Recreation Fees: Demonstration Program Successful in Raising Revenues but
Could Be Improved (Testimony, 02/04/99, GAO/T-RCED-99-77).

Pursuant to a congressional request, GAO discussed the recreational fee
demonstration program, focusing on: (1) ensuring that future revenues
can be applied to the agencies' highest priority unmet needs; (2)
coordinating fees between agencies at demonstration sites that are close
to each other; (3) being more innovative in setting fees; and (4)
assessing the effect of fees on specific segments of the population.

GAO noted that: (1) the demonstration program gives opportunities to
collect new and increased fees to the major agencies that provide the
public with recreational opportunities on federal land--the National
Park Service, Bureau of Land Management, Fish and Wildlife Service, and
the Forest Service; (2) the four agencies reported that, because of the
program, their combined fee revenues have nearly doubled, from about $93
million in fiscal year (FY) 1996 to about $180 million in FY 1998; (3)
this extensive new revenue allows such sites to address past unmet needs
in maintenance, resource protection, and visitor services; (4) the Park
Service and the Department of the Interior recognize that certain sites
may be able to quickly fix all of the problems that meet the
demonstration program's criteria; (5) 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;
(6) 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; (7) demonstration sites may be reluctant to coordinate on fees
partly because the program's incentives are geared towards increasing
their revenues; (8) by contrast, because joint fee arrangements may
potentially reduce revenues to specific sites, there may be a
disincentive among these sites to coordinate; (9) in addition, there is
currently no formal mechanism or entity within these agencies charged
with pursuing opportunities for more and better coordination; (10) as a
result, GAO's review showed that coordination among the agencies occurs
infrequently; (11) without such a person or group pursuing opportunities
for better coordination, this lack of coordination among the fee sites
is likely to continue; (12) the demonstration program also encouraged
the four agencies to be innovative in setting and collecting their own
fees; (13) GAO found many examples of agencies experimenting with ways
to make payment more convenient; (14) however, GAO found fewer examples
of the agencies experimenting with different pricing structures that
could make the fees more equitable; (15) of the 206 sites in the
demonstration program in FY 1997, 58 percent had increases in
visitation, 41 percent had decreases, and 1 percent were unchanged; and
(16) the demonstration has brought millions of additional dollars to
recreation areas across the country with little or no impact on
visitation patterns.

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

 REPORTNUM:  T-RCED-99-77
     TITLE:  Recreation Fees: Demonstration Program Successful in 
             Raising Revenues but Could Be Improved
      DATE:  02/04/99
   SUBJECT:  National parks
             Federal property management
             National forests
             Profits
             User fees
             Prices and pricing
             Budget outlays
             Interagency relations
             National recreation areas
             Maintenance costs
IDENTIFIER:  Shenandoah National Park (VA)
             Zion National Park (UT)
             Timpanogos Cave National Forest (UT)
             Uinta National Forest (UT)
             Assateague Island National Seashore (MD)
             Chincoteague National Wildlife Refuge (VA)
             Olympic National Forest (WA)
             Olympic National Park (WA)
             
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Cover
================================================================ COVER


Before the Committee on Energy and Natural Resources, U.S.  Senate

For Release
on Delivery
Expected at
10 a.m.  EST
Thursday
February 4, 1999

RECREATION FEES - DEMONSTRATION
PROGRAM SUCCESSFUL IN RAISING
REVENUES BUT COULD BE IMPROVED

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

GAO/T-RCED-99-77

GAO/RCED-99-77T


(141285)


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


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

Mr.  Chairman and Members of the Committee: 

We are pleased to be here to summarize the results of our recent
review of the recreational fee demonstration program.  The testimony
we are providing today is based on a report we prepared for this
Committee and others last November.\1 The report's overall message is
clearly positive:  The program has provided hundreds of millions of
dollars to improve visitor services and address backlogs of unmet
needs.  In addition, those who pay the fees are generally supportive
of the program, and it has not adversely affected visitation rates. 
Nonetheless, it is appropriate to focus today on several areas in
which changes or improvements may be needed.  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¿½more experimentation to determine what works best. 

The four issues I will focus on today involve the following:  (1)
ensuring that future revenues can be applied to the agencies' highest
priority unmet needs, (2) coordinating fees between agencies at
demonstration sites that are close to each other, (3) being more
innovative in setting fees, and (4) assessing the effect of fees on
specific segments of the population.  Before discussing each issue in
turn, I will provide some general information from our report about
the program's implementation. 


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


   PROGRAM HAS GENERATED
   CONSIDERABLE REVENUE
---------------------------------------------------------- Chapter 0:1

The demonstration program gives opportunities to collect new and
increased fees to the major agencies that provide the public with
recreational opportunities on federal landï¿½the 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 sitesï¿½100 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, the Forest Service 15 percent, the Bureau of Land Management
3 percent, and the Fish and Wildlife Service about 2 percent. 

Putting the money to work took some time.  Our report, as well as
more recent data provided by the agencies, shows that about
two-thirds of the fee revenues still remain to be spent as of
September 1998.  This occurred for a variety of reasons, including
the time the agencies spent developing financial systems and internal
processes for managing and controlling collections and expenditures. 
At the time of our review, most expenditures had been used on either
repairs and maintenance or on setting up fee collection activities at
the sites.  Each of the agencies expects to make significant
expenditures in fiscal year 1999.  At the sites we visited,
expenditures appeared to be consistent with the purposes authorized
in the law.  (App.  I lists the demonstration sites we visited, by
agency.)

Now, I would like to discuss several issues where we think
improvements can be made to the demonstration program. 


   PERMITTING GREATER FLEXIBILITY
   IN ALLOCATING REVENUES
---------------------------------------------------------- Chapter 0:2

The demonstration program required the agencies to spend at least 80
percent of the fee revenues at the site where these revenues were
generated.  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 extensive 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
backlog.  Some sites with high fee revenues may be able to address
these needs within a few years.  However, the 80-percent requirement
will preclude the agencies from using fee revenues for more pressing
needs at other sites. 

Two of the sites we visitedï¿½Zion and Shenandoah National Parksï¿½are
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
operating budget would double.  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 millionï¿½enough money, the park superintendent said, to
eliminate the park's estimated $15 million repair and maintenance
backlog in a few years. 

The Park Service and the Department of the Interior recognize that
certain sites may be able to quickly fix all of the problems that
meet the demonstration program's criteria.  The Assistant Secretary
of the Interior for Policy, Management, and Budget has testified that
setting aside some of the fee revenues for broader agency priorities
is important and has cautioned that permanent legislation giving
collecting sites a high percentage of the revenues could "create
undesirable inequities" within an agency.  We found support for this
view among some managers at higher-revenue sites we visited, who
supported more flexibility in splitting revenues between sites. 

Our reviews at individual sites indicate that this is a significant
and sensitive issue that involves balancing the most efficient use of
the fee revenues against the need to maintain incentives to collect
fees at local sites.  Our report stated that as the Congress decides
on the future of the fee demonstration program, it may 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.  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. 


   IMPROVING INTERAGENCY
   COORDINATION
---------------------------------------------------------- Chapter 0:3

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 $5 per vehicle entrance fees. 
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 on 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 can be done in this area. 

In addition, there is currently no formal mechanism or entity within
these agencies charged with pursuing opportunities for more and
better coordination.  As a result, our review showed that
coordination among the agencies occurs infrequently.  Furthermore,
when disputes arise between sites regarding potential coordination
opportunities, as we found in El Malpais, the issues remain
unresolved because no one person or group at the agency or department
level gets involved.  In our view, without such a person or group
pursuing opportunities for better coordination, this lack of
coordination among the fee sites is likely to continue. 


   GREATER INNOVATION WOULD MAKE
   FEES MORE EQUITABLE
---------------------------------------------------------- Chapter 0:4

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 teller machines, 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 to $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 agenciesï¿½the Park Service and Fish and Wildlife Serviceï¿½look
for further opportunities to experiment and innovate with new and
existing fees. 


   VISITATION APPEARS LARGELY
   UNAFFECTED BUT MORE RESEARCH IS
   NEEDED
---------------------------------------------------------- Chapter 0:5

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. 

Agency surveys also found that visitors generally support the program
and the amount of the entrance or user fees charged.  For example, a
Park Service survey at 11 demonstration sites found that 83 percent
of the respondents either were satisfied with the fees they paid or
thought the fees were too low.  As mentioned earlier, surveys
indicate that visitors especially endorse the retention of the fees
at the sites where they were collected, so that they can be used to
fund the sites' needs. 

These positive results notwithstanding, some interest groups and
recreation fee experts have identified gaps in the survey data.  For
example, while the surveys provide information about users in
general, they may not be able to address the impact of fees on
certain groups, such as backcountry users and low-income users. 
These survey efforts may also not provide information about potential
visitors who may have chosen not to enter because of the fee. 

All four agencies plan additional surveys of visitors.  As the four
continue with the demonstration program by adding sites and trying
new types of fees or means for collecting them, it is important to
continue to assess the support of site visitors and consider
addressing identified gaps in their visitor research. 


-------------------------------------------------------- Chapter 0:5.1

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.  The demonstration
has brought millions of additional dollars to recreation areas across
the country with little or no impact on visitation patterns.  The
program has created opportunities for the agenciesï¿½particularly the
Park Serviceï¿½to address, and in some cases resolve, their past unmet
repair and maintenance needs.  There are now more than two years
remaining in this demonstration program.  These two years represent
an opportunity for the agencies to further the goals of the program
by making more efforts to coordinate their programs, innovate their
fees, and understand the reactions of the visitors. 

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


FEE DEMONSTRATION SITES VISITED BY
GAO, BY AGENCY
=========================================================== Appendix I

Agency/site                               Location
----------------------------------------  ----------------------------
Park Service
----------------------------------------------------------------------
Assateague Island National Seashore       Maryland

Carlsbad Caverns National Park            New Mexico

Frederick Douglass National Historic      Washington, D.C.
Site

Olympic National Park                     Washington State

Shenandoah National Park                  Virginia

Timpanogos Cave National Monument         Utah

Zion National Park                        Utah


Fish and Wildlife Service
----------------------------------------------------------------------
Bosque del Apache National Wildlife       New Mexico
Refuge

Chincoteague National Wildlife Refuge     Virginia

Nisqually National Wildlife Refuge        Washington State


Forest Service
----------------------------------------------------------------------
American Fork Canyon-Alpine Loop          Utah
Recreation Area, Uinta National Forest

Mount St. Helens National Volcanic        Washington State
Monument, Gifford Pinchot National
Forest

Roosevelt Lake, Salt and Verde Rivers     Arizona
Recreation Complex, Tonto National
Forest


BLM
----------------------------------------------------------------------
Red Rock Canyon National Conservation     Nevada
Area

Yaquina Head Outstanding Natural Area     Oregon
----------------------------------------------------------------------

*** End of document. ***