Recreation Fees: Demonstration Has Increased Revenues, but Impact on Park
Service Backlog Is Uncertain (Testimony, 03/03/99, GAO/T-RCED-99-101).

Pursuant to a congressional request, GAO discussed the National Park
Service's Recreational Fee Demonstration Program, focusing on the: (1)
rate at which the Park Service spends revenue collected under the
program in comparison with the Fish and Wildlife Service, the Bureau of
Land Management, and the Forest Service; and (2) impact of the fee
program on the Park Service's maintenance needs.

GAO noted that: (1) the overall message about the demonstration program
is positive; (2) the program is providing hundreds of millions of
dollars to improve visitor services and address the backlogs of unmet
needs in the four land management agencies; (3) in addition, those who
pay the fees generally support the program, and it has not appeared to
have adversely affected visitation rates; (4) nonetheless, it is
appropriate to focus on several areas in which changes or improvements
may be needed; (5) specifically, these issues include the need for
greater coordination of fees by the agencies, greater innovation, and
flexibility in revenue distribution; (6) these issues are important
because the demonstration program is still at a stage where
experimentation is encouraged; (7) most of GAO's observations relate to
doing just that--experimenting more to determine what works best; (8)
regarding the Park Service, GAO found that the agency's spending of
demonstration program revenue has lagged substantially behind the other
three agencies in the first 2 years of the program; (9) this has been
due primarily to the larger number and scale of Park Service projects
and additional scrutiny these projects are receiving within the agency
and the Department of the Interior; (10) further, the Park Service has
not yet developed accurate and reliable information on its total
deferred maintenance needs; and (11) until this is done, determining the
impact that the revenue from the fee program is having on these needs is
not possible.

--------------------------- Indexing Terms -----------------------------

 REPORTNUM:  T-RCED-99-101
     TITLE:  Recreation Fees: Demonstration Has Increased Revenues, but 
             Impact on Park Service Backlog Is Uncertain
      DATE:  03/03/99
   SUBJECT:  National parks
             Federal property management
             Maintenance costs
             User fees
             National recreation areas
             Interagency relations
             Budget outlays
             Maintenance (upkeep)
             Historic preservation
IDENTIFIER:  NPS Recreational Fee Demonstration Program
             Timpanogos Cave National Monument (UT)
             Uinta National Forest (UT)
             Assateague Island National Seashore (MD/VA)
             Chincoteague National Wildlife Refuge (VA)
             Olympic National Park (WA)
             Olympic National Forest (WA)
             Zion National Park (UT)
             Shenandoah National Park (VA)
             Grand Canyon National Park (AZ)
             Golden Gate National Recreation Area (CA)
             Rocky Mountain National Park (CO)
             
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Cover
================================================================ COVER


Before the Subcommittee on Interior and Related Agencies, Committee
on Appropriations, House of Representatives

For Release
on Delivery
Expected at
10 a.m.  EST
Wednesday
March 3, 1999

RECREATION FEES - DEMONSTRATION
HAS INCREASED REVENUES, BUT IMPACT
ON PARK SERVICE BACKLOG IS
UNCERTAIN

Statement of Barry T.  Hill, Associate Director,
Energy, Resources, and Science Issues,
Resources, Community, and Economic
Development Division

GAO/T-RCED-99-101

GAO/RCED-99-101T


(141251)


Abbreviations
=============================================================== ABBREV


============================================================ Chapter 0

Mr.  Chairman and Members of the Subcommittee: 

We are here today to discuss the Recreational Fee Demonstration
Program.  Most of my statement will summarize the results of our
recently issued report on this program.\1 However, as you requested,
we will also comment on two other issuesï¿½(1) the rate at which the
National Park Service spends revenue collected under the program in
comparison with the other agencies and (2) the impact of the fee
program on the Park Service's maintenance needs. 

In summary, our overall message about the demonstration program is
clearly positive.  The program is providing hundreds of millions of
dollars to improve visitor services and address the backlog of unmet
needs in the four land management agencies.  In addition, those who
pay the fees generally support the program, and it has not appeared
to have adversely affected visitation rates.  Nonetheless, it is
appropriate to focus today on several areas in which changes or
improvements may be needed.  Specifically, these issues include the
need for greater coordination of fees by the agencies, greater
innovation and flexibility in revenue distribution.  These issues are
important because the demonstration program is still at a stage where
experimentation is encouraged.  Most of our observations relate to
doing just thatï¿½experimenting more to determine what works best. 
Regarding the Park Service, we found that the agency's spending of
demonstration program revenue has lagged substantially behind the
other three agencies in the first 2 years of the program.  This has
been due primarily to the larger number and scale of Park Service
projects and additional scrutiny these projects are receiving within
the agency and the Department of the Interior.  Further, the Park
Service has not yet developed accurate and reliable information on
its total deferred maintenance needs.  Until this is done,
determining the impact that the revenue from the fee program is
having on these needs is not possible. 


--------------------
\1 Recreation Fees:  Demonstration Fee Program Successful in Raising
Revenues but Could Be Improved (GAO/RCED-99-7, Nov.  20, 1998). 


   DEMONSTRATION PROGRAM
   SUCCESSFUL IN RAISING REVENUE,
   BUT IMPROVEMENTS CAN BE MADE
---------------------------------------------------------- Chapter 0:1

The demonstration program affords opportunities to collect new and
increased fees to the major agencies that provide the public with
recreational opportunities on federal land--the Park Service, Bureau
of Land Management, and Fish and Wildlife Service (all within the
Department of the Interior), and the Forest Service (within the
Department of Agriculture).  Each agency can experiment with new or
increased fees at up to 100 sites.  By September 1998, such fees were
in place at 312 sites--100 administered by the Park Service, 77 by
the Fish and Wildlife Service, 68 by the Bureau of Land Management,
and 67 by the Forest Service.  The four agencies reported that,
because of the program, their combined recreational fee revenues have
nearly doubled, from about $93 million in fiscal year 1996 (the last
year before the demonstration program was implemented) to about $180
million in fiscal year 1998.  The Park Service collected 80 percent
of the fee revenue in fiscal year 1998, the Forest Service 15
percent, the Bureau of Land Management 3 percent, and the Fish and
Wildlife Service about 2 percent. 

Visitation appears largely unaffected by the new and increased fees,
according to surveys conducted by the four agencies.  In fiscal year
1997, visitation at the demonstration sites increased overall by 5
percent compared with 4 percent at other sites.  Effects varied
somewhat from location to location.  Of the 206 sites in the
demonstration program in fiscal year 1997, 58 percent had increases
in visitation, 41 percent had decreases, and 1 percent were
unchanged.  However, with data from only 1 year, it is difficult to
draw definitive conclusions, either about the lack of a negative
effect on visitation at most sites or about whether fees had an
impact at sites where visitation declined. 

Now, I would like to discuss several areas in which we think
improvements can be made to the demonstration program. 


      IMPROVING INTERAGENCY
      COORDINATION
-------------------------------------------------------- Chapter 0:1.1

The demonstration program was authorized with the expectation that
the four agencies would coordinate their fee collection efforts, both
among themselves and with state and local agencies, where it made
sense to do so.  During our review, we did find examples of such
coordination, with demonstrated benefits for the public.  In Utah,
for example, where the Park Service's Timpanogos Cave National
Monument is surrounded by a recreation area in the Forest Service's
Uinta National Forest, the two agencies decided to charge a single
entrance fee for both.  Such coordination can reduce agencies'
operating costs, strengthen resource management activities, and
provide more agency personnel to assist visitors. 

We also found, however, that agencies were not taking full advantage
of this flexibility.  For example, the Park Service and the Fish and
Wildlife Service manage sites with a common border on the same island
in Maryland and Virginia.  The two sites are Assateague Island
National Seashore and Chincoteague National Wildlife Refuge. 
Administratively, the two agencies cooperate on law enforcement
matters and run a joint permit program for off-road vehicles, and the
Park Service provides staff to operate and maintain a ranger station
and bathing facilities on refuge land.  However, when the agencies
selected the two sites for the demonstration program, they decided to
charge separate, nonreciprocal entrance fees of $5 per vehicle. 
Officials at the refuge told us that visitors are sometimes confused
by this lack of reciprocity.  Our report discusses other cases in
which greater coordination among the agencies would either improve
the service to the public or permit greater efficiency in
implementing a fee program.  These cases included (1) backcountry
fees in Olympic National Park and Olympic National Forest in
Washington State, and (2) a proposed fee at Park Service and BLM
lands located in the El Malpais area of New Mexico. 

Demonstration sites may be reluctant to coordinate fees partly
because the program's incentives are geared towards increasing their
revenues.  By contrast, because joint fee arrangements may
potentially reduce revenues to specific sites, there may be a
disincentive among these sites to coordinate.  However, at sites such
as Assateague and Chincoteague, the increase in service to the public
may be worth a small reduction in revenues.  That is why our report
recommends that the agencies perform a site-by-site review of their
demonstration sites to identify opportunities for greater
coordination.  In commenting on our report, the agencies generally
agreed that more could be done in this area. 


      GREATER INNOVATION WOULD
      MAKE FEES MORE EQUITABLE
-------------------------------------------------------- Chapter 0:1.2

The demonstration program also encouraged the four agencies to be
innovative in setting and collecting their own fees.  Such
improvements take two main forms:  making it as convenient as
possible for visitors to pay and making fees more equitable.  We
found many examples of agencies experimenting with ways to make
payment more convenient, including selling entrance passes using
machines like automated tellers, selling hiking permits over the
Internet, and selling entrance or user permits through vendors such
as gas stations, grocery stores, and convenience stores.  However, we
found fewer examples of the agencies experimenting with different
pricing structures that could make the fees more equitable, such as
basing fees on (1) the extent of use or (2) whether the visit
occurred during a peak visitation period. 

Most of the experiments with pricing have been done by the Forest
Service or the Bureau of Land Management.  These two agencies have
experimented with setting fees that vary on the basis of (1) how long
the visitor will stay or (2) whether the visit occurs during a peak
period (such as a weekend) or an off-peak period (such as midweek or
during the off season).  For example, a 3-day visit to a recreational
area might cost $3 per car, compared with $10 per car for a 2-week
visit.  Such pricing has resulted in greater equity to the visitors,
in that visitors who use the area for greater lengths of time pay
higher fees.  It would appear to have broader applicability in the
other agencies as well. 

By contrast, the Park Service has done little to experiment with
different pricing structures.  Visitors generally pay the same fee
whether they are visiting during a peak period (such as a weekend in
the summer) or an off-peak period (such as midweek during the winter)
or whether they are staying for several hours or several days.  A
more innovative fee system would make fees more equitable for
visitors and might change visitation patterns somewhat to enhance
economic efficiency and reduce overcrowding and its effects on parks'
resources.  Furthermore, according to the four agencies, reducing
visitation during peak periods can lower the costs of operating
recreation sites by reducing (1) the staff needed to operate a site,
(2) the size of facilities, (3) the need for maintenance and future
capital investments, and (4) the extent of damage to a site's
resources. 

Because it was one of the goals of the program, and because it could
result in more equitable fees to the public, our report recommends
that two agencies--the Park Service and Fish and Wildlife
Service--look for further opportunities to experiment and innovate
with new and existing fees. 


      PERMITTING GREATER
      FLEXIBILITY IN ALLOCATING
      REVENUES
-------------------------------------------------------- Chapter 0:1.3

The demonstration program required the agencies to spend at least 80
percent of the fee revenues at the site where these revenues were
generated.  However, some demonstration sites are generating so much
revenue as to raise questions about their long-term ability to spend
these revenues on high-priority items.  By contrast, sites outside
the demonstration program, as well as demonstration sites that do not
collect much in fee revenues, may have high-priority needs that
remain unmet.  As a result, some of the agencies' highest-priority
needs may not be addressed. 

For many sites in the demonstration program--particularly in the Park
Service--the increased fee revenues equal 20 percent or more of the
sites' annual operating budgets.  This large amount of new revenue
allows such sites to address past unmet needs in maintenance,
resource protection, and visitor services.  The Park Service has set
a priority on using fee revenues to address its repair and
maintenance needs.  Some sites with high fee revenues may be able to
address these needs within a few years.  However, the 80-percent
requirement could, over time, preclude the agencies from using fee
revenues for more pressing needs at other sites. 

Two of the sites we visited--Zion and Shenandoah National Parks--are
examples of how this issue may surface in the near future.  At Zion,
park officials told us that the park expected to receive so much new
fee revenue in fiscal year 1998 (about $4.5 million) that the park's
budget would be doubled.  The park's current plans call for using
this additional money to begin a $20 million alternative
transportation system.  However, park officials said that if for some
reason this particular project did not move forward, they might have
difficulty preparing and implementing enough projects to use the
available funds in a manner consistent with the program's objectives. 
At Shenandoah, fee revenues for fiscal year 1998 were expected to be
about $2.9 million--enough money, the park superintendent said, to
eliminate the park's estimated $15 million repair and maintenance
backlog in a few years. 

This is a significant and sensitive issue that involves balancing
important features of the program.  Specifically, the increased
efficiency that would be achieved by allowing the agencies more
spending flexibility needs to be balanced with the continued need to
demonstrate to the visitors that improvements are being made with the
new or increased fees and the need to maintain incentives to collect
fees.  Our report stated that as the Congress decides on the future
of the fee demonstration program, it might wish to consider modifying
the current requirement.  Providing some further flexibility in the
spending of fee revenues would give agencies more opportunities to
address their highest-priority needs among all of their field units. 
If this is not done, undesirable inequities could occur within
agencies if and when the current legislation is made permanent.  At
the same time, however, any change in the requirement would need to
be done in such a way that (1) fee-collecting sites would continue to
have an incentive to collect fees and (2) visitors who pay the fees
will continue to support the program.  Visitor surveys show that
putting fees to work where they are collected is a popular idea. 


   PARK SERVICE SPENDING LAGS
   BEHIND OTHER AGENCIES
---------------------------------------------------------- Chapter 0:2

Through the first 2 fiscal years of the program, the Park Service
retained about $182 million in recreational fee revenue, which
represents over 80 percent of the total amount of revenue generated
by all four of the participating agencies.  However, by the end of
fiscal year 1998, the agency had obligated only about $56 million, or
about 31 percent, of this revenue.\2 This spending rate was by far
the lowest among the four agencies participating in the program. 
Specifically, by the end of fiscal year 1998, the Forest Service had
spent about 63 percent of its revenues; the Fish and Wildlife Service
about 56 percent; and the Bureau of Land Management about 72 percent. 
(See app.  I for more specific revenue and spending information.)

In order to understand why the rate of spending in the Park Service
is so far behind the other agencies, we visited four parks.  For
these parks, the percentages of revenue available to them that was
obligated through September 30, 1998, varied from a low of 10 percent
at Golden Gate National Recreation Area to a high of 48 percent at
Olympic National Park.  The other two parks we visited were Rocky
Mountain National Park and Grand Canyon National Park, which
obligated 41 and 20 percent, respectively.  In total, these parks had
proposed 101 projects for funding under the demonstration fee
program.  Projects at the four parks ranged from the planning and
construction of major facilities, like a visitor transportation and
orientation center at the south rim of the Grand Canyon for $18
million, to small projects, like the rehabilitation of trail signs in
Golden Gate for $11,000.  They also included other projects, like the
replacement of outhouses and campground rehabilitation. 

Our work indicates that there are two main factors that have
contributed to the Park Service's low rate of spending over the
program's first 2 years.  These factors are that (1) the project
review and approval process has delayed the start of construction and
maintenance projects and (2) the capacity of the agency to handle the
large number of projects planned under the program is limited.  The
large size of some of the projects being funded by the demonstration
fee program also contributes to slowing the agency's spending rate. 


--------------------
\2 The spending information that is provided by the agencies reflects
funds obligated. 


      PARK SERVICE PROJECTS
      RECEIVE MORE SCRUTINY THAN
      THOSE OF OTHER AGENCIES
-------------------------------------------------------- Chapter 0:2.1

In 1997, this Subcommittee and others heavily criticized the Park
Service because of spending abuses involving an outhouse costing over
$300,000 at one park and employee residences costing over $500,000 at
another.  In response to these criticisms, and in order to avoid
similar abuses in the future, the Park Service and the Department of
the Interior are paying particularly close attention to how
individual park units are using the revenues provided by the
demonstration fee program. 

Park Service headquarters officials review all projects approved by
regions before individual parks are permitted to proceed with
construction.  As of March 1998, the Park Service also required an
additional review by top agency officials of all projects costing
$500,000 or more.  Furthermore, another level of review was added
when Department of the Interior officials decided that they too would
review all of the projects that the Park Service proposed for its
recreational fee revenue.  The implementation of this
Departmental-level review added more time to the project approval
process.  Adding these layers of review specifically for Park Service
projects helps explain why the rate of spending for the agency has
been the lowest among the agencies participating in the program. 
However, in light of the spending abuses noted earlier, in our
opinion, the additional Park Service and Departmental reviews appear
prudent. 

In contrast, the projects being done by the other three agencies--the
Bureau of Land Management, the Fish and Wildlife Service, and the
Forest Service--have not had these additional levels of scrutiny.  In
those agencies, determining how the fee money will be spent has been
left to on-site and regional managers.  Not surprisingly, the
spending rates for these other agencies have been substantially
higher than for the Park Service. 


      CAPACITY OF THE AGENCY TO
      HANDLE LARGE VOLUME OF
      PROJECTS LIMITS SPENDING
-------------------------------------------------------- Chapter 0:2.2

Another factor limiting the pace of the Park Service's spending
relative to the other agencies in the program has been the agency's
ability to handle the large volume of projects that are now in the
pipeline.  All of the parks we visited have had substantial funding
increases in recent years to help them address maintenance and other
needs.  These increases were due to not only to the increased funding
made available from the demonstration fee program but also from
appropriated funds such as those for repair and rehabilitation and
line item construction projects.  This large inflow of funding from a
variety of sources has, according to some park managers we
interviewed, exceeded their ability to get projects initiated and
completed. 

At most of the parks and regional offices we visited, officials said
there was a bottleneck of projects that were both approved and funded
but waiting to be initiated.  For example, Golden Gate National
Recreation Area has 14 projects costing about $4.7 million that have
been approved as part of the fee demonstration program.  Managers at
the site said they have spent little to date on these projects
because the current staff cannot prepare plans and manage the large
volume of projects now funded.  Two of the other parks we visited,
Rocky Mountain and Grand Canyon, have similar explanations about why
their spending was relatively slow. 

Another factor that has some impact on the spending rate for the Park
Service is the large scale of some of the projects being undertaken
by the agency.  Some parks must accumulate a substantial amount of
funds before they could proceed with these large projects.  For
example, while Grand Canyon has very high revenue under the program,
over $20 million annually, it also has some of the largest projects
planned, like a new, multimillion-dollar visitor orientation and
transportation center.  To begin this project, the park has had to
set aside millions of dollars during the first years of the program
in order to fund the construction contracts for the new facility in
later years.  Setting funds aside for later use has the effect of
lowering the rate of expenditures in the initial years of the
program. 


   IMPACT OF THE FEE PROGRAM ON
   PARK SERVICE MAINTENANCE NEEDS
---------------------------------------------------------- Chapter 0:3

Given the substantial increase in funding that the Park Service will
receive under the demonstration fee program, now more than ever the
agency will have to be accountable for demonstrating its
accomplishments in improving the maintenance of Park Service
facilities with these additional resources.  The agency cannot now do
this.  The Park Service will need to develop more accurate and
reliable information on its deferred maintenance needs (as well as
its other park operating needs) and to track progress in addressing
them. 

In administering its recreational fee demonstration program, the Park
Service decided that using the revenue to address its maintenance
needs is a high priority.  However, during hearings before this
Subcommittee last year, we reported that the Park Service did not
have a common definition of what should be included in its backlog of
maintenance needs and did not have a routine, systematic process for
determining these needs.\3 As a result, the agency was unable to
provide us with a reliable estimate of its deferred maintenance
needs. 

At the same hearing, Interior's Assistant Secretary for Policy,
Management, and Budget made several commitments to address these
problems.  The commitments were to (1) establish common definitions
for deferred maintenance and other key maintenance and construction
terms; (2) develop improved data collection processes for
accumulating data about annual and deferred maintenance needs, among
other things; (3) provide guidance for preparing a 5-year priority
maintenance and construction plan for the fiscal year 2000 budget;
and (4) issue instructions for reporting deferred maintenance in
agency financial statements. 

To date, the Department of the Interior has made some progress in
meeting these commitments.  In February 1998, common definitions were
developed for deferred maintenance.  The Department has also provided
guidance for the agencies to use to develop priority maintenance
plans.  In addition, the Department has issued instructions on how
agencies should report deferred maintenance in their financial
statements.  These are all positive steps that should, if implemented
properly, help the Park Service as well as other Interior agencies
manage their maintenance activities. 

Nonetheless, the Park Service still does not have accurate
information on its maintenance needs.  This is evident from a
February 1998 Interior report,\4 which states, among other things,
that the deferred maintenance needs of Interior agencies, including
the Park Service, have never been adequately documented.  To remedy
this situation, Interior and its agencies, including the Park
Service, are beginning to develop a maintenance management system
that can generate consistent maintenance data for all Interior
agencies.  Interior expects to identify the systems needed to
generate better maintenance data needs by June 1999.  However, this
is just a first step.  Interior and its agencies are also in the
process of obtaining better information on the condition of their
facilities.  Any data improvements resulting from this effort will
likely be several years away. 

The Congress has attempted to help the Park Service address its
deferred maintenance and other program needs in recent years by
providing additional appropriations and revenue from the recreational
fee program.  Given this substantial increase in funds, the Park
Service needs to be held accountable for demonstrating what is being
accomplished with these financial resources.  To date, however, the
agency is not yet able to determine how much these additional funds
are helping because it does not know the size of the problem. 
Accordingly, while we and others have frequently reported on the
deteriorating conditions of the agency's facilities, until accurate,
reliable and useful data are developed about the size and scope of
the agency's maintenance needs, the agency will be unable to
determine how much progress is being made to address these needs and
resolution of the deferred maintenance problem will continue to elude
the agency. 


--------------------
\3 National Park Service:  Maintenance Backlog Issues
(GAO/T-RCED-98-61, Feb.  4, 1998). 

\4 Facilities Maintenance Assessment and Recommendations, U.S. 
Department of the Interior, February 1998, prepared for the Interior
Planning, Design and Construction Council. 


-------------------------------------------------------- Chapter 0:3.1

In closing Mr.  Chairman, while our testimony today has focused on
improvements that could be made to the fee demonstration program, it
is important to remember that this program appears to be working well
and meeting many of the law's intended objectives.  So far, the
demonstration program has brought over $200 million in additional
revenue to recreation areas across the country with no apparent
impact on visitation patterns.  It has created opportunities for the
agencies--particularly the Park Service--to address, and in some
cases resolve, their past unmet repair and maintenance needs.  There
are now more than 2 years remaining in this demonstration program. 
These 2 years represent an opportunity for the agencies to further
the program's goals by coordinating their efforts more, developing
innovative fee structures, and understanding the reactions of the
visitors. 

This concludes my statement.  I would be happy to answer any
questions you or the other Members of the Subcommittee may have. 


TOTAL FEE REVENUES AND OBLIGATIONS
FOR FOUR AGENCIES THROUGH
SEPTEMBER 30, 1998
=========================================================== Appendix I

                         (Dollars in thousands)

                                                     Total  Percent of
                                         Total  obligation    revenues
Agency                                revenues           s   obligated
----------------------------------  ----------  ----------  ----------
Park Service                          $181,217     $56,116          31
Fish and Wildlife Service               $3,712      $2,095          56
Forest Service                         $30,029     $19,045          63
Bureau of Land Management               $3,947      $2,857          72
======================================================================
Total                                 $218,905     $80,113          37
----------------------------------------------------------------------
Source:  Department of the Interior and the Department of
Agriculture. 


*** End of document. ***