Budget & Tax , Culture and the Family
Byron Schlomach, Ph.D. | April 22, 2022
An evaluation of LOFT’s report on Oklahoma’s state parks
Byron Schlomach, Ph.D.
Apparently due to a legislative request resulting from an agency budget request, the Legislative Office of Fiscal Transparency (LOFT) conducted a review of Oklahoma’s state parks system. Oklahoma’s state parks are run by the State Parks Division within the Oklahoma Tourism and Recreation Department.
This report results from a review of the LOFT report. For purposes of this report, the state bureaucracy responsible for administering parks will merely be referred to as “Parks.”
Quick Summary of the LOFT Report
LOFT’s report has a succinct executive summary. Rather than repeat it here, a brief outline of central findings and a few details from the report are bulleted here.
Parks values state park assets (including roads and culverts, as well as buildings and other capital improvements) at $1.16 billion.
Of 80,000 acres of state parks land, only 25,000 are “owned” by Parks; the rest are leased from government entities, the bulk from federal agencies, but also from cities and the state’s Land Department.
State parks received 9.2 million visits in 2019, 11.5 million in 2020, and 11.7 million in 2021.
There are 38 state parks:
Six (6) “flagship parks” that include lodges
Six (6) “state natural heritage areas”
26 “state recreational” parks that might include cabins but generally include RV and tent camping as well as other amenities in some cases.
LOFT categorizes the parks differently:
Six (6) “premier” parks – include lodges
12 “developed” parks – include cabins
17 “basic” parks – RV & tent camping only
Three (3) “primitive” parks – tent camping or no camping at all.
LOFT’s Criticisms or Findings
- LOFT is highly critical of the methodology Parks used to estimate annual maintenance costs of $46.5 million per year, which forms the basis for a $19.3 million increased budget request.
Parks merely calculates four percent of total assets as maintenance costs.
Parks claims to have conducted an exhaustive study of all parks, respective capital investments, and maintenance needs, but neglects to itemize needs, using a general methodology instead.
Parks has estimated replacement cost of facilities erroneously – for example, by assigning the same replacement cost to a 22-room lodge as a 120-room lodge.
LOFT is also highly critical of Parks’ investment strategy in that by focusing on maintaining current lodges and restaurant facilities, where the costs are high, it moves the system farther from breaking even. In its response to LOFT, Parks’ current management mentions a mere 37 complaints in one year that restaurants didn’t have more hours as a justification for putting resources in this area.
LOFT says that the state parks system can be improved by better aligning spending with the purpose of the parks. There is some acknowledgment by LOFT and Parks that the legislature must step up in this regard. LOFT mentions Colorado’s focus on land conservation and preservation on the one hand, and Arkansas’s focus on complementing tourism in general as the only guidance to the legislature.
LOFT’s recommendations are split into two groups – a list for the legislature and a list for Parks. These recommendations (page VII of the report) are referenced below (more discussion below).
Insights Confirmed or Gained from LOFT’s Report
The reform of state parks systems has been discussed (and presumably carried out) in various states. This author recommended parks reform in Texas and witnessed it in Arizona. LOFT’s staffers impressively carried out site visits in addition to evaluating data and reports. LOFT’s report includes a response from Parks as well as a Parks “strategy” report in an appendix. The documentation and author insights from past experience inform the following discussion.
LOFT’s report is a solid piece of work. However, likely because LOFT views its role as limited and highly objective, or perhaps due to some lack in expertise and experience, some key insights are missed or the report fails to stress them, and some of its recommendations are impractical or lack focus.
Parks Lacks a Customer Focus
In its second and third findings, LOFT more than alludes to Parks’ lack of customer focus. However, LOFT does not explain it, nor does it offer reforms that would fundamentally change this fact.
To put it bluntly, Parks has been run as much or more for the sake of Parks employees than anyone else. This is not an uncommon phenomenon across states. The people drawn to a career running parks tend to be outdoor oriented. They are drawn to the work because it promises a career of perks – having the run of parks and their recreational opportunities. Customers, facilities, and their demands get in the way of such enjoyment. What’s more, the expectation of park caretakers is that parks will be tax-supported for their own sake, whatever that actually means, rather than for the sake of the population’s general enjoyment. LOFT offers some praise to Parks in mentioning its high employee retention and satisfaction (page 5 of the report), but under the circumstances, this might not actually be a strength; it might only reflect how “perky” it is to work for Parks.
Additionally, while LOFT provides no Parks employee background, leadership or otherwise, it should be noted that individuals planning a career in hospitality major in parks and recreation at some universities. The lodges could well be viewed as a training system for some Parks employees to move on to bigger and better things. Another common college major of government administrators is “public administration.” Regarding this type of training, an anecdote from Auburn University is relevant. In the past, due to their weak academic performance, college athletes were often jokingly said to be majoring in basket weaving. As it happens, Auburn got in trouble for establishing a “basket weaving” major. That major was in public administration – clearly not generally a rigorous major or the strongest background for assessing financial issues and gaining insight into customer service.
Parks Has Neglected Facilities Maintenance
In justifiably putting a great deal of emphasis on lodge facilities as a source of cost, LOFT fails to point out that facilities neglect is a common problem among government agencies. Schools are a prime example. Solidly built school buildings obviously intended to easily last 100 years are often neglected and given minimal maintenance to the point that long before their service life is exhausted, they must be abandoned or torn down with new facilities constructed to replace them. The reasons for this are obvious. First, nobody in charge of the buildings owns them; their personal wealth is not at stake directly or indirectly. Second, hiring people makes administrators’ jobs easier and builds an empire, so administrators would far prefer spending on people than on facilities. These issues are no less present in running parks than in running schools.
Another aspect of this problem, related to the lack of customer focus, is that the people running agencies are often overly concerned with internal agency “fairness.” For example, the Texas Department of Transportation has 25 districts. Needs in high-traffic districts were often deferred for mere wants in low-traffic districts for the sake of letting all districts have a “fair share” of projects in the state. LOFT found that despite a plan to invest in a single restaurant per year, Parks invested in several. It’s likely “fairness” to Parks personnel, rather than financial soundness, was a central concern. Meanwhile, other profitable facilities’ upkeep or expansion was neglected.
It would be interesting to know if Parks employees receive discounts when using lodge facilities and/or in patronizing restaurants. It would be particularly interesting to know the share of revenue these facilities receive from Parks employees.
All this said, Parks has a point when they bring attention to past fund sweeps (at least $25 million). Past sweeps should be restored, but probably not without conditions. (See independent recommendations below.) In the report, LOFT criticizes a doubling of annual asset investment while attendance has increased only 10 percent (page 17), a remark that seems to confuse investment with operating expenditures.
Parks is Overly Committed to Lodges, Cabins, and Restaurants
As mentioned above, LOFT found that Parks has committed itself to keeping and investing in the upkeep of lodges, which often include restaurants, as well as one standalone restaurant. While LOFT makes it clear that lodges are a losing proposition, the report reads as if this is due to costs associated with upgrading the facilities. However, in Appendix C (page A5) of the report, there is a table showing the net revenue of each state park, accounting only for operating costs. It shows only eight parks with a positive net revenue. All of the rest lose money.
By far, the parks losing the most money are what Parks calls Flagship parks (see Appendix F, page A9), which are categorized as Premier parks by LOFT (Appendix E, page A7) – the ones with lodges. Of the eight parks with a positive net revenue, six are what LOFT characterizes as Basic (only RV and tent sites); the other two include cabins and are what LOFT calls Developed. This had to be pieced from appendix material; LOFT did not plainly state these facts in its report.
What’s more, in the last Appendix, which is the response to LOFT from Parks, on page 86 of the report, there is a deceptive pie chart showing shares of FY21 revenues from various accommodations within state parks. The largest pie section is “Cabin.” The second largest pie section is labeled “RV Semi.” The third largest is “Lodge.” There is no pie chart showing operating costs. What’s more, there are three more pie chart sections related to RVs, “RV Semi Prem,” “RV Modern,” and “RV Modern Premium.” “Cabins” constitute 39.47% of revenue. “Lodges” constitute 13.87% of revenue. “RV Semi” constitutes 17.09% of revenue. The chart makes it appear that Cabins and Lodges are the first and third largest categories of revenue, but when all the RV-related pie pieces are summed, RVs constitute 44.89% of revenue, clearly the largest revenue source, slightly greater than Cabins and Lodges combined, and much less costly.
Given the strong preference for RV facilities expressed by state park visitors (page A11), the revenue pattern should not be a surprise, and Parks intends to expand such relatively low-cost, high-demand facilities (Appendix K, page 10 of Parks’ Strategy document). However, Parks has no plans to divest itself of lodges and restaurants, or cabins. It even sees cabins built by the CCC as some sort of cultural heritage items to be conserved, with any allowed to fall to ruin being used for cultural interpretive history. Thus, it can be said the Parks personnel are predisposed to cabins and lodges to the point of engaging in at least mild deception.
Discussion of Selected LOFT Recommendations
LOFT’s recommendations for Parks (on page VII of the report) are good, at least as far as they go. LOFT’s recommendations for the legislature are less appropriate for what needs to be done, partly because several are overly broad and LOFT offers little guidance on them.
The Oklahoma Legislature shows little inclination toward oversight or for taking the time to truly dig into details, with the exception of when scandal erupts or information is dropped in legislators’ laps. Part of this is due to the lack of cooperation by agencies, which could be disciplined by the legislature, but the legislature has shown little will to do this. At least a few of LOFT’s recommendations for the legislature, while good on the surface, assume a legislature that can sustain oversight. Given the Oklahoma Legislature’s tendencies and the likelihood that LOFT’s staff would play a strong intermediary role in oversight, LOFT should provide some fairly detailed and very carefully considered guidance or suggestions.
LOFT says the legislature should clarify legislative intent for the parks system, a good recommendation. The legislature should provide a mission statement for every agency and mandated program, not leaving it to agency personnel to determine their own jobs. However, LOFT mentions the legislated purposes for Colorado and Arkansas parks, making it sound as if they are contrasting or mutually exclusive (they are not), while otherwise providing no guidance.
LOFT suggests freezing all capital expenditures by Parks pending a full accounting of capital needs. Parks understandably balks at this. For one thing, it is planning investments in RV spaces, which it clearly and justifiably needs to do. LOFT is really just aiming at lodges and cabins. Parks would still balk, but suggesting freezing capital investments only in lodges and cabins makes more sense.
LOFT wants the legislature to do an impact analysis of access fees. This is a sop to the crowd protesting parking fees recently instituted by Parks. That is, regular visitors to some parks are having to pay for their access where they once had free run of these places, and they do not like it. The correct response to people who insist they receive a publicly-owned resource for free is “tough.” At the same time, it might be appropriate to assess whether the fees are set at the appropriate amounts, whether they should differ by location or by patron purpose and time spent, whether access to historical/cultural sites and specific natural wonders should be charged at all, whether season passes would be appropriate, and what the logistics of charging fees on different bases would be.
LOFT would have the legislature oversee Parks investment plans. No legislature can directly oversee investment plans of every agency over and above prescribing broad missional guidelines. This is an impractical recommendation, especially for the Oklahoma Legislature (see above).
The strategic planning process suggested by LOFT is one used (LOFT prefers “utilized”) by many agencies. No doubt, agency personnel learn from such exercises, but these tend to be dog and pony shows to give the appearance of responsiveness that agencies use to identify activists and supporters; then, agencies do what they wanted to do in the first place, complete with a cadre of motivated activists in support. This is actually a bad recommendation.
The rest of the legislature recommendations are good. The last one, in particular, appears to be aimed at having the legislature provide some leadership and raking off some TSET revenues for parks purposes since they are arguably part of TSET’s public health mission. That would be a good development.
Further Comments and Recommendations
It should be noted that current Parks leadership appears to be making some sound attempts to better allocate resources and provide more focus in administering Parks. For example, in its strategy report, Parks talks about establishing dynamic pricing; that is, charge more during peak-demand periods like holidays and special events, a wise and efficient strategy. Parks also mentions having park-specific strategies for fixed assets (page 4 of Appendix K), precisely along the lines of LOFT suggestions. On the other hand, Parks talks about focusing on its core business – a good thing – but includes lodges as part of that core, a losing proposition (page 8, Appendix K), though it also says it will favor RV/tent camping (page 12, Appendix K). Parks also mentions that patrons should provide a greater share of revenue, a policy that is both necessary and proper (page 9, Appendix K). Yet, Parks talks about investing in climbing/rappelling (p 12, App J) despite generally low interest in such activity and the high risk it presents for Parks (page A10).
Both LOFT and Parks envision some type of top-down approach in reforming parks. Instead, there should be an effort to institute better incentive structures so that the citizens of Oklahoma see their wishes, as demonstrated by their paying patronage, honored by Parks employees whose current incentives are largely to serve themselves and, perhaps, activist supporters, while throwing bones to people willing to pay for services Parks philosophically doesn’t particularly like to provide.
Mission of State Parks
No doubt, many libertarians would say providing for parks and recreation is beyond the ken of government and therefore parks should be divested. However, for more than 100 years now, there has been a general agreement that some preservation of natural wonders and historical resources is desirable and that the general citizenry should be able to enjoy them. Perhaps this helps to scratch the itch many have for a general type of equity in society. Also, many yearn for a measure of solitude and adventure that parks provide and that private land owners rarely provide except for considerable fees. Perhaps parks allow for some measure of calming of deep instinctive desires that might otherwise explode into social unrest. In this way, parks arguably fit into the mission of Oklahoma’s state government as laid out in its preamble, “…, in order to secure and perpetuate the blessing of liberty; to secure just and rightful government; to promote our mutual welfare and happiness, we the people…”
All parks systems (including both Colorado’s and Arkansas’s) seek to accomplish three things: 1) conserve natural resources, 2) preserve historical resources, and 3) provide for citizens to enjoy park resources. These are NOT mutually incompatible purposes. Cattle are preserved and conserved despite the fact that humans enjoy eating them precisely because of that desire to consume combined with a system of property rights wherein cattle are not held in common. The problem with park lands is that they are held in common but they cannot be commonly managed, though we attempt this through government ownership, legislation, and bureaucratic management. Despite the inherent inefficiency, it does help to at least establish a mission statement.
In addition, parks systems should not compete directly with the private sector, but complement it. That complementing will be in the tourism and recreation sector by default. One problem with lodges, and even cabins, is that they directly compete with the private sector.
A parks system mission statement should read along the lines of: “The mission of the parks system is to preserve important cultural and historical resources and to conserve natural resources under the system’s control, cultivating access and patronage from the general public by providing for financially self-sufficient, compatible recreational opportunities that the public desires and that are complementary to, not in competition with, the state’s private tourism industry.”
Financially Separate Recreational Resources from Those Devoted to History/Culture/Nature
Historical/cultural/natural items, artifacts, and wonders are a draw for some parks and, minimally all parks are a natural draw, to some extent. Expenditures for the investment in and upkeep of non-recreational assets of historical/cultural/natural value should be separately accounted for and potentially funded through appropriations rather than through park fees.
For the most part, Parks is right to move toward user-based funding. In fact, funding for recreational facilities and investments should be entirely user-based. One reason for this is so that the parks promote statewide tourism, not local-resident exercise and recreation. A parks system operating under the suggested mission statement would not and should not be congested with local residents enjoying the facilities at everyone else’s expense and driving away potential tourism business. At the same time, to the extent that there are expenses associated with other purposes that are not directly related to recreation, user fees might or might not fully fund them, and where they do not, if the legislature and the general public want certain non-recreational resources provided/preserved, they should be funded with taxes.
One last point in this section. There is nothing wrong with Parks enjoying the benefits of public bonding, but Parks fee revenues from recreational services should be sufficient to pay off the bond balances that provide for recreational assets, which should not be funded by appropriations from general revenue.
Align Employee Incentives with the Mission
Neither LOFT nor the Parks report (Appendix K) discuss park employee incentives. State parks are an enterprise, whether Parks likes it or not. Each park should be run as a separate enterprise with park employees, especially top managers, financially rewarded according to the financial success of the park. In other words, business-like performance incentives should be built into contracts with park managers. This would align incentives with the public’s interests and discourage investing in lodges and restaurants where they cannot make money. A well-constructed contract would penalize for inadequate maintenance. What’s more, there would be a realization that inadequate maintenance would result in fewer customers, lower revenue, and reduced pay, so maintenance would less likely be neglected.
Implementing financial incentives would moot some of LOFT’s recommendations. Rather than having the legislature arbitrarily determine asset use and funding, Parks employees would do so informed by the finances of the parks they run, which are impacted by the preferences of their customers – taxpayers and out-of-state visitors spending money in the state to the benefit of taxpayers.
Use Public-Private Partnerships Concessions Where Possible
If lodges and restaurants are money-losers, then what should be done with them? Both LOFT and Parks talk as if these facilities are assets, but they do not contribute net revenue to the parks system, so they are liabilities. The problem is that it would be costly to tear them down, which would seem a waste to many people, and could potentially create scars in the land that would be considered eyesores.
Given that lodges/restaurants and cabins directly compete with the private sector to a greater degree than other facilities and that they serve as financial liabilities, it would be preferable if Parks could divest itself of these facilities. This is probably impossible for a number of reasons, some likely having to do with intergovernmental lease agreements. However, wherever possible, Parks should turn these liabilities into assets, or at least lesser liabilities, by putting them up for bid as public-private partnership concessions.
Simply put, Parks should offer lodge and cabin facilities to private vendors in a bid system where these vendors would pay Parks for the right to administer these facilities for a period of time, perhaps 10 to 30 years. A concession agreement could specify the condition of facilities at the end of the contract period and specify that the facilities be administered in a compatible way to the parks where they exist. Vendors would hire their own employees and administer the facilities in the most profitable way they see fit under the agreement’s constraints.
Given the losses suffered by the facilities in question, it’s quite possible Parks would have to pay some vendors to take on the concession task, but odds are that they would see value where bureaucrats do not, and the net negative would be less if Parks had to pay someone to take on a concession. For that matter, other facilities like RV spaces and tent campsites could be made part of a concession. Parks could conceivably mostly become a department that administers such contracts.
This recommendation depends heavily on the nature of specific parks and facilities, whether such an agreement is compatible with current leases, and whether Parks could develop the willingness and expertise to get the contracting done. However, this type of privatization preserves public ownership while enjoying the benefits of private enterprise incentives and should be seriously considered.
Byron Schlomach, Ph.D.
Byron Schlomach (Ph.D. in economics, Texas A&M University) has served as director of the Center for Economic Prosperity at the Goldwater Institute and as chief economist for the Texas Public Policy Foundation. He has also served as scholar-in-residence at the Institute for the Study of Free Enterprise at Oklahoma State University. Write to him at [email protected].