and 9.
The second line up there, supplemental is $7.1 million that relates to Rider 27, which has the same number going the next biennium as it does this year. That’s the rider that allows the Department to get additional appropriations for state park revenue and for license revenue. That amount is $5.5 that we’re seeking, Rider 27, and there’s $1.6 million built in on that second line for State Parks Account, which relates to the opt-in provision when people register their vehicles with DMV.
COMMISSIONER HOLT: In other words, that’s what we have said we think we’re going to earn from that?
MR. JENSEN: That’s what the legislature has estimated that we will collect on that. I think at the last two meetings we talked about we have concerns that we can ‑‑
COMMISSIONER HOLT: Yes.
MR. JENSEN: ‑‑ achieve that or not. But that’s what they’ve actually built in to our budget, so if we do not collect that, that will have ‑‑ be effective a budget cut for the Department, yes.
COMMISSIONER HOLT: That’ll come down to us then.
MR. JENSEN: Yes.
COMMISSIONER HOLT: Okay.
MR. JENSEN: The third line that we have on there is Article 9. That’s the provision ‑‑ primarily, that $31.46 million is comprised of some general obligation bonds that were appropriated to us, $32.35 million, but we also had a net reduction for the IBM contract, the data center services, so that nets it to about $31.46 million, which is on the slide.
We also had some special appropriations in the extended session, the special session. It had two pieces to that. One piece was for border security, and the second piece was additional appropriation authority for license plates. We have license plate authority for $288,000 for internal plates and an additional $78,500 for pass-through plates. On the border security piece ‑‑
COMMISSIONER DUGGINS: Okay. Well, before you leave that ‑‑
MR. JENSEN: Sure.
COMMISSIONER DUGGINS: ‑‑ what’s the difference between an internal plate and a pass-through plate?
MR. JENSEN: The internal plates are what we use for our divisions internally to do projects. When we get through some slides later those are the projects that Wildlife, Communications, Inland Fisheries do. Those specific plates. We have ‑‑
COMMISSIONER DUGGINS: You’ll get to it later. That’s okay.
MR. JENSEN: I’ll get to it.
And the border security funding is $744,359. That’s about $500,000 for an additional safe boat, and it’s about $77,000 to equip that safe boat with weapons and ammunition, and operating funds of $165,000. When we get into 2013, the operating funds will continue as we’ll have approximately ‑‑
COMMISSIONER HOLT: We get two boats.
MR. JENSEN: Two boats. Safe boats, $501,000 for safe boats.
COMMISSIONER HOLT: So there’ll be a shoot-out down in Hidalgo County. All of a sudden Senator Ogden decided he wanted us to have big boats with big guns on them. Seriously. He came to us. And you’re going to get the first one ‑‑
MR. SMITH: What are we looking at, Pete, in terms of the delivery on that?
MR. FLORES: Those two boats have ‑‑ Peter Flores ‑‑ for the record, Peter Flores, Director of Law Enforcement ‑‑ those two vessels, upon our appropriation in September will be ordered the first week of September and they should arrive some time in the early spring.
COMMISSIONER HOLT: So you’ll get both at the same time then.
MR. FLORES: Yes, sir.
COMMISSIONER HOLT: Oh, good.
MALE VOICE: March.
MR. FLORES: Probably more like February.
COMMISSIONER HOLT: Are you getting your captain’s license?
MR. FLORES: Well, you know, we can drive anything, just ‑‑
MR. FLORES: But state-of-the-art vessels to add to our already increasing safe boat fleet, of which three vessels will be delivered in September of this year, all from federal funds. These vessels are totally from general revenue, which is a good deal.
MR. SMITH: So one will go at Falcon Lake and then one will go in Hidalgo County.
COMMISSIONER HOLT: All right.
MR. SMITH: That’ll cover that area.
MR. FLORES: State-of-the-art vessels, and operating, which we really appreciate.
COMMISSIONER HOLT: All right. Thank you.
MR. JENSEN: The next section that you see up here on the slide is a supplemental adjustment where we add into the budget some federal funds, appropriated receipts and interagency contacts. The federal funds is $9.36 million. It’s about 17 different sources, but the top five sources that account for about $9 million, it’s sport fish restoration funds, we have recreational program funds in there, wildlife funds, restoration, some NOAA funds and some disaster grants that account for $9 million of that.
Appropriated receipts is $830,000, it has about 10 different sources, including the NRDA money, the Natural Resource Damage Assessment funds, and we have some agreements with the Sabine River Authority, and we have some agreements out there with TxDOT mitigation and WAFWA, which is the Western Association of Fish and Wildlife Associations. On interagency contracts, that $70,000 is primarily with the Water Development Board. They do collection of water quality samples along the coast.
And one thing to note, the General Appropriation Act, when they make the bill they do not appropriate fringe benefits for any state agency. So that’s the primary difference between what is in the appropriation bill, this last line, the fringe benefits and benefits replacement pay, that’s not in the bill, so if you go looking through the big book when they publish it, you’re not going to find a line for fringe. So the fringe benefits are $40.4 million.
The total budget for 2012 will be $332.17 million. If you look at that by method of finance, and this pie graph it includes the fringe, general obligation bonds, we have about $43.6 million. That makes 13 percent of the budget. That includes the Article 9 $32.35 million, plus an unexpended balance amount of 11 point ‑‑ almost $11.3‑ in prior issuance of bonds.
Other GR dedicated, it’s about $2.31 million, less than 1 percent of the budget. General revenue is $81 million, about 24 percent of the budget, and that’s primarily sporting goods sales tax. It accounts for, oh, almost $37 million of that. Other funds, which is appropriated receipts in [inaudible] to the contracts, is $10.87 million, or 3 percent of the budget. The federal funds is almost $49 million, 14 percent of the budget. Game Fish Water Safety, Account 9, that’s about $105 million, which is 30 ‑‑ almost 32 percent of the budget. And the state park account is $40-1/2 million, it’s about 12.2 percent of the budget.
One important thing to note before I go through the next slide is if you look at what we had in 2011 for sporting goods sales tax, we actually had $66.5 million in our budget this year that we’re closing down. As we move into the next one, the next fiscal year, we only have 36.7 ‑‑ $36.8 million, so that’s a significant reduction, almost $30 million reduction right there.
COMMISSIONER HOLT: And how much do they collect and stick in an escrow account?
MR. SMITH: Well, so they ‑‑ it’s an estimate, Chairman, and they estimate that they collect, around $125 million a year off that portion of the sales tax that’s attributable to those items. So I think Mike’s point in this, this is a very significant method of finance change, and so I want to make sure that you all are aware of that. And so it has pretty significant consequences for us, and is a fairly significant departure in terms of fiscal policy from a couple of sessions ago, so important to note.
MR. JENSEN: From the Comptroller’s standpoint, they just do a calculation and they really don’t have a specific ‑‑ they have account out there after they do the calculation to decide what they will let us have, and they put that there. So it’s not the full amount ‑‑
COMMISSIONER HOLT: The rest of it will be used essentially to count against deficit, I mean ‑‑
MR. JENSEN: It’s balancing the budget ‑‑
COMMISSIONER HOLT: ‑‑ it balances the budget.
MR. JENSEN: ‑‑ of the state as a whole, yes.
COMMISSIONER HOLT: And this has been an issue for eight years, it’s the one thing we’ve had no luck with.
Sporting good tax was put in when, Gene, in the ’90s?
MR. McCARTY: ’90, ’93.
COMMISSIONER HOLT: Have we ever gotten the full amount?
MR. McCARTY: No, sir.
MR. JENSEN: Okay. We’ll provide you a summary by object of expense on this slide. And this will relate ‑‑ tomorrow when you look at Exhibit A, it kind of lays it out in a table, the budget by object of expense. It also provides the number of employees we’re allowed to have.
Salaries, know the personnel cost will be $141.3 million. Operating is $69-1/2 million. Grants is $15 million. Out of that $15 million, most of that is really a pass-through to the General Land Office piece of sporting goods sales that comes in, $11.2 million will pass to General Land Office for coastal erosion projects. And in that grants we also have $2.8 million of federal funds for recreational trail grants.
The benefits, fringe, is $40.4 million, the capital budget’s $58.48 million, and we have another slide that we’ll touch on the detail of that, and the debt service is $7.31 million, for a total of $332.17 million. You’ll note that if we compared this to ’11, the percentage by object of expense for each object is going to be higher in ’12, except for capital because that’s where we took the biggest cut out of this last budget cut.
If we do this by division, the Administrative Resources Division has $8.3 million, Coastal Fisheries $17.1, Communications $8.3. Department-wide we have a separate slide for the detail on that of $22.1. Executive office, $3 million; human resources $1.88; information technologies $7.21; infrastructure $6.6, inland fisheries $19 million; law enforcement $57.1 million; legal $1 million; local parks $4 million; state parks $83.1 million; wildlife $26.3 million; capital construction $51.59 million; information technology capital $4 million; and General Land Office pass-through for coastal erosion projects is $11.23 million.
Again, if we compared this to 2011, most of these percentages, of the total per division, will be slightly higher this year, primarily due to the significant cuts that took place to capital and to the sporting goods sales tax.
COMMISSIONER DUGGINS: And what’s ‑‑ pardon me, what is the GLO transfer? Is that the pass-through?
MR. JENSEN: That’s the pass-through for coastal erosion projects.
One of the break-out groups that we had in the divisional slides was the department-wide budget, and each Commission meeting we kind of walk you through what’s in there. Just an important thing to note, the very last line that’s going ‑‑ you see it’s red, so it probably already drew your attention to it ‑‑ given the budget cuts that we had to endure, last year we had a strategic reserve that the executive office managed of a million. Well, when it came time to do budget cuts and reductions, they ‑‑ the executive office used that $1 million to minimize the impact across the resource divisions and the operating divisions and all divisions.
So we are pre-budgeting about a million dollars of salary lapse. We have about ‑‑ approximately $5 million in salary lapse per fiscal year so that there is some risk here, but it’s not a risk that we cannot assume. It’s just the nature of what we have from the legislature. So we’re going to work with this very carefully early on in the year and manage our attrition and we’re probably going to delay division directors filling positions so that we build that salary lapse as quickly as we can and eliminate this deficit that’s on this slide.
Department-wide budget includes the debt service that’s paid on the bonds of $7.3 million. We have payments to license agents for the Verizon system of $3.6 million. That’s what it’s going to be for this year and probably next year. And as we go to a new vendor, that amount will probably increase. We have the license system of $3 million. We have some boating access funds of $3 million, some uncertified authority that’s related to Rider 27 of $2.85 million.
When they passed the bill, Rider 27 allowed us to request from the Comptroller certain funds for Fund 9 and 64. We have a request in for a small piece of 9, and for a larger piece of Fund 64. But this amount here we do not believe at this time we’ll be able to collect. This is primarily Fund 9 piece, $2.85 million.
The next line is a brand new line. This legislative session every state agency, not just Parks and Wildlife, has been asked to allocate a certain percentage, 1 percent of their budget, to support the Employee Retirement System. For us it allocates as $1.31 million. And on the previous slides, that amount is also covered in the fringe benefits area.
We have about $800,000 for State Office of Risk Management. That is the amounts that we pay for workers compensation and other things that we do through SORM. Airport-Commerce is the facilities that we have about three miles from here where we have training and we have some other ‑‑ state parks and some other divisions with staff there. The rent on that is about $680,000.
We have some pass-through plates that the executive office has discretion to pass through as we work with the divisions of about $290,000. The reason that’s there is we have to wait on collection of receipts. As soon as we collect these receipts, the executive office will pass that out to the appropriate divisions for projects. And we have pass-through plates, it’s a hold-in-place until those other entities request their funds and then we’ll hand that out once it’s collected. We have master lease payments of $70,000, and we already addressed the pre-budgeted salary lapse.
I have one slide for the capital budget. If we walk across the first line, the $32.35, that is the Article 9 Section 18.01 general obligation bonds. I believe the next item up this morning is going to be Rich McMonagle. He’ll probably give you some more information, some more details on that.
We have an unexpended balance forward of $19.24. That is broken down by almost $11.3 million in prior issuance of bonds, $5.7 million in appropriated receipts, and about a million and a half of federal funds, and $749,000 of Fund 9. I think it’s important to note, in the past the legislature has allowed us UB authority of almost $3.7 million of Fund 9. So as we move into this year, that’s a significant reduction in UB authority.
The second line on here is primarily state parks minor repairs, $2.77 million. And then we have the data center capital authority for $4 million. And we have the master lease purchase payments of about $70,000 each year. So the total amount is $58.48 million for capital.
COMMISSIONER HOLT: Information technology, is this ‑‑
MR. SMITH: The data center project.
COMMISSIONER HOLT: Yes.
MR. SMITH: Yes.
COMMISSIONER HOLT: Another one of our favorites.
MR. SMITH: Certainly one of the ones that we are participating in.
COMMISSIONER HOLT: How is that ‑‑ did anything get cleared up or resolved? I mean ‑‑
MR. SMITH: So DIR has put together a new governance model for the big statewide data center project, and so certainly we’re participating in that. And so they are in the throes of looking for new vendors that can assume the various tasks that IBM originally had assumed by itself. And so right now we’re still working with IBM as they’re winding down things, and then also working with DIR, they’re in throes of looking for new vendors to help support that project. I think we’ve had maybe 10 to 12 percent of our servers moved.
Gene, is that about right?
MR. McCARTY: Yes.
MR. SMITH: Looking at George for ‑‑ yes, yes. So we still have most of our servers that are still here and so we’ll be a ways out before that’s fully consummated.
COMMISSIONER HOLT: Did we get the money though we needed to cover the cost?
MR. SMITH: Well, we got appropriation authority to cover that, and then we take those funds in from Fund 9 and Fund 64 in order to cover those extra costs that we’ve had with the data center project. One of the things as you’ll recall when we started the session we asked for some additional flexibility to be able to handle the impact on our IT budget. And so the legislature granted us that. So all of those funds to pay for this aren’t coming out of that IT budget. So we did get a little flexibility there.
COMMISSIONER HOLT: You did get it there. Okay.
MR. SMITH: Well, we got flexibility to be able to move it from different parts of the agency to cover those costs.
COMMISSIONER HOLT: So you got flexibility, but you didn’t ‑‑
MR. SMITH: Yes.
COMMISSIONER HOLT: ‑‑ get any extra dollars.
MR. SMITH: Well, we got the appropriation authority. So we’re using the funds that we have.
Gene, you want to add to that?
COMMISSIONER HOLT: Yes, I think what I’m asking you is ‑‑
COMMISSIONER FRIEDKIN: Do we have them.
COMMISSIONER HOLT: Remember we had gotten, two sessions ago or whatever, actually ‑‑ or when they first started this program, extra dollars to pay for the extra cost that it was going to be to us, because we ran our IT Department efficiently? ‑‑ can I say that?
MR. McCARTY: Yes, yes, sir. You can say that.
COMMISSIONER HOLT: And remember they gave us some extra dollars to then become part of the big picture. But what happened in 2011? No extra dollars, just flexibility to move dollars?
MR. McCARTY: Gene McCarty, Deputy Executive Director. Those extra dollars that were given to us at the last session roll into our base.
COMMISSIONER HOLT: Okay.
MR. McCARTY: Okay. So that appropriation rolls forward. And we were appropriated, originally appropriated at the base level, so those extra dollars were reappropriated to the Agency so we have the dollars to cover our need.
They also, in the contract, the DIR contract, is something called COLA, cost of living adjustment, and which is basically an escalating cost to our services. The legislature did not fund the COLA, but we are still required to live by the contract. So basically we’re going to end up having to do one of two things, we’re either going to have to pay more money and it’s going to have to come out of our operating, or we’re going to have to reduce services.
COMMISSIONER HOLT: Okay.
MR. McCARTY: And so that’s where we really, kind of in this particular session how ‑‑ where we kind of got into a pinch. They did fund our base but they did not fund the COLA.
COMMISSIONER HOLT: Fund the COLA. And is this true of all the agencies?
MR. McCARTY: Yes, sir.
COMMISSIONER HOLT: Okay. The COLA because inflation is so high, I assume that IBM gave us a pretty good number?
MR. McCARTY: It’s $400,000. And so, you know, I guess ‑‑ yes, but they’ve got an inflation increasing cost factor in the contract, but we don’t have that in our appropriations.
COMMISSIONER HOLT: Right. No, I understand. They’ve got it in the contract, but we don’t have the money. Or, well, not ‑‑
MR. McCARTY: Well, we don’t ‑‑
COMMISSIONER HOLT: ‑‑ appropriated.
MR. McCARTY: We don’t have it directly appropriated. Right.
COMMISSIONER HOLT: No ‑‑
MR. McCARTY: We’re either going to have to take it out ‑‑
COMMISSIONER HOLT: ‑‑ I’m just saying you’ve got to take it from somebody else.
MR. McCARTY: Yes, sir.
COMMISSIONER HOLT: Okay.
MR. JENSEN: It’s about $470,000, the COLA, on the first slide where we cross-walked the Appropriation Act.
COMMISSIONER HOLT: Okay.
MR. JENSEN: That’s why the Article 9 is less than the amount of the bonds, because that’s being netted against the bonds.
COMMISSIONER HOLT: Gotcha. Okay. A little bit frustrating.
COMMISSIONER DUGGINS: To your point, A, we had no choice, we had to make this conversion even though we didn’t think it was in our best interest, and, B, it ended up costing more than the DIR projected it would cost, and, again, back to your point, we didn’t get the funds to cover those extra costs, but we got the authority to take it from other funding ‑‑
MR. McCARTY: Yes, sir.
COMMISSIONER DUGGINS: ‑‑ that we had. Right?
COMMISSIONER HOLT: Yes, and the system’s not working, I assume. There’s no agencies that I’ve talked to that are happy with it.
MR. JENSEN: We’re continuing to have service problems.
COMMISSIONER HOLT: Right.
MR. JENSEN: I mean it’s ‑‑ they’re not living up to their service levels in any way.
COMMISSIONER HOLT: Yes, so far it’s been a 100 percent.
COMMISSIONER MARTIN: As expected.
COMMISSIONER HOLT: Well, no, I think the idea was, you know, they were trying to do the right thing, I think, it just ‑‑ they could never get it to work.
MR. SMITH: Well, I think originally when they thought about it, it was going to be a consolidation and they were going to ‑‑ and all the agencies would cross ‑‑
COMMISSIONER HOLT: Yes, and the other agencies would be part of it.
MR. SMITH: Right. All the agencies. But I think it turned out to be a lot more complicated than what they envisioned, and so we’ve seen these problems. So hopefully with the new governance model and the rebidding it out to new vendors that will take on parts of this contract we can have a better focus, and most importantly from our end we can have better service, which has been a huge issue for us, and also can have better cost ceilings.
That’s been the challenge for us, is the costs have just escalated with each passing year, and that’s been a real source of difficulty for us. So George and his team are actively involved in working with DIR and so we’re certainly doing our part to participate here to help make the transition.
COMMISSIONER HOLT: Thank you, Gene.
MR. JENSEN: This next slide, it kind of crosswalks the number of employees that the legislature allows us to have in ’12 compared to fiscal year 2011. The cap in 2011 was 3,175.3. If you look at the bill in 2012 it actually says 2,917.7, and that includes two FTEs from off-highway vehicles, the Rider 36. And this number up here includes that, it also includes 60.3 FTEs related to Rider 27 for state parks to bring back those staff. And it includes 28.2 FTEs in Article 9 Section 18.2 related to law enforcement. So our actual cap in ’12 is 3,006.2. It’s a variance of almost 169, almost 170 positions compared to ’11.
Each year we tend to budget about 4 percent above the cap because we’re planning on some attrition, and this year we’re being a little more conservative, we’re planning on attrition of 3.5 percent. So we pre-budgeted in ’12 104 FTEs compared to 120.7 in fiscal year 2011.
The next slide is going to be an action item for tomorrow. It’s the conservation capital account. Historically this account has been comprised of two components. It’s been comprised of sporting good sales tax. We have Parks and Wildlife Code Section 11.043 that allows us to use that allocation for projects for the Department.
This fiscal year we got no sporting good sales tax allocation. So Account 5004 for 2012 will be limited to license plate revenues, and it can only be spent on projects that you as the Commission approve. That’s what the next two or three slides will be. So in this Account 5004, the conservation capital account, we have funding available of $313,000 as of September 1st. The legislature has given us additional authority of $288,000, provided we collect it. So our authority is $601,000 for 2012.
There’s a note on here I think many of you are aware of. At one point in time during the session we thought we were going to be limited to 50 percent of the revenue collected, but in the special session we’re not limited anymore. We’ll have authority up to this $288,000 amount, which is with 100 percent projection.
MR. SMITH: And that’s both for the plates that are internal to our funding as well as the plates that we’re collecting funds and then passing through to partners like the Friends of Big Bend National Park or CCA and that kind of thing, Ducks Unlimited. So that’s good.
MR. JENSEN: In your Commission books there’s going to be an Exhibit C that gives you additional detail on the projects, and tomorrow we’ll ask you to approve that list of projects. Wildlife has their wildlife action plan, they do TWIM software development, they have research projects for white-tailed deer, pronghorn sheep, mule deer, bighorn sheep. They use some of these funds for projects related to managed land deer permits and for habitat management publications and the harvest surveys.
Communications gets a small allocation for marketing to encourage the public to continue to buy these specialty plates. Inland fisheries uses some of the revenues for freshwater resource management, for fish-stocking plans, habitat improvement plans and research. And state parks uses this ‑‑ a piece of this for operational costs, utilities, supplies, travel.
The goal that we have for the Commission when you approve this is to limit, or avoid using these funds for salaries because it does create some problems when they come back for benefits proportional. Benefits proportional is where they look at where you’re spending on salaries and they come back when the Comptroller ‑‑ and there’s a calculation and we pay an allocation to the State Comptroller and to SORM.
COMMISSIONER HUGHES: Well, everything I’m looking at is $313,000. We’re stretching this across a lot of different programs?
MR. JENSEN: Yes. We have $313,000 right now because that’s what the cash is on hand. But if we collect the additional $288,000 ‑‑
COMMISSIONER HUGHES: $601.
MR. JENSEN: ‑‑ then it could be passed out. That’s why we’re ‑‑ on the department-wide slide there was a piece sitting in department-wide. We have not collected those revenues so we’re not going to hand that out. But the D-wide amount is ‑‑ basically that’s the appropriation authority until it’s collected.
The budget policy, it did not change for the prior year, so this slide is basically summarizing what the policy is. The Commission has authorized the Executive Director to execute the budget. Any budget adjustments of $250,000 or greater that don’t involve bonds or federal funds require approval of the Chair and the Finance Chair. Donations or gifts exceeding $500 are accepted on a monthly basis, now recognized at each Commission meeting. And this Commission has ‑‑ I’m just reminding you this Commission has decided that funds are authorized for any use permitted by statute or rule. You’re allowing the most flexibility possible to maximize the use of the funds.
The next slide we do have an investment policy. It has been revised, so when you see Exhibit E, it is significantly different than what it was last year. The primary reason ‑‑ I want to give you some background as to why we had a policy in the first place. There’s a state statute, the Public Funds Investment Act. Basically that statute says if you deposit money outside the Treasury, you must appoint an investment officer, and you have to adhere to some pretty strict reporting requirements.
We do not have any funds deposited outside the Treasury. Currently we only have two funds that have discretion to be outside the Treasury, and one is the Texas Park Development Fund, the other is the Lifetime License Endowment Account. And the Park Development Fund is basically ‑‑ it’s a sinking fund to pay off some old bonds and the Lifetime Endowment Account is related to the lifetime license sales. Operation game thief, they operate according to the rules and policy set by the Operation Game Thief Committee.
So the new policy, the changes is basically to clarify that the intent is for all of our funds to be deposited with the Treasury. They’ll be invested by the Comptroller, either by the Comptroller or by the Safekeeping Trust, which is managed by the Comptroller. In the event that the Commission desires funds, these two funds be deposited outside the Treasury, you will allow the Executive Director to designate an investment officer and that investment officer will then ensure that we follow the Public Funds Investment Act with respect to training and reporting.
COMMISSIONER DUGGINS: Mike, how quickly can this be changed if this Commission were to decide to change that?
MR. JENSEN: Just as soon as tomorrow, if you ‑‑
COMMISSIONER DUGGINS: All right.
MR. JENSEN: ‑‑ approve the language, or if we need to change the language, we can do it ‑‑
COMMISSIONER DUGGINS: No, I’m just saying if the group wanted to hire an outside ‑‑
MR. JENSEN: Oh, you mean to do that? That would require some ‑‑ a hearing and consensus.
COMMISSIONER DUGGINS: Normal rulemaking.
COMMISSIONER HOLT: Normal rulemaking?
COMMISSIONER DUGGINS: Yes.
MR. SMITH: No.
MR. JENSEN: No, it’s not a rule. It’d just be an action item, they decided that they wanted to do that, then we’d have to follow the Public Funds Investment Act, appoint an investment officer and follow the reporting requirements.
MS. BRIGHT: Ann Bright, General Counsel. That’s right.
MALE VOICE: Perfect.
MALE VOICE: Short and sweet.
MR. JENSEN: But the only concern I would have is, given the downsizing the Department has, we really don’t have a staff who’s a specialist in investing. We have staff who are very good at analysis and projecting, we have a planning analysis group that’s probably a top notch group in-state that can do cash management analysis and they probably do a good job, but that’s not really what they were hired to do. To get the right skill set to invest a 22, $23 million portfolio, I would want to make sure that we did it right. We’d take any advice and counsel that the Commission would give us, but we do not really have staff within the Department that does that primarily.
COMMISSIONER DUGGINS: I’m not promoting it, I just want to make sure we had the flexibility to make a prompt change if we decided we could do better with our own investment person than ‑‑
MR. SMITH: Yes, in the event we do that. Absolutely. Yes.
MR. JENSEN: Because when you look at those two accounts, it’s basically just the Lifetime License Endowment Account because the State Park Development is just a sinking fund to pay off old bonds so there’s not much money there.
The state parks listing, this is an action item. The Legislative Budget Board has a number of performance measures, every agency has them. We have key and non-key performance measures. And one of our measures is the number of state parks in operation. This is just to establish a baseline for their new definition. So the list that you have as Exhibit F lists 95 parks, and tomorrow we’ll ask for your approval to use that as the baseline for this calculation for that performance measure.
And tomorrow I will read this into the record for Chairman Falcon so he doesn’t have to read this. This will be the recommended motion for tomorrow. And that concludes our presentation. If you have any questions, I’d be happy to try and answer them.
COMMISSIONER FALCON: Any other questions from any other Commissioners?
COMMISSIONER FALCON: Thank you, Mike.
Being no further discussion, I will place this item on the Thursday Commission meeting agenda for public comment and action.
Committee Item Number 3, fiscal year 2012-2013 General Obligation Bond Program. Rich McMonagle.
MR. McMONAGLE: Good morning, Chairman Falcon, Commissioners. My name is Rich McMonagle. I’m the Director of the Infrastructure Division. This morning I will present a resolution for your action tomorrow authorizing us to request financing for the General Obligation Bonds that were appropriated by the 82nd Legislature. Before I introduce that resolution, what I’d like to do very quickly is discuss our bond financing process, as well as the importance of these bonds.
So moving on to slide 3, this is the process we use for bond funding. Early in the last session the Parks and Wildlife leadership modified the request for capital construction to $32,350,000. The significance of that number is it represents one-half of the recommendation by a 2008 legislatively directed park study that said that we should be reinvesting $64.7 million per biennium in repairs and maintenance for state parks.
At the time that we submitted this request, we also submitted a list of projects to the Legislative Budget Board, which is Exhibit B to this item. This list is a product of a call for projects that we did last fall. Those projects were ranked using a prioritization model that was created to ‑‑ in response to a 2007 State Auditors Office recommendation that we have such a prioritization model.
The reason I mention that is that much has probably changed since the fall as we’ve changed needs and priorities. So we have gone back to the divisions and requested that they reprioritize the projects on not just that list, but the 160 projects that we have on the books right now. We’re still a couple of weeks away from me being able to submit that list to the executive office. So what I’m telling you is, the list you have before you is probably about an 80 percent solution. It’s more representative of the projects than the actual projects.
And what I’m asking ‑‑ what I’ll be asking from you for tomorrow is to authorize us to request the financing, I’m not asking you at this point to be approving ‑‑ to approve this list. Again, I will submit it to Mr. Smith and ‑‑ for his approval and notification of the Commission.
Once you direct us to do that, to request financing, our request goes to the Legislative Budget Board, who then forwards it on to the Texas Public Finance Authority who determines the financing, and if they approve, the Texas Public Financing Authority then takes it before the Bond Review Board. So as we’ve talked about before, there are a number of steps in this process. In the best case we will have our financing by the end of this calendar year, and we are striving to meet that calendar.
Moving on to slide 4 is the importance of these projects. This is a graph of our projects remaining over time, and the yellow line represents our current projects. And I think this graph well demonstrates that the work that we have done over the last several years culminates in this coming biennium with the completion of nearly all of the projects that we have left. The dotted line, or the dashed line, excuse me, represents the 40 or so projects that we will add from this ’12 and ’13 bond projects.
So you can certainly see how important getting this bond money has been, and we’ve talked in the past how important it is for us to get bond funding each and every session so that we can continue the momentum of repairs at all of our facilities. So I know Mr. Smith and members of the Commission very clearly understood that and worked hard to get us those bonds, and it is appreciated.
With that, I’ll move to slide 5 and this is the staff recommendation, which I will read to you tomorrow. Pending any questions, that completes my presentation.
COMMISSIONER FALCON: Any questions, comments?
COMMISSIONER FALCON: Thank you very much.
COMMISSIONER HOLT: You want to talk about the Battleship Texas? We’re trying to be fun.
COMMISSIONER FALCON: If there is no further discussion, I will place this item on the Thursday Commission meeting agenda ‑‑
COMMISSIONER HOLT: I’m in good spirits today. Well, see, I dreamed about that ‑‑ had nightmares about that. A hundred times in eight years? Especially when those hurricanes were coming.
COMMISSIONER FALCON: Chairman Holt, this Committee has completed its business. Thank you.
COMMISSIONER HOLT: Thank you.
(Whereupon, at 10:00 a.m., the meeting was concluded.)
C E R T I F I C A T E
Texas Parks and Wildlife Commission
LOCATION: Austin, Texas
DATE: August 24, 2011
I do hereby certify that the foregoing pages, numbers 1 through 38, 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.
On the Record Reporting, Inc.
3307 Northland, Suite 315
Austin, Texas 78731