    Valles Caldera: Trust Has Made Some Progress, but Needs to Do
    More to Meet Statutory Goals (16-NOV-05, GAO-06-98).

    In 2000, Congress authorized the purchase of the Valles Caldera
    (the Caldera) in north-central New Mexico. The Valles Caldera
    Trust (Trust), a wholly owned government corporation, is to
    become financially self-sustaining and to manage the Caldera for
    multiple purposes while sustaining the land's valuable natural
    resources. GAO was mandated to assess the progress the Trust is
    making in meeting its statutory goals.
    -------------------------Indexing Terms-------------------------
    REPORTNUM:   GAO-06-98
        ACCNO:   A41537
      TITLE:     Valles Caldera: Trust Has Made Some Progress, but Needs
    to Do More to Meet Statutory Goals
         DATE:   11/16/2005
      SUBJECT:   Conservation
    	     Federal corporations
    	     Federal property management
    	     Internal controls
    	     Land management
    	     Natural resources
    	     Performance management
    	     Program management
    	     Risk management
    	     Strategic planning
    	     Performance plans
    	     Policies and procedures
    	     Valles Caldera (NM)

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    GAO-06-98

         * Report to Congressional Committees
              * November 2005
         * VALLES CALDERA
              * Trust Has Made Some Progress, but Needs to Do More to Meet
                Statutory Goals
         * Highlights
         * Contents
              * Results in Brief
              * Background
              * The Trust Is Making Progress toward Preserving and Protecting the
                Caldera and Providing Recreation and Sustained Yield Management
                   * The Board Established the Trust Organization
                   * Infrastructure Surveyed and Potential Solutions to Problems
                     Identified
                   * The Trust Implemented Interim Grazing
                   * The Trust Has Established Interim Recreation Programs
                   * The Trust Set Up a Science- Based Adaptive Management
                     Framework
              * The Trust Has Much Work to Do to Meet Its Statutory Goals
                   * The Trust Has Not Developed Strategic and Performance Plans
                     with Measurable Goals and Objectives
                   * The Trust Has Not Addressed Risks Potentially Posed by Fire
                     and Legal Liabilities
                   * The Trust Has Not Developed Required Mechanisms for
                     Monitoring Progress in Meeting Financial and Other Goals
                   * Turnover of Board Members and Staff Contributed to Delays in
                     Implementing Components of a More Effective Management
                     Control Program Needed to Meet Statutory Goals
              * Conclusions
              * Recommendations for Executive Action
              * Trust Comments and Our Evaluation
              * Scope and Methodology
         * Comments from the Valles Caldera Trust
         * Guiding Principles of the Valles Caldera Trust
         * GAO Contact and Staff Acknowledgments

    Report to Congressional Committees

    November 2005

    VALLES CALDERA

    Trust Has Made Some Progress, but Needs to Do More to Meet Statutory Goals

    Contents

    Tables

    Figures

    November 16, 2005 Letter

    Congressional Committees

    The Valles Caldera Preservation Act (Preservation Act) of 2000 authorized
    the federal government's purchase of about 89,000 acres of privately owned
    land in north-central New Mexico, known as the Baca Ranch.1 The federal
    government acquired this property, referred to as the Valles Caldera
    (Caldera) for about $97 million. Scientifically, the Caldera has served as
    a model for geological studies of this and other volcanic areas around the
    world. Culturally and historically, the Caldera has had religious
    significance for Native Americans since prehistoric times because of its
    plentiful water resources in an otherwise arid region and because it
    provided a major source of black volcanic glass (obsidian), which was
    widely used for tools and weapons. Recreationally, the Caldera's landscape
    is noted for its opportunities for hiking, cross-country skiing,
    backpacking, bicycling, hunting, and fishing. Commercially, it provides
    ranchers with forage for livestock. Since the Caldera's acquisition
    through fiscal year 2005, the Valles Caldera Trust (Trust), established
    under the Preservation Act, has received about $16 million in federal
    funding to operate and maintain the Caldera.

    As stated in the Preservation Act, the Trust is to be governed by a Board
    of Trustees (Board) responsible for managing the Caldera as a national
    preserve. Until the Trust could be organized, however, management of the
    Caldera was provided by the U.S. Department of Agriculture's Forest
    Service. The Secretary of Agriculture was to transfer management
    responsibility to the Trust once the Board was able to conduct business
    and provide for essential management services. The transfer occurred in
    August 2002. The Preservation Act also charged the Trust with managing the
    land to achieve a number of goals, including the following:

    o protecting and preserving the Caldera's scientific, scenic, historic,
    and natural values, including rivers and ecosystems, and archaeological,
    geological, and cultural resources for future generations;

    o providing opportunities for public recreation;

    o providing for sustained yield management of the ranch for timber
    production and domesticated livestock grazing insofar as those were
    consistent with its other responsibilities; and

    o becoming financially self-sustaining within 15 years of the purchase
    date-that is, by 2015.

    The Preservation Act also established the Trust as a wholly owned
    government corporation subject to the Government Corporation Control Act
    (Control Act).2 The Trust is also subject to the Government Performance
    and Results Act (Results Act).3 Under the Control Act, the Trust must
    obtain independent annual financial audits and report annually to
    Congress. Under the Results Act, the Trust must prepare a strategic plan
    and an annual performance plan with measurable goals and objectives, and
    submit annual performance reports to Congress and the President.

    The Preservation Act requires GAO to provide two reports to Congress on
    the Trust's activities: an interim report 3 years after the Trust assumed
    management responsibility and a final report 4 years later. For this
    interim report, we examined the (1) Trust's accomplishments since its
    inception and (2) work that remains for the Trust in order to meet its
    goals under the act, including the goal of becoming financially
    self-sustaining.

    To address these issues, we analyzed information and interviewed officials
    from the Forest Service and the Trust on the programs and activities the
    Trust has initiated since assuming management of the Caldera. We also
    analyzed documents, financial records, and other information, and visited
    the site to observe the actions taken to date toward meeting the Trust's
    statutory obligations. In addition, we analyzed the requirements of the
    Control Act and the Results Act for government corporations. The financial
    statements of the Trust have not been independently audited. We conducted
    limited testing of these data and discussed these data with key Trust
    officials. We describe issues related to these financial data in the body
    of this report. We assessed and determined that the nonfinancial data,
    such as participation in recreation activities and levels of livestock
    grazing, were sufficiently reliable for the purposes of this report. We
    conducted our work from January 2005 through October 2005 in accordance
    with generally accepted government auditing standards.

    Results in Brief

    Since 2000, the Trust has made progress in meeting its goals of preserving
    and protecting the Caldera for future generations as well as of providing
    for public recreation and sustained yield management. To advance these
    goals, the Trust established a basic organization with about 25 staff and
    drafted policy and procedures-including guiding management principles and
    a management framework; it also contracted with the Department of the
    Interior's National Business Center for accounting services. On the
    Caldera, the Trust began engineering and construction efforts to address
    infrastructure problems-roads, water systems, fences, and buildings-to
    make the Caldera more accessible for resource management, recreation, and
    commercial uses. In addition, since 2002, the Trust has granted access to
    the public through its interim grazing and recreation programs. To
    preserve the land and implement environmental protection requirements, the
    Trust uses science-based adaptive management-an approach under which
    management decisions are based on site-specific scientific data, evaluated
    for impact, and adjusted in response to these evaluations.

    Despite the progress made, the Trust has much work to do to meet its goals
    under the Preservation Act, including achieving a financially
    self-sustaining operation. Specifically, the Trust has not yet developed
    the following:

    o Strategic and performance plans with measurable goals and objectives for
    (1) protecting and preserving the scientific, scenic, historic, and
    natural values of the Caldera; (2) providing opportunities for public
    recreation; (3) providing for sustained yield management of the ranch for
    timber production and domesticated livestock grazing; and (4) becoming
    financially self-sustaining. Strategic and performance planning processes
    can help highlight mission conflicts for decision makers. For example, the
    Board must decide on the level of activities (e.g., grazing, hiking, and
    hunting) that will be allowed so as to not seriously harm the land's
    resources, yet provide sufficient recreational activity and sustained
    yield management, and must select additional opportunities for generating
    revenues, such as securing private donations.

    o Plans to manage program risks, including losses due to fire and legal
    liabilities that could undermine the Trust's ability to meet its goals.
    For example, the Trust lacks a comprehensive fire plan outlining a
    decision-making process for responding to naturally occurring fires. As a
    result, the Trust spent about $338,000 in May 2005 to suppress a fire that
    could have been left to burn because it did not threaten any key resources
    or public infrastructure, in the opinion of the Forest Service Region 3
    Fire Manager. The Trust has not obtained liability coverage because it is
    uncertain of its legal authority to do so. As a result, the Trust has
    restricted the number of visitors to the Caldera.

    o Mechanisms for monitoring progress, such as annual financial audits
    required by the Control Act and performance reports required by the
    Results Act, would help the Trust assess its progress toward meeting its
    financial and other goals.

    Any one or a combination of these problems could undermine the Trust's
    efforts to raise the revenues needed to bring it closer to meeting its
    self-sustainability goal or other goals. Also, the Trust has experienced
    significant turnover of Board members and key staff, which has contributed
    to delays in implementing the goals under the act.

    To establish a more effective management control program, we are
    recommending that the Board develop a strategic and performance plan with
    measurable goals and objectives, a plan for becoming financially
    self-sustaining, performance monitoring mechanisms, and a plan for timely
    replacement of personnel, prior to devoting additional resources to other
    activities. We are also recommending that the Trust obtain an audit of its
    2005 financial statements and report the results to Congress.

    In commenting on a draft of this report, the Board generally agreed with
    the accuracy of the findings, validity of the conclusions, and soundness
    of the recommendations. The Board also provided additional information
    regarding its efforts to address strategic planning, program risks related
    to fire and legal liabilities, Board member and staff turnover, and
    financial self-sustainability. With regard to the issue of financial
    self-sustainability, the Board disagreed with our statement that financial
    self-sustainability was not a priority and noted that this goal is
    considered to be of equal priority to other goals it has to achieve. To
    avoid ambiguity, we revised the language in the report to state that the
    Trust considers the self-sustainability goal as one of many goals of equal
    priority. We also added language in the report stating that the Trust can
    use its own funds to purchase liability insurance.

    Background

    About 1.2 million years ago, a volcano erupted and collapsed inward,
    forming the crater now known as the Valles Caldera, in north-central New
    Mexico. This geologically and ecologically unique area covers about 89,000
    acres of meadows, pine forests, hot springs, volcanic domes, and streams
    that support elk herds and other wildlife and fishery resources. Figure 1
    shows a view of Valle Grande from Redondo Peak, the highest elevation
    within the Caldera.

    Figure 1: Valle Grande Viewed from Redondo Peak

    The Caldera comprises the formerly private lands known as the Baca Ranch
    and is almost entirely surrounded by the Santa Fe National Forest and
    Bandelier National Monument. Figure 2 shows the location of the Caldera in
    relation to the Santa Fe National Forest and Bandelier National Monument.

    Figure 2: The Caldera, Santa Fe National Forest, and Bandelier National
    Monument

    The owners of the Baca Ranch operated it as a working ranch, providing
    grazing for their own cattle and, for a fee, for livestock owned by other
    parties. According to the Preservation Act, the working ranch arrangement
    was to continue after the federal government purchased the ranch. In
    managing the Caldera, the Trust is to protect and preserve the land while
    attempting to achieve a financially self-sustaining operation.
    "Financially self-sustaining," as defined by the act, means that
    management and operating expenditures-including trustees' expenses;
    salaries and benefits; administrative, maintenance, and operating costs;
    and facilities improvements-are equal to or less than proceeds derived
    from fees and other receipts (including interest on invested funds) for
    resource use and development. Appropriated funds are not to be considered.
    To carry out its duties, the Trust has the authority to solicit and accept
    donations of funds, property, supplies, or services from any private or
    public entity; negotiate and enter into agreements, leases, contracts, and
    other arrangements with any individual or federal or private entity; and
    consult with Indian tribes and pueblos on matters that may affect them.

    The Trust is managed by a nine-member Board. The President appoints seven
    members, and the other two members are the Supervisor of the Santa Fe
    National Forest and the Superintendent of the Bandelier National Monument.
    Of the seven presidential appointees, who are selected in consultation
    with the New Mexico congressional delegation, five must be New Mexico
    residents. Appointees are to be selected based on their expertise or
    experience. Generally, one individual must be appointed with knowledge of
    or experience in each of the following: (1) livestock and range
    management; (2) recreation management; (3) sustainable management of
    forest lands for commodity and noncommodity purposes; (4) financial
    management, budget and program analysis, and small business operations;
    (5) cultural and natural history of the region; (6) nonprofit conservation
    organizations concerned with Forest Service activities; and (7) state or
    local government activities in New Mexico, with expertise in the customs
    of the local area. Board members are generally appointed to 4-year terms
    and can be reappointed; however, no Board member may serve more than 8
    consecutive years. The Trustees select a chairman from the Board's
    members. An executive director, who is hired by the Board, oversees the
    Trust's day-to-day operations. The Board must hold at least three public
    meetings a year in New Mexico.

    Under the Control Act, the financial statements of a government
    corporation must receive an independent financial audit annually in
    accordance with generally accepted government auditing standards. In
    addition, agencies must submit annual management reports to Congress that
    include a statement of financial position, a statement of operations, a
    statement of cash flow, a budget report reconciliation, a statement on
    management controls, a report on the results of the annual financial
    audit, and other necessary information about the operations and financial
    condition.

    The Results Act requires agencies to develop strategic and performance
    plans, measure performance, and report annually to Congress. The Results
    Act shifts the focus of an agency's operations from reporting on
    activities toward achieving results. It requires a results-oriented
    strategic planning process with clearly defined strategic objectives
    linked to measurable performance goals and the collection of information
    to monitor and evaluate the programs. A strategic plan should contain the
    organization's mission statement and strategic goals, a description of the
    means and strategies that will be used to achieve the goals, a description
    of the relationship between annual performance goals and the
    organization's strategic goal framework, the identification of key factors
    that could affect achievement of the strategic goals, a description of
    program evaluations used in preparing the strategic plan, and a schedule
    for future program evaluations. The annual performance plan articulates
    measurable goals for the upcoming fiscal year that are aligned with an
    organization's long-term strategic goals. The annual performance report
    compares an organization's performance with performance goals for the past
    year.4 Implementation of the Results Act requirements enables managers to
    improve accountability, effectiveness, service delivery, and internal
    management, and to provide better information to Congress.

    A more effective management control program, as we have defined it for the
    purposes of this report, would encompass the requirements of the Control
    Act and the Results Act. These requirements include, among other things,
    (1) a strategic plan, (2) performance plans with measurable goals and
    objectives, (3) the identification and mitigation of program risks, (4)
    performance monitoring and reporting, and (5) annual audits.

    The Trust Is Making Progress toward Preserving and Protecting the Caldera
    and Providing Recreation and Sustained Yield Management

    As required under the Preservation Act, the Board has taken steps to
    establish and implement management policies to achieve the goals of
    preserving and protecting the Caldera and providing for public recreation
    and sustained yield management. In particular, the Board (1) established a
    basic organization, (2) began to address infrastructure problems, (3)
    granted limited access to the public through its interim grazing and
    recreation programs, and (4) established an adaptive management framework.

    The Board Established the Trust Organization

    Between January 2001-the Board's first meeting-and September 2001, the
    Board met regularly and held listening sessions with the general public to
    obtain views on how the Caldera should be managed. Separately, the Board
    met with representatives of local Indian tribes and pueblos. Using the
    information from these sessions, in December 2001, the Board issued 10
    guiding principles for future decision making. These guiding principles,
    which are listed in appendix II, include a commitment to fair and
    affordable access for all permitted activities. At the same time, however,
    the Board stated that it would emphasize the quality of Caldera
    experiences over quantity, which could limit activities and fees.

    From January 2001 through August 2002, the Forest Service served as the
    interim manager, and the Board and employees from the Forest Service and
    other federal agencies conducted the Trust's work. In October 2001, the
    Board hired its first employee, an executive director. During that year,
    the Trust's office was located at the Santa Fe National Forest offices.
    The Trust officially assumed management of the Caldera in August 2002,
    after it provided for essential management services, including
    establishing staff, beginning business operations, and adopting management
    policies and procedures. During 2002, the Board drafted personnel and
    procurement policies and procedures as well as policies for environmental
    protection. It also drafted a tribal access and use policy to ensure
    access to the Caldera for religious and cultural purposes, as authorized
    by the Preservation Act. By the end of fiscal year 2002, the Trust had 7
    employees, including business and resource managers. At the time of our
    review in 2005, the Trust was reorganizing under a new executive director
    and employed about 25 permanent and limited-term employees. Figure 3 shows
    the Trust's proposed organization, as of September 2005.

    Figure 3: Valles Caldera Trust's Proposed Organization, as of September
    2005

    Note: As of October 2005, the Board had not officially approved this
    organizational proposal.

    In addition, the Trust published its final management framework in May
    2005. This document, entitled The Framework and Strategic Guidance for
    Comprehensive Management, describes the history and natural features of
    the Caldera, the goals of the Preservation Act, and the Trust's approach
    for land stewardship, decision making, and public involvement. It further
    describes a range of potential public uses of the Caldera, from hunting
    and fishing to hiking and camping.

    From its inception through fiscal year 2003, the Trust maintained its
    financial accounts on the Forest Service's financial system. However, in
    2003, the Board decided to obtain an independent financial system for the
    Trust. The Trust contracted for financial services on the Oracle Federal
    Financial System managed by the Department of the Interior's National
    Business Center-an option the Trust considered to be more cost-effective
    than developing a system in-house.5 Beginning with fiscal year 2004, the
    Trust maintains its financial information on that system.

    Infrastructure Surveyed and Potential Solutions to Problems Identified

    Shortly after the federal government assumed ownership of the Caldera, the
    Trust learned that the existing infrastructure-roads, buildings, fences,
    and water treatment facilities-was seriously degraded and would have to be
    rehabilitated before it could provide public access to the Caldera. The
    Trust began the rehabilitation work in 2002.

    Roads. The Caldera has an estimated 1,200 miles of roads, including 200
    miles for the main access roads. Most of these roads had been constructed
    with little planning or engineering and had been used to support logging
    operations. They could not be readily used to support administration,
    ranching, recreation, and other needs. In 2002, 3.5 miles of Road 1, the
    main access road, and five key bridges were upgraded to all-weather
    commercial gravel standards; work on the this road was completed in 2003.
    Road 2-a 10.2-mile access road-was upgraded in 2004 and 2005. Road work
    will continue as needs are identified and resources become available.
    Figure 4 shows a portion of the main access road to the Caldera after
    rehabilitation.

    Figure 4: Portion of the Main Access Road to the Caldera after
    Rehabilitation

    Buildings, fences, and other facilities. From 2002 to 2005, the Trust
    conducted minor maintenance on the ranch buildings used to house
    employees. In 2002 and 2003, the Trust repaired the Caldera's 54 miles of
    boundary fence and installed restricted access signs. In 2004, it assessed
    the layout and condition of 64 miles of interior fences. The height of the
    fences was shortened in many areas to allow for elk movement. The Trust
    also installed scenic vistas and kiosks on New Mexico Highway 4, the main
    access road to the Caldera, to allow public viewing of the Caldera. Other
    facilities-such as livestock corrals-were also assessed and rehabilitated.
    Figure 5 shows a historic building constructed in 1909 and used as a
    commissary where ranch hands could purchase supplies on the Caldera.

    Figure 5: Historic Commissary on the Caldera

    Water treatment facilities. When the federal government acquired the
    Caldera, the existing water treatment facility was not functioning and the
    Caldera did not have potable water. Rehabilitating the system became a top
    priority for the Trust. Repairs to the water collection and filtration
    system were completed in 2004, and work was ongoing to repair the water
    distribution system in 2005. As currently scheduled, potable water will be
    available in the spring of 2006.

    The Trust Implemented Interim Grazing

    According to the Preservation Act, the Trust is to provide for livestock
    grazing consistent with the other purposes of the act. The grazing
    program, begun in 2002 as a 5-week drought-relief program, has been
    operating under an interim livestock management plan, which is effective
    through calendar year 2005. Until it can develop a more comprehensive
    strategy, the Trust has established an interim grazing program that allows
    grazing for between 1 and 2,000 cattle, depending on the condition of the
    forage. This level is lower than the private owners had allowed-up to
    6,000 cattle during the spring, summer, and fall grazing seasons. Table 1
    shows the level of livestock grazing through 2005 (estimated) by calendar
    year.

    Table 1: Level of Livestock Grazing on the Caldera, Calendar Years 2002
    through 2005

          Components of the grazing program     2002  2003  2004 2005 (estimated)
    Cow-calf pairs                            703   305     a                a
    Conservation Stewardship Program (number              205              198
    of cattle)
    Replacement Heifer Program                      375   461              402

    (number of cattle)
    Duration of grazing season (months)      1.25     4     4                4
    Animal unit monthsb                       879 2,270 2,621            2,354

    Source: GAO analysis of Trust data.

    aThe Trust replaced the cow-calf pair program in 2004 with the
    Conservation Stewardship Program, which requires grazing applicants to
    demonstrate that they have conservation initiatives on their own land.

    bAn animal unit month (AUM) is the computed amount of forage (vegetation
    such as grass and shrubs) that a cow and her calf eat in a month.

    Two of these grazing programs-Conservation Stewardship and Replacement
    Heifers-are designed, in part, to introduce local ranchers to more prudent
    management practices. Under the stewardship program, which replaced the
    cow-calf program, applicants have to demonstrate that they will implement
    projects on their own lands to improve the condition of the range while
    their cattle graze on the Caldera. The largest participant in the program,
    the Pueblo of Jemez, implemented major range improvements on its own
    lands, such as reseeding and resting rangeland. The Replacement Heifer
    Program allows ranchers to graze heifers on the Caldera and have the
    heifers bred with the Trust's registered bulls, which are certified to
    produce calves with low birth weights. The program is designed to improve
    the genetics of local herds and to protect the heifers from dying or
    suffering other complications when they give birth.

    The Trust Has Established Interim Recreation Programs

    The Trust granted limited public access through recreation programs
    beginning in 2002. Recreation activities offered have included, for
    example, hunting, fishing, hiking, cross-country skiing, snowshoeing,
    sleigh rides, wagon rides, and horseback riding. In most cases, the Trust
    charged fees for access to the Caldera. Table 2 shows the level of public
    participation in the various recreation programs from calendar years 2002
    through 2004. Participation in recreation activities is expected to
    increase for 2005. As shown in table 2, the Trust offered limited
    recreational opportunities in 2002-a total of 1,920 participants. However,
    in 2004, participation in recreation activities increased more than
    fourfold over the 2002 level. The fishing program hosted the most visitors
    over the period, or approximately 26 percent of total visitors. Elk
    hunting/antler collection and hiking were also popular, each representing
    about 21 percent of visitor participation, followed by wagon/sleigh rides
    at about 15 percent.

    Table 2: Public Participation in Recreation Programs, Calendar Years 2002
    through 2004

        Public participation          2002         2003         2004        Total
                              participants participants participants participants
                                                                     by activity,
                                                                     2002 through
                                                                             2004
    Fishing permits and                        1,785        2,107        3,892
    clinics
    Elk hunting and               1,470        1,040          689        3,199
    elk-antler collection
    Hiking                          200        1,296        1,620        3,116
    Wagon and sleigh rides          250          447        1,520        2,217
    Van and group tours                          353        1,306        1,659
    Mountain biking                                           440          440
    Horseback riding                                          215          215
    (equestrian program)
    Skiing and snowshoeing                        64          142          206
    Stargazing lectures                           71           70          141
    Seminars, workshops,                                       87           87
    and overnight photo
    excursions
    Bird watching                                 14           14           28
    Total participants            1,920        5,070        8,210       15,200

    Sources: Valles Caldera Trust staff and annual reports to Congress.

    Fishing and fishing clinics. Two  streams on the Caldera are suitable for
    fishing. In 2003, the Trust granted fishing access to 1,785 participants
    on a first-come, first-served basis. With increased demand in 2004, the
    Trust used a lottery system to award access to 2,107 participants. In
    addition, the Trust hosted youth and adult fishing clinics in both years.

    Elk hunting and antler collection. The Trust worked with the New Mexico
    Department of Game and Fish to set the numbers of available elk-hunting
    licenses and used a lottery and auction to award licenses. Participation
    in elk hunts has declined each year because of the New Mexico Department
    of Game and Fish decided to decrease the number of hunting licenses
    available to sustain a viable elk herd. In addition to the elk hunt, the
    Trust has offered area youth groups the opportunity to collect antlers
    shed by elk each year. These groups sell the antlers, which are generally
    used to make decorative items, such as lamps, and the groups use the
    proceeds to support nonprofit programs.

    Hiking. Beginning in 2002, the Trust provided guided hiking through a
    contractor to enable public access to the Caldera before it developed the
    infrastructure needed for general public access. In 2003 and 2004, the
    Trust implemented its own hiking program, expanded the activity boundaries
    for hiking, and established unguided hikes as an option. In 2005, the
    Trust increased the number of trails available for hikers on the Caldera.
    In total, the Trust now has 24 miles of trails available for hikers.

    Wagon and sleigh rides. The Trust offered horse-drawn wagon and sleigh
    rides to visitors. The horse-drawn rides allow greater access to areas in
    the Caldera. Wagon rides can occur year-round, while sleigh rides, of
    course, need sufficient snowfall. Participation in wagon and sleigh rides
    has increased more than sixfold, from 250 in 2002 to 1,520 in 2004. Also
    in 2004, the Trust donated wagon rides on the Caldera as a prize for a
    charity auction.

    Other recreation. In 2003, the Trust added van tours, snowshoeing,
    cross-county skiing, bird watching, and stargazing lectures. In 2004, the
    Trust implemented an equestrian program, so that riders could transport
    their own horses to the Caldera for rides on designated trails. Over 200
    riders participated. Also in 2004, the Trust added mountain biking, group
    tours and seminars, workshops, and overnight photo- and bird-watching
    excursions.

    The Trust Set Up a Science-Based Adaptive Management Framework

    The Trust is using a science-based adaptive management framework for the
    Caldera, which many believe to be a potentially effective approach to
    managing the land. Under this approach, the Trust will make land
    management decisions on the basis of scientific research and monitoring,
    taking into account the public's views and federal environmental
    requirements. The foundation of this management approach is inventorying
    natural resources, monitoring environmental changes that result from the
    Trust's programs, conducting research that will primarily help manage the
    Caldera's resources, and complying with federal environmental
    requirements.

    Inventories. Little information was available about the Caldera's
    resources when the federal government acquired the Caldera. As a result,
    in 2001, the Trust-using volunteers and employees detailed from other
    federal agencies-began to inventory the Caldera's vegetation and forest,
    wildlife and fisheries, geology, and other resources. Some of these
    baseline inventories have several components. For example, the wildlife
    inventory includes components by species, such as mammals, reptiles, and
    fish. Some inventory components have been completed, while others are
    still ongoing and are scheduled to be completed during 2007. Figure 6
    shows the current inventory and monitoring locations on the Caldera.

    Figure 6: Inventory and Monitoring Sites on the Caldera

    In addition, about 5 percent of the Caldera has been surveyed for cultural
    resources. As a result of recent surveys, 25 previously unknown historic
    properties have been discovered. For example, scientists have identified
    prehistoric sites showing evidence of toolmaking using obsidian. The
    cultural inventory is ongoing, and its completion date has not been
    established because future construction plans are uncertain. According to
    the Caldera's cultural program coordinator, planned surveys can be delayed
    because of the need to survey areas slated for construction, such as
    roads.

    Monitoring. The monitoring program is intended to assess the impact that
    grazing, fishing, forest thinning, prescribed fire programs, and other
    activities have had on the Caldera. For example, the Trust is monitoring
    areas it has fenced along streambeds to prevent elk and cattle grazing in
    order to better understand the impacts of grazing on areas that are not
    fenced off. Figure 7 shows a fenced riparian area on the Caldera. The
    Trust is also monitoring the effects of natural and nonprogrammatic
    factors, such as changes in climate and species populations, especially
    nonnative populations. For example, as part of this program, the Trust
    established five weather stations to monitor rainfall, snowfall, wind, and
    temperature as well as five stations to monitor stream water quality.

    Figure 7: Fenced Riparian Area on the Caldera

    Research. The research program benefits both the management of the Caldera
    and public land management. For example, hydrological research funded by
    the National Science Foundation through the University of Arizona will
    provide information to aid in the day-to-day management of the Caldera and
    will also contribute to the understanding of hydrologic systems overall.
    This research will enable scientists to understand how much rain the
    Caldera's lands absorb and predict the amount of runoff into streams and
    rivers. As more data become available, scientists can predict the impact
    of rain and drought on water quality and forage availability on the
    Caldera and use the information to drive future management decisions for
    grazing and recreation.

    Environmental compliance and public participation. The Trust must comply
    with the National Environmental Policy Act (NEPA), which requires federal
    agencies to assess the likely environmental impacts of any major actions
    they propose. If the agency determines that a proposed activity will
    significantly affect the quality of the human environment, it must prepare
    an environmental impact statement (EIS). An EIS specifies, among other
    things, the purpose of and need for the proposed action, its environmental
    consequences, and the comparison of alternatives to the proposal.

    Federal agencies, in addition to complying with the Council on
    Environmental Quality's regulations for implementing NEPA, develop
    agency-specific procedures. Before the Trust adopted its NEPA procedures
    in July 2003, it used the Forest Service's procedures to ensure NEPA
    compliance.6 Under the Forest Service procedures, the Trust categorically
    excluded interim fishing, hiking, road maintenance, and hazardous-fuel
    reductions from the general requirement to develop an environmental
    assessment or impact statement because it was determined that the actions
    would have no significant impact on the human environment. Under the
    Forest Service regulations, the Trust conducted environmental assessments
    of the interim grazing, noxious-weed eradication, and prescribed burns and
    did not find that these activities significantly affected the Caldera. The
    Trust expects to complete an environmental impact statement before
    establishing a permanent grazing program in 2007.

    The 2003 procedures are intended to efficiently and effectively implement
    NEPA and create a collaborative working relationship between the Trust and
    tribal governments, citizens, and federal, state, and local authorities.7
    To obtain public views and to track and report the Trust's land management
    actions, the Trust is developing an Internet-based system-the Stewardship
    Action Record System (StARS). Once functional (expected at the end of
    2005), StARS will allow public review and comment on all actions taken and
    provide the public with opportunities to monitor the results of ongoing
    efforts. StARS proposals have been developed for public recreation,
    grazing, infrastructure development, research projects, and fire
    management. The Trust is also exploring ways to distribute information to
    the public and obtain comments without using the Internet.

    According to the President's Council on Environmental Quality, the Trust's
    NEPA procedures clearly integrate progressive NEPA compliance with
    principles of adaptive management and environmental management systems.8
    The council also stated that the procedures allow for uncertainty in the
    decision-making process because actions are monitored and revised as more
    information becomes available.

    The Trust Has Much Work to Do to Meet Its Statutory Goals

    Despite the progress made, the Trust has much work to do to meet its
    mandated goals under the Preservation Act. Specifically, the Trust lacks
    (1) strategic and performance plans and programs to ensure that revenue
    streams are sufficient to achieve financial self-sustainability, (2) plans
    to minimize program risks from fire that could damage resources and legal
    liabilities that could result in catastrophic losses and reduced visitor
    use, and (3) mechanisms for monitoring progress in meeting its financial
    and other obligations, including annual audits and performance reporting.
    These shortfalls could be addressed through a more effective management
    control program, as envisioned in the Control and Results Acts. Frequent
    turnover of Board members and key staff also contributed to delays in
    implementing the components of an effective management control program.
    Without a more effective management control program, the Trust cannot
    adequately plan and implement programs or monitor progress toward meeting
    the mandated goals of the Preservation Act.

    The Trust Has Not Developed Strategic and Performance Plans with
    Measurable Goals and Objectives

    The Trust has not developed strategic and performance plans as required
    under the Results Act. Specifically, it has not developed a strategic plan
    that not only outlines its mission and goals but also describes how it
    will achieve and revise its goals and objectives, how performance goals
    relate to the organization's strategic goal framework, and how it will
    conduct program evaluations. In 2005, the Trust published its Valles
    Caldera National Preserve Framework and Strategic Guidance for
    Comprehensive Management. This document provides useful information about
    the history of the Caldera, background on the Trust, and general goals,
    but discusses issues in terms of possibilities and in a broad and
    philosophic manner instead of applying a methodical and analytical
    approach to strategic planning. Board members stated that they did not
    prepare a strategic plan because they believed that the NEPA compliance
    process had to be completed before they could publish a plan. However,
    agencies are not required to prepare an EIS prior to formulating a
    strategic plan.

    The Trust has not developed an annual performance plan with measurable
    goals for the activities it allows on the Caldera, which would help it
    determine whether it is accomplishing the overall strategic goals. For
    example, the performance plan could support the overall strategic goal to
    provide recreational opportunities by establishing annual measurable goals
    for the Trust's recreation activities. An example of a measurable goal
    could be to increase public participation in hiking activities by 10
    percent per year until the Trust has determined that the allowed level of
    hiking will not impair or damage the Caldera and is consistent with the
    other goals under the Preservation Act. The performance plan could also
    support the strategic goal to protect and preserve the Caldera, which
    could contain a measurable goal to restore and expand a specific number of
    wetland acres per year. However, the Trust cannot agree on the balance
    that should be struck between the activities that should occur on the
    Caldera and the impact of these activities on the land in order to achieve
    its overall goals of resource protection, recreation, sustained yield
    management, and financial self-sustainability.

    To become financially self-sustaining by 2015, the Trust needs to generate
    enough revenue to pay for its operations and maintenance as well as
    infrastructure development costs. The Trust's main revenue-generating
    activities are hunting, fishing, special events such as mountain biking,
    and grazing. Table 3 shows the revenue generated, by program activity, for
    fiscal year 2004.

    Table 3: Revenue Collected, by Program Activity, Fiscal Year 2004

                         Program                                          Revenue
    Hunting                                                           $245,885
    Fishing                                                             62,793
    Special events                                                      45,699
    Grazing                                                             42,728
    Hiking                                                              28,744
    Souvenirs, books, maps                                              13,256
    Donations                                                              841
    Other a                                                             60,137
    Total                                                             $500,083

    Source: Valles Caldera unaudited data.

    Notes: The Trust's financial statements remain unaudited as of the date of
    this report.

    aOther includes lodging, filming, and other revenues generated by credit
    card payments not specifically identified to programs.

    To date, however, the Board has not developed sufficient revenue streams
    to cover its program costs or developed performance goals for becoming
    financially self-sustaining. Specifically, managers estimated that the
    grazing program lost about $55,000 in 2004 but have not computed the gain
    or loss for other programs. With total revenues of about $500,000 and
    total expenditures in excess of $5 million in fiscal year 2004, it is
    apparent that programs were operating at a loss. The Board does not plan
    to change the operation of revenue-generating programs until the Trust
    complies with NEPA.

    According to the Valles Caldera National Preserve Framework and Strategic
    Guidance for Comprehensive Management, the Trust considers the financial
    self-sustainability goal as one of many goals of equal priority.
    Furthermore, according to the framework, the Trust cannot set a date for
    achieving financial self-sustainability-established as a goal to be
    accomplished by 2015 in the Preservation Act-because its federal land
    stewardship obligations do not allow it to operate grazing and recreation
    activities at a level that puts natural resources at risk. Therefore, the
    framework states, it may be reasonable to continue appropriations to cover
    environmental stewardship costs, such as those for environmental
    assessments and resources inventories, while the balance of the Trust's
    programs operate in a self-sustaining manner. While financial self-
    sustainability may not be attainable in the long run, we believe it is
    premature to assume that appropriations will continue to be needed after
    the Trust's 15th year of operation-the time period established to achieve
    the goal of self-sustainability. Moreover, the Trust is directed to report
    to Congress in its 14th year if the achievement of self-sustainability by
    its 15th year is unrealistic. In the meantime, the Trust has an obligation
    to continue to develop a strategy and implement a plan to become
    financially self-sustaining.

    The Preservation Act also requires the Trust to report to Congress on how
    and when the Trust will become financially self-sustaining. That is, the
    Trust is to provide Congress with a schedule of decreasing appropriations
    that demonstrates how it will achieve financially self-sustaining
    operations by 2015. Such a schedule should, at a minimum, quantify the
    annual appropriations as well as other projected revenue sources needed
    through 2015 and demonstrate that these sources of income will meet or
    exceed the expected program operations and maintenance costs during that
    time frame. However, the Trust has only presented the three-phased
    strategy shown in table 4 to achieve that goal. As the table shows, the
    Trust's Schedule of Decreasing Appropriations does not include financial
    information to show how the appropriations will decrease each year.

    Table 4: The Trust's 15-Year Strategy for Achieving a Financially
    Self-Sustaining Operation

              Phase                  Goal                       Task
    I. Institution       To develop the staff   Hire and organize staff,
    building (2001-2005) and tools needed to    develop science-based
                            manage the preserve    management mechanisms, and
                                                   institute real-time accounting
                                                   controls
    II. Infrastructure   To develop the         Obtain appropriations and
    development          infrastructure needed  develop infrastructure,
    (2005-2010)          to support land        including roads, trails,
                            stewardship, public    facilities, and permanent
                            access, and receipts   recreation and public access
                            generation             programs
    III. Program         To cultivate           Implement previous phase
    refinement           alternative sources of business plans, which evaluate
    (2010-2015)          funds and streamline   potential sources of funds
                            programs to permit     such as access and activity
                            decreasing             fees, grants, sustained
                            appropriations         utilization of resources,
                                                   private fund-raising, retail
                                                   and merchandizing activities,
                                                   and special events

    Source: GAO analysis of the Board's Schedule of Decreasing Appropriations.

    The Preservation Act also authorized the Trust to solicit and accept
    donations of funds, property, supplies, and services. The Trust has
    received some donations, primarily volunteer labor. Through 2005, cash
    donations totaled about $56,000, $50,000 of which was earmarked to pay the
    salary of a full-time employee to coordinate volunteer efforts. However,
    the Trust has not developed a plan for outreach to philanthropic
    organizations. For example, charitable organizations supporting national
    parks have been established to solicit donations to help support park
    needs. The Trust has discussed this option but has not actively pursued
    it.

    The Trust Has Not Addressed Risks Potentially Posed by Fire and Legal
    Liabilities

    The Trust has not addressed program risks, including fire and legal
    liabilities that could undermine its ability to meet its financial
    obligations.9 The Trust completed a fire management plan in 2004 that
    adopts, by reference, the federal National Fire Plan. According to the
    National Fire Plan, agencies need a fire management plan to outline a
    decision-making process for responding to naturally occurring fires.10
    Such a plan lays out the conditions under which fires must be suppressed
    or allowed to burn to benefit resources.11 The Caldera's plan, however,
    has not addressed fire management to benefit resources, only the
    management of prescribed fires. Without a plan to manage fires for
    resource benefits, all naturally occurring fires on the Caldera must be
    suppressed, and suppression can be costly.12 For example, in May 2005, a
    fire on the Caldera burned about 82 acres before being suppressed-at a
    cost of about $338,000. In the opinion of the Forest Service Region 3 Fire
    Manager, this fire could have been left to burn because it did not
    threaten any key resources or public infrastructure. Extended periods of
    drought and high fire risk in northern New Mexico could easily deplete the
    Caldera's financial resources because suppression costs are high.

    The Trust does not have liability coverage to protect against injuries on
    the Caldera because it was uncertain whether it could acquire such
    insurance using appropriated funds. Moreover, as a government corporation,
    the Trust did not believe it could access the federal judgment fund, a
    fund in the U.S. Treasury used for the payment of final judgments against
    the United States. This lack of liability coverage and uncertainty led the
    Trust to take a cautious approach to implementing programs and increasing
    public access. According to the Board, in June 2005 the Trust clarified
    these issues with its legal counsel, who determined that legislation might
    be necessary to access the judgment fund but that it could use its own
    funds to purchase liability insurance.

    The Trust Has Not Developed Required Mechanisms for Monitoring Progress in
    Meeting Financial and Other Goals

    The Trust has yet to develop the mechanisms needed to monitor progress in
    meeting its financial and other obligations under the Preservation,
    Control, and Results Acts. These mechanisms include an annual financial
    audit to ensure the credibility of reported financial information and an
    annual performance report that describes progress toward achieving its
    annual performance goals. Without these mechanisms, the Trust, Congress,
    and other stakeholders cannot determine whether the Trust is on a course
    to meet all of its goals.

    Annual Audits. The Control Act requires annual financial audits for
    government corporations' financial statements by an independent, external
    auditor selected by the head of the corporation. The results of the audits
    are to be reported to the head of the government corporation and to
    Congress. The Board has yet to conduct an audit because it has not
    produced auditable financial statements.

    In 2003, the Trust contracted with an independent accounting firm for
    auditing services, including an audit of the (1) statement of financial
    position of the Trust and (2) related statement of activities and cash
    flows, as of September 30, 2003. However, according to the Trust's former
    business manager, the audit firm recommended that the audit be postponed
    until 2004 since the Trust's financial records had only recently been
    established on the new financial system operated by the National Business
    Center. The Trust agreed with this recommendation. As of October 2005, the
    Trust had not contracted with an independent firm to audit its annual
    financial statements. Also in 2003, the Trust contracted with another firm
    to review the payroll process and controls for each of the revenue sources
    and to recommend improvements. According to Trust managers, in fiscal year
    2005, financial policies and procedures were still not in place and
    financial statements had not been produced. The managers told us that they
    were in the process of establishing management controls and attempting to
    reconstruct prior years' expenditures in preparation for their first
    external audit.

    Annual Performance Reports. The Control, Results, and Preservation Acts
    require the Trust to report annually to Congress on certain aspects of its
    operations. Collectively, these acts require a statement of financial
    position, a statement of operations, a statement of cash flows,
    reconciliation to the budget report, a management controls statement, a
    report on a financial statement audit, and reports on annual performance.
    The annual reports to Congress the Trust has prepared for fiscal years
    2001 through 2004 under the Preservation Act describe the interim programs
    the Trust has implemented and summarize the prior years' accomplishments.
    The Trust may not have been able to prepare annual reports to Congress
    that address requirements of the Control Act partly because the Trust has
    not produced a budget report or financial statements. In addition, because
    the Trust has not developed annual performance plans with performance
    goals, it has not produced a performance report required by the Results
    Act.

    Turnover of Board Members and Staff Contributed to Delays in Implementing
    Components of a More Effective Management Control Program Needed to Meet
    Statutory Goals

    Effective management of an organization's workforce-its human capital-is
    essential to achieving results and an important part of internal control.
    Operational success is possible only when the right people for the job are
    on board and are provided the right training, tools, structure,
    incentives, and responsibilities. Management should ensure that it obtains
    a workforce with the required skills that match those necessary for
    achieving organizational goals. As part of its human capital planning,
    management should also consider how best to retain valuable employees,
    plan for their eventual succession, and ensure continuity of needed skills
    and abilities. Excessive or unexpected turnover of staff can indicate
    problems with an organization's management control program and contribute
    to delays in implementing programs needed to achieve established goals.

    Throughout its short history, the Trust has experienced significant
    turnover among Board members and staff. According to the Preservation Act,
    three of the initial Board members are appointed for 2 years, while four
    other Board members are initially appointed for 4-year terms. All
    subsequent appointments to these positions are for 4 years. At the end of
    the first 2-year term, the Board operated for about 5 months before the
    President appointed replacements. In January 2005, four more board members
    completed their terms, and the Board operated for 4 months before the
    President appointed three of the four replacements. As of October 2005,
    the President had not appointed anyone for the fourth position, which has
    now been vacant for about 10 months.

    The Trust has also experienced high turnover among key staff. The Trust's
    first executive director served 18 months, resigning as director in March
    2004. The position remained vacant for about 7 months while the Trust
    searched for a replacement. Although this position was filled in October
    2004, the executive director resigned after 10 months of service. Other
    key positions became vacant in 2004 and 2005, including the Trust's
    controller, business manager, programs director, chief administrative
    officer, communications manager, and cultural program coordinator. As of
    October 2005, the executive director, programs director, chief
    administrative officer, cultural resources coordinator, and geospatial
    information systems coordinator positions remained vacant. The business
    manager position was abolished. Table 5 shows the turnover of key Trust
    staff in 2004 and 2005 and the current status of these positions.

    Table 5: Turnover of Key Trust Staff in 2004 and 2005

                Key positions          Date hired Date vacated Replacement hired
    First executive director        Oct. 2001  March 2004   Oct. 2004
    Second executive director       Oct. 2004  Sept. 2005   Vacant
    Controller                      July 2002  Nov. 2004    Sept. 2005
    Programs director               June 2005  Sept. 2005   Vacant
    Cultural resources coordinator  Sept. 2003 Aug. 2005    Vacant
    Communications manager          Jan. 2003  May 2005     Vacant
    Business manager                June 2002  Apr. 2005    Position abolished
    Chief administrative officer    Dec. 2004  Sept. 2005   Vacant
    Geospatial information systems  Aug. 2003  Sept. 2005   Vacant
    coordinator

    Source: GAO analysis of the Trust's personnel records.

    According to some stakeholders we spoke with, the turnover of Board
    members and other key staff has contributed to the Trust's inability to
    develop a strategic and performance plan with measurable goals and
    objectives as well as to delays in implementing programs. For example, the
    NEPA environmental assessment related to the grazing program was postponed
    when four Board members completed their 4-year terms in January 2005. Some
    staff stated that the lack of consistent leadership and the lack of
    progress in organizational and program development has contributed greatly
    to staff turnover.

    Conclusions

    To meet the mandated management goals of the Caldera, the Trust faces
    multiple challenges-balancing conflicting goals and objectives for
    resource development and use with preserving and protecting these
    resources for sustained future recreational enjoyment of the Caldera.
    While the Trust has made some progress in achieving its mandated goals,
    its further progress is in doubt because it has not developed a
    well-defined management control program, which is collectively encompassed
    in the mandates governing the Caldera's operations. Such a program would
    include strategic and performance plans, measurable goals and objectives
    and monitoring plans, annual performance reports, and a strategy for
    achieving financial self-sustainability. These mechanisms would help
    provide greater accountability for achieving results and enhancing
    decision making. Furthermore, an effective management control program-to
    include human capital initiatives designed to retain needed skills and
    provide timely replacement of lost skills-can ease the effects associated
    with turnover in the Board and staff.

    Achieving financial self-sustainability by 2015 is only one of many goals
    and objectives set forth in the Preservation Act, but it is key to the
    Trust's success in managing and operating the Caldera without federal
    funds. The Trust assumes that it may have to continue to rely on federal
    funding after 2015, but this assumption is premature because the Trust has
    not focused on the actions it needs to take to become self-sustaining,
    such as expanding or establishing new revenue-generating programs or
    identifying other nonfederal revenue sources (donations). Furthermore,
    without developing programs to minimize risks associated with implemented
    programs, the Trust cannot manage the uncertainty surrounding liability
    and fire suppression costs, which could undermine its efforts to achieve
    financial self-sustainability. Finally, without an independent financial
    statement audit, the Trust cannot demonstrate to Congress and other
    stakeholders that it is developing a sound financial base and that
    reported financial information is credible.

    Recommendations for Executive Action

    To help ensure that the Trust meets its goals under the Preservation Act
    and to improve management oversight, accountability, and transparency
    under the Control Act and the Results Act, we are making the following
    seven recommendations to the Valles Caldera Board of Trustees.

    To establish a more effective management control program, we recommend
    that the Board develop

    o a strategic and performance plan that identifies measurable goals and
    objectives for protecting and preserving the Caldera, providing
    recreation, sustaining yield, and becoming financially self-sustaining;

    o a plan for becoming financially self-sustaining that includes financial
    information detailing how and when the Trust will try to achieve this
    goal;

    o mechanisms for periodic performance monitoring and reporting, including
    annual performance reports that enable Congress and the Trust to track
    progress in achieving the Trust's program goals and objectives; and

    o a plan for the timely replacement of key personnel.

    To increase accountability to Congress and other stakeholders, we also
    recommend that the Board

    o obtain the annual financial statement audit for 2005,

    o provide a status report or the auditor's final opinion on the Trust's
    financial condition in its January 2006 annual report to Congress, and

    o arrange to conduct future annual financial audits in a timely manner.

    Trust Comments and Our Evaluation

    We provided the Valles Caldera Board of Trustees with a draft of this
    report for review and comment. The Board provided written comments that
    are included in appendix I. The Board generally agreed with the accuracy
    of the findings, validity of the conclusions, and soundness of the
    recommendations. It also provided additional insights into four specific
    areas. First, it stated that it has, over the last several years, engaged
    in extensive strategic planning sessions to lay the foundation for
    developing more detailed operating plans once the highest level strategic
    planning work is completed and sufficient experience has been obtained in
    conducting interim programs. It also said that it has adopted, in 2005, a
    set of strategic goals, the achievement of which is both measurable and
    time specific. We acknowledge that in 2005 the Board announced four
    broadly stated strategic goals. However, as stated in the report, the
    Trust has not developed strategic and performance plans that include all
    required elements of the Results Act, which provides a methodical and
    analytical approach to strategic planning.

    Second, with regard to risks posed by fire and legal liabilities, the
    Board said it was in the process of completing a Fire Use Plan that
    addresses the use of management-ignited fire as well as the use of fire
    originating from natural ignitions and that Congress has adopted
    legislation to provide the Board with access to federal fire suppression
    funds. These actions will enhance the Board's ability to evaluate natural
    ignitions and apply the appropriate management response. We agree that it
    is important to complete the Fire Use Plan, which, according to the Board,
    will be finalized by May 2006. As mentioned in the report and in the
    Board's comments, having a sound fire management plan will provide greater
    assurance that proper management actions are taken in the event of a
    wildland fire. The Board also said it has pursued clarification of whether
    the Board can access the federal government's judgment fund and has
    obtained a legal opinion from an independent firm that concludes that
    legislation might be necessary to access the judgment fund but that the
    Trust could use its own funds to purchase liability insurance. We revised
    the report to include this clarification and agree that the Trust should
    use its own funds to purchase liability insurance.

    Third, the Board agreed that the timely appointment of Board members and
    the management of its human resources are essential to achieving positive
    results. In this regard, it mentioned that it has revised its bylaws to
    effect the orderly transition of Board members, so as to mitigate the
    impact of possible delays in the appointment process. It also said it had
    adopted a new organizational structure and performance review process for
    employees. The change in the Board's bylaws has the effect of allowing the
    Board to make important decisions in the absence of a full Board due to
    delays in appointments of Board members. We agree this is important given
    that the replacement of Board members is out of its control. The Board
    also recognized that it has experienced a relatively high level of Trust
    employee turnover, which it said has "occurred in a constructive fashion,
    void of grievances or formal complaints." Nonetheless, the fact remains
    that high turnover, particularly of key employees, can cause disruption to
    an organization and affect its ability to accomplish established goals. As
    the report states, an effective management control program has a process
    in place for the timely replacement of key personnel lost to turnover.
    Establishing such a process is within the purview of the Board and
    important to effective management of an organization's human capital.

    Finally, the Board stated that while the Trust was fully committed to the
    goal of financial self-sustainability, the Trust recognizes that to obtain
    that goal, it needs to streamline required federal overhead stemming from
    compliance with federal laws and statutes and to control administrative
    and operating costs. It said it was committed to developing the management
    plans required for conversion of financially attractive programs to
    regular status and acquiring capital resources. Furthermore, it stated
    that the Board takes the goal of financial self-sustainability seriously
    and on par with other provisions of the Preservation Act and thus
    disagreed with the implication in the report that it did not consider the
    financial self-sustainability goal as a priority. Because the Board's
    published management framework, entitled Valles Caldera National Preserve
    Framework and Strategic Guidance for Comprehensive Management,  states
    that the Trust considers the financial self-sustainability goal as only
    one of many goals, to avoid ambiguity, we revised the report's language to
    state that the Trust considers the self-sustainability goal as one of many
    goals of equal priority. Regardless, the seriousness of the Board's
    actions in addressing this goal would, as mentioned in the report, be
    further enhanced by demonstrating a more aggressive approach to
    identifying additional revenue sources that would help the Trust come
    closer to achieving financial self-sustainability.

    Scope and Methodology

    We obtained and analyzed information from the Trust on its activities,
    relevant laws, regulations, program documents, and related materials, and
    met with Trust officials responsible for major activities, such as
    recreation, resource inventorying, construction, and financial management.
    Since the Caldera was initially under the management of the Forest
    Service, we interviewed Forest Service officials and reviewed available
    documentation supporting activities undertaken during this time. We also
    visited the Caldera to observe the actions taken to date toward meeting
    the Trust's statutory goals. The financial statements of the Trust have
    not been independently audited. We conducted limited testing of these data
    and discussed these data with key Trust officials. We describe issues
    related to these financial data in the body of this report. We assessed
    and determined that the nonfinancial data, such as participation in
    recreation activities and levels of livestock grazing, were sufficiently
    reliable for the purposes of this report. We conducted our work from
    January 2005 through October 2005 in accordance with generally accepted
    government auditing standards.

    We are sending copies of this report to interested parties. We will also
    make copies available to others upon request. In addition, this report
    will be available at no charge on GAO's Web site at http://www.gao.gov .

    If you or your staff have any questions about this report, please contact
    me at (202) 512-3841 or nazzaror@gao.gov . Contact points for our Offices
    of Congressional Relations and Public Affairs may be found on the last
    page of this report. GAO staff who made major contributions to this report
    are listed in appendix III.

    Robin M. Nazzaro Director, Natural Resources and Environment

    List of Committees

    The Honorable Pete V. Dominici Chairman The Honorable Jeff Bingaman
    Ranking Minority Member Committee on Energy and Natural Resources United
    States Senate

    The Honorable Richard Pombo Chairman The Honorable Nick J. Rahall II
    Ranking Minority Member Committee on Resources House of Representatives

    Comments from the Valles Caldera Trust Appendix I

    Guiding Principles of the Valles Caldera Trust Appendix II

    1.Future generations. Administer the Preserve with the long view in mind,
    directing efforts toward the benefit of future generations.

    2.Protection. Recognizing that the Preserve imparts a rich sense of place
    and qualities not to be found anywhere else, commit to the protection of
    its ecological, cultural, and aesthetic integrity.

    3.Integrity. Strive to achieve a high level of integrity in the
    stewardship of the lands, programs, and other assets in the Trust's care.
    This includes adopting an ethic of financial thrift and discipline and
    exercising good business sense.

    4.Science and adaptive management. Exercise restraint in the
    implementation of all programs, basing them on sound science and adjusting
    them consistent with the principles of adaptive management.

    5.Good neighbor. Recognizing the unique heritage of northern New Mexico's
    traditional cultures, be a good neighbor to surrounding communities,
    striving to avoid negative impacts from Preserve activities and to
    generate positive impacts.

    6.Religious significance. Recognizing the religious significance of the
    Preserve to Native Americans, the Trust bears a special responsibility to
    accommodate the religious practices of nearby tribes and pueblos, and to
    protect sites of special significance.

    7.Open communication. Recognizing the importance of clear and open
    communication, commit to maintaining a productive dialogue with those who
    would advance the purposes of the Preserve and, where appropriate, to
    developing partnerships with them.

    8.Part of a larger whole. Recognizing that the Preserve is part of a
    larger ecological whole, cooperate with adjacent landowners and managers
    to achieve a healthy regional ecosystem.

    9.Learning and inspiration. Recognizing the great potential of the
    Preserve for learning and inspiration, strive to integrate opportunities
    for research, reflection, and education in the programs of the Preserve.

    10.Quality of experience. In providing opportunities to the public,
    emphasize quality of experience over quantity of experiences. In so doing,
    and in reserving the right to limit participation or to maximize revenue
    in certain instances, commit to providing fair and affordable access for
    all permitted activities.

    GAO Contact and Staff Acknowledgments Appendix III

    Robin M. Nazzaro, (202) 512-3841 or nazzaror@gao.gov

    In addition to the contact named above, Roy Judy, Assistant Director;
    Christine Bonham; Doreen Feldman; Lisa Knight; Tom Kingham; Julian
    Klazkin; Allen Lomax; Cynthia Norris; Judy Pagano; Dawn Shorey; Carol
    Herrnstadt Shulman; and Maria Vargas made key contributions to this
    report.

    (360525)

    www.gao.gov/cgi-bin/getrpt? GAO-06-98 .

    To view the full product, including the scope

    and methodology, click on the link above.

    For more information, contact Robin Nazzaro at (202) 512-3841 or
    nazzaror@gao.gov.

    Highlights of GAO-06-98 , a report to congressional committees

    November 2005

    VALLES CALDERA

    Trust Has Made Some Progress, but Needs to Do More to Meet Statutory Goals

    In 2000, Congress authorized the purchase of the Valles Caldera (the
    Caldera) in north-central New Mexico. The Valles Caldera Trust (Trust), a
    wholly owned government corporation, is to become financially
    self-sustaining and to manage the Caldera for multiple purposes while
    sustaining the land's valuable natural resources. GAO was mandated to
    assess the progress the Trust is making in meeting its statutory goals.

    What GAO Recommends

    To help ensure that the Trust meets its goals and establish a more
    effective management control program, GAO recommends that the Trust's
    Board of Trustees develop (1) a strategic and performance plan that
    identifies measurable goals and objectives for protecting and preserving
    the Caldera, providing recreation, sustaining yield, and becoming
    financially self-sustaining; (2) a plan for becoming financially
    self-sustaining; (3) periodic performance monitoring and reporting that
    enable Congress and the Trust to track progress in achieving program
    goals; and (4) a plan to fill vacant positions.

    GAO also recommends that the Board obtain the required financial audit for
    2005 and report on the status of the audit in its 2006 annual report to
    Congress.

    In commenting on the draft report, the Board generally agreed with GAO's
    recommendations.

    The Trust has made progress in meeting its goals to preserve and protect
    the Caldera for future generations as well as to provide for public
    recreation and sustained yield management. Specifically, it has (1)
    established a basic organization with about 25 staff; (2) drafted policy
    and procedures and contracted with the Department of the Interior's
    National Business Center for accounting services; (3) begun engineering
    and construction efforts to address infrastructure problems-roads, water
    systems, fences, and buildings; (4) established interim grazing and
    recreation programs; and (5) implemented an adaptive management approach
    that focuses on making management decisions based on scientific data.

    The Trust, however, still has much work to do to meet its goals, including
    achieving a financially self-sustaining operation. Specifically, the Trust
    has not yet developed the following:

               o  Strategic and performance plans with measurable goals and
               objectives. For example, the Trust must decide on the level of
               activities (e.g., grazing, hiking, and hunting) that will be
               allowed without seriously harming the land's resources, and yet
               will still provide sufficient recreational activity and sustained
               yield management. The Trust also must select additional
               opportunities for generating revenues, such as securing private
               donations.

               o  Plans to manage program risks. The Trust has not addressed
               program risks, including fire and legal liabilities. For example,
               the Trust lacks a fire plan, which would outline a decision-making
               process for responding to fires, and has not obtained liability
               coverage. Because it did not have a fire plan, the Trust spent
               about $338,000 in May 2005 to suppress a fire, which, in the
               opinion of the Forest Service Region 3 Fire Manager, could have
               been left to burn because the fire did not threaten any key
               resources or public infrastructure. Also, because it has not
               obtained liability coverage, the Trust has restricted the number
               of Caldera visitors.

               o  Mechanisms for monitoring progress. Among other things, the
               Trust has not had annual financial audits and has not prepared
               performance reports that would help it assess its progress toward
               meeting its financial and other goals.

    The Trust's efforts to raise the revenues needed to bring it closer to
    meeting its financial self-sustainability goal could be undermined by one
    or more of these issues. Frequent turnover in Board members and key staff
    has contributed to the problems experienced to date.
    *** End of document. ***