oversight

Recreation Fees: Demonstration Has Increased Revenues, but Impact on Park Service Backlog Is Uncertain

Published by the Government Accountability Office on 1999-03-03.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

                    United States General Accounting Office

GAO                 Testimony
                    Before the Subcommittee on Interior and Related
                    Agencies, Committee on Appropriations, House of
                    Representatives


For Release
on Delivery
Expected at
                    RECREATION FEES
10 a.m. EST
Wednesday
March 3, 1999
                    Demonstration Has
                    Increased Revenues, but
                    Impact on Park Service
                    Backlog Is Uncertain
                    Statement of Barry T. Hill, Associate Director,
                    Energy, Resources, and Science Issues,
                    Resources, Community, and Economic
                    Development Division




GAO/T-RCED-99-101
                        Mr. Chairman and Members of the Subcommittee:

                        We are here today to discuss the Recreational Fee Demonstration
                        Program. Most of my statement will summarize the results of our recently
                        issued report on this program.1 However, as you requested, we will also
                        comment on two other issues—(1) the rate at which the National Park
                        Service spends revenue collected under the program in comparison with
                        the other agencies and (2) the impact of the fee program on the Park
                        Service’s maintenance needs.

                        In summary, our overall message about the demonstration program is
                        clearly positive. The program is providing hundreds of millions of dollars
                        to improve visitor services and address the backlog of unmet needs in the
                        four land management agencies. In addition, those who pay the fees
                        generally support the program, and it has not appeared to have adversely
                        affected visitation rates. Nonetheless, it is appropriate to focus today on
                        several areas in which changes or improvements may be needed.
                        Specifically, these issues include the need for greater coordination of fees
                        by the agencies, greater innovation and flexibility in revenue distribution.
                        These issues are important because the demonstration program is still at a
                        stage where experimentation is encouraged. Most of our observations
                        relate to doing just that—experimenting more to determine what works
                        best. Regarding the Park Service, we found that the agency’s spending of
                        demonstration program revenue has lagged substantially behind the other
                        three agencies in the first 2 years of the program. This has been due
                        primarily to the larger number and scale of Park Service projects and
                        additional scrutiny these projects are receiving within the agency and the
                        Department of the Interior. Further, the Park Service has not yet
                        developed accurate and reliable information on its total deferred
                        maintenance needs. Until this is done, determining the impact that the
                        revenue from the fee program is having on these needs is not possible.


                        The demonstration program affords opportunities to collect new and
Demonstration           increased fees to the major agencies that provide the public with
Program Successful in   recreational opportunities on federal land—the Park Service, Bureau of
Raising Revenue, but    Land Management, and Fish and Wildlife Service (all within the
                        Department of the Interior), and the Forest Service (within the
Improvements Can Be     Department of Agriculture). Each agency can experiment with new or
Made                    increased fees at up to 100 sites. By September 1998, such fees were in

                        1
                         Recreation Fees: Demonstration Fee Program Successful in Raising Revenues but Could Be Improved
                        (GAO/RCED-99-7, Nov. 20, 1998).



                        Page 1                                                                    GAO/T-RCED-99-101
                        place at 312 sites—100 administered by the Park Service, 77 by the Fish
                        and Wildlife Service, 68 by the Bureau of Land Management, and 67 by the
                        Forest Service. The four agencies reported that, because of the program,
                        their combined recreational fee revenues have nearly doubled, from about
                        $93 million in fiscal year 1996 (the last year before the demonstration
                        program was implemented) to about $180 million in fiscal year 1998. The
                        Park Service collected 80 percent of the fee revenue in fiscal year 1998, the
                        Forest Service 15 percent, the Bureau of Land Management 3 percent, and
                        the Fish and Wildlife Service about 2 percent.

                        Visitation appears largely unaffected by the new and increased fees,
                        according to surveys conducted by the four agencies. In fiscal year 1997,
                        visitation at the demonstration sites increased overall by 5 percent
                        compared with 4 percent at other sites. Effects varied somewhat from
                        location to location. Of the 206 sites in the demonstration program in fiscal
                        year 1997, 58 percent had increases in visitation, 41 percent had decreases,
                        and 1 percent were unchanged. However, with data from only 1 year, it is
                        difficult to draw definitive conclusions, either about the lack of a negative
                        effect on visitation at most sites or about whether fees had an impact at
                        sites where visitation declined.

                        Now, I would like to discuss several areas in which we think
                        improvements can be made to the demonstration program.


Improving Interagency   The demonstration program was authorized with the expectation that the
Coordination            four agencies would coordinate their fee collection efforts, both among
                        themselves and with state and local agencies, where it made sense to do
                        so. During our review, we did find examples of such coordination, with
                        demonstrated benefits for the public. In Utah, for example, where the Park
                        Service’s Timpanogos Cave National Monument is surrounded by a
                        recreation area in the Forest Service’s Uinta National Forest, the two
                        agencies decided to charge a single entrance fee for both. Such
                        coordination can reduce agencies’ operating costs, strengthen resource
                        management activities, and provide more agency personnel to assist
                        visitors.

                        We also found, however, that agencies were not taking full advantage of
                        this flexibility. For example, the Park Service and the Fish and Wildlife
                        Service manage sites with a common border on the same island in
                        Maryland and Virginia. The two sites are Assateague Island National
                        Seashore and Chincoteague National Wildlife Refuge. Administratively, the



                        Page 2                                                     GAO/T-RCED-99-101
                           two agencies cooperate on law enforcement matters and run a joint permit
                           program for off-road vehicles, and the Park Service provides staff to
                           operate and maintain a ranger station and bathing facilities on refuge land.
                           However, when the agencies selected the two sites for the demonstration
                           program, they decided to charge separate, nonreciprocal entrance fees of
                           $5 per vehicle. Officials at the refuge told us that visitors are sometimes
                           confused by this lack of reciprocity. Our report discusses other cases in
                           which greater coordination among the agencies would either improve the
                           service to the public or permit greater efficiency in implementing a fee
                           program. These cases included (1) backcountry fees in Olympic National
                           Park and Olympic National Forest in Washington State, and (2) a proposed
                           fee at Park Service and BLM lands located in the El Malpais area of New
                           Mexico.

                           Demonstration sites may be reluctant to coordinate fees partly because
                           the program’s incentives are geared towards increasing their revenues. By
                           contrast, because joint fee arrangements may potentially reduce revenues
                           to specific sites, there may be a disincentive among these sites to
                           coordinate. However, at sites such as Assateague and Chincoteague, the
                           increase in service to the public may be worth a small reduction in
                           revenues. That is why our report recommends that the agencies perform a
                           site-by-site review of their demonstration sites to identify opportunities for
                           greater coordination. In commenting on our report, the agencies generally
                           agreed that more could be done in this area.


Greater Innovation Would   The demonstration program also encouraged the four agencies to be
Make Fees More Equitable   innovative in setting and collecting their own fees. Such improvements
                           take two main forms: making it as convenient as possible for visitors to
                           pay and making fees more equitable. We found many examples of agencies
                           experimenting with ways to make payment more convenient, including
                           selling entrance passes using machines like automated tellers, selling
                           hiking permits over the Internet, and selling entrance or user permits
                           through vendors such as gas stations, grocery stores, and convenience
                           stores. However, we found fewer examples of the agencies experimenting
                           with different pricing structures that could make the fees more equitable,
                           such as basing fees on (1) the extent of use or (2) whether the visit
                           occurred during a peak visitation period.

                           Most of the experiments with pricing have been done by the Forest
                           Service or the Bureau of Land Management. These two agencies have
                           experimented with setting fees that vary on the basis of (1) how long the



                           Page 3                                                      GAO/T-RCED-99-101
                            visitor will stay or (2) whether the visit occurs during a peak period (such
                            as a weekend) or an off-peak period (such as midweek or during the off
                            season). For example, a 3-day visit to a recreational area might cost $3 per
                            car, compared with $10 per car for a 2-week visit. Such pricing has
                            resulted in greater equity to the visitors, in that visitors who use the area
                            for greater lengths of time pay higher fees. It would appear to have
                            broader applicability in the other agencies as well.

                            By contrast, the Park Service has done little to experiment with different
                            pricing structures. Visitors generally pay the same fee whether they are
                            visiting during a peak period (such as a weekend in the summer) or an
                            off-peak period (such as midweek during the winter) or whether they are
                            staying for several hours or several days. A more innovative fee system
                            would make fees more equitable for visitors and might change visitation
                            patterns somewhat to enhance economic efficiency and reduce
                            overcrowding and its effects on parks’ resources. Furthermore, according
                            to the four agencies, reducing visitation during peak periods can lower the
                            costs of operating recreation sites by reducing (1) the staff needed to
                            operate a site, (2) the size of facilities, (3) the need for maintenance and
                            future capital investments, and (4) the extent of damage to a site’s
                            resources.

                            Because it was one of the goals of the program, and because it could result
                            in more equitable fees to the public, our report recommends that two
                            agencies—the Park Service and Fish and Wildlife Service—look for further
                            opportunities to experiment and innovate with new and existing fees.


Permitting Greater          The demonstration program required the agencies to spend at least
Flexibility in Allocating   80 percent of the fee revenues at the site where these revenues were
Revenues                    generated. However, some demonstration sites are generating so much
                            revenue as to raise questions about their long-term ability to spend these
                            revenues on high-priority items. By contrast, sites outside the
                            demonstration program, as well as demonstration sites that do not collect
                            much in fee revenues, may have high-priority needs that remain unmet. As
                            a result, some of the agencies’ highest-priority needs may not be
                            addressed.

                            For many sites in the demonstration program—particularly in the Park
                            Service—the increased fee revenues equal 20 percent or more of the sites’
                            annual operating budgets. This large amount of new revenue allows such
                            sites to address past unmet needs in maintenance, resource protection,



                            Page 4                                                      GAO/T-RCED-99-101
and visitor services. The Park Service has set a priority on using fee
revenues to address its repair and maintenance needs. Some sites with
high fee revenues may be able to address these needs within a few years.
However, the 80-percent requirement could, over time, preclude the
agencies from using fee revenues for more pressing needs at other sites.

Two of the sites we visited—Zion and Shenandoah National Parks—are
examples of how this issue may surface in the near future. At Zion, park
officials told us that the park expected to receive so much new fee
revenue in fiscal year 1998 (about $4.5 million) that the park’s budget
would be doubled. The park’s current plans call for using this additional
money to begin a $20 million alternative transportation system. However,
park officials said that if for some reason this particular project did not
move forward, they might have difficulty preparing and implementing
enough projects to use the available funds in a manner consistent with the
program’s objectives. At Shenandoah, fee revenues for fiscal year 1998
were expected to be about $2.9 million—enough money, the park
superintendent said, to eliminate the park’s estimated $15 million repair
and maintenance backlog in a few years.

This is a significant and sensitive issue that involves balancing important
features of the program. Specifically, the increased efficiency that would
be achieved by allowing the agencies more spending flexibility needs to be
balanced with the continued need to demonstrate to the visitors that
improvements are being made with the new or increased fees and the need
to maintain incentives to collect fees. Our report stated that as the
Congress decides on the future of the fee demonstration program, it might
wish to consider modifying the current requirement. Providing some
further flexibility in the spending of fee revenues would give agencies
more opportunities to address their highest-priority needs among all of
their field units. If this is not done, undesirable inequities could occur
within agencies if and when the current legislation is made permanent. At
the same time, however, any change in the requirement would need to be
done in such a way that (1) fee-collecting sites would continue to have an
incentive to collect fees and (2) visitors who pay the fees will continue to
support the program. Visitor surveys show that putting fees to work where
they are collected is a popular idea.




Page 5                                                     GAO/T-RCED-99-101
                        Through the first 2 fiscal years of the program, the Park Service retained
Park Service Spending   about $182 million in recreational fee revenue, which represents over 80
Lags Behind Other       percent of the total amount of revenue generated by all four of the
Agencies                participating agencies. However, by the end of fiscal year 1998, the agency
                        had obligated only about $56 million, or about 31 percent, of this revenue.2
                        This spending rate was by far the lowest among the four agencies
                        participating in the program. Specifically, by the end of fiscal year 1998,
                        the Forest Service had spent about 63 percent of its revenues; the Fish and
                        Wildlife Service about 56 percent; and the Bureau of Land Management
                        about 72 percent. (See app. I for more specific revenue and spending
                        information.)

                        In order to understand why the rate of spending in the Park Service is so
                        far behind the other agencies, we visited four parks. For these parks, the
                        percentages of revenue available to them that was obligated through
                        September 30, 1998, varied from a low of 10 percent at Golden Gate
                        National Recreation Area to a high of 48 percent at Olympic National Park.
                        The other two parks we visited were Rocky Mountain National Park and
                        Grand Canyon National Park, which obligated 41 and 20 percent,
                        respectively. In total, these parks had proposed 101 projects for funding
                        under the demonstration fee program. Projects at the four parks ranged
                        from the planning and construction of major facilities, like a visitor
                        transportation and orientation center at the south rim of the Grand
                        Canyon for $18 million, to small projects, like the rehabilitation of trail
                        signs in Golden Gate for $11,000. They also included other projects, like
                        the replacement of outhouses and campground rehabilitation.

                        Our work indicates that there are two main factors that have contributed
                        to the Park Service’s low rate of spending over the program’s first 2 years.
                        These factors are that (1) the project review and approval process has
                        delayed the start of construction and maintenance projects and (2) the
                        capacity of the agency to handle the large number of projects planned
                        under the program is limited. The large size of some of the projects being
                        funded by the demonstration fee program also contributes to slowing the
                        agency’s spending rate.




                        2
                         The spending information that is provided by the agencies reflects funds obligated.



                        Page 6                                                                          GAO/T-RCED-99-101
Park Service Projects       In 1997, this Subcommittee and others heavily criticized the Park Service
Receive More Scrutiny       because of spending abuses involving an outhouse costing over $300,000 at
Than Those of Other         one park and employee residences costing over $500,000 at another. In
                            response to these criticisms, and in order to avoid similar abuses in the
Agencies                    future, the Park Service and the Department of the Interior are paying
                            particularly close attention to how individual park units are using the
                            revenues provided by the demonstration fee program.

                            Park Service headquarters officials review all projects approved by regions
                            before individual parks are permitted to proceed with construction. As of
                            March 1998, the Park Service also required an additional review by top
                            agency officials of all projects costing $500,000 or more. Furthermore,
                            another level of review was added when Department of the Interior
                            officials decided that they too would review all of the projects that the
                            Park Service proposed for its recreational fee revenue. The
                            implementation of this Departmental-level review added more time to the
                            project approval process. Adding these layers of review specifically for
                            Park Service projects helps explain why the rate of spending for the
                            agency has been the lowest among the agencies participating in the
                            program. However, in light of the spending abuses noted earlier, in our
                            opinion, the additional Park Service and Departmental reviews appear
                            prudent.

                            In contrast, the projects being done by the other three agencies—the
                            Bureau of Land Management, the Fish and Wildlife Service, and the Forest
                            Service—have not had these additional levels of scrutiny. In those
                            agencies, determining how the fee money will be spent has been left to
                            on-site and regional managers. Not surprisingly, the spending rates for
                            these other agencies have been substantially higher than for the Park
                            Service.


Capacity of the Agency to   Another factor limiting the pace of the Park Service’s spending relative to
Handle Large Volume of      the other agencies in the program has been the agency’s ability to handle
Projects Limits Spending    the large volume of projects that are now in the pipeline. All of the parks
                            we visited have had substantial funding increases in recent years to help
                            them address maintenance and other needs. These increases were due to
                            not only to the increased funding made available from the demonstration
                            fee program but also from appropriated funds such as those for repair and
                            rehabilitation and line item construction projects. This large inflow of
                            funding from a variety of sources has, according to some park managers




                            Page 7                                                    GAO/T-RCED-99-101
                      we interviewed, exceeded their ability to get projects initiated and
                      completed.

                      At most of the parks and regional offices we visited, officials said there
                      was a bottleneck of projects that were both approved and funded but
                      waiting to be initiated. For example, Golden Gate National Recreation
                      Area has 14 projects costing about $4.7 million that have been approved as
                      part of the fee demonstration program. Managers at the site said they have
                      spent little to date on these projects because the current staff cannot
                      prepare plans and manage the large volume of projects now funded. Two
                      of the other parks we visited, Rocky Mountain and Grand Canyon, have
                      similar explanations about why their spending was relatively slow.

                      Another factor that has some impact on the spending rate for the Park
                      Service is the large scale of some of the projects being undertaken by the
                      agency. Some parks must accumulate a substantial amount of funds before
                      they could proceed with these large projects. For example, while Grand
                      Canyon has very high revenue under the program, over $20 million
                      annually, it also has some of the largest projects planned, like a new,
                      multimillion-dollar visitor orientation and transportation center. To begin
                      this project, the park has had to set aside millions of dollars during the
                      first years of the program in order to fund the construction contracts for
                      the new facility in later years. Setting funds aside for later use has the
                      effect of lowering the rate of expenditures in the initial years of the
                      program.


                      Given the substantial increase in funding that the Park Service will receive
Impact of the Fee     under the demonstration fee program, now more than ever the agency will
Program on Park       have to be accountable for demonstrating its accomplishments in
Service Maintenance   improving the maintenance of Park Service facilities with these additional
                      resources. The agency cannot now do this. The Park Service will need to
Needs                 develop more accurate and reliable information on its deferred
                      maintenance needs (as well as its other park operating needs) and to track
                      progress in addressing them.

                      In administering its recreational fee demonstration program, the Park
                      Service decided that using the revenue to address its maintenance needs is
                      a high priority. However, during hearings before this Subcommittee last
                      year, we reported that the Park Service did not have a common definition
                      of what should be included in its backlog of maintenance needs and did




                      Page 8                                                     GAO/T-RCED-99-101
not have a routine, systematic process for determining these needs.3 As a
result, the agency was unable to provide us with a reliable estimate of its
deferred maintenance needs.

At the same hearing, Interior’s Assistant Secretary for Policy, Management,
and Budget made several commitments to address these problems. The
commitments were to (1) establish common definitions for deferred
maintenance and other key maintenance and construction terms;
(2) develop improved data collection processes for accumulating data
about annual and deferred maintenance needs, among other things;
(3) provide guidance for preparing a 5-year priority maintenance and
construction plan for the fiscal year 2000 budget; and (4) issue instructions
for reporting deferred maintenance in agency financial statements.

To date, the Department of the Interior has made some progress in
meeting these commitments. In February 1998, common definitions were
developed for deferred maintenance. The Department has also provided
guidance for the agencies to use to develop priority maintenance plans. In
addition, the Department has issued instructions on how agencies should
report deferred maintenance in their financial statements. These are all
positive steps that should, if implemented properly, help the Park Service
as well as other Interior agencies manage their maintenance activities.

Nonetheless, the Park Service still does not have accurate information on
its maintenance needs. This is evident from a February 1998 Interior
report,4 which states, among other things, that the deferred maintenance
needs of Interior agencies, including the Park Service, have never been
adequately documented. To remedy this situation, Interior and its
agencies, including the Park Service, are beginning to develop a
maintenance management system that can generate consistent
maintenance data for all Interior agencies. Interior expects to identify the
systems needed to generate better maintenance data needs by June 1999.
However, this is just a first step. Interior and its agencies are also in the
process of obtaining better information on the condition of their facilities.
Any data improvements resulting from this effort will likely be several
years away.

The Congress has attempted to help the Park Service address its deferred
maintenance and other program needs in recent years by providing

3
 National Park Service: Maintenance Backlog Issues (GAO/T-RCED-98-61, Feb. 4, 1998).
4
 Facilities Maintenance Assessment and Recommendations, U.S. Department of the Interior,
February 1998, prepared for the Interior Planning, Design and Construction Council.



Page 9                                                                      GAO/T-RCED-99-101
additional appropriations and revenue from the recreational fee program.
Given this substantial increase in funds, the Park Service needs to be held
accountable for demonstrating what is being accomplished with these
financial resources. To date, however, the agency is not yet able to
determine how much these additional funds are helping because it does
not know the size of the problem. Accordingly, while we and others have
frequently reported on the deteriorating conditions of the agency’s
facilities, until accurate, reliable and useful data are developed about the
size and scope of the agency’s maintenance needs, the agency will be
unable to determine how much progress is being made to address these
needs and resolution of the deferred maintenance problem will continue
to elude the agency.


In closing Mr. Chairman, while our testimony today has focused on
improvements that could be made to the fee demonstration program, it is
important to remember that this program appears to be working well and
meeting many of the law’s intended objectives. So far, the demonstration
program has brought over $200 million in additional revenue to recreation
areas across the country with no apparent impact on visitation patterns. It
has created opportunities for the agencies—particularly the Park
Service—to address, and in some cases resolve, their past unmet repair
and maintenance needs. There are now more than 2 years remaining in
this demonstration program. These 2 years represent an opportunity for
the agencies to further the program’s goals by coordinating their efforts
more, developing innovative fee structures, and understanding the
reactions of the visitors.

This concludes my statement. I would be happy to answer any questions
you or the other Members of the Subcommittee may have.




Page 10                                                    GAO/T-RCED-99-101
Page 11   GAO/T-RCED-99-101
Appendix I

Total Fee Revenues and Obligations for Four
Agencies Through September 30, 1998


               Dollars in thousands
                                                                                                   Percent of
                                                                                       Total        revenues
               Agency                                    Total revenues          obligations        obligated
               Park Service                                     $181,217               $56,116            31
               Fish and Wildlife Service                           $3,712               $2,095            56
               Forest Service                                     $30,029              $19,045            63
               Bureau of Land Management                           $3,947               $2,857            72
               Total                                            $218,905               $80,113            37
               Source: Department of the Interior and the Department of Agriculture.




(141251)       Page 12                                                                      GAO/T-RCED-99-101
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