Valles Caldera: The Trust Has Made Progress but Faces Significant Challenges to Achieve Goals of the Preservation Act
Released: 2009-10-30T00:00:00

Letter

Background

About 1.2 million years ago, a volcano erupted and collapsed inward, forming the crater now known as Valles Caldera, in north-central New Mexico (see fig. 1). Almost entirely surrounded by the Forest Service’s Santa Fe National Forest and the National Park Service’s Bandelier National Monument, this geologically and ecologically unique area covers about 89,000 acres of meadows, forests, hot springs, volcanic domes, and streams supporting elk herds, fish, and other wildlife. While in private hands, the Baca Ranch was operated as a working ranch, providing grazing for livestock plus hunting and fishing for a limited number of visitors. According to the Preservation Act, the working ranch arrangement was to continue after ownership was assumed by the federal government.

The act also calls for the Trust 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 to equal or be less than proceeds derived from fees and other receipts 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.

The Trust’s Board consists of nine trustees. The President of the United States appoints seven of these trustees, and the other two are the Supervisor of Santa Fe National Forest and the Superintendent of Bandelier National Monument, under the jurisdiction of the Department of the Interior’s National Park Service. Of the seven presidential appointees, who are selected in consultation with New Mexico’s congressional delegation, five must be New Mexico residents. Appointees are to be selected on the basis of their expertise or experience, as follows: one trustee each (1) with livestock and range management expertise; (2) with expertise in recreation management; (3) who is knowledgeable in sustainable management of forest lands for commodity and noncommodity purposes; (4) with expertise in financial management, budget and program analysis, and small business operations; (5) who is familiar with the cultural and natural history of the region; (6) who is active in a nonprofit conservation organization concerned with Forest Service activities; and (7) who is active in state or local government activities in New Mexico, with expertise in the customs of the local area. Trustees are appointed to 4-year terms and can be reappointed; no trustee, however, may serve more than 8 consecutive years. The trustees select a chairman from the Board’s ranks. With the exception of the Board Chair, trustees serve without pay, although they are reimbursed for travel and subsistence expenses while performing their duties. The Board must hold at least three public meetings a year in New Mexico. An executive director, who is hired by the Board, oversees the Trust’s day-to-day operations.

The Trust Has Taken Steps to Achieve the Preservation Act’s Goals but Has Made Less Progress Than Expected

Although the Trust has taken steps to establish and implement a number of programs and activities to achieve the goals of the Preservation Act, it is behind the schedule it set for itself in 2004. A number of factors, such as high turnover among Board members and key management staff, have contributed to this slow progress, according to former and current Board members and staff.

The Trust Took a Number of Steps toward Achieving Preservation Act Goals

As we reported in 2005, the Board’s first steps were to establish a basic organization and to acquaint itself with conditions at the preserve. In 2001, the Board held regular meetings and listening sessions with the public and gathered views on how the preserve should be managed. The Board hired its first employee, an executive director, in October 2001 and, in December 2001, issued 10 principles to guide future decision making. These principles focused on a long-term view, emphasizing the ideas of landscape protection, sound business management and good-neighbor relations, the role of science in defining programs, and the quality of experiences to be provided to the public at the preserve. Overall, these principles constituted the Trust’s initial philosophy and foundation for the programs and activities that the Trust undertook to fulfill the Preservation Act’s goals. The following sections describe some of the Trust’s accomplishments.

The Trust Has Surveyed and Repaired Roads, Buildings, Fences, and Other Infrastructure

Shortly after the federal government assumed ownership of the preserve, the Trust learned that the existing infrastructure—such as roads, buildings, fences, and water treatment facilities—was in disrepair and needed rehabilitation. All the roads needed upgrading, fences were falling down, rodents had invaded all the structures, and the water supply system was not functioning. Work began immediately, and it continues today.

The preserve has about 1,000 miles of roads, including 140 miles of main access roads. Road building into the preserve began in 1935, and by the 1970s, more than 800 miles of logging roads had been bulldozed into high- elevation forests, causing erosion and damaging downhill streams and wetland areas (see fig. 2). On assuming its management role, the Trust determined that the existing roads could not be readily used to support administration, ranching, recreation, or other needs. Since then, the Trust has upgraded over 14 miles of road to all-weather gravel standards, so they are usable for passenger vehicles and are not as environmentally damaging. To enhance safety and public viewing of the preserve, the Trust also installed kiosks, scenic turnouts, and a new gate (see fig. 3); in addition, it reconfigured the entry to and exit from New Mexico Highway 4, the main access road to the preserve. The Trust has systematically numbered and mapped a network of about 184 miles of roads, which provide open public access, as well as restricted access for the Trust’s land management activities.

At the time of the federal government’s purchase, the preserve had numerous existing buildings, fences, and other structures. In 2002, the Trust recognized that the majority of its structures needed major restoration to bring them up to local building codes. Over the next 6 years, the Trust conducted minor maintenance on the ranch buildings used to house employees and documented the condition of structures of historic value throughout the preserve (see fig. 4). In addition, the Trust repaired the preserve’s 54 miles of boundary fences—including adjusting their height to allow for elk movement—and installed signs restricting access to the preserve. The Trust also assessed the layout and condition of 64 miles of interior fences, many of which were used to separate pastures for livestock. Other facilities, such as livestock corrals, have also been assessed and rehabilitated, and in 2009 a new temporary visitor building was purchased and placed on site (see fig. 5).

Regarding water supplies, when the federal government acquired the preserve, the existing water treatment facility was not functioning, so no potable water was available. Rehabilitating this facility became one of the Trust’s top priorities. Repairs to the water collection and filtration systems were completed in 2004, the water distribution system was repaired in 2005, and potable water became available in spring 2006. Still, the present water supply freezes during the winter and can dry up during the summer; the Trust is therefore evaluating groundwater reserves and options for drilling a well to supply water year-round.

In the end, rehabilitating deteriorating infrastructure has proven to be an expensive and time-consuming endeavor, and the Trust’s efforts have not begun to address capital improvements, such as permanent visitor facilities or roads in support of the Preservation Act’s goals. Indeed, as of 2008, the Trust still faced nearly $1.2 million in deferred maintenance costs for existing buildings alone.

The Trust Created a Science Program to Lay the Foundation for Activities Allowed at the Preserve

From the time it first articulated the principles by which it would manage Valles Caldera, the Trust viewed science as key to protecting and preserving the land while developing programs that could bring in revenue. It committed to using science in an “adaptive management” framework, by continuously gathering and applying site-specific scientific knowledge. According to the Trust’s Framework and Strategic Guidance for Comprehensive Management, the chief characteristic of the Trust’s view of adaptive management is the monitoring of natural systems and the human activities impinging on those systems, coupled with use of the monitoring information to guide and, when needed, revise management goals and activities. Thus, according to Trust documents, the Trust makes land management decisions on the basis of scientific research and monitoring, taking into account the public’s views and federal environmental requirements.

The science program includes three components: inventorying natural resources, monitoring environmental changes resulting from the Trust’s programs, and conducting research that will help manage the preserve’s resources. Up and running in 2003, this program assists the Trust in complying with federal environmental requirements, including those of the National Environmental Policy Act of 1969 (NEPA). By 2008, the Trust had assessed or was assessing most of the preserve’s natural resources, such as its forests, biodiversity, watershed and stream health, fish habitats, ground water quality, and geology and soils. In inventories of cultural resources, the Trust has also uncovered over 430 historic and archaeological sites. Such inventories will continue to be done as needed before construction projects or other ground disturbance to comply with NEPA guidelines. In addition, to assess the effects of activities such as grazing, recreation, or forest thinning, the Trust has established long-term programs to monitor ecological conditions, including climate, stream water quality, and plant and animal habitat and population dynamics. Finally, in collaboration with universities, federal and state agencies, and other research entities, the Trust has hosted a wide range of research programs, ranging from a study of the ecological drivers of rodent-borne diseases to earth-coring studies of past climate change. For example, hydrological research funded by the National Science Foundation through the University of Arizona is to provide information to aid in the day-to-day management of the preserve and also contribute to the understanding of hydrologic systems overall. This research should help scientists understand how much precipitation the preserve’s lands absorb and predict the amount of runoff into its streams and rivers. As more data become available, scientists may be able to forecast the effect of precipitation and drought on water quality and forage availability on the preserve and to use the information to drive future management decisions about livestock and recreation. Each year the Trust has generated between $1 million and $2 million of externally funded research.

To further enhance and communicate the results of the science program, the Trust in August 2009 leased a facility in the town of Jemez Springs, 20 miles west of the preserve’s main gate, as a new science and education center adjacent to the Trust’s administrative headquarters. The facility is to accommodate a laboratory, classrooms, offices, a dining hall, and lodging for visitors participating in the center’s formal and informal science education programs for all age groups.

Since 2002, the Trust Has Been Experimenting with a Variety of Approaches to Manage Grazing

Given that the Preservation Act requires keeping the preserve as a working ranch, grazing has been a central activity since the Trust began. Over the years, the grazing program’s objectives, scope, and size have changed repeatedly, in response to annual scientific assessments of forage availability, as well as shifting directives from the Board. In addition, because the preserve is federal land, continued grazing requires completion of a NEPA environmental assessment. The Trust’s ultimate goal is to manage its livestock operations for multiple aims, including revenue generation, local community benefit, research, and public education.

To date, the Trust has experimented with a number of grazing programs, beginning in 2002 with a small drought-relief program that allowed just over 700 cow-calf pairs belonging to local ranchers to graze on preserve pastures for 5 weeks. The Trust also hosted a “conservation stewardship” program for local ranchers, allowing about 200 cattle in each of 2 years to graze on preserve lands for about 4 months while the ranchers implemented conservation measures on their own lands. In addition, the Trust has conducted a breeding program for 3 years to benefit local ranchers and has tested varied cattle management approaches in an attempt to make the program profitable for the Trust. In 2006, because of drought, the Trust switched its focus to research assessing the effects on cattle forage of controlled burning of the grasslands; initial findings suggested that such burning improved forage quality. Then in 2008, the Trust attempted to make a profit from grazing, allowing nearly 2,000 head of cattle to graze at the preserve over a 4-month period and generating about $58,000 in gross revenues. Because the cattle were brought in from Mexico and were sold in Texas, this effort drew local criticism. Moreover, the sheer number of cattle created conflicts with fishing and other recreational activities. In 2009, the program again took on a research emphasis and aimed to benefit local communities.

The Trust Has Taken a Number of Steps to Manage Its Forests

The preserve’s lands encompass more than 60,000 forested acres. When the Trust was first established, these forests were envisioned as a possible source of revenue toward the Preservation Act’s purpose of providing for the multiple use and sustained yield of the preserve’s renewable resources. But the Trust’s forest inventory in 2006 revealed a lack of marketable timber, partly because of intensive logging in the past. As a result of this logging and past fire suppression, about half the preserve’s forested acres contain dense vegetation that pose a very high risk of wildland fire. To date, therefore, the Trust’s forest management efforts have focused on restoring forest health, reducing the risk of large fires, and protecting watersheds. These efforts have also included identifying the most effective means of reducing hazardous fuels and a potential market for the sale of wood products (poles, mulch, pellets), sometimes in collaboration with local businesses.

The Trust Continues to Expand Recreational Opportunities

Beginning in 2002, the Trust granted the public limited access to the preserve for recreation; in most cases, it has charged a fee for this access. In the beginning, public recreation was confined to guided hikes or van tours. Over the next several years, the Trust allowed varied summer and winter activities, including: Hunting. The Trust has worked with New Mexico’s Department of Game and Fish to hold elk hunts since 2002. In 2008, the Trust added a spring turkey hunt.

Fishing. In 2003, the Trust granted 1,785 people access to the preserve’s two fishable streams, on a first-come, first-served basis. The Trust also holds adult and youth fishing clinics. In 2009, it began allowing anglers to drive their own vehicles to parking areas near assigned stream reaches, instead of providing van transportation as in previous years.

Hiking. Visitors have been allowed to hike at the preserve since 2002, first in guided hikes, then on their own. The Trust has increased the number and mileage of available hiking trails, opening about 30 miles of trails to hikers, including 5 miles requiring no fee.

Other recreational activities. The Trust has also offered horse-drawn wagon rides, sleigh rides, van tours, snowshoeing, cross-country skiing, stargazing lectures, horseback riding, marathon runs, mountain biking, group tours and seminars, workshops, antler collection, and overnight photographic and birding excursions.

In 2006, the Trust also hosted its first free open house, which drew more than 1,400 cars and nearly 4,000 people. The Trust used this event to inform the public about then-current programs and future opportunities and to monitor the effects of so many visitors. Since 2008, the preserve has been open 7 days a week from April through September for summer recreation and events and fewer days the rest of the year to accommodate hunting and winter activities.

The Trust Has Taken Its First Steps toward Becoming Financially Self-Sustaining

The Preservation Act’s findings and purposes section states, among other things, that the Baca Ranch could serve as a model for sustainable land development and use of timber, grazing, and recreation and that management of the ranch through a trust would eventually allow the ranch to become financially self-sustaining. Over its existence, the Trust recognized it had no marketable timber, but it has experimented with a number of grazing options and expanded recreational opportunities. Collectively, from 2005 through 2008, the Trust’s grazing, recreation, and other activities have generated, on average, about $733,000 in gross revenues per year (see table 1). In comparison, from 2000 through 2009, the Trust received nearly $31 million in federal funding—an average of about $3.5 million per year over the time frame.

Faced with average gross revenues amounting to about 20 percent of average federal funding, the Board of Trustees contracted with an independent consulting firm in 2008 to develop a revenue enhancement study aimed at realizing annual revenues of about $5 million. Made public in April 2009, this document details various options for generating revenues of this scale and bringing the Trust to financially self-sustaining status by the end of fiscal year 2015. These options include high-end elements such as a luxury lodge, as well as more modest elements such as tent camps. The options could be mixed and matched to produce a plan that the Trust could use as it decides how to further develop infrastructure and public programs at the preserve. According to the Trust, many of the options described in this document are to be incorporated into the alternatives the Trust is evaluating in preparing the environmental analyses called for by NEPA before it can provide for greater public access and use of the preserve.

The Trust Is Behind Its Own Schedule to Achieve the Goals of the Act in 2015

The Trust has not met the timeline that it set for itself to meet the Preservation Act’s goals, as outlined in a required report to Congress in 2004. The timeline called for achieving financially self-sustaining status in three phases over 15 years, a schedule reiterated in the Trust’s 2005 Framework and Strategic Guidance.

Phase 1, institution building, was to take place from 2001 through 2005.

During this phase, the Trust was to develop the staff and tools needed to manage the preserve as a wholly owned government corporation, including accounting systems and support mechanisms for its science- based adaptive management approach. No new roads or facilities were to be constructed during phase 1; rather, all public programs were to use existing infrastructure and temporary buildings and would therefore not require a full environmental assessment or environmental impact statement under NEPA.

Phase 2, program development, was to take place from 2005 through 2010.

During phase 2, the Trust envisioned completing NEPA analyses for major infrastructure projects and beginning construction for an array of programs, such as an integrated road and trails system, an interpretive center, and a science and education facility.

Phase 3, program refinement, was to unfold from 2010 through 2015.

During phase 3, the Trust planned to cultivate additional sources of funds and streamline programs to permit decreasing reliance on federal appropriations as revenue-generating programs expanded. It was believed that the experience gained in the prior phases would enable the Trust to increase revenues and decrease costs in time to be self-sustaining by the end of fiscal year 2015.

As of September 2009, only the science and grazing programs at the preserve have moved into phase 2 of the Trust’s envisioned timeline. The Trust’s publication in 2003 of its own NEPA regulations and its adaptive management framework marked the passage of the science program into phase 2. With completion of a forage environmental assessment in January 2009, the grazing program moved into phase 2. For recreation and associated infrastructure development to move into phase 2, a public use and access plan including NEPA compliance—which is due in mid-2010— must be completed. For the Trust’s forest management program, too, a NEPA analysis will have to be done to move into phase 2. Thus, at the close of fiscal year 2009, the Trust continued to work mostly on phase 1 of its programs and activities—at least 5 years behind its anticipated schedule (see fig. 6).

A Number of Factors Have Delayed the Trust’s Progress

Current and previous Trust Board and staff members have all identified certain factors as contributing most significantly to delays in the Trust’s progress. Key among these factors is high turnover among Board members. Under the Preservation Act, at least three Board positions are up for appointment every 2 years. In addition, members may resign for personal reasons before completing their term of appointment, and the two ex officio Board members from the Forest Service and the Park Service may change according to how they are assigned within their own agencies. A time lag—ranging from 2 to 9 months—inevitably occurs between the end of some members’ terms and the beginning of others’. Thus, it can take months before a full Board is seated once again. New members face a learning curve. The result of such frequent turnover has led to delays in decision making, as well as false starts to programs. For example, an environmental assessment that needed to be completed before permanent livestock operations could be put in place was restarted three times before it was finally completed in 2009, largely because of Board turnover.

The Trust has also experienced high turnover among key management staff. Within its first 7 years, nine people served as acting executive director or executive director; the most recent executive director reported for duty in January 2009. The chief administrative officer position also turned over four times. In addition, the position of communications manager—key to the Trust’s obligation to communicate and collaborate with the public—remained vacant for 3 years, until 2009. Among the Trust’s key management staff, only the preserve general manager, who is responsible primarily for the preserve’s natural resources, infrastructure, and recreational programs, and the preserve science and education director, who is responsible for and has developed the science and education programs, have been with the Trust since they were first hired, in 2002 and 2003, respectively.

In addition, according to the Trust’s Board and staff, they discovered upon assuming their responsibilities that the preserve’s cultural and natural resources and infrastructure were not as healthy or robust as they had expected or as described in the opening to the Preservation Act. For example, road building and timber cutting in high-elevation forests had been done since the early 1930s, and streamside and other areas had been damaged by logging roads and overgrazing. Forests clear-cut in the 1960s and 1970s had been replaced by dense stands of young trees that provide little marketable timber and present a wildland fire hazard. Further, the act directed the Trust to open the preserve for public recreation within 2 years after the federal government purchased the land. As a result, the Trust found itself with more ecological restoration and infrastructure rehabilitation to do than expected—even while providing public access to the preserve—almost immediately after it assumed active management of the land in August 2002.

Finally, almost everyone we interviewed observed that one or more of the foregoing factors contributed to the Trust’s inability to focus on establishing itself as a fully functioning government corporation, which in turn exacerbated the effects of Board and staff turnover. Ultimately, these shortcomings raised serious concerns among interest groups and the public about whether the Trust could successfully manage the preserve in the manner envisioned by the Preservation Act.

The Trust Has Failed to Put in Place Key Elements of an Effective Management Program

As of September 2009, the Trust had yet to develop and put in place several key elements of an effective management control program for a government corporation, as required under GPRA and as we recommended in our previous report. Specifically, the Trust had not clearly defined a long-term strategic plan, developed annual performance plans, or systematically monitored and reported its progress. Additionally, the Trust’s financial management has been weak. Consequently, it has been difficult for Congress and the public to understand the Trust’s long- term goals and objectives, annual plans and performance, or progress.

As a Government Corporation, the Trust Is Required to Have Effective Management Controls

For government agencies and corporations, GPRA and GCCA specify the means to achieve an effective management control program. That is, they establish a framework for government entities to provide reasonable assurance that an organization’s operations are effective and efficient, that its financial reporting is reliable, and that the organization is complying with applicable laws and regulations. This framework includes, among other components, (1) a strategic plan with long-term, measurable goals and objectives; (2) annual performance plans for achieving the strategic plan’s goals and objectives; (3) performance monitoring and reporting; and (4) annual management reviews and financial audits. Such plans, methods, and procedures are collectively known as internal, or management, controls.

Under GPRA, a federal agency is required to develop a strategic plan that covers a period of at least 5 years, to be updated every 3 years, and includes the agency’s mission statement, identifies its long-term strategic goals and objectives, describes strategies to achieve those goals and objectives, explains the relationship between long-term and annual goals, analyzes key external factors, and specifies how and when program evaluations will be conducted. GPRA further requires each agency to submit an annual performance plan, which must establish performance goals that link the goals of the agency’s strategic plan directly with managers’ and employees’ day-to-day activities. In essence, this plan is to set forth the yearly performance goals the agency will use to gauge progress toward the strategic goals, identifies performance measures the agency will use to assess its progress, explains the procedures the agency will use to verify and validate its performance data, and ties these goals and measures with the processes and resources the agency will use to meet performance goals. In addition, GPRA requires agencies to report each year, usually to the President and Congress, on program performance for the previous fiscal year. This annual performance report should describe the performance indicators established in the agency’s annual performance plan and the actual program performance achieved compared with the performance goals. It should also explain why a performance goal has not been met and set forth plans for achieving it. Finally, the plan should also summarize the year’s program evaluations and findings. Key steps and critical practices for GPRA implementation include involving stakeholders in defining missions, plans, and outcomes; producing key results-oriented performance measures at each level of the agency or organization; and using the results of measuring past performance to inform future planning.

Under GCCA, a government corporation must submit annual management reports to Congress, including statements of financial position, operations, and cash flow; a budget report reconciliation; a report summarizing the results of an annual financial audit; and other information about operations and financial status. GCCA also requires that the corporation’s financial statements be independently audited in accordance with generally accepted government auditing standards.

Finally, under the Preservation Act, the Trust is required to report annually to Congress on its activities. These reports are to be “comprehensive and detailed report of operations, activities, and accomplishments for the prior year, including information on the status of ecological, cultural, and financial resources . . . and benefits provided by the Preserve to local communities” and “shall also include a section that describes the Trust’s goals for the current year.” The law also requires preparation of an annual budget.

The Trust Lacks a Strategic Plan

We reported in 2005 that the Trust lacked a GPRA-compliant strategic plan and recommended that it develop such a plan. Although the Trust agreed with our recommendation, it still did not have a plan in place as of September 2009. The Trust has, however, produced two documents (one of them in response to a previous recommendation from us) that offer some strategic guidance, although neither of these meets GPRA requirements or was used as a formal strategic plan. The first guidance document was the 2005 Framework and Strategic Guidance for Comprehensive Management, which presents the values and vision the Trust was to apply in making management decisions. The document articulates the Trust’s commitment to the various goals of the Preservation Act, including operating the preserve as a working ranch according to principles of science-based adaptive management, striving toward financial self-sufficiency, and making the preserve accessible to visitors. As we observed in our 2005 report, the 187-page document describes, among other things, the preserve’s history and natural features; the Trust’s approach to decision making; and public involvement at the preserve, including a range of potential public uses, from hunting and fishing to hiking and camping.

The mission of the Valles Caldera Trust is to operate the preserve as a working ranch; to become financially self-sustaining; to meet the varied needs of visitors; to utilize and steward the multiple resources of the preserve; and to work collaboratively with our neighbors.

The document also outlines six goals—which the Trust labeled alternately as “actions” or “near-term goals”—each accompanied by a desired outcome, objectives, strategies or actions, and metrics. For example, one of the six near-term goals is to evaluate existing facilities and identify needs for additional infrastructure; eight strategies and actions are given for achieving the objectives for that goal. The desired outcome is “identification of essential infrastructure” to support operations and “achievement of financial self-sustainability,” and one of the objectives is to improve the entrance to the preserve and visitor service center. To fulfill this objective, the document states that the Trust will engage a contractor to design and improve the preserve’s entrance and gives as the metric for measuring progress the completion of a new preserve entrance during fiscal year 2007.

Both the 2005 and 2006 documents fall short of GPRA’s requirements for effective strategic planning in a number of respects. For example, despite its broad and philosophical articulation of the Trust’s guiding principles— essentially, the Trust’s vision and mission—the 2005 Framework and Strategic Guidance does not meet GPRA’s requirements for a formal and detailed strategic plan. Indeed, title aside, this document never claims to be a formal strategic plan. In its own words, the document does “not intend to present a blueprint for future management of the preserve” but rather to sketch “the range of possible programs the Trust will consider implementing in pursuit of goals.” Likewise, although the 2006 “Strategic Planning Document” combines elements of strategic planning (mission statement, goals, and objectives) with elements of annual performance plans (actions and metrics), it does not cover a 5-year period, has not been updated, does not explain the relationship between long-term and annual goals, does not analyze key external factors, and does not specify how and when program evaluations are to be conducted. Furthermore, according to Trust officials and senior staff, the document was drafted and approved by the Trust’s Board without benefit of guidance or assistance from stakeholders, such as Congress and the public, as expected under GPRA; neither did the Board specifically instruct the staff to implement the actions or monitor the metrics. By failing to develop a strategic plan from the beginning of its operation of the preserve in 2002, as well as failing to craft and adopt a formal strategic plan later, the Trust lost an opportunity to move forward systematically as an institution—independent of personnel turnover in either the Board or staff—toward meeting the Preservation Act’s goals. In September 2009, recognizing the value of better strategic planning, Trust officials told us they were planning to work to develop a GPRA-compliant plan with an outside consultant experienced in developing strategic plans for federal agencies.

The Trust Has Not Fully Met the Requirements for Performance Planning, Monitoring, or Reporting

Since its beginning, the Trust has failed to fully meet GPRA’s annual performance planning, monitoring, or reporting requirements. The Trust has not put together formal annual performance plans containing either specific performance goals for the next fiscal year—goals tied directly to any strategic goals stated in the 2005 Framework and Strategic Guidance or November 2006 strategic planning document—or any performance measures or related information for monitoring its progress. Under GPRA, an annual performance plan must establish yearly performance goals linked to long-term goals of a strategic plan; identify performance measures that will be used to gauge progress toward meeting long-term strategic goals; explain the methods to be used for validating and verifying performance data; and link the goals and measures with the processes and resources, such as staffing and funding, that will be used to meet the performance goals. The only documents that the Trust has produced to date that begin to address these requirements are its 2006 strategic planning document and fiscal year 2008 annual report to Congress. While not labeled an annual performance plan, the 2006 strategic planning document does identify “near-term” (performance) goals and metrics (performance measures) for fiscal year 2007, as well as for fiscal years 2008 and 2009. These goals and metrics, however, are not linked to any long-term strategic goal, as required by GPRA, nor does the planning document meet other GPRA requirements for annual performance plans. In addition, although the Trust’s fiscal year 2008 annual report to Congress identifies goals for the upcoming 2009 fiscal year, along with metrics, neither the goals nor the metrics are linked to any long-term strategic goal or strategy for achieving such a goal. Neither are other requirements for annual performance plans addressed in this annual report. Although the Trust’s fiscal year 2007 annual report identifies 2008 performance goals, without metrics, annual reports before 2007 do not identify either performance goals or metrics for the next fiscal year.

In monitoring its performance, the Trust has not established or monitored a stable set of quantitative indicators of progress over time. In its annual reports to Congress, the Trust summarized the past year’s accomplishments and mentioned its intentions for the future, sometimes quantitatively but more often qualitatively. For example, an early two-page report for fiscal year 2004 lists as one preserve goal to “manage public use, access to and the occupancy of the preserve” and notes an accomplishment under this goal as completing a road inventory of 76 miles. The Trust’s plan, as stated, was to use this inventory to develop a transportation plan that was to begin in fiscal year 2007 and be completed in fiscal year 2008; development of this plan was labeled very high priority. But no methods or indicators for tracking the progress of this transportation plan were given. Moreover, although the transportation plan was supposed to begin in 2007 and be completed by 2008, reference to the plan in the Trust’s 2007 annual report to Congress is essentially identical to the wording in its 2006 annual report, and to date, no transportation plan has been developed. Similarly, for the Preservation Act’s goal of achieving financially self-sustaining operations, the Trust’s plan as stated in its 2004 annual report says only that it will implement financially sound business practices, develop and implement a business plan incorporating an annual budget tied to a plan of work for 5 years, and revise this business plan annually; again, the assigned priority is “very high.” Nevertheless, our review of Trust documents found that progress toward implementing these very high-priority plans was not formally monitored, nor were the plans fully executed. In fact, the 2005 annual report copies the wording of the 2004 report with respect to development of a business plan, the 2006 annual report makes no mention of a business plan, and the 2007 annual report lists developing a strategic business plan as one of its goals for 2008.

Because it has not developed annual performance plans with performance goals, the Trust has not produced formal annual performance reports as required by GPRA. Since 2006, however, annual reports required by the Preservation Act, as well as a 5-year State of the Preserve report released in 2007, detail the Trust’s operations, activities, and prior year’s accomplishments, including the status of the preserve’s natural, cultural, and financial resources and benefits to local communities. While the Trust’s annual reports before 2006 did not address all these elements, the reports have improved over the years, becoming more detailed and comprehensive. The most recent annual report, for fiscal year 2008, contains major sections devoted to attainment of fiscal year 2008 goals; Trust organization, program accomplishments, and budget; and goals for fiscal year 2009. Each section on fiscal year 2008 goals attained (e.g., develop a strategic business plan) states the goal’s objective (e.g., “to create a business plan that identifies options to generate revenues from programs”); gives the status of progress (e.g., the Trust awarded a contract to a consulting firm to develop this business plan); and offers a brief narrative related to the goal.

With respect to goals for 2009, the report states each goal along with a statement of its objective, metric for measuring progress, and related narrative. This annual report and previous ones do not, however, report on the status of current year goals that were not attained or link back to a long-term strategy.

The evolution of the Trust’s reports suggests a growing understanding within the organization of the need for key management elements, such as strategic goals, annual performance goals and plans, and measurable performance indicators. Our review of the annual reports nevertheless revealed a lack of consistency in report format, organization, and content from year to year, particularly in relation to measurable indicators of progress. For example, before 2007 the Trust counted and reported only the number of paying visitors to the preserve. In 2007, however, it began to include nonpaying visitors in visitor counts—a key change for understanding the growth in Trust programs. Yet this change in data collection was never explicitly pointed out in the 2007 annual report. Furthermore, given the absence of links in any of these reports directly to metrics listed in the Trust’s November 2006 strategic planning document, it is difficult to follow the progress of one year’s “plan” through subsequent years or to systematically track the Trust’s progress toward accomplishing the Preservation Act’s overarching goals.

The Trust’s Financial Management Has Been Weak

Compounding the absence of systematic strategic planning and routine performance planning, monitoring, and reporting, the Trust’s financial management has suffered from varied and numerous weaknesses. From when the Trust first took over management of the preserve through fiscal year 2003, the Trust’s finances were administered by the Forest Service. At the beginning of fiscal year 2004, the Trust briefly attempted to do its own accounting in house. When this attempt failed, however, partly because of turnover in accounting staff, it shifted these functions to the Department of the Interior’s National Business Center, which provided accounting services from fiscal year 2004 until fiscal year 2008. At the start of fiscal year 2008, the Trust once again moved its accounting operations, to the Forest Service’s Albuquerque Service Center, so as to bring its finances under a single, integrated financial management system and to reduce costs.

In part because of poor financial management and accounting practices, inadequate records, and difficulties in hiring and retaining accounting staff, until 2007 the Trust could not produce financial statements that would have enabled it to fulfill its obligation to undergo an annual independent audit, as required by GCCA. As we reported in 2005, the Trust contracted in 2003 with an independent accounting firm for auditing services, but the firm recommended that the audit be postponed because the Trust lacked the financial policies, procedures, and records needed to produce auditable financial statements. It took several years for the Trust to reconstruct its financial transactions and prepare any auditable statements. At the end of 2007, an independent auditing firm was contracted. The firm completed its work in 2009, producing independent auditor’s reports for fiscal years 2005 through 2008.

The auditor’s reports found numerous weaknesses in the Trust’s accounting, management control, and compliance with applicable laws and regulations. For example, the audit report for fiscal year 2008 found “material weaknesses” and “significant deficiencies” ranging from a lack of documented policies and procedures to the lack of a secure information technology system and failure to properly process cash and check payments. Consequently, according to the auditor’s report, decisions made by the Trust on the basis of deficient information could themselves be inaccurate or misleading. Moreover, because the Trust had not identified such deficiencies, it could not and did not report them to Congress. Among its other findings, this report also confirmed the lack of performance goals and objectives in compliance with GPRA requirements.

The audit reports for all the audited fiscal years thus cast considerable doubt on the accuracy and completeness of the Trust’s annual or other reports to date and its degree of compliance with applicable laws.

As a result of the auditor’s reports, the Trust has made an effort to improve its management control framework. In July 2009, for example, the Trust asked the Albuquerque Service Center to conduct an “internal control assessment” of the Trust’s operations, which the center had begun to do as of the end of fiscal year 2009. Once completed, this assessment could help improve the Trust’s management controls.

The Trust Sees Becoming a Self- Sustaining Entity as Its Greatest Challenge

In managing a remote, undeveloped expanse of public land under the public-private experiment created by the Preservation Act, the Trust is breaking new ground. In accordance with the act’s goals, the Trust is responsible for preserving and protecting the preserve’s resources while generating revenues from these resources. The long-term vision articulated in the Preservation Act is for the Trust to become a self- sustaining entity, without need for federal funding. Yet the current Board chairman and the Trust’s executive director believe that, of all the goals for the foreseeable future, becoming financially self-sustaining is the most challenging. A consensus among Board members is that the Trust will not become financially self-sustaining by the end of fiscal year 2015 as envisioned by the Preservation Act; a few within the Trust doubt that this goal can ever be achieved. In particular, as for other multiple-use land management agencies, a daunting corollary to the Trust’s mission is how to balance managing the land to produce a sustained yield of revenue- generating resources with preserving and protecting those resources and other natural and cultural values of the preserve. Others external to the Trust, such as Los Amigos de Valles Caldera and Caldera Action, have expressed similar views about the Trust’s ability to become financially self-sustaining. Nevertheless, the Trust is continuing to explore opportunities for becoming financially self-sustaining.

As of the end of fiscal year 2009—nearly halfway through the 20-year public-private land management experiment and about 6 years before the authorization for Trust appropriations expires—the Trust had only begun to focus on the goal of becoming financially self-sustaining. A number of issues—such as its remaining life expectancy, activities capable of providing sufficient revenues, funds for needed key capital investments, and legal issues—present significant challenges to achievement of this goal. These challenges include the following: Completing key steps to becoming financially self-sustaining in the time remaining before the end of fiscal year 2015, when the current authorization of appropriations expires. If the Trust is not well on its way toward becoming financially self-sustaining by the end of fiscal year 2015, the Trust may or may not have the funds to continue operating, regardless of how much or how little progress it has made on its various land management and recreation programs. Yet within the 6 years from the beginning of fiscal year 2010 to the end of fiscal year 2015, the Trust must develop a public use and access plan, including an environmental impact statement and an associated transportation plan; secure funding to implement these plans; begin and complete construction; and then begin operating the programs to generate revenues. All these activities could well take longer than 6 years.

Identifying, developing, or expanding revenue-generating activities that would enable the Trust to raise sufficient funds to become financially self- sustaining. To date, several anticipated sources of revenue have not materialized or have not materialized to the degree anticipated. For example, the vision of timber production as a major source of revenue disappeared when an inventory of the preserve’s timber resources revealed that few to no trees of commercial value remained after clear- cutting in the mid-twentieth century. Both current and former Trust officials noted that many of the forested areas are more a liability than an asset to the Trust because they are covered with dense vegetation that could fuel large wildland fires. Recreation, too, failed to prosper as expected. The Trust had anticipated holding luxury elk hunts to provide a major source of future revenue and, in 2008, sought state legislation to allow these hunts. The proposal received public criticism, however, and the legislation failed. In addition, the Trust’s several years of experimenting with various approaches to grazing has led to the realization that grazing will not make as much money as anticipated.

Obtaining funding for major capital investments to construct and preserve facilities and other infrastructure needed to generate revenues. The 2009 revenue enhancement study commissioned by the Trust estimated that somewhere between $21 million and $53 million would be needed to further develop the facilities and infrastructure to support greater public use of the preserve, such as additional parking lots and further road upgrades, a visitor center, an educational research center, and a visitor lodge. Yet neither the revenues the Trust has generated to date through any of its programs nor current appropriations are sufficient to make such investments.

Legal constraints. The Trust faces several legal constraints that may affect its ability to achieve financially self-sustaining operations, according to Trust officials. Provisions of the Preservation Act—specifically, that the Trust expires in 2020 and that it is prohibited from entering into leases lasting longer than 10 years—limit the Trust’s ability to attract concessionaires or other enterprises desiring to establish long-term businesses on the preserve that could generate revenue for the Trust. Another question facing the Trust, according to Trust officials, is what authority it has to borrow and lend money. Trust officials said that Agriculture’s General Counsel told them that the Preservation Act does not specifically address this question. The Trust recently learned it has no authority to borrow money from the Federal Financing Bank, whose purpose is to make loans to government corporations. Trust officials also raised concerns about the Trust’s authority to purchase property outside the preserve or to construct new buildings inside the preserve. In addition, the Trust has expressed concern about not having access to the federal “judgment fund”—a permanent indefinite appropriation available to federal agencies under certain circumstances to satisfy judgments against them—to cover liability incidents such as hunting accidents. According to a Senate committee report on a 2004 bill amending the Preservation Act, the Department of Justice opposed a provision of the bill that would have provided the Trust access to the judgment fund. The Trust is paying over $80,000 annually for liability insurance.

Conclusions

Nine years have passed since the federal government purchased Valles Caldera, and 11 years remain before the Valles Caldera Trust could, under the Preservation Act, come under Forest Service jurisdiction if it fails to become financially self-sustaining. The ultimate success of the Valles Caldera land management experiment hinges on the Trust’s ability to become a fully functioning, financially self-sustaining government corporation while simultaneously preserving and protecting the land’s natural, cultural, and recreational values. We acknowledge that achieving such a mission is no easy task, and we recognize that the Trust continues to work toward achieving these goals. Nevertheless, the Trust has struggled for nearly a decade to establish the basic framework for effective management required of government corporations, it has not maintained the pace of progress it set for itself, and it faces a number of legal constraints. Thus, it is uncertain whether the Trust can overcome its management and legal challenges and, as many Board and management officials of the Trust have also noted, whether it can achieve financially self-sustaining status by the Preservation Act’s 2015 deadline. We believe that our previous recommendations, if implemented, could substantially enhance the Trust’s ability to make greater progress toward meeting the goals of the act, as well as to improve management oversight, accountability, and transparency under GCCA and GPRA. We therefore reiterate the need for the Trust to fully implement recommendations from our 2005 report, specifically, continue to develop—and systematically implement—the following elements of effective management: a formal strategic plan that includes measurable goals and objectives; a plan, including planned timelines, for becoming financially self- mechanisms for periodic monitoring and reporting of the Trust’s performance to Congress and other stakeholders.

Recommendation for Executive Action

To help further the Trust’s efforts toward becoming a financially self- sustaining government corporation, we recommend that the Trust’s Chairman of the Board and Executive Director work with the relevant congressional committees to seek legislative remedies, as appropriate, for the legal challenges confronting the Trust.

Agency Comments and Our Evaluation

We provided the Valles Caldera Board of Trustees with a draft of this report for review and comment. The Board generally agreed with our findings and conclusions but did not comment on our recommendation. In its written comments, the Trust said it found our assessment of its accomplishments to date accurate, although it provided additional details about infrastructure, forestry work, the livestock program, and science and education. In addition, the Board agreed with our finding that the Trust has failed to put in place an effective management program, saying “there is no excuse for these plans and controls to be lacking” and “top priority will be given to reaching prompt compliance with the law.” The Board also noted that we aptly described the current and future challenges the Trust is facing and stated that financial self-sustainment by 2015 is not a possibility under the current provisions of the Preservation Act. Without agreeing or disagreeing with our recommendation that the Trust work with Congress to seek legislative remedies for its legal challenges, the Trust stated that changes to the law are needed.

We are sending copies of this report to the Board Chairman, Valles Caldera Trust and other interested parties. In addition, the report will be available at no charge on the GAO Web site at http://www.gao.gov.

If you or your staff members 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 II.

Appendix I: Comments from the Valles Caldera Trust

Appendix II: GAO Contact and Staff Acknowledgments

Staff Acknowledgments

In addition to the person named above, David P. Bixler, Assistant Director; Lisa Brownson; Ellen W. Chu; Elizabeth Curda; Richard P. Johnson; Mehrzad Nadji; James M. Rebbe; Dawn Shorey; Jena Sinkfield; and Maria Vargas made key contributions to this report.