National Park Service: Revenues from Fees and Donations Increased, but Some Enhancements Are Needed to Continue This Trend
Released: 2016-01-14T00:00:00

Letter

Background

The National Park Service Organic Act of 1916 established the Park Service within the Department of the Interior to promote and regulate the use of the National Park System with the purpose of conserving the scenery, natural and historic objects, and wildlife therein and to leave them unimpaired for the enjoyment of future generations. The Park Service manages its responsibilities through its headquarters office located in Washington, D.C., seven regional offices, and 409 individual park units that are part of the system. Park unit types include national parks, such as Yellowstone and Great Smoky Mountains; national historic parks, such as Valley Forge and the Chesapeake and Ohio Canal; national battlefields, such as Antietam and Fort Necessity; national historic sites, such as Ford’s Theatre and Theodore Roosevelt’s birthplace; national monuments, such as Muir Woods and the Statue of Liberty; national preserves, such as the Yukon-Charley Rivers and Big Cypress; national recreation areas, such as Lake Mead and the Chattahoochee River, and national lakeshores, such as Sleeping Bear Dunes and the Apostle Islands.

Funding for the Park Service is composed of two sources: (1) annual appropriations and (2) fees, donations, and other funding sources.

Annual appropriations. The Park Service generally receives funding through annual appropriations acts, which provide funds used by park units or applicable entities, such as states and local governments, in the following five accounts:

Operation of the National Park System. Provides base funding for the operation of park units and for Park Service-wide programs. This funding is used by park units for visitor services, park protection, and maintenance projects, among other things.

National Recreation and Preservation. Supports programs that assist state, local, and tribal governments, and private organizations with outdoor recreation, preservation, and environmental compliance.

Historic Preservation Fund. Provides grants to state, territorial, and tribal governments and certain private groups for preserving historical and cultural resources.

Construction. Supports planning and implementation of major rehabilitation and replacement projects at park units, along with unplanned, emergency construction projects.

Land Acquisition and State Assistance. Uses funding from the Land and Water Conservation Fund to support Park Service land acquisition activities and provide grants to state and local governments for the purchase of land for recreation activities.

Fees, donations, and other funding sources. The Park Service collects and uses funds from fees, donations, and other funding sources. These include:

Entrance fees and amenity fees. The Federal Lands Recreation Enhancement Act (FLREA) authorizes the Park Service to collect and use recreation fees, including entrance fees and amenity fees for certain equipment and services, such as campgrounds.

Franchise fees and commercial use authorization fees. The National Park Service Concessions Management Improvement Act of 1998 (Concessions Act) authorizes the Park Service to collect and use certain fees from concessioners that operate businesses in park units. Specifically, the Park Service may collect and use franchise fees from concessioners who operate restaurants, lodges, and other business operations inside park units. These fees are generally assessed as a percentage of the concessioners’ total gross receipts. The Park Service also collects fees for commercial use authorizations, which include small-scale commercial activities, such as leading workshops or tours.

Rents. The Park Service is authorized to collect and use certain rents. Through its leasing program, the Park Service leases buildings and associated property to businesses, individuals, and government entities.

Donations. The Park Service is authorized by law to receive and use cash donations and in-kind donations from individuals, nonprofit organizations, and corporations. Examples of in-kind donations include artifacts or services provided by nonprofit partner groups on behalf of the Park Service. The Park Service is also authorized to develop agreements with nonprofit partner groups, known as friends groups and cooperating associations. In general, friends groups engage in fundraising efforts on behalf of individual parks units, while cooperating associations provide interpretive services for visitors and manage retail operations at parks and share a portion of their proceeds from these operations with park units. The Park Service also has a volunteer program authorized by the Volunteers in the Parks Act of 1969. Volunteers help with a variety of tasks at park units, including doing maintenance work and providing interpretive services to visitors.

Other funding sources. Other funding sources include transportation fees the Park Service collects to operate public transportation systems in park units; rents collected for employee housing; and funding from the U.S. Department of the Treasury for certain pension payments for United States Park Police annuitants.

Park Service’s Total Funding Did Not Keep Pace with Inflation for Fiscal Years 2005 through 2014, Even with Increases in Fees and Donations

According to our analysis of OMB MAX data, total funding for the Park Service increased in nominal dollars from $2.7 billion in fiscal year 2005 to $3.1 billion in fiscal year 2014 (15 percent), as shown in table 1. However, when adjusted for inflation, total funding for the Park Service declined by 3 percent during this period.

For fiscal years 2005 through 2014, the largest component of funding for the Park Service was its annual appropriations, which comprised 88 percent of its total funding on average, with fees, donations, and other funding sources comprising the remaining 12 percent. Over time, there has been some growth in the proportion of total Park Service funding that fees, donations, and other funding sources comprise (see fig. 1).

Annual appropriations increased by 9 percent overall from fiscal year 2005 through fiscal year 2014 in nominal terms but declined by 8 percent after adjusting for inflation (see fig. 2). A large increase in appropriations came in fiscal year 2009, when the American Recovery and Reinvestment Act provided an additional $750 million to the Park Service. Since fiscal year 2010, annual appropriations for the Park Service have generally declined. Park Service officials told us that flat or declining appropriations have made it difficult to cover increases in salary and expenses for agency employees and to address the agency’s growing maintenance backlog. In addition, the number of park units in the system has been growing, and some Park Service officials said that this increase in units meant that the agency’s appropriations had to be divided among an increasing number of units. In 2006, there were 390 park units, and there are 409 park units as of November 2015.

Fees, donations, and other funding sources grew 64 percent in nominal terms from fiscal year 2005 through fiscal year 2014 and have increased in most years, as shown in figure 3. Even after adjusting for inflation, funding from these sources increased by 39 percent during this period.

Recreation fees, commercial service fees, and cash donations comprised on average 74 percent of the total fees, donations, and other funding sources for the Park Service for fiscal years 2005 through 2014. Park Service officials told us that these three revenue sources provided important support to park units. For example, from 2005 through 2011, recreation fees funded an estimated 8,575 projects at park units, including maintenance and other projects that enhanced the visitor experience, according to a 2012 report on the implementation of FLREA. In addition, during that time period, the Park Service used revenue from franchise fees to reimburse numerous concessioners that improved facilities in park units. Further, philanthropic donations enabled some parks to complete projects, such as improving trails or rehabilitating visitor centers. Some Park Service officials voiced concern to us that fees and donations could be viewed as a substitute for annual appropriations. They said that these sources are to be viewed as a supplement to annual appropriations but not a replacement.

Park Service’s Revenues from Fees and Donations Increased to Varying Degrees from Fiscal Year 2005 through Fiscal Year 2014

Revenues from recreation and commercial service fees and donations from philanthropic sources grew from fiscal year 2005 through fiscal year 2014. Specifically, revenues from recreation fees increased 26 percent during the period, while revenue from commercial service fees nearly tripled. Meanwhile, cash donations from philanthropic sources have fluctuated, while volunteer support has consistently increased.

Revenues from Recreation Fees Grew 26 Percent, and a Small Number of Parks Account for a Large Proportion of These Fees

According to our analysis of Park Service data, revenues from recreation fees increased from about $148 million to about $186 million (26 percent) during the period we examined, as shown in figure 4. With the exception of fiscal years 2009, 2010, and 2013, revenues from recreation fees increased over the prior year.

Revenues from recreation fees are comprised largely of entrance fees and amenity fees for equipment, services, and facilities, such as campsites. Revenues from entrance fees have been higher than amenity fees from fiscal year 2005 through fiscal year 2014, accounting for about 77 percent on average of the total recreation fees collected, with amenity fees on average accounting for the remaining 23 percent.

Although recreation fee revenues have been generally increasing, the number of park units collecting entrance fees has declined from fiscal year 2008, the first year for which data are available according to Park Service officials, through fiscal year 2015. The number of park units charging amenity fees has remained largely constant over this period (see table 2).

The decision to charge recreation fees involves individual park units, which make proposals to charge fees, and regional and headquarters officials who approve these fees. According to Park Service guidance, one of the guiding principles of the program is that parks will not collect recreation fees if the cost of collection exceeds the amount of revenue generated. For example, some park units do not have many visitors, so the administrative costs of charging these fees, which include paying staff to collect them, purchasing cash registers to process them, and hiring an armored car service to deposit them, can outweigh the anticipated revenues.

Even with the decline in the number of parks collecting recreation fees, revenues grew over the period we examined, largely because the fees collected at a small number of parks account for a large portion of the fees collected. In fiscal year 2014, five national parks—Grand Canyon, Yosemite, Yellowstone, Rocky Mountain, and Zion—accounted for $59.6 million or about one-third of the total recreation fees collected that year. In addition, according to our analysis of the Park Service data, the top 50 park units collected about 88 percent of the total recreation fees collected in fiscal year 2014.

Revenues from Commercial Service Fees and Rents Almost Tripled, and Concessions Contracts Generate the Majority of These Revenues

According to our analysis of Park Service data, revenues from commercial service fees and rents almost tripled during the period, growing from almost $33 million in fiscal year 2005 to about $95 million in fiscal year 2014, as shown in figure 5. Revenues from franchise fees, rents, and commercial use authorization fees all grew during this period. Specifically, revenues from franchise fees almost tripled, growing from about $29 million in fiscal year 2005 to about $85 million in fiscal year 2014. In addition, rents grew from about $2 million in fiscal year 2005 to almost $8 million in fiscal year 2014, and fees from commercial use authorizations more than doubled from about $988,000 in fiscal year 2005 to about $2 million in fiscal year 2014.

The Park Service generates the vast majority of its commercial service revenues from franchise fees associated with concession contracts. Specifically, these fees accounted for about 90 percent of all commercial service revenues in fiscal year 2014. A small number of large concessions contracts accounted for the majority of these fees. According to Park Service officials, data from concessioners’ 2014 annual financial reports showed that 51 of the agency’s approximately 500 concessions contracts generated 84 percent of all franchise fees paid to the Park Service in fiscal year 2014. Leases generated about 8 percent of fiscal year 2014 commercial service revenues, and commercial use authorizations generated about 2 percent.

The growth in commercial service revenues can be attributed in part to an increase in the franchise fee rates that concessioners are paying to the Park Service. According to Park Service officials, franchise fees for individual contracts have increased an average of 2.4 percentage points as they have turned over and been awarded under the terms of the new Concessions Act. In addition, our analysis of Park Service data showed that the number of park units collecting commercial service fees has grown. In fiscal year 2005, 146 parks reported collecting at least one type of commercial service fee; the number grew to 176 by 2014. According to Park Service officials, growth in commercial service revenues can also be attributed to improved economic conditions, which has led to increased visitation levels at park units and higher gross receipts for concessioners.

Cash Donations to the Park Service Fluctuated, and Volunteer Support Consistently Increased

Cash donations to the Park Service did not have a discernible trend from fiscal year 2005 through fiscal year 2014, and there was considerable fluctuation in donations during this period (see fig. 6), ranging from $19.5 million in fiscal year 2011 to $94.7 million in fiscal year 2014. According to a senior Park Service official, this variation is largely due to donors contributing to large projects at particular park units that attracted the attention of donors in certain years. For example, $65.5 million of the $94.7 in total cash donations (69 percent) the Park Service received in fiscal year 2014 is from donations to renovate the museum and build a new visitor’s center at the Gateway Arch in St. Louis, which is part of the Jefferson National Expansion Memorial. Park Service officials also pointed out that economic factors play a role in influencing donation trends, noting that donations declined after the 2008 U.S. recession.

Cash donations to the Park Service come from a variety of sources, including friends groups and cooperating associations. These groups also provide in-kind donations to the Park Service, which include artifacts donated or services provided to the agency. In general, we found that total donations from friends groups—both cash and in-kind donations— rose from about $68 million in fiscal year 2005 to about $147 million in 2011, the latest year for which data are available according to Park Service officials. Regarding donations from cooperating associations, Park Service officials and cooperating association officials told us that donations have generally been increasing, although this trend has been tempered by declining book sales nationwide, which have traditionally been a key source of cooperating associations’ revenues at the stores they operate.

According to Park Service data, volunteer support for the agency has increased steadily. Specifically, the number of volunteers increased from about 132,000 in fiscal year 2005 to about 248,000 in fiscal year 2014, and the estimated cash value of their work increased from about $93 million to about $155 million during this period. The number of volunteers increased every year, except for fiscal year 2013. According to a senior Park Service official, the decline in the number of volunteers that year was attributable to Hurricane Sandy and the 2013 federal government shutdown, both of which disrupted the typical operations of the Park Service.

Park Service Has Initiatives Under Way to Increase Revenues from Fees and Donations, but Certain Factors Complicate These Efforts

The Park Service has efforts under way to increase revenues from recreation and commercial service fees along with philanthropic donations. However, certain factors complicate these efforts and limit the agency’s ability to increase revenue from these sources.

Park Service Recently Increased Recreation Fees at Many Parks, but Faces Challenges to Further Increases

In 2014, the Park Service encouraged park units that were collecting recreation fees to increase them, and 111 park units subsequently elected to do so, as of September 2015. Park Service officials told us that parks are expected to examine their amenity fees each year; however, there are no plans to regularly reassess entrance fees. The Park Service’s ability to increase funding from recreation fees is also limited by legislation and park-specific characteristics.

Park Service Increased Both Entrance and Amenity Fees at Several Parks but Does Not Plan to Regularly Reassess Entrance Fees

The Park Service has recently increased entrance and amenity fees at several parks. In August 2014, the Director of the Park Service issued a memorandum that ended a moratorium on entrance fee increases that had been in place since 2008 and updated the agency’s entrance fee rate schedule for the first time since 2006 (see table 3). Like the 2006 fee schedule, the updated schedule separates the park units that collect entrance fees into four groups by type of park unit. If adopted, these fees represent an increase of 20 to 50 percent in most instances over the 2006 fee schedule, depending on the type of park unit and type of entrance fee being charged. Park Service officials told us that the agency estimates that $58 million in additional entrance fees could be generated if all parks charging entrance fees followed the schedule and visitation is not impacted by the increase in fees.

The Park Service gave discretion to the park units to decide whether to increase entrance fees, and the memo states “if there is significant public controversy, a park may choose not to implement new fees, may phase in the new rates over three years, or delay the new rates until 2016 or 2017.” To assess public reaction to proposed fee changes, the memorandum encouraged park units to conduct public outreach in late summer or fall of 2014. According to Park Service officials we interviewed, park units used different methods to conduct this outreach, including using social media, holding public meetings, and meeting with congressional delegations.

According to the memorandum, once public outreach was complete, each park unit that chose to proceed with a rate change had to submit their proposed change to regional and headquarters offices for approval. Of the 130 park units that charged an entrance fee in 2014, 92 park units proposed increasing the per person entrance fee, and 60 park units proposed increasing the per vehicle entrance fee, and all of them received approval to do so. For those increasing fees, a number of park units chose to charge less than the revised entrance fee schedule by 2017. Specifically, of the 92 park units that received approval to increase fees for individuals, 59 (64 percent) will be charging an entrance fee for individuals in line with the proposed schedule; the remainder elected to charge less than what the schedule recommends.

A senior Park Service official told us that discretion was given to the parks under agency guidance about whether to follow the fee schedule, and fee increases needed to be supported by the public. According to the memorandum establishing the new entrance fee schedule, “the goal (if supported by civic engagement) is for all entrance fee parks to align with the standard rate for their group by 2017.” However, several park units that are collecting some type of entrance fee in 2015 did not increase entrance fees, and may not align with the fee schedule by 2017, unless they undertake efforts to do so. In addition, Park Service does not require park units to provide information supporting their decisions on not increasing entrance fee rates or increasing their fees by less than the fee schedule. According to a senior Park Service official, providing this information was not required because it was not compulsory that park units increase their fees. However, Federal Internal Control Standards state that for an agency to run its operations, it must have reliable and timely communication and that information is needed throughout the agency to achieve its objectives. By not requiring that parks provide information on decisions that deviate from the fee schedule, the Park Service may not have relevant information that would help to manage changes to recreation fees more effectively and ensure that park units are taking steps to determine whether entrance fees are set at a reasonable level.

Regarding amenity fees, the August 2014 Park Service Director’s memorandum encouraged park units that charge amenity fees to examine them to determine whether they should increase. In order to increase these fees, the memorandum directs park units to conduct studies to compare the amenities offered in their parks and associated fees with those offered by private businesses in the surrounding area. Of the 131 park units that charged amenity fees in 2014, 55 park units received approval from Park Service headquarters to increase their amenity fees. Many of these parks received headquarters approval to increase fees at campgrounds. For example, Whiskeytown National Recreation Area in California received approval to increase fees $5 a night in most cases for recreation vehicle, tent, and horse camping. In general, Park Service officials told us that they expect parks to conduct comparability studies on an annual basis to see if amenity fees should be raised as part of the annual process to request changing fees, which is laid out in Park Service guidance.

Unlike amenity fees, Park Service officials told us there were no plans to periodically review entrance fees to see if they should be increased. Our 2008 guide on federal user fees states that if federal user fees are not reviewed and adjusted regularly, federal agencies run the risk of undercharging or overcharging users. Moreover, Park Service guidance directs the agency to ensure its fees are set at a reasonable level, but this guidance does not direct that these fees be periodically reviewed. In a 2015 report, the Department of the Interior Inspector General recommended that the Park Service establish intervals for periodic reviews of its entrance fees to ensure that the fee schedule remains up to date. Park Service officials told us they were hesitant to commit to such reviews until FLREA is reauthorized because they were unsure if they would continue to have the authority to continue charging entrance fees. However, Park Service has not required periodic reviews of entrance fees for the 11 years that FLREA has been in place. By not regularly reviewing its entrance fee schedule, the Park Service is missing an opportunity to ensure that these fees are reasonable.

Legislation and Park-Specific Characteristics Limit Recreation Fee Collection

The Park Service’s ability to further increase revenues from recreation fees is limited by legislation and park-specific characteristics.

Legislation. According to Park Service data, 58 park units are prohibited by law from charging entrance fees. For example, the Alaska National Interest Lands Conservation Act prohibits the Park Service from charging entrance fees at all park units in Alaska. FLREA prohibits the Park Service from charging entrance fees at parks that lie within the District of Columbia, and the National Parks and Recreation Act of 1978 prohibits the Park Service from charging entrance fees at Point Reyes National Seashore. Park Service officials also said there were limits to how much the agency could raise fees because FLREA requires that the agency consider the impacts of fees on visitors, and the Park Service did not want to dissuade visitors from coming to parks. For example, there was opposition from the public to implementing entrance fees at additional areas of the Chesapeake and Ohio (C&O) National Historical Park and, in response, park officials withdrew this proposal in February 2015.

FLREA also directed the Secretary of the Interior to establish an interagency pass that covers entrance fees and certain amenity fees for all federal recreational lands. The price of the pass is $80 annually, as of October 2015, and covers national park units, as well as recreational lands managed by U.S. Forest Service, Bureau of Reclamation, Bureau of Land Management, and the U.S. Fish and Wildlife Service. However, FLREA limits agencies’ ability to increase revenue from recreation fees. For example, the law prohibits charging entrance fees to persons under 16 years of age. FLREA also requires the Secretary of the Interior to offer a lifetime interagency pass for a one-time $10 price to senior citizens, defined as being over 62 years of age, and requires that free interagency passes be made available to permanently disabled people.

While under FLREA, the price of the annual interagency pass can be changed by the agencies that administer it, the law does not provide this flexibility for the $10 lifetime senior pass, the free annual pass for disabled individuals, or free entry for those under age 16. Interior’s Inspector General found that this aspect of FLREA “hampers agencies’ flexibility and their ability to make business decisions” and concluded that free and substantially discounted passes represent missed opportunities for revenue. The price of the senior pass has been $10 since 1993, but a bill introduced in September 2015 would increase this price to a one- time amount matching the price of the annual interagency pass, which is $80, as of October 2015. If this occurred, it could generate about another $35 million in revenue annually, assuming that the same number of passes was sold, as in fiscal year 2014, which was about 500,000. Because of the limitations in FLREA, Park Service and the other agencies that administer the recreation fee program do not have the flexibility to periodically reassess and change the price of the lifetime senior pass. Providing this flexibility to these agencies would allow them to consider adjusting fees periodically, which is consistent with our guide on federal user fees.

Park-specific characteristics. At some park units, collecting recreation fees is precluded by the configuration of the parks or is not economically advantageous. For example, some park units have many entry points, which make the logistics of collecting entrance fees difficult, according to Park Service officials. In addition, as previously described, at some park units, it may not be economically advantageous to collect recreation fees at some park units. For example, at parks with few visitors, the costs of administering the fee collection program would be a significant portion of the total fees collected, and these parks may not choose to charge an entrance fee. Other park units—for example, national historic sites—may not offer amenities, such as campsites, for which the Park Service could charge fees.

Park Service Increased Revenues from Commercial Services and Is Looking for New Opportunities to Generate Revenue, but Several Factors Complicate These Efforts

The Park Service increased revenues from commercial service fees from fiscal year 2005 through 2014, in part by increasing the franchise fees that concessioners are to pay and by taking steps to make certain contracts more attractive to potential bidders. However, several factors complicate these efforts.

Park Service Increased Concessions Revenues and Is Looking for Opportunities to Increase Revenues from Other Commercial Services

The Park Service increased revenues from commercial service fees from fiscal year 2005 through fiscal year 2014, in part by increasing the minimum franchise fees included in contract prospectuses. According to Park Service officials, the agency increased the minimum franchise fee by modifying the process they used to develop contract prospectuses, which describe the services concessioners are to provide, any investments required for the operation, such as maintenance or equipment, and the minimum franchise fee, among other things. After a prospectus is issued, potential concessioners submit bids that include, among other things, the franchise fee they agree to pay if they are awarded the contract—which has to be equal to or higher than the minimum in the prospectus—along with details about the services they propose to provide. Before 1998, when the Concessions Act was enacted, the Park Service set minimum franchise fees based on limited financial reviews of concessioners’ financial statements, according to Park Service officials. After 1998, Park Service officials told us that they started hiring hospitality consultants to help them with the financial aspects of contract prospectuses to meet the requirements of the new act. Specifically, the agency started working with hospitality consultants to conduct in-depth financial analyses to develop minimum franchise fees for the Park Service’s largest contracts—those with gross revenues above $5 million. These analyses involve estimating concessioners’ costs and anticipated revenues and comparing the estimated profitability of the concessions operations with industry standards. Park Service officials and hospitality consultants told us that these more sophisticated analyses allowed the agency to better estimate the franchise fees that concessioners could pay while still having a reasonable opportunity for profit, as required by the Concessions Act, which led to higher franchise fees.

Park Service officials also made efforts to increase revenues from commercial service fees by working to make concessions contracts more attractive and increasing competition among potential bidders. Park Service officials told us that increased competition among potential concessioners generally results in higher franchise fees in winning contracts. Our analysis of Park Service data also found that increased competition was associated with higher franchise fees. Specifically, based on our analysis of 25 large contracts awarded between fiscal years 2005 and 2014 we found that the Park Service earned an average of 5 percent in franchise fees from contracts that attracted 1 or 2 bidders and an average of 16 percent in franchise fees from contracts that attracted 3 or more bidders. One of the ways that Park Service officials said they tried to make concessions contracts attractive to more potential bidders was by reducing the amount of Leaseholder Surrender Interest (LSI) that had accumulated under certain contracts. LSI generally represents the depreciated value of capital improvements made by a concessioner to a property, such as building a new structure or completing a major rehabilitation. If a contract is awarded to a different concessioner when the contract ends, the Concessions Act requires the previous concessioner to be reimbursed for any LSI. The previous concessioner may be reimbursed by the new contract holder or the Park Service. Park Service officials and concessioners we spoke with said that LSI can create barriers to competition because few companies have the resources to reimburse the previous concessioner. Park Service officials told us that they chose to reduce the LSI associated with certain contracts because these contracts would otherwise have attracted few bidders. For example, in 2014, the Park Service spent almost $100 million reducing LSI to increase competition for a large concessions contract at Grand Canyon National Park. The Park Service initially invested $19 million in LSI payments. However, even with this reduction in LSI, the Park Service did not receive offers that met the terms of its first three prospectuses, and agency officials said that the level of LSI remained a barrier to potential bidders. As a result, the Park Service paid an additional $81 million to further reduce LSI. The Park Service received multiple bids on the fourth prospectus for this contract. Park Service officials told us that they plan to award this contract by January 1, 2016.

In addition to reducing LSI associated with certain contracts, the Park Service has limited the amount of LSI that potential bidders can incur in new contracts, according to Park Service and concessioner officials we spoke with. Park Service officials told us that limiting LSI could reduce start-up costs associated with future contracts since new concessioners would not have to reimburse previous concessioners for accumulated LSI. However, some concessioners told us that limiting LSI could lead to lower levels of investment in concessioner-run properties, since concessioners may be less likely to make capital improvements if they are not reimbursed for these investments. This, in turn, could contribute to additional asset degradation and increased future maintenance costs, according to some concessioners we spoke with.

Park Service officials also have looked for opportunities to increase revenues from leases and commercial use authorizations. Specifically, the Park Service hired a national leasing manager in 2015 to formalize its leasing program, and some parks units and regions have developed active leasing programs. For example, from 2009 through 2014, the Northeast region increased the number of leases from 25 to 76. As a result, the region more than doubled the revenue it generated from rents and payments made in lieu of rent, which increased from almost $14 million to $38 million during this time period. According to regional Park Service officials, the region increased its leases by increasing the number of full-time leasing positions and by hiring staff with real estate expertise to help advise parks on developing leases and perform market studies to set rental rates.

The Park Service also has developed a new policy that has the potential to increase revenues from commercial use authorizations, according to Park Service officials. Traditionally, fees for commercial use authorizations were set to recover costs that park officials incurred administering the program. According to several park unit officials we spoke with, these fees ranged from $100 to $350 per permit. In 2015, the Park Service developed guidance that allows park officials to charge businesses a fee based on a percentage of gross receipts or a fee that is sufficient to cover administrative and management costs incurred issuing these commercial use authorizations—whichever is more. For example, the new guidance allows park officials to charge recreation service providers that generate less than $250,000 in annual gross receipts the greater of either 3 percent of gross receipts or $500. Some businesses operating under commercial use authorizations generate significant revenues, sometimes hundreds of thousands of dollars, according to Park Service officials. As a result, officials said that this shift has the potential to increase revenues because the resulting fees would be higher than the flat fees that have traditionally been charged.

Several Factors Complicate Park Service’s Efforts to Increase Revenues from Commercial Service Fees

Several factors complicate the Park Service’s efforts to increase revenues from commercial service fees. In particular, officials noted that the Park Service is required by law to balance a number of priorities. Specifically, under the Concessions Act, accommodations, facilities, and services offered under a concessions contract must be consistent to the highest practicable degree with the preservation and conservation of park units they are proposed to operate in, provide a reasonable opportunity for profit to concessioners, and offer reasonable rates for facilities and services to the public. The law does not require the Park Service to maximize franchise fees; instead, it states that franchise fees are a lower priority than protecting, conserving and preserving park units or providing necessary and appropriate facilities and services to visitors at reasonable rates. As a result, Park Service officials told us that increasing revenues from franchise fees can be challenging.

The Park Service’s efforts to increase revenues from commercial service fees also have been affected by limited competition for some concessions contracts. Our analysis of Park Service data found that 32 percent (8 of 25) of the Park Service’s largest contracts—those generating $5 million or more—awarded between fiscal years 2005 and 2014 attracted one bidder. These 25 contracts generated about 45 percent of the $65 million in franchise fees collected by the Park Service in fiscal year 2013, the most recent year for which data are available. Park Service officials told us that, of these 25 contracts, 2 contracts for lodging services initially received no bids. In addition, some parks offer limited opportunities for revenue generation, which may in turn limit the number of bidders. For example, Park Service officials told us that some park units are located in remote locations that attract few visitors or have short tourist seasons, which limits the potential profitability of these contracts. According to Park Service officials, they are pleased to receive one bid in such cases.

Adjusting a concessions contract to provide additional services, which could increase revenues for concessioners and the Park Service, can be a lengthy process, according to some concessioners we spoke with. For example, one concessioner that provides transportation services at a park told us that his company proposed increasing the number of park visitors transported per day to levels consistent with the park’s management plan. This proposed change took 20 months to be reviewed and approved by the Park Service, which, according to the concessioner, resulted in lost revenue for both the concessioner and Park Service. Another transportation concessioner told us about similar challenges adjusting his company’s operating plan to increase service hours by 30 minutes. Although such a change in operating hours is generally the purview of the park superintendent, according to the concessioner, the change took 5 years to be approved due to turnover in park leadership and park budget constraints.

Park Service officials told us that they act as quickly as possible when they receive requests to change or increase concessioners’ services but, in some cases, it takes time to collect and assess the necessary information to make an informed decision. For example, according to Park Service officials, the agency considers the impact of the proposed change on park operations and on other business operations in the park. Park Service officials also told us that they are developing guidance to establish factors to consider for adding services to help park unit staff when considering concessioners’ requests. Proposed factors include whether the proposed services complement the terms of the current contract and whether there will be environmental impacts at the park unit from these services. In addition, concessioners must be fully compliant with their current contracts before requests to add services may be considered. As of August 2015, this guidance was under development, and agency officials were uncertain when it would be issued.

Efforts to increase revenues from leases and commercial use authorizations also face challenges. According to Park Service officials, leasing opportunities can be limited because some park units do not have buildings available to lease or the facilities they have are not suitable for leasing due to their poor physical condition. In addition, park officials at two parks we visited told us that they do not have sufficient staff to manage a leasing program. For commercial use authorizations, some park officials we spoke with said that changing their fee structure to one based on a percentage of business owners’ gross revenues could pose a financial burden to smaller businesses that have low profit margins yet provide important services for park visitors. For example, park officials at one park told us that some businesses have held commercial use authorizations to deliver portable toilets, which they said is an essential service during large events. These officials told us that these businesses have relatively low profit margins and may be unwilling to operate in parks if they had to pay higher fees.

Park Service Has Sought to Increase Philanthropic Donations, but Several Factors Limit Its Ability to Do So

To increase philanthropic donations, the Park Service is leveraging opportunities arising from its centennial anniversary in 2016, adjusting relevant policies, helping to increase the fundraising capacity of its nonprofit partners, and training its own staff on ways to collaborate more effectively with nonprofit partners. Several factors limiting the Park Service’s ability to increase philanthropic support include attractiveness of certain projects needing donations, limited capacity to manage volunteers, and lack of detailed information on donations.

Park Service Is Leveraging Its Centennial Anniversary, Revising Policy, and Providing Other Assistance to Increase Donations

To increase philanthropic donations, the Park Service is leveraging opportunities arising from its centennial anniversary in 2016. The Centennial Campaign has two primary efforts—fundraising and public outreach—both of which are being conducted in collaboration with the Park Service’s congressionally chartered nonprofit partner, the National Park Foundation (Foundation).

Fundraising. The Park Service and the Foundation have launched a major fundraising campaign, which aims to raise $250 million in donations by 2018. These funds will be used to support 100 projects that protect resources, connect visitors with the parks, and develop the next generation of park stewards. For example, in the area of protecting resources, projects include rehabilitating Constitution Gardens in Washington, D.C., and restoring an area of large Sequoia trees to a more natural state in Yosemite’s Mariposa Grove.

Public Outreach. In collaboration with the Foundation, the Park Service launched the “Find Your Park” campaign in 2015. This public outreach effort is designed to encourage Americans to visit park units, generate interest in parks, and help raise financial and in-kind support for park units. This effort uses social media and disseminates marketing materials online and in park units. The Park Service has partnered on this campaign with certain major donors, which each made at least $500,000 in contributions to the Foundation to support the campaign. Figure 7 shows examples of posters developed for the campaign to be displayed in park units and also used in online and print advertising.

The Park Service also has allocated about $49 million in funds appropriated by Congress for the centennial anniversary. Congress has also appropriated funds to be used for matching grants. Specifically, Congress appropriated $25 million in 2008, $15 million in 2010, and $10 million in fiscal year 2015 to match philanthropic donations dollar-for- dollar to fund projects in park units. To be considered, proposed projects are to benefit one or more Park Service areas and have matching donations of at least 50 percent of project costs, according to the Park Service. Agency officials have prioritized projects with higher rates of matching donations, and considered the timeliness of donations, readiness of projects, and whether proposed projects address centennial and service-wide goals, such as high-priority deferred maintenance. Examples include rehabilitating the underground Franklin Court Museum at Independence National Historical Park and reconstructing roads, parking, walks, signs, and pedestrian areas to meet park road standards, accessibility standards, and historical context at Roosevelt Arch in Yellowstone National Park.

Since 2014, the Park Service has also been revising its policies related to philanthropy to help increase donations. Specifically, the Park Service has been revising Director’s Order 21—the Park Service’s main policy governing donations and fundraising. Some nonprofit partners told us that this guidance lengthened the donations process in the past by requiring significant Park Service review. Park Service documentation suggests that, when approved, the revised Director’s Order 21 will likely shift greater authority to regional directors and superintendents to accept donations and approve fundraising agreements. For example, current policy allows regional directors to approve donations less than $1 million. The revised policy, which will likely be signed in early 2016, may allow the Park Service Director to delegate approval authority to regional directors for donations up to $5 million. The Park Service is also revising Director’s Order 7, which addresses volunteering, and Reference Manual 32, its internal guidance on cooperating associations and is planning to complete these revisions in late 2015. According to Park Service officials involved with these revisions, the goal of these revisions is to emphasize the importance of collaboration between Park Service and its partners.

In addition, in January 2015 the Park Service temporarily waived three parts of its policies to help with centennial fundraising efforts. First, Park Service policy generally prohibits naming park assets as a form of donor recognition. For example, buildings, vehicles, and park features are not to bear donor names. Park Service waived this policy with regard to certain donations for items including benches, bricks, motor vehicles, and rooms in buildings—although buildings themselves are still prohibited from bearing donors’ names. Second, Park Service policy generally prohibits donor recognition from including corporate logos in park units. The Park Service waived this policy to allow corporate logos to be included on vehicles under certain conditions. Figure 8 provides an example of a corporate logo displayed on a Park Service vehicle. Third, the Park Service also issued a waiver allowing it to advertise with an alcohol company. All three of these waivers will be effective until 2017, when Park Service will reevaluate them to determine if they should remain in place, according to a Park Service official.

The Park Service has also sought to increase philanthropic donations by encouraging the Foundation to expand and by helping friends groups increase their fundraising capacity. Specifically, the Park Service encouraged the Foundation to restructure and expand its staffing to better align with the current philanthropic practices. Since 2008, the Foundation has added 50 people and created three offices focused on corporate giving, private giving, and marketing. According to Foundation officials, the Foundation plans to continue increased fundraising efforts after the centennial campaign. With regard to friends groups, the Park Service has begun training its own staff on ways in which they can collaborate more effectively with nonprofit partners on their fundraising efforts. Park unit officials we spoke with told us that they help friends groups with their member outreach by attending fundraising events to describe the park’s needs to potential donors. In addition, park unit officials work with friends groups to identify potential projects that need funds and that donors would likely support. Park Service officials told us that improving the fundraising capacity of friends groups is important since several new friends groups have been started in the past 10 years, and many have not yet developed fundraising skills.

The Park Service has also taken steps to increase volunteerism. Specifically, the Park Service allocated an additional $2 million in fiscal year 2015 to pay for 70 new volunteer coordinators, known as Centennial Volunteer Ambassadors. According to the Park Service, these 1-year internship positions will be dispersed throughout the Park Service. These coordinators will be responsible for helping to design and coordinate volunteer training and service. They will also perform outreach to attract volunteers.

Several Factors Hamper the Park Service’s Ability to Increase Donations

According to Park Service officials, several factors hamper the agency’s ability to increase philanthropic donations. One factor they cited is the types of projects that need funding are not always attractive to donors. For example, routine maintenance on buildings or sewer systems may be less attractive to donors than large, visible projects, such as the construction of a visitor center. In addition, the location of some parks can limit their ability to obtain philanthropic support. For example, Park Service officials in one regional office told us that some friends groups have difficulty raising large sums of money because their parks are not near urban areas with large pools of potential donors. Similarly, some parks may not generate as much interest as larger, better known parks and may struggle to attract donors. Another factor that Park Service officials cited is some internal resistance to relying on outside funding sources. For example, Park Service officials told us that some agency employees have expressed concern about some efforts to increase philanthropic donations—particularly the recent temporary waiver on partnering with corporations, which they view as commercializing the parks.

The Park Service also has limited capacity to manage volunteers. According to Park Service officials, volunteers provide essential support at many parks—including helping with maintenance projects and interpretative assistance—but their efforts must be managed. In addition, the number of people who want to volunteer at some parks outpaces the availability of staff to manage them. Park Service officials explained that some park units do not have dedicated volunteer coordinators and instead assign these tasks as collateral duties due to budget constraints. Park Service officials told us that if they were able to dedicate more staff hours to managing volunteers, they could increase the level of volunteer support the agency receives.

The Park Service compiles data on cash and in-kind donations from friends groups and cooperating associations as part of their business practices, but these data have several limitations. For example:

Certain data are outdated. The Park Service is delayed in compiling data on donations from friends group because the agency’s process relies on examining Internal Revenue Service (IRS) Form 990s submitted by friends groups, and these groups can request extensions in filing these forms.

Certain data are incomplete. We found that some information was missing—specifically some years of data from the National Park Foundation and information on donations from smaller friends groups. For cooperating associations, we also found that data were missing for certain years.

Some data lack specificity and hinder certain analyses. We were unable to determine the trends in cash donations and in-kind donations received from friends groups because the Park Service did not differentiate between cash and in-kind donations for all years. For cooperating associations, we also found that the Park Service had not disaggregated cash from in-kind donations provided by cooperating associations.

The Park Service is developing a new data portal for philanthropic donations that may address some shortcomings we identified. Specifically, according to a Park Service official leading this effort, the portal is intended to collect information from all friends groups, not just the larger ones, in addition to gathering information from cooperating associations. In addition, the portal is to gather information on monetary as well as in-kind services provided, according to documentation describing the system. Further, information is to be collected on an annual basis as a way to improve the timeliness of data. The Park Service plans to provide training on the portal in the spring of 2016 to the philanthropic partners who will be expected to enter data using the portal, according to a Park Service official involved in this effort. This official also said the agency plans to develop measures to ensure the reliability of the data collected, but specific details on these measures are not yet available.

Conclusions

In a time of constrained resources, recreation fees, commercial service fees, and philanthropic donations are becoming increasingly important to the Park Service. The Park Service has undertaken several efforts to increase funding from these sources, and from fiscal year 2005 through fiscal year 2014, funding from these sources increased by about 40 percent, after adjusting for inflation. However, the Park Service faces challenges in increasing revenues from these sources and may be missing additional opportunities to increase funding from recreation fees.

In particular, since 1993, senior lifetime interagency passes have been sold for a one-time price of $10—a significantly lower price than the current $80 annual price for a regular annual interagency pass. Our past work on federal user fees has highlighted the importance of regularly reviewing these fees. However, unlike the annual interagency pass, FLREA does not permit Park Service or the other agencies that charge recreation fees to increase the price of the senior pass. Without the authority to adjust the price of the senior pass, the Park Service is limited in its ability to increase revenue from this recreation fee. In addition, when the Park Service updated its entrance fee schedule for the first time since 2006, several parks increased entrance fees, but the Park Service does not have guidance to periodically review these fees. Moreover, the Park Service does not require park units that choose not to follow its entrance fee schedule to provide information on these decisions. Without guidance to periodically review fees and direct the park units to provide information on deviations from the fee schedule, the Park Service may not ensure that its entrance fees are set at a reasonable level and may be missing opportunities to more effectively manage its fees.

Matter for Congressional Consideration

To increase the flexibility that Park Service has to change entrance fees, Congress should consider amending FLREA to give authority to the Park Service and the other four agencies that implement the recreation fee program—Bureau of Reclamation, Bureau of Land Management, the U.S. Fish and Wildlife Service, and the U.S. Forest Service—to adjust the price of a lifetime senior pass.

Recommendations for Executive Action

To help improve its management of recreation fees, we recommend that the Secretary of the Interior direct the Director of the Park Service to take the following two actions: revise its guidance on recreation fees so that the agency periodically reviews its entrance fees to determine whether the fees are reasonable, and direct that park units provide information to headquarters on why they are choosing to not increase entrance fees or increase them by an amount less than the fee schedule.

Agency Comments and Our Evaluation

We provided a draft of this report to the Department of the Interior for review and comment. In its written comments, reproduced in appendix IV, the Department of the Interior generally agreed with our findings and concurred with our recommendations. Interior also noted that the Park Service is planning to address these recommendations. Specifically, in 2016, the Park Service is planning to revise its guidance on recreation fees to require periodic evaluation of the entrance fee pricing structure. In addition, beginning in 2016, Interior indicated the Park Service will require park units to provide information on their decisions to not increase entrance fees.

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If you or your staff members have any questions about this report, please contact me at (202) 512-3841 or fennella@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 V.

Appendix I: Objectives, Scope, and Methodology

Our objectives were to examine (1) general trends in funding for the National Park Service (Park Service) for fiscal years 2005 through 2014; (2) the trends in the Park Service’s revenues from recreation and commercial service fees and donations from philanthropic sources for fiscal years 2005 through 2014; and (3) the Park Service’s efforts to increase fee revenues and donations, and factors, if any, that may affect these efforts.

To examine general funding trends for the Park Service for fiscal years 2005 through 2014, we obtained and analyzed data on the Park Service from the Office of Management and Budget (OMB) MAX Information System (MAX). We selected this period because this was the most recent 10-year period for which data were available, and 10 years of data would allow us to identify any trends. Data reported in OMB MAX are subject to review and checks through OMB to help ensure consistency of the data, and we determined these data were sufficiently reliable for our purposes. We analyzed these data in both nominal and inflation adjusted terms. We also examined Park Service budget documents, including its annual budget justifications.

To examine trends in fee revenues and donations for the Park Service for fiscal years 2005 through 2014, we analyzed OMB MAX data along with other data on these funding sources we received from the Park Service. We used the OMB MAX data to examine the trends at a national level, and we used the data from the Park Service to examine trends at the national and park unit levels. To determine the reliability of the Park Service’s data, we spoke with agency officials who were familiar with these data, reviewed relevant documentation, and compared these data to data from OMB MAX. We generally found these data to be sufficiently reliable for our purposes. The exception is the park unit level data on philanthropic donations, which we found to have certain limitations, and we identify these limitations in our use of these data.

To examine the Parks Service’s efforts to increase fee revenues and donations and any factors that may affect these efforts, we examined relevant laws and Park Service documents, and interviewed agency officials. The laws we examined were the Federal Lands Recreation Enhancement Act for recreation fees; National Park Service Concessions Management Improvement Act of 1998 for commercial service fees; and laws governing Park Service’s relationships with friends groups, cooperating associations, and volunteers, such as the Volunteers in Parks Act of 1969. We also examined Park Service’s policy manual along with specific policy documents for the revenue streams we examined: Director’s Order 22 and Reference Manual 22A for recreation fees; Reference Manuals 48A and 48B for commercial service fees; Director’s Order 21 and Reference Guide to Director’s Order 21 for friends groups; Director’s Order 32 and Reference Manual 32 for cooperation associations; Director’s Order 7 for volunteers. We also reviewed the agency’s August 2014 memorandum that encouraged parks to consider increasing fees and memorandums that approved the fee increases that followed. We compared the laws and agency guidance and memoranda, as well as GAO’s design guide for federal user fees and Standards for Internal Control in the Federal Government, with documentation associated with Park Service’s efforts to increase recreation fees. For commercial service fees, we analyzed Park Service data on franchise fee rates, number of bidders, revenues of certain commercial use authorization holders, and certain lease payments. For philanthropic donations, we examined documents associated with Park Service’s centennial efforts.

For all three objectives, we conducted interviews with Park Service officials at the headquarters, region, and park unit levels. At the headquarters level, we interviewed officials in the Chief Financial Officer’s Office, including those responsible for budgeting and overseeing the recreation fee program; officials in the Office of Commercial Services that are responsible for overseeing the commercial service program; officials in the Office of Partnerships and Civic Engagement that oversee relationships with friends groups; and officials in the Office of Interpretation, Education, and Volunteers that oversee cooperating associations and volunteers. At the regional level, we spoke with the regional directors in all seven of Park Service’s regional offices—Alaska, Intermountain, Midwest, National Capital, Northeast, Pacific West, Southeast—along with officials in these offices that help to manage the recreation fee program, commercial services program, and relationships with philanthropic partners. At the park unit level, we spoke with officials that are involved in managing 31 park units. Specifically, we interviewed officials at 23 park units in person and contacted officials from another 8 park units by phone and asked about their experiences with these funding sources. Table 4 in appendix II lists the parks that we contacted as part of our work. In selecting parks to contact, we included a range of parks, that varied by certain characteristics, including number of visitors and type (i.e., scenic vs. historical), and we interviewed officials from at least one park unit in all seven of the Park Service’s regions. We also spoke with a variety of stakeholders, including concessioners and nonprofit partners. We selected these stakeholders because of their affiliation with parks in our review or because they would be able to provide other perspectives on these revenue sources. For example, during some of our site visits, we met with concessioners and partners that were working with the park units we were visiting. The views from these interviews are not generalizable to all parks, concessioners, and nonprofit partners, but they were used to provide a range of perspectives on Park Service’s efforts. We also examined reports prepared in the last 10 years by Park Service and stakeholder groups on recreation fees, commercial service fees, and philanthropic donations.

We conducted this performance audit from October 2014 to December 2015 in accordance with generally accepted government auditing standards. Those standards require that we plan and perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions based on our audit objectives. We believe that the evidence obtained provides a reasonable basis for our findings and conclusions based on our audit objectives.

Appendix II: Data on Selected National Park Units

Table 4 provides information on the national park units that we contacted as part of our work. The table describes how we contacted the park (either in person or by phone) along with background information on the park and data on recreation fees, commercial service fees, and philanthropic donations.

Appendix III: Park Profiles on Selected National Park Units

The following figures provide a summary of selected information we collected during interviews with park officials and information we reviewed about individual parks’ recreation fees, commercial service fees, and philanthropic partnerships.

Recreation fees include entrance fees and amenity fees for certain equipment and services, such as campgrounds.

Commercial service fees include franchise fees, commercial use authorizations, and rents.

The Park Service is also authorized to develop agreements with nonprofit partner groups, known as friends groups and cooperating associations.

Appendix IV: Comments from the Department of the Interior

Appendix V: GAO Contact and Staff Acknowledgments

GAO Contact:

Staff Acknowledgments:

In addition to the individual named above, Elizabeth Erdmann (Assistant Director), Scott Heacock, Mary Koenen, and Sean Standley made key contributions to this report. Additional contributions were made by Penny Berrier, Antoinette Capaccio, Alexandra Dew Silva, Carol Henn, Paul Kinney, Ying Long, Armetha Liles, John Mingus, Alison O’Neill, Guisseli Reyes-Turnell, and Rebecca Shea.