Valles Caldera: Trust Has Made Some Progress, but Needs to Do More to Meet Statutory Goals
Published: 2005-11-16T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: In 2000, Congress authorized the purchase of the Valles Caldera (the Caldera) in north-central New Mexico. The Valles Caldera Trust (Trust), a wholly owned government corporation, is to become financially self-sustaining and to manage the Caldera for multiple purposes while sustaining the land's valuable natural resources. GAO was mandated to assess the progress the Trust is making in meeting its statutory goals.
section_title: What GAO Found
paragraphs: The Trust has made progress in meeting its goals to preserve and protect the Caldera for future generations as well as to provide for public recreation and sustained yield management. Specifically, it has (1) established a basic organization with about 25 staff; (2) drafted policy and procedures and contracted with the Department of the Interior's National Business Center for accounting services; (3) begun engineering and construction efforts to address infrastructure problems--roads, water systems, fences, and buildings; (4) established interim grazing and recreation programs; and (5) implemented an adaptive management approach that focuses on making management decisions based on scientific data. The Trust, however, still has much work to do to meet its goals, including achieving a financially self-sustaining operation. Strategic and performance plans with measurable goals and objectives: For example, the Trust must decide on the level of activities (e.g., grazing, hiking, and hunting) that will be allowed without seriously harming the land's resources, and yet will still provide sufficient recreational activity and sustained yield management. The Trust also must select additional opportunities for generating revenues, such as securing private donations. Plans to manage program risks: The Trust has not addressed program risks, including fire and legal liabilities. For example, the Trust lacks a fire plan, which would outline a decision-making process for responding to fires, and has not obtained liability coverage. Because it did not have a fire plan, the Trust spent about $338,000 in May 2005 to suppress a fire, which, in the opinion of the Forest Service Region 3 Fire Manager, could have been left to burn because the fire did not threaten any key resources or public infrastructure. Also, because it has not obtained liability coverage, the Trust has restricted the number of Caldera visitors. Mechanisms for monitoring progress: Among other things, the Trust has not had annual financial audits and has not prepared performance reports that would help it assess its progress toward meeting its financial and other goals. The Trust's efforts to raise the revenues needed to bring it closer to meeting its financial self-sustainability goal could be undermined by one or more of these issues. Frequent turnover in Board members and key staff has contributed to the problems experienced to date.

section_title: Letter
paragraphs: The Valles Caldera Preservation Act (Preservation Act) of 2000 authorized  the federal government’s purchase of about 89,000 acres of privately owned  land in north-central New Mexico, known as the Baca Ranch.  The federal  government acquired this property, referred to as the Valles Caldera  (Caldera) for about $97 million. Scientifically, the Caldera has served as a  model for geological studies of this and other volcanic areas around the  world. Culturally and historically, the Caldera has had religious significance  for Native Americans since prehistoric times because of its plentiful water  resources in an otherwise arid region and because it provided a major  source of black volcanic glass (obsidian), which was widely used for tools  and weapons. Recreationally, the Caldera’s landscape is noted for its  opportunities for hiking, cross-country skiing, backpacking, bicycling,  hunting, and fishing. Commercially, it provides ranchers with forage for  livestock. Since the Caldera’s acquisition through fiscal year 2005, the  Valles Caldera Trust (Trust), established under the Preservation Act, has  received about $16 million in federal funding to operate and maintain the  Caldera.
As stated in the Preservation Act, the Trust is to be governed by a Board of  Trustees (Board) responsible for managing the Caldera as a national  preserve. Until the Trust could be organized, however, management of the  Caldera was provided by the U.S. Department of Agriculture’s Forest  Service. The Secretary of Agriculture was to transfer management  responsibility to the Trust once the Board was able to conduct business and  provide for essential management services. The transfer occurred in  August 2002. The Preservation Act also charged the Trust with managing  the land to achieve a number of goals, including the following:  protecting and preserving the Caldera’s scientific, scenic, historic, and  natural values, including rivers and ecosystems, and archaeological,  geological, and cultural resources for future generations;  providing opportunities for public recreation;  providing for sustained yield management of the ranch for timber  production and domesticated livestock grazing insofar as those were  consistent with its other responsibilities; and   becoming financially self-sustaining within 15 years of the purchase  date—that is, by 2015.
The Preservation Act also established the Trust as a wholly owned  government corporation subject to the Government Corporation Control  Act (Control Act).  The Trust is also subject to the Government  Performance and Results Act (Results Act).  Under the Control Act, the  Trust must obtain independent annual financial audits and report annually  to Congress. Under the Results Act, the Trust must prepare a strategic plan  and an annual performance plan with measurable goals and objectives, and  submit annual performance reports to Congress and the President.
The Preservation Act requires GAO to provide two reports to Congress on  the Trust’s activities: an interim report 3 years after the Trust assumed  management responsibility and a final report 4 years later. For this interim  report, we examined the (1) Trust’s accomplishments since its inception  and (2) work that remains for the Trust in order to meet its goals under the  act, including the goal of becoming financially self-sustaining.
To address these issues, we analyzed information and interviewed officials  from the Forest Service and the Trust on the programs and activities the  Trust has initiated since assuming management of the Caldera. We also  analyzed documents, financial records, and other information, and visited  the site to observe the actions taken to date toward meeting the Trust’s  statutory obligations. In addition, we analyzed the requirements of the  Control Act and the Results Act for government corporations. The financial  statements of the Trust have not been independently audited. We  conducted limited testing of these data and discussed these data with key  Trust officials. We describe issues related to these financial data in the  body of this report. We assessed and determined that the nonfinancial data,  such as participation in recreation activities and levels of livestock grazing,  were sufficiently reliable for the purposes of this report. We conducted our  work from January 2005 through October 2005 in accordance with  generally accepted government auditing standards.
subsections: section_title: Background
paragraphs: About 1.2 million years ago, a volcano erupted and collapsed inward,  forming the crater now known as the Valles Caldera, in north-central New  Mexico. This geologically and ecologically unique area covers about 89,000  acres of meadows, pine forests, hot springs, volcanic domes, and streams  that support elk herds and other wildlife and fishery resources. Figure 1  shows a view of Valle Grande from Redondo Peak, the highest elevation  within the Caldera.
The Caldera comprises the formerly private lands known as the Baca  Ranch and is almost entirely surrounded by the Santa Fe National Forest  and Bandelier National Monument. Figure 2 shows the location of the  Caldera in relation to the Santa Fe National Forest and Bandelier National  Monument.
The owners of the Baca Ranch operated it as a working ranch, providing  grazing for their own cattle and, for a fee, for livestock owned by other  parties. According to the Preservation Act, the working ranch arrangement  was to continue after the federal government purchased the ranch. In  managing the Caldera, the Trust is to protect and preserve the land while  attempting to achieve a financially self-sustaining operation. “Financially  self-sustaining,” as defined by the act, means that management and  operating expenditures—including trustees’ expenses; salaries and  benefits; administrative, maintenance, and operating costs; and facilities  improvements—are equal to or less than proceeds derived from fees and  other receipts (including interest on invested funds) for resource use and  development. Appropriated funds are not to be considered. To carry out its  duties, the Trust has the authority to solicit and accept donations of funds,  property, supplies, or services from any private or public entity; negotiate  and enter into agreements, leases, contracts, and other arrangements with  any individual or federal or private entity; and consult with Indian tribes  and pueblos on matters that may affect them.
The Trust is managed by a nine-member Board. The President appoints  seven members, and the other two members are the Supervisor of the  Santa Fe National Forest and the Superintendent of the Bandelier National  Monument. Of the seven presidential appointees, who are selected in  consultation with the New Mexico congressional delegation, five must be  New Mexico residents. Appointees are to be selected based on their  expertise or experience. Generally, one individual must be appointed with  knowledge of or experience in each of the following:  (1) livestock and  range management; (2) recreation management; (3) sustainable  management of forest lands for commodity and noncommodity purposes;  (4) financial management, budget and program analysis, and small business  operations; (5) cultural and natural history of the region; (6) nonprofit  conservation organizations concerned with Forest Service activities; and  (7) state or local government activities in New Mexico, with expertise in  the customs of the local area. Board members are generally appointed to 4- year terms and can be reappointed; however, no Board member may serve  more than 8 consecutive years. The Trustees select a chairman from the  Board’s members. An executive director, who is hired by the Board,  oversees the Trust’s day-to-day operations. The Board must hold at least  three public meetings a year in New Mexico.
Under the Control Act, the financial statements of a government  corporation must receive an independent financial audit annually in  accordance with generally accepted government auditing standards. In  addition, agencies must submit annual management reports to Congress  that include a statement of financial position, a statement of operations, a  statement of cash flow, a budget report reconciliation, a statement on  management controls, a report on the results of the annual financial audit,  and other necessary information about the operations and financial  condition.
The Results Act requires agencies to develop strategic and performance  plans, measure performance, and report annually to Congress. The Results  Act shifts the focus of an agency’s operations from reporting on activities  toward achieving results. It requires a results-oriented strategic planning  process with clearly defined strategic objectives linked to measurable  performance goals and the collection of information to monitor and  evaluate the programs. A strategic plan should contain the organization’s  mission statement and strategic goals, a description of the means and  strategies that will be used to achieve the goals, a description of the  relationship between annual performance goals and the organization’s  strategic goal framework, the identification of key factors that could affect  achievement of the strategic goals, a description of program evaluations  used in preparing the strategic plan, and a schedule for future program  evaluations. The annual performance plan articulates measurable goals for  the upcoming fiscal year that are aligned with an organization’s long-term  strategic goals. The annual performance report compares an organization’s  performance with performance goals for the past year.  Implementation of  the Results Act requirements enables managers to improve accountability,  effectiveness, service delivery, and internal management, and to provide  better information to Congress.
A more effective management control program, as we have defined it for  the purposes of this report, would encompass the requirements of the  Control Act and the Results Act. These requirements include, among other  things, (1) a strategic plan, (2) performance plans with measurable goals  and objectives, (3) the identification and mitigation of program risks, (4)  performance monitoring and reporting, and (5) annual audits.
section_title: The Trust Is Making Progress toward Preserving and Protecting the Caldera and Providing Recreation and Sustained Yield Management
paragraphs: As required under the Preservation Act, the Board has taken steps to  establish and implement management policies to achieve the goals of  preserving and protecting the Caldera and providing for public recreation  and sustained yield management. In particular, the Board (1) established a  basic organization, (2) began to address infrastructure problems, (3)  granted limited access to the public through its interim grazing and  recreation programs, and (4) established an adaptive management  framework.
subsections: section_title: The Board Established the Trust Organization
paragraphs: Between January 2001—the Board’s first meeting—and September 2001,  the Board met regularly and held listening sessions with the general public  to obtain views on how the Caldera should be managed. Separately, the  Board met with representatives of local Indian tribes and pueblos. Using  the information from these sessions, in December 2001, the Board issued  10 guiding principles for future decision making. These guiding principles,  which are listed in appendix II, include a commitment to fair and affordable  access for all permitted activities. At the same time, however, the Board  stated that it would emphasize the quality of Caldera experiences over  quantity, which could limit activities and fees.
From January 2001 through August 2002, the Forest Service served as the  interim manager, and the Board and employees from the Forest Service and  other federal agencies conducted the Trust’s work. In October 2001, the  Board hired its first employee, an executive director. During that year, the  Trust’s office was located at the Santa Fe National Forest offices. The Trust  officially assumed management of the Caldera in August 2002, after it  provided for essential management services, including establishing staff,  beginning business operations, and adopting management policies and  procedures. During 2002, the Board drafted personnel and procurement  policies and procedures as well as policies for environmental protection. It  also drafted a tribal access and use policy to ensure access to the Caldera  for religious and cultural purposes, as authorized by the Preservation Act.  By the end of fiscal year 2002, the Trust had 7 employees, including  business and resource managers. At the time of our review in 2005, the  Trust was reorganizing under a new executive director and employed about  25 permanent and limited-term employees. Figure 3 shows the Trust’s  proposed organization, as of September 2005.
In addition, the Trust published its final management framework in May  2005. This document, entitled The Framework and Strategic Guidance for  Comprehensive Management, describes the history and natural features of  the Caldera, the goals of the Preservation Act, and the Trust’s approach for  land stewardship, decision making, and public involvement. It further  describes a range of potential public uses of the Caldera, from hunting and  fishing to hiking and camping.
From its inception through fiscal year 2003, the Trust maintained its  financial accounts on the Forest Service’s financial system. However, in  2003, the Board decided to obtain an independent financial system for the  Trust. The Trust contracted for financial services on the Oracle Federal  Financial System managed by the Department of the Interior’s National  Business Center—an option the Trust considered to be more cost-effective  than developing a system in-house.  Beginning with fiscal year 2004, the  Trust maintains its financial information on that system.
section_title: Infrastructure Surveyed and Potential Solutions to Problems Identified
paragraphs: Shortly after the federal government assumed ownership of the Caldera,  the Trust learned that the existing infrastructure—roads, buildings, fences,  and water treatment facilities—was seriously degraded and would have to  be rehabilitated before it could provide public access to the Caldera. The  Trust began the rehabilitation work in 2002.
Roads. The Caldera has an estimated 1,200 miles of roads, including 200  miles for the main access roads. Most of these roads had been constructed  with little planning or engineering and had been used to support logging  operations. They could not be readily used to support administration,  ranching, recreation, and other needs. In 2002, 3.5 miles of Road 1, the main  access road, and five key bridges were upgraded to all-weather commercial  gravel standards; work on the this road was completed in 2003. Road 2—a  10.2-mile access road—was upgraded in 2004 and 2005. Road work will  continue as needs are identified and resources become available. Figure 4  shows a portion of the main access road to the Caldera after rehabilitation.
Buildings, fences, and other facilities. From 2002 to 2005, the Trust  conducted minor maintenance on the ranch buildings used to house  employees. In 2002 and 2003, the Trust repaired the Caldera’s 54 miles of  boundary fence and installed restricted access signs. In 2004, it assessed  the layout and condition of 64 miles of interior fences. The height of the  fences was shortened in many areas to allow for elk movement. The Trust  also installed scenic vistas and kiosks on New Mexico Highway 4, the main  access road to the Caldera, to allow public viewing of the Caldera. Other  facilities—such as livestock corrals—were also assessed and rehabilitated.  Figure 5 shows a historic building constructed in 1909 and used as a  commissary where ranch hands could purchase supplies on the Caldera.
Water treatment facilities. When the federal government acquired the  Caldera, the existing water treatment facility was not functioning and the  Caldera did not have potable water. Rehabilitating the system became a top  priority for the Trust. Repairs to the water collection and filtration system  were completed in 2004, and work was ongoing to repair the water  distribution system in 2005. As currently scheduled, potable water will be  available in the spring of 2006.
section_title: The Trust Implemented Interim Grazing
paragraphs: According to the Preservation Act, the Trust is to provide for livestock  grazing consistent with the other purposes of the act. The grazing program,  begun in 2002 as a 5-week drought-relief program, has been operating  under an interim livestock management plan, which is effective through  calendar year 2005. Until it can develop a more comprehensive strategy, the  Trust has established an interim grazing program that allows grazing for  between 1 and 2,000 cattle, depending on the condition of the forage. This  level is lower than the private owners had allowed—up to 6,000 cattle  during the spring, summer, and fall grazing seasons. Table 1 shows the level  of livestock grazing through 2005 (estimated) by calendar year.
Two of these grazing programs—Conservation Stewardship and  Replacement Heifers—are designed, in part, to introduce local ranchers to  more prudent management practices. Under the stewardship program,  which replaced the cow-calf program, applicants have to demonstrate that  they will implement projects on their own lands to improve the condition of  the range while their cattle graze on the Caldera. The largest participant in  the program, the Pueblo of Jemez, implemented major range improvements  on its own lands, such as reseeding and resting rangeland. The  Replacement Heifer Program allows ranchers to graze heifers on the  Caldera and have the heifers bred with the Trust’s registered bulls, which  are certified to produce calves with low birth weights. The program is  designed to improve the genetics of local herds and to protect the heifers  from dying or suffering other complications when they give birth.
section_title: The Trust Has Established Interim Recreation Programs
paragraphs: The Trust granted limited public access through recreation programs  beginning in 2002. Recreation activities offered have included, for example,  hunting, fishing, hiking, cross-country skiing, snowshoeing, sleigh rides,  wagon rides, and horseback riding. In most cases, the Trust charged fees  for access to the Caldera. Table 2 shows the level of public participation in  the various recreation programs from calendar years 2002 through 2004.  Participation in recreation activities is expected to increase for 2005. As  shown in table 2, the Trust offered limited recreational opportunities in  2002—a total of 1,920 participants. However, in 2004, participation in  recreation activities increased more than fourfold over the 2002 level. The  fishing program hosted the most visitors over the period, or approximately  26 percent of total visitors. Elk hunting/antler collection and hiking were  also popular, each representing about 21 percent of visitor participation,  followed by wagon/sleigh rides at about 15 percent.
Fishing and fishing clinics. Two streams on the Caldera are suitable for  fishing. In 2003, the Trust granted fishing access to 1,785 participants on a  first-come, first-served basis. With increased demand in 2004, the Trust  used a lottery system to award access to 2,107 participants. In addition, the  Trust hosted youth and adult fishing clinics in both years.
Elk hunting and antler collection. The Trust worked with the New Mexico  Department of Game and Fish to set the numbers of available elk-hunting  licenses and used a lottery and auction to award licenses. Participation in  elk hunts has declined each year because of the New Mexico Department  of Game and Fish decided to decrease the number of hunting licenses  available to sustain a viable elk herd. In addition to the elk hunt, the Trust  has offered area youth groups the opportunity to collect antlers shed by elk  each year. These groups sell the antlers, which are generally used to make  decorative items, such as lamps, and the groups use the proceeds to  support nonprofit programs.
Hiking. Beginning in 2002, the Trust provided guided hiking through a  contractor to enable public access to the Caldera before it developed the  infrastructure needed for general public access. In 2003 and 2004, the Trust  implemented its own hiking program, expanded the activity boundaries for  hiking, and established unguided hikes as an option. In 2005, the Trust  increased the number of trails available for hikers on the Caldera. In total,  the Trust now has 24 miles of trails available for hikers.
Wagon and sleigh rides. The Trust offered horse-drawn wagon and sleigh  rides to visitors. The horse-drawn rides allow greater access to areas in the  Caldera. Wagon rides can occur year-round, while sleigh rides, of course,  need sufficient snowfall. Participation in wagon and sleigh rides has  increased more than sixfold, from 250 in 2002 to 1,520 in 2004. Also in 2004,  the Trust donated wagon rides on the Caldera as a prize for a charity  auction.
Other recreation. In 2003, the Trust added van tours, snowshoeing, cross- county skiing, bird watching, and stargazing lectures. In 2004, the Trust  implemented an equestrian program, so that riders could transport their  own horses to the Caldera for rides on designated trails. Over 200 riders  participated. Also in 2004, the Trust added mountain biking, group tours  and seminars, workshops, and overnight photo- and bird-watching  excursions.
section_title: The Trust Set Up a Science- Based Adaptive Management Framework
paragraphs: The Trust is using a science-based adaptive management framework for the  Caldera, which many believe to be a potentially effective approach to  managing the land. Under this approach, the Trust will make land  management decisions on the basis of scientific research and monitoring,  taking into account the public’s views and federal environmental  requirements. The foundation of this management approach is inventorying  natural resources, monitoring environmental changes that result from the  Trust’s programs, conducting research that will primarily help manage the  Caldera’s resources, and complying with federal environmental  requirements.
Inventories. Little information was available about the Caldera’s resources  when the federal government acquired the Caldera. As a result, in 2001, the  Trust—using volunteers and employees detailed from other federal  agencies—began to inventory the Caldera’s vegetation and forest, wildlife  and fisheries, geology, and other resources. Some of these baseline  inventories have several components. For example, the wildlife inventory  includes components by species, such as mammals, reptiles, and fish. Some  inventory components have been completed, while others are still ongoing  and are scheduled to be completed during 2007. Figure 6 shows the current  inventory and monitoring locations on the Caldera.
In addition, about 5 percent of the Caldera has been surveyed for cultural  resources. As a result of recent surveys, 25 previously unknown historic  properties have been discovered. For example, scientists have identified  prehistoric sites showing evidence of toolmaking using obsidian. The  cultural inventory is ongoing, and its completion date has not been  established because future construction plans are uncertain. According to  the Caldera’s cultural program coordinator, planned surveys can be delayed  because of the need to survey areas slated for construction, such as roads.
Monitoring. The monitoring program is intended to assess the impact that  grazing, fishing, forest thinning, prescribed fire programs, and other  activities have had on the Caldera. For example, the Trust is monitoring  areas it has fenced along streambeds to prevent elk and cattle grazing in  order to better understand the impacts of grazing on areas that are not  fenced off. Figure 7 shows a fenced riparian area on the Caldera. The Trust  is also monitoring the effects of natural and nonprogrammatic factors, such  as changes in climate and species populations, especially nonnative  populations. For example, as part of this program, the Trust established  five weather stations to monitor rainfall, snowfall, wind, and temperature  as well as five stations to monitor stream water quality.
Research. The research program benefits both the management of the  Caldera and public land management. For example, hydrological research  funded by the National Science Foundation through the University of  Arizona will provide information to aid in the day-to-day management of  the Caldera and will also contribute to the understanding of hydrologic  systems overall. This research will enable scientists to understand how  much rain the Caldera’s lands absorb and predict the amount of runoff into  streams and rivers. As more data become available, scientists can predict  the impact of rain and drought on water quality and forage availability on  the Caldera and use the information to drive future management decisions  for grazing and recreation.
Environmental compliance and public participation. The Trust must  comply with the National Environmental Policy Act (NEPA), which  requires federal agencies to assess the likely environmental impacts of any  major actions they propose. If the agency determines that a proposed  activity will significantly affect the quality of the human environment, it  must prepare an environmental impact statement (EIS). An EIS specifies,  among other things, the purpose of and need for the proposed action, its  environmental consequences, and the comparison of alternatives to the  proposal.
Federal agencies, in addition to complying with the Council on  Environmental Quality’s regulations for implementing NEPA, develop  agency-specific procedures. Before the Trust adopted its NEPA procedures  in July 2003, it used the Forest Service’s procedures to ensure NEPA  compliance.  Under the Forest Service procedures, the Trust categorically  excluded interim fishing, hiking, road maintenance, and hazardous-fuel  reductions from the general requirement to develop an environmental  assessment or impact statement because it was determined that the actions  would have no significant impact on the human environment. Under the  Forest Service regulations, the Trust conducted environmental  assessments of the interim grazing, noxious-weed eradication, and  prescribed burns and did not find that these activities significantly affected  the Caldera. The Trust expects to complete an environmental impact  statement before establishing a permanent grazing program in 2007.
The 2003 procedures are intended to efficiently and effectively implement  NEPA and create a collaborative working relationship between the Trust  and tribal governments, citizens, and federal, state, and local authorities.   To obtain public views and to track and report the Trust’s land management  actions, the Trust is developing an Internet-based system—the Stewardship  Action Record System (StARS). Once functional (expected at the end of  2005), StARS will allow public review and comment on all actions taken  and provide the public with opportunities to monitor the results of ongoing  efforts. StARS proposals have been developed for public recreation,  grazing, infrastructure development, research projects, and fire  management. The Trust is also exploring ways to distribute information to  the public and obtain comments without using the Internet.
According to the President’s Council on Environmental Quality, the Trust’s  NEPA procedures clearly integrate progressive NEPA compliance with  principles of adaptive management and environmental management  systems.  The council also stated that the procedures allow for uncertainty  in the decision-making process because actions are monitored and revised  as more information becomes available.
section_title: The Trust Has Much Work to Do to Meet Its Statutory Goals
paragraphs: Despite the progress made, the Trust has much work to do to meet its  mandated goals under the Preservation Act. Specifically, the Trust lacks (1)  strategic and performance plans and programs to ensure that revenue  streams are sufficient to achieve financial self-sustainability, (2) plans to  minimize program risks from fire that could damage resources and legal  liabilities that could result in catastrophic losses and reduced visitor use,  and (3) mechanisms for monitoring progress in meeting its financial and  other obligations, including annual audits and performance reporting.  These shortfalls could be addressed through a more effective management  control program, as envisioned in the Control and Results Acts. Frequent  turnover of Board members and key staff also contributed to delays in  implementing the components of an effective management control  program. Without a more effective management control program, the Trust  cannot adequately plan and implement programs or monitor progress  toward meeting the mandated goals of the Preservation Act.
subsections: section_title: The Trust Has Not Developed Strategic and Performance Plans with Measurable Goals and Objectives
paragraphs: The Trust has not developed strategic and performance plans as required  under the Results Act. Specifically, it has not developed a strategic plan  that not only outlines its mission and goals but also describes how it will  achieve and revise its goals and objectives, how performance goals relate  to the organization’s strategic goal framework, and how it will conduct  program evaluations. In 2005, the Trust published its Valles Caldera  National Preserve Framework and Strategic Guidance for  Comprehensive Management. This document provides useful information  about the history of the Caldera, background on the Trust, and general  goals, but discusses issues in terms of possibilities and in a broad and  philosophic manner instead of applying a methodical and analytical  approach to strategic planning. Board members stated that they did not  prepare a strategic plan because they believed that the NEPA compliance  process had to be completed before they could publish a plan. However,  agencies are not required to prepare an EIS prior to formulating a strategic  plan.
The Trust has not developed an annual performance plan with measurable  goals for the activities it allows on the Caldera, which would help it  determine whether it is accomplishing the overall strategic goals. For  example, the performance plan could support the overall strategic goal to  provide recreational opportunities by establishing annual measurable goals  for the Trust’s recreation activities. An example of a measurable goal could  be to increase public participation in hiking activities by 10 percent per  year until the Trust has determined that the allowed level of hiking will not  impair or damage the Caldera and is consistent with the other goals under  the Preservation Act. The performance plan could also support the  strategic goal to protect and preserve the Caldera, which could contain a  measurable goal to restore and expand a specific number of wetland acres  per year. However, the Trust cannot agree on the balance that should be  struck between the activities that should occur on the Caldera and the  impact of these activities on the land in order to achieve its overall goals of  resource protection, recreation, sustained yield management, and financial  self-sustainability.
To become financially self-sustaining by 2015, the Trust needs to generate  enough revenue to pay for its operations and maintenance as well as  infrastructure development costs. The Trust’s main revenue-generating  activities are hunting, fishing, special events such as mountain biking, and  grazing. Table 3 shows the revenue generated, by program activity, for  fiscal year 2004.
To date, however, the Board has not developed sufficient revenue streams  to cover its program costs or developed performance goals for becoming  financially self-sustaining. Specifically, managers estimated that the grazing  program lost about $55,000 in 2004 but have not computed the gain or loss  for other programs. With total revenues of about $500,000 and total  expenditures in excess of $5 million in fiscal year 2004, it is apparent that  programs were operating at a loss. The Board does not plan to change the  operation of revenue-generating programs until the Trust complies with  NEPA.
According to the Valles Caldera National Preserve Framework and  Strategic Guidance for Comprehensive Management, the Trust considers  the financial self-sustainability goal as one of many goals of equal priority.  Furthermore, according to the framework, the Trust cannot set a date for  achieving financial self-sustainability—established as a goal to be  accomplished by 2015 in the Preservation Act—because its federal land  stewardship obligations do not allow it to operate grazing and recreation  activities at a level that puts natural resources at risk. Therefore, the  framework states, it may be reasonable to continue appropriations to cover  environmental stewardship costs, such as those for environmental  assessments and resources inventories, while the balance of the Trust’s  programs operate in a self-sustaining manner. While financial self-  sustainability may not be attainable in the long run, we believe it is  premature to assume that appropriations will continue to be needed after  the Trust’s 15th year of operation—the time period established to achieve  the goal of self-sustainability. Moreover, the Trust is directed to report to  Congress in its 14th year if the achievement of self-sustainability by its 15th  year is unrealistic. In the meantime, the Trust has an obligation to continue  to develop a strategy and implement a plan to become financially self- sustaining.
The Preservation Act also requires the Trust to report to Congress on how  and when the Trust will become financially self-sustaining. That is, the  Trust is to provide Congress with a schedule of decreasing appropriations  that demonstrates how it will achieve financially self-sustaining operations  by 2015. Such a schedule should, at a minimum, quantify the annual  appropriations as well as other projected revenue sources needed through  2015 and demonstrate that these sources of income will meet or exceed the  expected program operations and maintenance costs during that time  frame. However, the Trust has only presented the three-phased strategy  shown in table 4 to achieve that goal. As the table shows, the Trust’s  Schedule of Decreasing Appropriations does not include financial  information to show how the appropriations will decrease each year.
The Preservation Act also authorized the Trust to solicit and accept  donations of funds, property, supplies, and services. The Trust has received  some donations, primarily volunteer labor. Through 2005, cash donations  totaled about $56,000, $50,000 of which was earmarked to pay the salary of  a full-time employee to coordinate volunteer efforts. However, the Trust  has not developed a plan for outreach to philanthropic organizations. For  example, charitable organizations supporting national parks have been  established to solicit donations to help support park needs. The Trust has  discussed this option but has not actively pursued it.
section_title: The Trust Has Not Addressed Risks Potentially Posed by Fire and Legal Liabilities
paragraphs: The Trust has not addressed program risks, including fire and legal  liabilities that could undermine its ability to meet its financial obligations.   The Trust completed a fire management plan in 2004 that adopts, by  reference, the federal National Fire Plan. According to the National Fire  Plan, agencies need a fire management plan to outline a decision-making  process for responding to naturally occurring fires.  Such a plan lays out  the conditions under which fires must be suppressed or allowed to burn to  benefit resources.  The Caldera’s plan, however, has not addressed fire  management to benefit resources, only the management of prescribed fires.  Without a plan to manage fires for resource benefits, all naturally occurring  fires on the Caldera must be suppressed, and suppression can be costly.   For example, in May 2005, a fire on the Caldera burned about 82 acres  before being suppressed—at a cost of about $338,000. In the opinion of the  Forest Service Region 3 Fire Manager, this fire could have been left to burn  because it did not threaten any key resources or public infrastructure.  Extended periods of drought and high fire risk in northern New Mexico  could easily deplete the Caldera’s financial resources because suppression  costs are high.
The Trust does not have liability coverage to protect against injuries on the  Caldera because it was uncertain whether it could acquire such insurance  using appropriated funds. Moreover, as a government corporation, the  Trust did not believe it could access the federal judgment fund, a fund in  the U.S. Treasury used for the payment of final judgments against the  United States. This lack of liability coverage and uncertainty led the Trust  to take a cautious approach to implementing programs and increasing  public access. According to the Board, in June 2005 the Trust clarified these  issues with its legal counsel, who determined that legislation might be  necessary to access the judgment fund but that it could use its own funds to  purchase liability insurance.
section_title: The Trust Has Not Developed Required Mechanisms for Monitoring Progress in Meeting Financial and Other Goals
paragraphs: The Trust has yet to develop the mechanisms needed to monitor progress  in meeting its financial and other obligations under the Preservation,  Control, and Results Acts. These mechanisms include an annual financial  audit to ensure the credibility of reported financial information and an  annual performance report that describes progress toward achieving its  annual performance goals. Without these mechanisms, the Trust, Congress,  and other stakeholders cannot determine whether the Trust is on a course  to meet all of its goals.
Annual Audits. The Control Act requires annual financial audits for  government corporations’ financial statements by an independent, external  auditor selected by the head of the corporation. The results of the audits  are to be reported to the head of the government corporation and to  Congress. The Board has yet to conduct an audit because it has not  produced auditable financial statements.
In 2003, the Trust contracted with an independent accounting firm for  auditing services, including an audit of the (1) statement of financial  position of the Trust and (2) related statement of activities and cash flows,  as of September 30, 2003. However, according to the Trust’s former  business manager, the audit firm recommended that the audit be postponed  until 2004 since the Trust’s financial records had only recently been  established on the new financial system operated by the National Business  Center. The Trust agreed with this recommendation. As of October 2005,  the Trust had not contracted with an independent firm to audit its annual  financial statements. Also in 2003, the Trust contracted with another firm to  review the payroll process and controls for each of the revenue sources  and to recommend improvements. According to Trust managers, in fiscal  year 2005, financial policies and procedures were still not in place and  financial statements had not been produced. The managers told us that  they were in the process of establishing management controls and  attempting to reconstruct prior years’ expenditures in preparation for their  first external audit.
Annual Performance Reports. The Control, Results, and Preservation Acts  require the Trust to report annually to Congress on certain aspects of its  operations. Collectively, these acts require a statement of financial  position, a statement of operations, a statement of cash flows,  reconciliation to the budget report, a management controls statement, a  report on a financial statement audit, and reports on annual performance.  The annual reports to Congress the Trust has prepared for fiscal years 2001  through 2004 under the Preservation Act describe the interim programs the  Trust has implemented and summarize the prior years’ accomplishments.  The Trust may not have been able to prepare annual reports to Congress  that address requirements of the Control Act partly because the Trust has  not produced a budget report or financial statements. In addition, because  the Trust has not developed annual performance plans with performance  goals, it has not produced a performance report required by the Results  Act.
section_title: Turnover of Board Members and Staff Contributed to Delays in Implementing Components of a More Effective Management Control Program Needed to Meet Statutory Goals
paragraphs: Effective management of an organization’s workforce—its human capital— is essential to achieving results and an important part of internal control.  Operational success is possible only when the right people for the job are  on board and are provided the right training, tools, structure, incentives,  and responsibilities. Management should ensure that it obtains a workforce  with the required skills that match those necessary for achieving  organizational goals. As part of its human capital planning, management  should also consider how best to retain valuable employees, plan for their  eventual succession, and ensure continuity of needed skills and abilities.  Excessive or unexpected turnover of staff can indicate problems with an  organization’s management control program and contribute to delays in  implementing programs needed to achieve established goals.
Throughout its short history, the Trust has experienced significant turnover  among Board members and staff. According to the Preservation Act, three  of the initial Board members are appointed for 2 years, while four other  Board members are initially appointed for 4-year terms. All subsequent  appointments to these positions are for 4 years. At the end of the first 2- year term, the Board operated for about 5 months before the President  appointed replacements. In January 2005, four more board members  completed their terms, and the Board operated for 4 months before the  President appointed three of the four replacements. As of October 2005, the  President had not appointed anyone for the fourth position, which has now  been vacant for about 10 months.
The Trust has also experienced high turnover among key staff. The Trust’s  first executive director served 18 months, resigning as director in March  2004. The position remained vacant for about 7 months while the Trust  searched for a replacement. Although this position was filled in October  2004, the executive director resigned after 10 months of service. Other key  positions became vacant in 2004 and 2005, including the Trust’s controller,  business manager, programs director, chief administrative officer,  communications manager, and cultural program coordinator. As of October  2005, the executive director, programs director, chief administrative officer,  cultural resources coordinator, and geospatial information systems  coordinator positions remained vacant. The business manager position was  abolished. Table 5 shows the turnover of key Trust staff in 2004 and 2005  and the current status of these positions.
According to some stakeholders we spoke with, the turnover of Board  members and other key staff has contributed to the Trust’s inability to  develop a strategic and performance plan with measurable goals and  objectives as well as to delays in implementing programs. For example, the  NEPA environmental assessment related to the grazing program was  postponed when four Board members completed their 4-year terms in  January 2005. Some staff stated that the lack of consistent leadership and  the lack of progress in organizational and program development has  contributed greatly to staff turnover.
section_title: Conclusions
paragraphs: To meet the mandated management goals of the Caldera, the Trust faces  multiple challenges—balancing conflicting goals and objectives for  resource development and use with preserving and protecting these  resources for sustained future recreational enjoyment of the Caldera. While  the Trust has made some progress in achieving its mandated goals, its  further progress is in doubt because it has not developed a well-defined  management control program, which is collectively encompassed in the  mandates governing the Caldera’s operations. Such a program would  include strategic and performance plans, measurable goals and objectives  and monitoring plans, annual performance reports, and a strategy for  achieving financial self-sustainability. These mechanisms would help  provide greater accountability for achieving results and enhancing decision  making. Furthermore, an effective management control program—to  include human capital initiatives designed to retain needed skills and  provide timely replacement of lost skills—can ease the effects associated  with turnover in the Board and staff.
Achieving financial self-sustainability by 2015 is only one of many goals and  objectives set forth in the Preservation Act, but it is key to the Trust’s  success in managing and operating the Caldera without federal funds. The  Trust assumes that it may have to continue to rely on federal funding after  2015, but this assumption is premature because the Trust has not focused  on the actions it needs to take to become self-sustaining, such as expanding  or establishing new revenue-generating programs or identifying other  nonfederal revenue sources (donations). Furthermore, without developing  programs to minimize risks associated with implemented programs, the  Trust cannot manage the uncertainty surrounding liability and fire  suppression costs, which could undermine its efforts to achieve financial  self-sustainability. Finally, without an independent financial statement  audit, the Trust cannot demonstrate to Congress and other stakeholders  that it is developing a sound financial base and that reported financial  information is credible.
section_title: Recommendations for Executive Action
paragraphs: To help ensure that the Trust meets its goals under the Preservation Act  and to improve management oversight, accountability, and transparency  under the Control Act and the Results Act, we are making the following  seven recommendations to the Valles Caldera Board of Trustees.
To establish a more effective management control program, we  recommend that the Board develop   a strategic and performance plan that identifies measurable goals and  objectives for protecting and preserving the Caldera, providing  recreation, sustaining yield, and becoming financially self-sustaining;  a plan for becoming financially self-sustaining that includes financial  information detailing how and when the Trust will try to achieve this  goal;    mechanisms for periodic performance monitoring and reporting,  including annual performance reports that enable Congress and the  Trust to track progress in achieving the Trust’s program goals and  objectives; and  a plan for the timely replacement of key personnel.
To increase accountability to Congress and other stakeholders, we also  recommend that the Board  obtain the annual financial statement audit for 2005,   provide a status report or the auditor’s final opinion on the Trust’s  financial condition in its January 2006 annual report to Congress, and  arrange to conduct future annual financial audits in a timely manner.
section_title: Trust Comments and Our Evaluation
paragraphs: We provided the Valles Caldera Board of Trustees with a draft of this report  for review and comment. The Board provided written comments that are  included in appendix I. The Board generally agreed with the accuracy of  the findings, validity of the conclusions, and soundness of the  recommendations. It also provided additional insights into four specific  areas. First, it stated that it has, over the last several years, engaged in  extensive strategic planning sessions to lay the foundation for developing  more detailed operating plans once the highest level strategic planning  work is completed and sufficient experience has been obtained in  conducting interim programs. It also said that it has adopted, in 2005, a set  of strategic goals, the achievement of which is both measurable and time  specific. We acknowledge that in 2005 the Board announced four broadly  stated strategic goals. However, as stated in the report, the Trust has not  developed strategic and performance plans that include all required  elements of the Results Act, which provides a methodical and analytical  approach to strategic planning.
Second, with regard to risks posed by fire and legal liabilities, the Board  said it was in the process of completing a Fire Use Plan that addresses the  use of management-ignited fire as well as the use of fire originating from  natural ignitions and that Congress has adopted legislation to provide the  Board with access to federal fire suppression funds. These actions will  enhance the Board’s ability to evaluate natural ignitions and apply the  appropriate management response. We agree that it is important to  complete the Fire Use Plan, which, according to the Board, will be finalized  by May 2006. As mentioned in the report and in the Board’s comments,  having a sound fire management plan will provide greater assurance that  proper management actions are taken in the event of a wildland fire. The  Board also said it has pursued clarification of whether the Board can  access the federal government’s judgment fund and has obtained a legal  opinion from an independent firm that concludes that legislation might be  necessary to access the judgment fund but that the Trust could use its own  funds to purchase liability insurance. We revised the report to include this  clarification and agree that the Trust should use its own funds to purchase  liability insurance.
Third, the Board agreed that the timely appointment of Board members and  the management of its human resources are essential to achieving positive  results. In this regard, it mentioned that it has revised its bylaws to effect  the orderly transition of Board members, so as to mitigate the impact of  possible delays in the appointment process. It also said it had adopted a  new organizational structure and performance review process for  employees. The change in the Board’s bylaws has the effect of allowing the  Board to make important decisions in the absence of a full Board due to  delays in appointments of Board members. We agree this is important given  that the replacement of Board members is out of its control. The Board also  recognized that it has experienced a relatively high level of Trust employee  turnover, which it said has “occurred in a constructive fashion, void of  grievances or formal complaints.”  Nonetheless, the fact remains that high  turnover, particularly of key employees, can cause disruption to an  organization and affect its ability to accomplish established goals. As the  report states, an effective management control program has a process in  place for the timely replacement of key personnel lost to turnover.  Establishing such a process is within the purview of the Board and  important to effective management of an organization’s human capital.
Finally, the Board stated that while the Trust was fully committed to the  goal of financial self-sustainability, the Trust recognizes that to obtain that  goal, it needs to streamline required federal overhead stemming from  compliance with federal laws and statutes and to control administrative  and operating costs. It said it was committed to developing the  management plans required for conversion of financially attractive  programs to regular status and acquiring capital resources. Furthermore, it  stated that the Board takes the goal of financial self-sustainability seriously  and on par with other provisions of the Preservation Act and thus disagreed  with the implication in the report that it did not consider the financial self- sustainability goal as a priority. Because the Board’s published  management framework, entitled Valles Caldera National Preserve  Framework and Strategic Guidance for Comprehensive Management,  states that the Trust considers the financial self-sustainability goal as only  one of many goals, to avoid ambiguity, we revised the report’s language to  state that the Trust considers the self-sustainability goal as one of many  goals of equal priority. Regardless, the seriousness of the Board’s actions in  addressing this goal would, as mentioned in the report, be further enhanced  by demonstrating a more aggressive approach to identifying additional  revenue sources that would help the Trust come closer to achieving  financial self-sustainability.
section_title: Scope and Methodology
paragraphs: We obtained and analyzed information from the Trust on its activities,  relevant laws, regulations, program documents, and related materials, and  met with Trust officials responsible for major activities, such as recreation,  resource inventorying, construction, and financial management. Since the  Caldera was initially under the management of the Forest Service, we  interviewed Forest Service officials and reviewed available documentation  supporting activities undertaken during this time. We also visited the  Caldera to observe the actions taken to date toward meeting the Trust’s  statutory goals. The financial statements of the Trust have not been  independently audited. We conducted limited testing of these data and  discussed these data with key Trust officials. We describe issues related to  these financial data in the body of this report. We assessed and determined  that the nonfinancial data, such as participation in recreation activities and  levels of livestock grazing, were sufficiently reliable for the purposes of this  report. We conducted our work from January 2005 through October 2005 in  accordance with generally accepted government auditing standards.
We are sending copies of this report to interested parties. We will also make  copies available to others upon request. In addition, this report will be  available at no charge on GAO’s Web site at http://www.gao.gov.
If you or your staff have any questions about this report, please contact me  at (202) 512-3841 or nazzaror@gao.gov. Contact points for our Offices of  Congressional Relations and Public Affairs may be found on the last page  of this report. GAO staff who made major contributions to this report are  listed in appendix III.
section_title: Comments from the Valles Caldera Trust
section_title: Guiding Principles of the Valles Caldera Trust
paragraphs: 1. Future generations. Administer the Preserve with the long view in  mind, directing efforts toward the benefit of future generations. 2. Protection. Recognizing that the Preserve imparts a rich sense of  place and qualities not to be found anywhere else, commit to the  protection of its ecological, cultural, and aesthetic integrity.
3.
Integrity. Strive to achieve a high level of integrity in the stewardship  of the lands, programs, and other assets in the Trust’s care. This  includes adopting an ethic of financial thrift and discipline and  exercising good business sense. 4. Science and adaptive management. Exercise restraint in the  implementation of all programs, basing them on sound science and  adjusting them consistent with the principles of adaptive management. 5. Good neighbor. Recognizing the unique heritage of northern New  Mexico’s traditional cultures, be a good neighbor to surrounding  communities, striving to avoid negative impacts from Preserve  activities and to generate positive impacts.  6. Religious significance. Recognizing the religious significance of the  Preserve to Native Americans, the Trust bears a special responsibility  to accommodate the religious practices of nearby tribes and pueblos,  and to protect sites of special significance. 7. Open communication. Recognizing the importance of clear and open  communication, commit to maintaining a productive dialogue with  those who would advance the purposes of the Preserve and, where  appropriate, to developing partnerships with them. 8. Part of a larger whole. Recognizing that the Preserve is part of a  larger ecological whole, cooperate with adjacent landowners and  managers to achieve a healthy regional ecosystem. 9. Learning and inspiration. Recognizing the great potential of the  Preserve for learning and inspiration, strive to integrate opportunities  for research, reflection, and education in the programs of the Preserve. 10. Quality of experience. In providing opportunities to the public,  emphasize quality of experience over quantity of experiences. In so  doing, and in reserving the right to limit participation or to maximize  revenue in certain instances, commit to providing fair and affordable  access for all permitted activities.
section_title: GAO Contact and Staff Acknowledgments
subsections: section_title: GAO Contact
section_title: Staff Acknowledgments
paragraphs: In addition to the contact named above, Roy Judy, Assistant Director;  Christine Bonham; Doreen Feldman; Lisa Knight; Tom Kingham; Julian  Klazkin; Allen Lomax; Cynthia Norris; Judy Pagano; Dawn Shorey; Carol  Herrnstadt Shulman; and Maria Vargas made key contributions to this  report.