The CCC provides more than three million hours of conservation work each year. In addition to activities traditionally associated with the CCC like tree planting, stream clearance, and trail building, the CCC responds to emergencies caused by fires, floods, earthquakes and other natural disasters.
The CCC is one of four departments participating in a pilot for performance-based budgeting.
The Legislature adopted supplemental report language in 1997-98 requiring CCC to schedule its main support item in the 1998-99 Budget Bill with performance measures and levels, using a specified format. Our review shows that while the Budget Bill schedules the expenditures in the department's main support item, the budget does not identify any proposed outcomes and their associated expenditures, as directed by the supplemental language. As a result, the Legislature will not be able to assess (1) how the department intends to achieve particular performance outcomes and (2) whether the proposed expenditures are in accordance with the Legislature's priorities.
The budget proposes total support of the commission in 1998-99 of $17.6 million, including the General Fund ($9.4 million), the Oil Spill Prevention and Administration fund ($5.1 million) and reimbursements ($3.1 million). This is a decrease of $0.6 million, or 3.3 percent, from estimated current-year expenditures.
We recommend that the Secretary for Resources and the Department of Finance jointly report at budget hearings on how the administration proposes to revise its budget proposal regarding the use of Natural Resources Infrastructure Fund money.
The budget projects $67 million in tidelands revenues for 1998-99. Under the requirements of Chapter 293, Statutes of 1997 (SB 271, Thompson), the bulk of tidelands revenues will be used for resources programs. (Please see Fund Conditions for Resources Programs in the Crosscutting Issues section of this chapter.) For 1998-99, the budget projects that a total of $55.4 million in tidelands revenues will be available to the Resources Trust Fund, including $8 million to the Salmon and Steelhead Trout Restoration Account and $47.4 million for the Natural Resources Infrastructure Fund (NRIF). The budget proposes to fully expend the funds in these accounts.
Updated Projection Shows Lower Tidelands Revenues. More recent projections prepared by the State Lands Commission, however, show that tidelands revenues in 1998-99 will likely be lower. Specifically, the commission now estimates total tidelands revenues to be $58 million instead--$9 million lower than initially projected in the Governor's budget. In part, the lower estimate reflects more recent, lower oil prices.
Less Revenues for Natural Resources Infrastructure Fund. Under the fund allocation formula of Chapter 293, the lower tidelands revenue projection will result in less revenues into NRIF. Instead of $47.4 million as initially projected, NRIF would receive $38.4 million instead. Consequently, NRIF expenditures will need to be reduced by $9 million.
At the time this analysis was prepared, the Department of Finance (DOF) did not have a plan as to how to revise the budget to align NRIF expenditures to projected revenues. Because the projection may be subject to further changes, depending on oil prices, we recommend that DOF provide an updated estimate at budget hearings. Depending on the updated information, we further recommend that the Secretary for Resources and the DOF report on (1) the administration's revised proposal on NRIF expenditures, and (2) how the administration proposes to fund the activities, including the various initiatives currently proposed in the Governor's budget.
The budget proposes total expenditures of $206.1 million from various sources for support of the DFG in 1998-99. This is an increase of $8.3 million, or 4.2 percent, from estimated current-year expenditures.
In 1997, DFG began a major reorganization effort to address problems it had identified with its previous organizational structure. At the time this analysis was prepared, the reorganization had not been completed and specific details were only partially available.
Problems With the Previous Organizational Structure. The department indicates that the reorganization is intended to address the following problems with the previous organization:
Proposed Organizational Structure. Figure 20 shows DFG's proposed organizational structure.
It differs from the previous organizational structure in two ways: it has (1) fewer divisions and
(2) more regions. Specifically, the proposed organizational structure has four policy divisions,
each of which will establish policies for areas under its jurisdiction. The policies and programs
are to be administered by seven regions. According to the department, the reorganization effort
is budget neutral in that it does not call for an increase in funding or personnel.
Department Believes Division Changes Would Promote Policy and Program Coordination.The proposed structure combines the previous seven divisions into four broader policy-making divisions. Specifically, the previously separate divisions of fish, wildlife, and law enforcement are proposed to be combined into one Hunting, Fishing, and Wildlife Protection division.
Under the proposed structure, the Biodiversity Conservation division would establish policies and activities consistent with the department's public trustee responsibilities. This would include developing policies, regulations, and programs that comply with the California Environmental Quality Act, the Endangered Species Act, and watershed and flood planning. This would help to eliminate the problem of fragmented directives to the regions.
Similarly, the Hunting, Fishing, and Wildlife Protection division would be responsible for establishing all enforcement policies of DFG. By consolidating into one policy division, this new division would be able to avoid inconsistencies in setting policies on enforcement.
The third and fourth divisions in the new structure, Oil Spill Prevention and Response (OSPR) and Administration and Program Support, would remain generally the same as they were under the previous organization. The OSPR division would be different in its new linkage with the Marine region, which we discuss later in this write-up.
Regional Changes Would Increase Focus on Marine Habitat. The reorganization would increase the number of regions from five to seven by creating two new regions. The department has attempted to divide the state into regions that contain similar natural ecosystems. By doing this, the department hopes to be able to manage the state's fish and wildlife more effectively. Specifically, one additional region would be created by splitting the former Region 5 (which covered most of Southern California) into two regions (Region 5 and Region 6). The new Region 5 would cover the south coast, while Region 6 would cover the inland deserts and eastern Sierras. The DFG maintains that this split will enable it to manage more effectively this vast geographical area with diverse wildlife populations and habitats.
The second new region would be the Marine region. Under the previous structure, ocean and marine resources were under the jurisdiction of three separate coastal regions. Creating a marine region would allow the department to manage the ocean as an ecosystem which it believes would be more effective than the fragmented species specific approach to management.
Criteria for Evaluating the Reorganization. Because the specific details of the reorganization are only partially available, we are not able to provide an in-depth analysis of the reorganization. Below we offer some criteria for the Legislature to consider in reviewing the department's proposed structure.
Using these criteria, below we offer our assessment and point out some concerns regarding the department's reorganization.
Reorganization Effort Is in the Right Direction. We believe that the department's reorganization is warranted. The department's responsibilities have increased over the years as a result of new programs and policies enacted by the Legislature. However, the department's structure has not evolved to ensure that it can effectively implement the new programs and meet new policy goals. Nevertheless, we have the following concerns regarding the new structure.
Responsibilities of Proposed Marine Region Not Fully Defined. Details about the responsibilities of this region remain unclear. First, while the Marine region would be the region responsible for the oceanic waters under the jurisdiction of the state, the department has yet to identify which region is responsible for protecting the state's bays and lagoons. It is important that the jurisdiction and responsibility for environmentally sensitive areas like the Bay-Delta region of the state also be clearly defined. This is because areas such as the Bay-Delta region represent unique ecosystems and should be managed in a coordinated manner to guarantee that the habitat is protected.
Second, the department has not articulated how it plans to coordinate the Marine region's activities with those of the other regions. Because many activities and programs implemented in the other five regions could affect the marine ecosystem, it is important that the activities of the regions are coordinated. For example, it is not clear what role the Marine region would play in allocating the proposed $8 million in local grants for the protection of salmon habitat and other watershed restoration activities in 1998-99. Specifically, watershed planning and protection are not coastal activities, but how watershed protection is carried out could have an impact on marine habitat.
Similarly, it is not clear how the marine region and other regions would coordinate their efforts to address the special needs of species, such as steelhead trout, which inhabit both the ocean and inland rivers.
Relationship Between OSPR and Marine Region Unclear. The department's reorganization plan provides for a new reporting relationship between the Marine region and OSPR. Specifically, OSPR field personnel (wardens, biologists, and specialists) would report administratively to the Marine region. However, these staff's work plans and assignments would be authorized by OSPR, and they will engage only in activities that are authorized under the Oil Spill Prevention and Response Act of 1990. These activities include establishing a marine safety program for the prevention of oil spills, overseeing oil spill contingency planning, coordinating of cleanup activities in the event of a marine oil spill, and establishing wildlife rescue and rehabilitation stations.
The department maintains this new reporting structure will increase efficiency by increased coordination and reduced duplication. We believe, however, that the change could create a potentially cumbersome reporting system by essentially establishing two reporting chain-of-commands for OSPR staff. Additionally, given this dual reporting system, it is unclear how the department will protect against the misuse of OSPR funds and personnel for activities that are not consistent with statute. Accordingly, the department should provide the Legislature more information on this reporting system.
Allocation of Resources. The department indicates that it will not seek additional funding or personnel as a consequence of this reorganization. However, the reorganization would entail the reallocation of some existing staff. By reallocating resources, the department seeks to increase organizational effectiveness, efficiency, and accountability. However, the extent and manner of the reallocation is not yet known. We recommend the department identify the new staffing levels in each of the divisions and regions, including an identification of which positions are being transferred in and out of divisions and regions.
Fiscal Feasibility. The department relies heavily on various special funds for its support. The use of many of the special funds are restricted to specific purposes. This means that the department has limited flexibility in how it can expend the funds. Given such funding limitations, it is not clear that the proposed structure would provide the department the flexibility to allocate funds to meet its programmatic priorities.
Recommendations. At the time this analysis was prepared, the department had provided us with preliminary details of its reorganization plan. However, many components of the plan remain unclear. We recommend that the department provide the Legislature, prior to budget hearings, with details about the elements of this reorganization and when the department expects it to be completed. We also recommend that the department provide further details on the change in reporting for some OSPR staff to ensure that safeguards exist against OSPR funds being used inappropriately for activities not authorized in statute. Finally, we recommend that the department address the concerns we raised in regard to organizational effectiveness, accountability, and fiscal feasibility.
The state park system consists of 265 units, including 38 units administered by local and regional park agencies. The system contains approximately 1.3 million acres of land with 280 miles of ocean and 811 miles of lake, reservoir, and river frontage. During 1997-98, approximately 70 million visitor-days are anticipated at state parks and beaches operated by the department.
The budget proposes expenditures totaling $213.9 million for departmental support and local assistance in 1998-99. This is a decrease of $15.3 million, or 6.7 percent, from estimated current-year expenditures. Of the total expenditures, the budget requests $192.8 million for support of the department, which is an increase of $4.9 million, or 2.6 percent, from the estimated current-year level. In addition, the budget proposes a total of $21.1 million for local assistance. This is a decrease of $20.1 million, or 49 percent, below estimated current-year expenditures for local assistance. This decrease is in part due to the depletion of bond funds for local park projects. In addition, it is because the department anticipates a large amount of past appropriations for local assistance to occur in the current year. The budget also proposes $24.9 million for capital outlay expenditures, including $5.9 million from the General Fund. (Please see our analysis of those expenditures in the Capital Outlay chapter of this Analysis.)
The department administers 226 concession contracts within the state park system. Concessions range in size and activity from a camp store in Big Basin Redwoods State Park, to a series of stores and restaurants in Old Town San Diego State Historical Park. Concessions pay rents to the state. Rents are typically based on some percentage of the concession's gross sales revenues. The rent revenues are deposited in the State Parks and Recreation Fund (SPRF) which is used to support the department.
State's Share of Concession Revenues Increasing. Our review shows that revenues from concessions have increased in recent years. As Figure 21 shows, from 1992-93 through 1996-97, total gross revenues earned by state park concessions grew at an annual rate of 2.6 percent (from $52 million to $58 million). During the same period, rental payments to the state increased by an average annual growth rate of 5.6 percent (from $5.6 million to $6.9 million). Rental revenues have increased at a higher rate than concession gross revenues primarily because many old contracts have expired, and have since been renegotiated at higher rents.
The department expects concession revenues to the state to continue to increase. For the first quarter of 1997-98, the state's rents were up 13 percent. For the entire year, the department projects gross revenues to be $75 million with corresponding rental revenues to the state at about $9 million.
According to the department, the growth in gross revenues (and thereby, state rental revenues) is attributable to three main reasons:
Increasing Concession Rents Help Department's Ongoing Support.The department relies heavily on SPRF for its support. In the current year, SPRF is expected to account for $80.7 million (or 43 percent) of total DPR support expenditures. For 1998-99, the budget proposes $82.5 million in support to come from SPRF. This increased reliance on SPRF in part is due to the continued decline in departmental support from the General Fund. For instance, in 1991-92, the General Fund accounted for 38 percent of the department's support expenditures. For 1998-99, the budget proposes that the General Fund provide 33 percent ($63.9 million) of that support.
The SPRF generates most of its revenues from park and beach fees. A significant portion of fund revenues come from concessions. In order to offset the drop in General Fund support in recent years, the department has proactively sought to increase SPRF revenues by increasing park and beach fees and by pursuing new concessions and revising the terms of expired concessions. As a result, concession rents will account for an increasing portion of total SPRF revenues. For instance, rents accounted for 11 percent of SPRF revenues in 1995-96, and are expected to account for about 14 percent of SPRF revenues in the current year.
We recommend denying the department authority to solicit bids for a concession at Stilwell Hall at the future site of Fort Ord Dunes State Park because the request is premature.
The department has included five concessions proposals in its budget. Of the five proposals, our review found two are warranted. Two other proposals lack sufficient detail on the appropriate rent to be charged. We recommend the department provide these rent figures at budget hearings. Lastly, our review found one concession request to be premature because the proposed concession site is not yet part of the state park system. We discuss these findings in detail below.
1. Restaurant at Old Town San Diego State Historic Park. The department already has authority to bid a five-year contract for a restaurant concession, but is asking for authority to seek a ten-year contract. The existing concessionaire is on a month-to-month contract and pays either 7 percent of gross receipts or $1,500 per month rent, whichever is greater. The new contract would be for ten years with a minimum acceptable bid of no less than 7 percent of gross receipts. Our review found the request to change this concession from a five-year to a ten-year contract to be warranted.
2. Golf Course at Pismo State Beach. The department requests approval to solicit bids to improve, operate, and maintain the nine-hole golf course, pro shop, restaurant, and day-use parking complex located at Pismo State Beach. The current concession has expired and is being held over on a month-to-month basis. The new contract would be for a period of ten years and will require approximately $125,000 in up-front facility repairs and refurbishment. The new contract also details a higher percentage rate to be paid to the state for each component of the concession. Our review found this concession proposal to be warranted.
3. Lodge at Pfeiffer Big Sur State Park. The department proposes a two-to-three year concession contract to continue operation and maintenance of the Big Sur Lodge, grocery store, and gift shop located within the park. The current contract expires on March 30, 1998. Beginning in April, the monthly rental will be 4 percent on the first $350,000 of annual gross receipts. The rental rate will be higher on the amount of gross receipts exceeding $350,000. The department is asking for a short-term contract because it expects the general plan for Pfeiffer Big Sur State Park to be completed within two-to-three years. The new plan will provide direction for future concession facilities and programs. The proposed short-term contract will include a higher percentage rental rate of no less than 8 percent and may be adjusted upwards based upon the financial information and recommendations provided in an upcoming economic study.
Because the study's findings may have an impact on the terms of the contract, we recommend that the DPR report, at budget hearings, on the findings of this economic study so that the Legislature may determine whether the proposed rental rate is appropriate.
4. Hotel at Columbia State Historic Park. The current concession will expire on January 18, 1999. Under the current contract, the concessionaire does not pay rent to the state but operates and maintains the historic hotel at no cost to the state. The department indicates that the new contract term would be for ten years. The department is unable to identify the rent to be paid to the state, but indicates that it will be based upon an "appropriate" percentage of gross receipts.
Without information on the rental rate to be charged the concessionaire, the Legislature is not able to determine whether the proposal is in the state's best interest. Accordingly, we recommend that the DPR provide the Legislature, at budget hearings, the percentage of gross receipts it plans to charge the concessionaire.
5. Stilwell Hall at Fort Ord Dunes State Park. Stilwell Hall is located in the proposed Fort Ord Dunes State Park. The historic building and the adjoining 886 acres are scheduled for conveyance to the DPR within the next one-to-two years as part of the federal base closure program. The department however, is unable to advise when the property in question will be conveyed to the state. Additionally, it is not clear if there are any toxic wastes on the property that must be cleaned up before the property is transferred to the state. Without knowing when the property (1) will be under state ownership and (2) can be expected to be used, it is premature to solicit bids for a concession. Accordingly, we recommend the proposal be denied.
All reservations taken for the state's 265 park units are exclusively booked through a contracted reservation service. On December 19, 1997, the DPR's reservation service contractor filed bankruptcy.
Losses to Be Recovered via Bankruptcy Court. The contractor owes the DPR $900,000 in park reservation fees which it collected prior to filing bankruptcy. According to the department, it is likely that the entire amount owed to it for reservations booked by the contractor will be recovered through bankruptcy court.
The loss of the department's reservation system contractor occurred during the off-season for the DPR which is generally a low visitation period. The department anticipates no loss in revenue during the transition to the new system.
Park Net Awarded New Contract. The DPR has replaced the previous contractor with Info/2000, Park Net. Park Net has been in business since 1984 and serves a number of other governmental entities including the U.S. Forest Service, the Army Corps of Engineers, and the States of Oregon and Washington. At the time this analysis was prepared, Park Net had started taking reservations.
Each year the California Council for Quality and Service confers the Eureka Awards for Quality and Service Excellence on selected service-oriented private businesses, nonprofits, and public organizations. The purpose of the awards is to recognize applicants who achieve superior quality and service results. This award is modeled on the Malcolm Baldrige National Quality Awards and is administered in the same fashion, using the same criteria. Thirty-eight states, including California, have developed their own quality awards based on these national awards.
In 1997, DPR won its second Silver Eureka Award for Quality and Service Excellence. Because it also had the highest score in the govern ment category, it won the Best In Class award. This is the highest award ever given in the government category.
Eureka Award applicants compete in one of six categories--large business (over 200 employees), small business (under 200 employees), nonprofit organizations, education, government, and health care. In general, any state or local governmental agency or federal agency that receives tax dollars within the state, is eligible to participate in the government category. All applicants are subject to a rigorous examination which includes an initial review of the application, seven independent evaluations, and a two-day site visit by a team of examiners who perform a fiscal audit and administrative reviews.
The budget proposes about $121.6 million from various funds, primarily the Motor Vehicle Account (MVA) for support of ARB in 1998-99. This is an increase of about $4.9 million, or 4.2 percent from estimated 1997-98 expenditures. This increase reflects (1) $3.6 million to develop a state implementation plan to control fine particulate matter ("PM 2.5") and (2) $2.5 million for the final year of a grant program to demonstrate technologies for the use of rice straw as an alternative to disposing of this material by burning it.
Under the state's 1994 long-term implementation plan to meet federal air quality standards, the state is committed to reducing smog-forming emissions from consumer products by 85 percent by 2010.
For 1998-99, the budget proposes an increase of $728,000 from the MVA in the stationary source program for research, standards development, product testing, enforcement, and outreach related to the control of emissions from consumer products. Consumer products identified specifically in the budget request as being of particular concern are mainly products that are not related to motor vehicles. These included herbicides, carpet cleaners, and personal hair care products.
Proposed Use of MVA Is Inappropriate. The State Constitution limits the use of vehicle taxes and fees (the main sources of MVA funds) for environmental programs to "the mitigation of the environmental effects of motor vehicle operation due to air and sound emissions." Because the proposal's focus will be on emission sources that are not related to motor vehicles, the proposed use of MVA funds therefore is inappropriate.
Proposal Should Be Funded From Broad-Based Funding Source. While the proposal has merit, we think that a more appropriate funding source would be the General Fund. The general public, as end user of the consumer products, is both ultimately responsible for creating the pollution problem and is a beneficiary of a program to reduce the emissions from these products. Therefore, we recommend that the MVA be reduced by $728,000 and the General Fund be increased by $728,000.