National Park Service: Major Operations Funding Trends and How Selected Park Units Responded to Those Trends for Fiscal Years 2001 through 2005
Released: 2006-04-05T00:00:00

Letter

Background

The Park Service is the caretaker of many of the nation’s most precious natural and cultural resources. Today, more than 130 years after the first national park was created, the National Park System has grown to include 390 units covering over 84 million acres. These units include a diverse mix of sites—now in more than 20 different categories. The Park Service’s mission is to preserve unimpaired the natural and cultural resources of the National Park System for the enjoyment of this and future generations. Its objectives include providing for the use of the park units by supplying appropriate visitor services and infrastructure (e.g., roads and facilities) to support these services. In addition, the Park Service protects its natural and cultural resources (e.g., preserving wildlife habitat and Native American sites) so that they will be unimpaired for the enjoyment of future generations.

The Park Service receives its main source of funds to operate park units through appropriations in the ONPS account. The Park Service chooses to allocate funds to its park units in two categories—one for daily operations, and another for specific, non-recurring projects. Daily operations allocations for individual park units are built on park units’ allocation for the prior year. Park units receive an increased allocation for required pay increases and may request specific increases for new or higher levels of ongoing operating responsibilities, such as adding additional law enforcement rangers for increased homeland security protection. As is true for other government operations, the cost of operating park units will increase each year due to required pay increases, the rising costs of benefits for federal employees, and rising overhead expenses such as utilities. The Park Service may provide additional allocations for daily operations to cover all or part of these cost increases. If the continuation of operations at the previous year’s level would require more funds than are available, park units must adjust either by identifying efficiencies within the park unit, use other authorized funding sources such as fees or donations to fund the activity, or reduce services. Upon receiving their allocations for daily operations each year, park unit managers exercise a great deal of discretion in setting operational priorities. Generally, 80 percent or more of each park unit’s allocation for daily operations is used to pay the salaries and benefits of permanent employees (personnel costs). Park units use the remainder of their allocations for daily operations for overhead expenses such as utilities, supplies, and training, among other things.

In addition to daily operations funding, the Park Service also allocates project-related funding to park units for specific purposes to support its mission. For example, activities completed with Cyclic Maintenance and Repair and Rehabilitation funds include re-roofing or re-painting buildings, overhauling engines, refinishing hardwood floors, replacing sewer lines, repairing building foundations, and rehabilitating campgrounds and trails. Park units compete for project allocations by submitting requests to their respective regional office and headquarters. Regional and headquarters officials determine which projects to fund. While an individual park unit may receive funding for several projects in one year, it may receive none the next.

Park units are authorized to collect revenue from outside sources such as visitor fees and donations—although how they are used may be limited to specific purposes. Since 1996, the Congress has provided the park units with authority to collect fees from visitors and retain these funds for use on projects to enhance recreation and visitor enjoyment, among other things. Since 2002, the Park Service has required park units to spend the majority of their visitor fees on deferred maintenance projects, such as road or building repair. The Park Service also receives revenue from concessionaires under contract to perform services at park units—such as operating a lodge—and cash or non-monetary donations from non-profit organizations or individuals. These funds may vary from year to year and, in the case of donations, may be accompanied by stipulations on how the funds may be used.

Appropriations for the Operation of the National Park System Account Increased Overall from Fiscal Year 2001 to 2005; When Adjusted for Inflation, the Total Allocation for Daily Operations Declined Overall and the Total Allocation for Projects Increased Overall

Overall appropriations for the ONPS account—including the amounts the Park Service allocated for daily operations and projects—rose in both nominal and inflation-adjusted dollars overall from fiscal year 2001 through 2005. Appropriations increased in nominal terms from about $1.4 billion in fiscal year 2001 to almost $1.7 billion in fiscal year 2005, an average annual increase of about 4.9 percent (i.e., about $68 million per year). After adjusting these amounts for inflation, the average annual increase was about 1.3 percent or almost $18 million per year. By contrast, the Park Service’s overall budget authority increased to about $2.7 billion in 2005 from about $2.6 billion in 2001, an average increase of about 1 percent per year. In inflation adjusted dollars, the total budget authority fell by an average of about 2.5 percent per year. Figure 1 shows the appropriations for the ONPS account from fiscal years 2001 through 2005.

The Park Service’s total allocation for daily operations for park units increased overall in nominal dollars but declined slightly when adjusted for inflation from fiscal year 2001 through 2005. As illustrated in figure 2, overall allocations for daily operations for park units rose from about $903 million in fiscal year 2001 to almost $1.03 billion in fiscal year 2005—an average annual increase of about $30 million, or about 3 percent. After adjusting for inflation, the allocation for daily operations fell slightly from about $903 million in 2001 to about $893 million in 2005—an average annual decline of about $2.5 million, or 0.3 percent. The fiscal year 2005 appropriation for the ONPS account included an additional $37.5 million over the amounts proposed by the House and Senate for the ONPS account, to be used for daily operations. The conference report accompanying the appropriation stated that the additional amount was to be used for (1) a service-wide increase of $25 million and (2) $12.5 million for visitor services programs at specific park units.

Allocations for projects and other support programs increased overall in both nominal and inflation-adjusted dollars. These allocations rose from about $478 million in 2001 to about $641 million in 2005—an average annual increase of about 7.7 percent, or about $36.5 million. When adjusted for inflation, the increase was 3.9 percent, or about $18.7 million per year. Figure 3 shows allocation trends of projects and other support programs for the Park Service from fiscal years 2001 through 2005. Three programs that include project funding for individual park units—Cyclic Maintenance, Repair and Rehabilitation, and Inventory and Monitoring— account for over half of the increase for the project and support program allocations. As a percentage of total project and support program funding, funding for these programs rose to 31 percent in 2005 from 23 percent in 2001. For example, Cyclic Maintenance program funding increased from $34.5 million in 2001 to $62.8 million in 2005—an average annual increase of 16.2 percent in nominal terms or 12.1 percent when adjusted for inflation. Increases in the Cyclic Maintenance and Repair and Rehabilitation programs reflect an emphasis on the effort for the Park Service to reduce its estimated $5 billion maintenance backlog. Increases in the Inventory and Monitoring Program reflect an emphasis on protecting natural resources primarily through an initiative called the Natural Resource Challenge.

Visitor fees are also used to support park units. Overall, the Park Service collected about $717 million in visitor fees in addition to their annual appropriation for operations from 2001 through 2005, increasing from about $140 million to about $147 million in 2005 (an average annual increase of about 1 percent); however, in inflation-adjusted dollars, the Park Service collected about $670 million in visitor fees, falling from about $140 million in 2001 to about $127 million 2005 (an average annual decline of over 2 percent). Overall, the Park Service collected an average of about $143 million per year in nominal terms or about $134 million per year when adjusted for inflation. Visitor fee revenue depends on several factors, including the number of visitors to each park unit, the number of national passes purchased, and the amount each park charges for entry and services.

Allocation Trends for Projects and Daily Operations at 12 High- Visitation Park Units Varied, but All 12 Parks Reported Reduced Services and an Increasing Reliance on Other Authorized Sources to Supplement Daily Operations Allocations

All 12 park units we visited received allocations for projects from fiscal years 2001 through 2005 that varied among years and among park units. Allocations for daily operations for the 12 park units we visited also varied. On an average annual basis, each unit experienced an increase in daily operations allocations, but most experienced a decline in inflation- adjusted terms. Officials at each park believed that their daily operations allocations were not sufficient to address increases in operating costs and new Park Service management requirements. To manage within available funding resources, park unit managers also reported that, to varying degrees, they made trade-offs among the operational activities—which in some cases resulted in reducing services in areas such as education, visitor and resource protection, and maintenance activities. Park officials also reported that they increasingly relied on volunteers and other authorized funding sources to provide operations and services that were previously paid with allocations for daily operations from the ONPS account.

Park units use project-related allocations for such things as rehabilitating structures, roads, and trails; and inventorying and monitoring natural resources. The allocations for projects at the 12 park units totaled $76.8 million from 2001 through 2005. Allocations varied from park to park and year to year because these allocations support non-recurring projects for which park units are required to compete and obtain approval from Park Service headquarters or regional offices. For example, at Grand Canyon National Park, allocations for projects between 2001 and 2005 totaled $6.7 million. However, during that time, the amount fluctuated from $824,000 in 2001 to $1.9 million in 2004 and $914,000 in 2005. Appendix I shows project-related allocations and their fluctuations from fiscal years 2001 through 2005 for the 12 parks we visited.

All twelve park units experienced an annual average increase, in nominal terms, in allocations for daily operations; however, when adjusted for inflation, 8 of the 12 parks we visited experienced a decline ranging from less than 1 percent to approximately 3 percent. For example, Yosemite National Park’s daily operations allocations increased from $22,583,000 in 2001 to $22,714,000 in 2005, less than an average of 1 percent per year. However, when adjusted for inflation, the park’s allocation for daily operations fell by about 3 percent per year. Daily operations allocations at the remaining four parks increased after adjusting for inflation, ranging from less than 1 percent to about 7 percent. For example, Acadia National Park’s daily operations allocations increased from $4,279,000 in fiscal year 2001 to $6,498,000 in fiscal year 2005, an average annual increase of about 11 percent in nominal terms and about 7 percent when adjusted for inflation. Park officials explained that although the daily operations allocation substantially increased over this period, most of the increase was for new or additional operations. To illustrate, in 2002, Acadia acquired the former Schoodic Naval Base. The increases in allocations for daily operations were to accommodate this added responsibility rather than for maintaining operations that were in existence prior to the acquisition.

Park unit officials reported that required salary increases exceeded the allocation for daily operations, and rising utility costs have reduced their flexibility in managing daily operations allocations. Park Service headquarters officials reported that from 2001 through 2005, the Park Service paid personnel cost increases enacted by the Congress. For example, from fiscal years 2001 through 2005, Congress enacted salary increases of about 4 percent per year for federal employees. Park Service officials reported that the Park Service covered these salary increases with appropriations provided in the ONPS account. The Park Service allocated amounts to cover about half of the required increases, and park units had to reduce spending to compensate for the difference. As a consequence of the increases, park units had to eliminate or defer spending in order to accommodate the increases. Officials at several park units told us that since 2001, they have refrained from filling vacant positions or have filled them with lower-graded or seasonal employees. For example, in an effort to continue to perform activities that directly impact visitors—such as cleaning restrooms and answering visitor questions—officials at Sequoia and Kings Canyon National Parks stated that they left several high-graded positions unfilled in order to hire a lower graded workforce to perform these basic operational duties. Officials at most park units also told us that when positions were left vacant, the responsibilities of the remaining staff generally increased in order to fulfill park obligations.

In addition to increasing personnel costs, officials at many of the parks we visited explained that rising utility costs caused parks to reduce spending in other areas. For example, at Grand Teton National Park, park officials told us that to operate the same number of facilities and assets, costs for fuel, electricity, and solid waste removal increased from $435,010 in 2003 to $633,201 in 2005—an increase of 46 percent, when adjusted for inflation. Officials told us that, as a result, their utility budget for fiscal year 2005 was spent by June 2005—three months early. In August, the park accepted the transfer requests of two division chiefs and used the salaries from these vacancies to pay for utility costs for the remaining portion of the year. Officials at some parks attributed increased utility costs to new construction that was generally not accompanied with a corresponding increase to their allocation for daily operations.

Officials at most of the parks we visited also told us that their park units generally did not receive additional allocations for administering new Park Service policies directed at reducing its maintenance backlog, implementing a new asset management strategy, or maintaining specified levels of law enforcement personnel (referred to as its “no-net-loss policy”), which has reduced their flexibility in addressing other park priorities. While officials stated that these policies were important, implementing them without additional allocations reduced their management flexibility. For example, since 2001, the Park Service has placed a high priority on reducing its currently estimated $5 billion maintenance backlog. In response, the Park Service, among other things, set a goal to spend the majority of its visitor fees on deferred maintenance projects—$75 million in 2002 increasing to $95 million in 2005. Officials at several park units report that they have used daily operations allocations to absorb the cost of salaries for permanent staff needed to oversee the increasing number of visitor fee-funded projects. Park officials reported that the additional administrative and supervisory tasks associated with these projects add to the workload of an already-reduced permanent staff. Furthermore, while the Park Service may use visitor fees to pay salaries for permanent staff that manage and administer projects funded with visitor fees, it has a policy prohibiting such use. Instead, these salaries are paid using allocations for daily operations which reduce the amount of the allocation available for visitor services and other activities and limit the park units’ ability to maintain these services and activities.

To address differences between allocations for daily operations and expenses, officials at the park units we visited reported that they reduced or eliminated some services paid with daily operations allocations— including some that directly affected visitors and park resources. Park officials at some of the parks we visited told us that before reducing services that directly affect the visitor, they first reduced spending for training, equipment, travel, and supplies paid from daily operations allocations. However, most parks reported that they did reduce services that directly affect the visitor, including reducing visitor center hours, educational programs, basic custodial duties, and law enforcement operations, such as back-country patrolling. Furthermore, when funds allocated for daily operations were not sufficient to pay for activities that were previously paid with this source, the park units we visited reported that they deferred activities or relied on other authorized funding sources such as allocations for projects, visitor fees, donations from cooperating associations and friends groups, and concessions fees. From 2001 to 2005, some parks delayed performing certain preventative maintenance activities formerly paid with allocations for daily operations until other authorized funding sources, such as project funds (including funds for cyclic maintenance, repair and rehabilitation, and visitor fees) could be found and approved.

Rather than eliminating or not performing daily operational activities, some parks used volunteers and funding from authorized sources such as donations from non-profit partners and concessionaires’ fees to accomplish activities that were formerly paid with daily operations funds. Officials at several park units said that they increasingly depend on donations from cooperating associations to pay for training and equipment and rely on their staff and volunteers to provide information and educational programs to visitors that were traditionally offered by park rangers. Funds from these sources can be significant, but they are subject to change from year to year. Officials at several park units expressed concern about using funding from other authorized sources to address needs—not only because the funds can vary from year to year, but also because these partners’ stipulations on how their donations can be used may differ from the parks’ priorities. As a result, relying on these sources for programs that require a long term funding commitment could be problematic.

The Park Service Has Undertaken Three Management Initiatives to Address Fiscal Performance and Accountability of Park Units

We identified three management initiatives that the Park Service has undertaken to address the fiscal performance and accountability of park units and to better manage within their available resources: the Business Plan Initiative (BPI), the Core Operations Analysis (COA), and the Park Scorecard. Each initiative operates separately and is at various stages of development and implementation. Table 2 in appendix II summarizes each of the three initiatives and their stages of implementation.

Through the BPI process, park unit staff—with the help of business interns from the Student Conservation Association—identify all sources and uses of park funds to determine funding levels needed to operate and manage park units. Using this information, park unit managers develop a 5-year business plan to address any gaps between available funds and park unit operational and maintenance needs. The process used in the BPI involves 6 steps, completed over an 11-week period. Park staff and the business interns (1) identify the park unit’s mission; (2) conduct an inventory of park assets; (3) analyze park funding trends; (4) identify sources and uses of park funding; (5) analyze park operations and maintenance needs; and (6) develop a strategic business plan to address gaps between funds and park needs. All 12 of the park units we visited have completed a business plan. Many officials—both at the unit level and headquarters—stated that business plans are, among other things, useful in helping them identify future budget needs. Once completed, park managers often issue a press release to announce its completion. Park managers may also send copies to their legislators, local community councils, and park partners (such as cooperating associations) to communicate the results. A Park Service official stated, however, that the Park Service is still refining these business plans to serve as a better tool for justifying funding needs.

The COA was developed in 2004 to help park managers evaluate their park unit’s core mission, identify essential park unit activities and associated funding levels, and make fully informed decisions on staffing and funding. The COA is part of a broader Park Service-wide effort to integrate management tools to improve park efficiency. Park Service headquarters, regional officials, and park unit staffs work together in a step-by-step process to conduct the analysis. These steps include preparing a 5-year budget cost projection (BCP) to establish baseline financial information and help project future park needs, defining core elements of the park unit’s mission, identifying park priorities, reviewing and analyzing activities and associated staff resources, and identifying efficiencies. Budget staff for each park unit first complete a 5-year BCP that uses the current year’s funding level for daily operations as a baseline, and estimates future levels, increases in non-personnel costs, and fixed costs such as salaries and benefits. The general target of the analysis is to adjust personal services and fixed costs at or below 80 percent of the unit’s funding levels for daily operations. Three of the twelve park units we visited have completed (or are in the process of completing) a COA, and three will begin the COA in fiscal year 2006. The remaining six park units we visited have yet to be selected. Park unit officials told us that the preliminary results have helped them determine where efficiencies in operations might accrue. A Park Service regional official told us that the core operations process is still in its early development, noting that preliminary results are useful but too early to determine results to be realized by the park units.

Park Service headquarters developed the Park Scorecard beginning in fiscal year 2004 to serve as an indicator of each park unit’s fiscal and operational condition, and managerial performance. The scorecard is intended to provide an overarching summary of each park unit’s condition by offering a way to analyze individual park unit needs. It also provides Park Service officials with information needed to understand how park units compare to one another based on broad financial, -organizational, - recreational, -and resource-management criteria. Although the Park Scorecard is still under development, the Park Service’s headquarters budget office used it to validate and approve requests for increases in daily operations allocations for the highest priorities among park units to be funded out of a total of $12.5 million that was provided in 2005 for daily operations directed at visitor service programs. The Park Service approved requests for funding at 3 out of the 12 parks we visited (Badlands National Park, Grand Teton National Park, and Yellowstone National Park). Park Service headquarters officials, with the assistance and input of park unit managers, plan on refining the Park Scorecard to more accurately capture all appropriate park measurements and to identify, evaluate, and support future budget increases for park units. The Park Service also intends for park managers to use the Park Scorecard to facilitate discussions about their needs and priorities.

In closing, we have found that overall, from 2001 through 2004, the Park Service increased allocations for support programs and project funding while placing less of an emphasis on funds for daily operations. In fiscal year 2005, this trend shifted, and as evidenced by our visits to 12 park units, appears to be going in the direction needed to help the units overcome some of the difficulties they have recently experienced in meeting operational needs. In responding to these trends, park unit officials found ways to reduce spending on their allocations for daily operations and to identify and use authorized sources other than these allocations to minimize some impacts on park operations and visitor services. While park units are relying more on other sources to perform operations, using such funds has its drawbacks because it usually takes parks longer, with more effort from park employees to obtain and use these sources. Visitor fees have been an important and significant source of funds for park units to address high priority needs such as reducing its maintenance backlog. However, Park Service policy prohibiting the use of visitor fees to pay salaries of permanent employees managing projects may reduce the flexibility in managing the use of funding for daily operations. While the Park Service is embarking upon three management initiatives that they believe will improve park performance and accountability, and better manage within available resources, it is too early to assess the effectiveness of these initiatives.

GAO Recommendation and Agency Response

To reduce some of the pressure on funding for daily operations, we recommended that the Secretary of the Interior direct the Director of the Park Service to revise its policy to allow park units to use visitor fee revenue to pay the cost of permanent employees administering projects funded by visitor fees to the extent authorized by law. In commenting on a draft of our report, the department generally agreed with the recommendation, but stated that it should clearly state that visitor fee revenue (and not other sources) be used to fund only a limited number of permanent employees and be specifically defined for the sole purpose of executing projects funded from fee revenue. We believe our recommendation, as written, gives the agency the flexibility sought. The department also said that our report creates a misleading impression concerning the state of park operations in that (1) record high levels of funds are being invested to staff and improve parks, and (2) the report does not examine the results achieved with these inputs. The department also believes that while employment levels at individual park units may have fluctuated for many reasons, employment servicewide, including both seasonal and permanent employees, was stable. We believe however, that our report provides a detailed analysis of the major funding trends affecting Park Service operations, including those at the 12 high-visitation park units we visited, as well as the department’s initiatives and efforts to achieve results.

This concludes our statement for the record.

GAO Contact and Staff Acknowledgments

For further information on this statement, please contact Robin Nazzaro at (202) 512-3841 or nazzaror@gao.gov. Individuals making contributions to this testimony included Roy Judy, Assistant Director; Thomas Armstrong, Ulana Bihun, Denise Fantone, Doreen Feldman, Tim Guinane, Richard Johnson, Alison O’Neill, and Patrick Sigl.

Appendix I: Project Allocations for 12 Selected Park Units, Fiscal Years 2001 through 2005