Improving State’s Approach to Park User Fees

Improving State’s Approach to Park User Fees MAC TAYLOR • L E G I S L A T I V E A N A L Y S T • JANUARY 2017 AN LAO REPORT Cover Photo Credit: Troy Harvey/Special to the Ventura County Star. July 1, 2016. Point Muga State Park, California 2 Legislative Analyst’s Office www.lao.ca.gov AN LAO REPORT EXECUTIVE SUMMARY User Fees Important Revenue Source for State Parks. The state park system, managed by the Department of Parks and Recreation (DPR), contains nearly 280 parks and serves about 70 million visitors each year. The parks cost over $400 million a year to operate. These costs are mainly supported by the state General Fund and revenue generated by the parks, including roughly $100 million in fees paid by park users for day use, camping, and special events. Lack of Statewide Policy Framework for Setting Fees Leads to Disparities. Statute authorizes DPR to collect user fees for the benefit of state parks and allows the department to determine the level of fees it charges. Relying on user fees to help fund park operations makes sense because park users receive direct benefits from visiting parks—such as recreational opportunities—and providing these benefits drives a significant portion of state operational costs. However, department headquarters and the State Parks and Recreation Commission provide park managers with only limited guidance on both the policies and process districts should use when setting user fees. This includes limited guidance on what specific factors to consider when setting fees, how to weigh different park goals (such as public access and resource preservation), and how frequently to reevaluate fee levels. Consequently, there is a wide range of fees throughout the park system even for parks within the same classification and same region. These inconsistencies are problematic for a few reasons. First, since these inconsistencies can result in some park users being charged more than others in different areas of the state for similar experiences, it places a greater financial burden on the park visitors that pay more without any clear policy rationale for doing so. Second, the state probably does not collect the optimal amount of revenue since fee collection is concentrated among a smaller group of visitors rather than distributed across all visitors. Third, the variations in park fees can be confusing for the public if the reasons for differences are unclear or if park visitors do not know what to expect at different parks. Fourth, the absence of a standardized process for updating fees means that fee revenue might not keep up with cost increases, and opportunities for public input are inconsistent throughout the state. LAO Recommendations. We make several recommendations to improve how state parks fees are determined and collected. • Establish Legislative Fee Policy. In our view, a key decision for the Legislature to make is to broadly determine how it prioritizes the different goals of the state park system and, based on that assessment, establish what share of statewide park operational costs should be borne by users versus the General Fund (or alternative funding sources). On the one hand, the Legislature might view state parks primarily as a public benefit that all Californians should be able to easily access at low or no cost. This approach would imply lower fee levels and greater reliance on funding parks through the General Fund. On the other hand, it might decide to treat state parks more like an enterprise that should be more self-sufficient and funded by the visitors that benefit directly. This approach would imply that a relatively high share of park operations be funded by user fees. Historically, the Legislature has, in www.lao.ca.gov Legislative Analyst’s Office 3 AN LAO REPORT effect, viewed state parks as somewhere in the middle, with the parks receiving a mix of public funds and user fees. Ultimately, the share of costs that should be borne by park users is a policy decision about the state’s priorities for the park system. • Create Standardized Statewide Fee Guidelines. We recommend that the Legislature direct the commission to develop and regularly update fee guidelines to be implemented by state park districts in order to provide greater consistency throughout the state. In our view, these guidelines would need to be based on legislative direction related to the share of operations costs that should be borne by park users, as well as other legislative priorities. Specifically, we recommend that the fee guidelines (1) provide acceptable ranges for fees by park classification and include guidance for how districts should set their fees for individual parks within those classification ranges, (2) be required to direct park districts to consider the most cost-effective ways to collect fees in their parks, (3) take into consideration legislative direction on how to ensure public access, (4) allow for variable pricing fee structures, and (5) require the department to recover all costs related to special events in state parks. • Design a More Uniform and Transparent Fee-Setting Process. We recommend that the Legislature specify a fee-setting process for parks that would be consistent statewide and provide greater opportunities for public input. Required changes should include (1) regular review of fees at each park, (2) a consistent process that provides opportunities for public participation, and (3) public reporting of fee schedules and changes. 4 Legislative Analyst’s Office www.lao.ca.gov AN LAO REPORT INTRODUCTION The state park system, managed by the “transformation team” is updating many DPR Department of Parks and Recreation (DPR), policies. In addition, the department’s main special contains nearly 280 parks and serves about fund, the State Parks and Recreation Fund (SPRF), 70 million visitors a year. These parks cost over is depleted due to several years of spending more $400 million a year to operate. These costs are from the fund than the amount of revenues being mainly supported by the General Fund and collected. Therefore, some changes to DPR’s budget revenue generated by the parks, including roughly are likely to be necessary for the upcoming fiscal $100 million in fees paid by park users for day use, years. camping, and special events. In this report, we provide an overview of As we discuss in this report, state parks do California’s state park system—including its not have clear and specific statewide policies organization, budget, historical funding, and how or processes for setting and collecting user it currently sets fees. Then, we discuss some of our fees. Instead, fees generally are determined findings related to how state parks set and collect independently by each park district (geographic fees from park users, and we discuss some of the cluster of parks that share resources), resulting inherent policy trade-offs with different choices in variation throughout the state. This variation involving fees, as well as limitations of the current has implications for meeting the state’s goals for process. Finally, we offer recommendations aimed the park system, including generating revenue to at improving consistency, transparency, and support park activities, ensuring that the public has oversight of state park user fees. access to the state’s natural and historic resources In preparing this report, we reviewed reports throughout the state, and preserving those from DPR and outside sources, analyzed DPR resources for the future. statistical and budget data, toured several state It is also likely that DPR’s budget will be parks, met with DPR staff and other stakeholders, reshaped over the next few years, perhaps and spoke with representatives and researchers significantly. The department is currently from other states. undergoing a major reorganization, and a BACKGROUND California Has One of the Largest who visit the state parks each year has remained State Park Systems relatively stable, averaging about 70 million visitors over the past 25 years. California’s state park system consists of nearly 280 state parks that totaled more than 1.6 million State Park System Is Diverse acres of property in 2014-15. In terms of acreage, it Many Types of Parks and Services. As shown is the second largest state park system in the U.S. in Figure 1 (see next page), the state park system (Alaska’s state park system has 3.3 million acres.) is quite diverse and includes beaches, museums, California state parks receive more annual visitors historical and memorial sites, forests, grass fields, than any other system. The number of people www.lao.ca.gov Legislative Analyst’s Office 5 AN LAO REPORT for current residents and the preservation of Figure 1 state resources for future generations. To those The State Parks System Is Diverse ends, as we discuss in more detail below, DPR Park Classifications and the Legislature have sought opportunities State Park 88 for parks to generate revenue where appropriate State Beach 62 in order to provide funding for a higher level of State Historic Park 52 State Recreation Area 33 service than would be possible with only public State Nature Reserve 16 funds. The department has a wide range of staff State Vehicular Recreation Area 9 to support its multifaceted mission—including Other 19 Total Units 279 rangers, lifeguards, interpreters, environmental Assets scientists, pest control specialists, foresters, historians, architects, engineers, archeologists, Acreage 1.6 million Campsites 14,472 restoration specialists, curators, photographers, and Miles of coastline 343 administrative support staff. Miles of lake and river frontage 984 The system is divided into 22 districts, which Miles of trails 6,276 Recorded historic buildings 3,000 are further divided into 68 sectors. Districts vary in Archeological sites 10,000 size. The smallest district by total operating costs is Archeological specimens 2 million the Twin Cities District, which spent $5.6 million Museum objects 1 million in 2014-15. The largest district is the Orange Coast District with operating costs that were roughly rivers and lakes, and rare ecological reserves. four times that amount ($22 million). Each district The size of each of park also varies, ranging from is led by a district superintendent who is overseen 0.11 acres at Watts Towers of Simon Rodia State by department headquarters based in Sacramento. Historic Park to 600,000 acres at Anza-Borrego Department headquarters also determines district Desert State Park. In addition, parks offer a wide budget allocations and provides certain statewide range of amenities including campsites, golf services such as marketing, local assistance grants, courses, ski runs, visitor information centers, facilities management, and planning. tours, trails, fishing and boating opportunities, The State Parks and Recreation Commission restaurants, and stores. Parks also vary in the establishes general policies for the guidance of types of infrastructure they maintain, including the department. The commission consists of buildings, roads, power generation facilities, and nine voting commissioners appointed by the water and wastewater systems. Governor and confirmed by the Senate, as well as Diversity Reflected in Department’s Mission two nonvoting ex-officio members appointed by and Organization. Under existing state law, DPR the Speaker of the Assembly and the Senate Rules is required to administer, protect, and develop the Committee. state park system, as well as ensure that the parks Commission Classifies Parks Based on Goals provide recreation and education to the people and Features. To help manage the park system’s of California. The department is also required to diverse assets, parks are classified based on their help preserve the state’s extraordinary biological mission and features. Each classification has diversity and its most valued natural and cultural different rules governing park management and resources. These statutory requirements reflect development. The major classifications are: the goals of ensuring broad public access to parks 6 Legislative Analyst’s Office www.lao.ca.gov AN LAO REPORT • State Parks. State parks (the most general scientific importance. Any development classification that includes the largest at state historic parks must be necessary number of parks) are relatively spacious for the safety or enjoyment of visitors, scenic areas that oftentimes contain such as to provide access, parking, water, significant historical, archaeological, sanitation, education, or picnicking. ecological, or geological features. The • State Nature Reserves. State nature purpose of state parks is to preserve reserves are selected and managed for the these elements and provide access to the purpose of preserving their ecology, unique most significant examples of the various habitat, geological features, and natural ecological regions of California, such as the scenery. Development is kept minimal and Sierra Nevada, coast, redwoods, foothills, is allowed only to provide visitor access and and desert. The department may undertake education. improvements at state parks to provide for recreational activities—including • State Vehicular Recreation Areas camping, picnicking, sightseeing, hiking, (SVRAs). SVRAs provide off-highway and horseback riding—so long as those vehicular trails and recreation. They improvements do not involve any major are operated by the Off-Highway Motor modification of land, forests, or waters. Vehicle Recreation Division, which has its own funding sources that are separate from • State Recreation Areas. State recreation funding for other state parks. areas are developed and operated to provide outdoor recreational opportunities. Campsites Also Classified by Features and Of all the park classifications, they allow Amenities. There are almost 15,000 campsites the broadest range of recreational activities. within the state park system. Similar to park units, In addition to the activities provided at campsites have different classifications. However, state parks, state recreation areas can also these classifications are typically applied to a be developed for swimming, bicycling, specific campsite rather than an entire campground boating, waterskiing, diving, winter sports, or park unit. Campsite classifications generally fishing, and hunting. State recreation areas reflect the level of amenities offered and the features may be established in inland areas of the of a site. For example, so-called “primitive” sites state. might be more remote and provide little more than a clearing for your tent. “Developed” campsites have • State Beaches. State beaches are very more amenities that can include vehicle access, similar to state recreation areas except fire pits or fire rings, showers, and a water supply. that they are located in coastal areas. They “Camper hook-up” sites often include electrical and are developed for the same recreational water hook ups for campers or motor homes as well opportunities. as dump stations to dispose of sewage. “Premium” sites often include a unique feature, such as ocean • State Historic Parks. State historic parks views. are established primarily to preserve objects of historical, archaeological, and www.lao.ca.gov Legislative Analyst’s Office 7 AN LAO REPORT Parks Operations Supported by Figure 2 Multiple Funding Sources State Operations Makes Up Operational Funding Supports Ongoing Most of DPR Expenditures Park Activities. The 2016-17 budget provides a 2016-17 Capital total of $468 million for state parks, including Outlay $374 million for state operations. (For the purposes Local of this report, figures do not include the divisions Assistance of Boating and Waterways and Off-Highway Vehicles within DPR because they are funded differently than the rest of the department.) Park Operations operations are ongoing activities necessary to run the park system, including staffing, management, maintenance, fee collection, and administration. Total: $468 Million Other activities performed by DPR, such as DPR = Department of Parks and Recreation. capital outlay projects and grants provided to specific recreational activities, such as the use of local governments, are not considered part of overnight campsites. Parks also receive revenue park operations. As shown in Figure 2, most DPR from contracts with state park concessionaires spending in 2016-17 is to support state operations. that provide certain services at state parks, such General Fund and Fees Are Main Funding as restaurants, rentals, or gift shops. Revenues Sources for Park Operations. Park operations is from park user fees and concession agreements funded from several sources. As shown in Figure 3, are deposited into SPRF, which is administered about one third is funded from the General Fund, and one quarter comes from park user fees. Other Figure 3 funding sources for state park Most State Park Operations Funding operations include revenue Is From the General Fund and Park User Fees from fuel taxes, federal 2016-17 highway dollars for trails, the Total: $374 Million cigarette surtax, and various special funds designated Fees General Fund for natural resource habitat protection. Revenue Generated by Parks Deposited Into Parks Special Fund. Concessions Individual parks generate Donations revenue primarily from park Other user fees and concession agreements. Park users pay fees to enter state parks, a The 2016-17 budget included a one-time transfer of $31 million from the Motor Vehicle Fuel Account. as well as for parking and 8 Legislative Analyst’s Office www.lao.ca.gov AN LAO REPORT by DPR. In general, about two-thirds of revenue has provided support for capital outlay in order to and transfers to SPRF is from park user fees. The acquire and develop park lands. The expansion and other third is mostly revenue from concessionaire development of California’s state park system has agreements and motor vehicle fuel tax revenue. generally been financed with bond funding and Funding Has Fluctuated With Economy General Fund dollars. About $1.2 billion in bond Over Past 20 Years. Historically, the mix funding for parks has been approved since 2000. of funding sources used for state parks has The state General Fund typically pays for general fluctuated significantly, in large part depending obligation bond debt service—including for both on the state’s overall General Fund situation. As the principal and interest costs—over a couple shown in Figure 4, General Fund support for decades. parks increased by 80 percent in 2000-01 when How User Fees Are Established and Collected California experienced a large budget surplus. In response, DPR reduced day use and camping Different Types of User Fees. State parks collect fees by half, and overall fee revenues declined by fees from park users for various activities. The about a third. A few years later when state finances most common type of fee is a “day use” fee, which were not as strong, General Fund support for is charged for entering the park or parking in lots parks was reduced and user fees were increased owned by state parks. Only about half of state parks close to their prior levels. Then, in 2005-06, when charge a day use fee. The department also offers the economy had recovered, the Legislature visitors the option of purchasing annual passes to increased the department’s General Fund enter certain state parks. The second most common appropriation, including for ongoing activities as type of fee is for camping or other overnight well as a one-time allocation to address deferred accommodations. Parks also charge entities fees maintenance. However, following the beginning of a Figure 4 recession in 2007-08, General Funding Sources to Support Fund support was reduced Park Operations Has Fluctuated With the Economy several times. Moderate 2016-17 Dollars (In Millions) increases in fee revenue since 2007-08 have partially offset $350 this General Fund reduction. 300 As shown in Figure 4, the current level of General 250 Fund support for state park General Fund 200 operations is lower and fee revenues are higher than 150 they were 20 years ago when 100 adjusted for inflation. User Fees Bond Funding Frequently 50 Used to Build Park System. In addition to funding for 1998-99 2000-01 2002-03 2004-05 2006-07 2008-09 2010-11 2012-13 2014-15 2016-17 park operations, the state www.lao.ca.gov Legislative Analyst’s Office 9 AN LAO REPORT for holding special events on park property, such as school groups, contributing to more than half of fund-raisers or weddings. their visitors paying no day use fees. DPR Has Authority to Implement and Set User Legislature Created Fees. Statute authorizes DPR to collect user fees for Revenue Generation Program the benefit of state parks and allows the department to determine the level of fees it charges. While State parks have historically relied on DPR headquarters provides some general guidance park-generated revenue to help support operations. and ultimately must approve fee schedules, most In recent years, the Legislature has directed DPR decisions on fees and fee levels are determined at to improve its revenue generation. Specifically, the park district level. Consequently, fee levels vary Chapter 39 of 2012 (SB 1018, Committee on Budget across the state. For example, when determining and Fiscal Review) directed DPR to maximize fees for special events, headquarters has directed revenue generation activities (consistent with the districts to “recover costs.” However, each district mission of the department). determines which costs are attributable to an A major component of Chapter 39 is the event and how to charge for them. Since districts District Incentive Program. This program sets interpret “cost recovery” in different ways, there annual revenue targets for each district based are varying special event fee levels throughout the on how much revenue that district earned in state. the previous three years. If both the state as a Most Park Visitors Do Not Pay Day Use Fees. whole and an individual district exceed revenue The department estimates that of the 68 million targets, half of the district’s revenue earned park visitors in 2014-15 (not including campers), above its target is allocated back to that district. about two-thirds did not pay day use fees. (We note The remainder stays in SPRF—in the Revenue that there is some uncertainty with this estimate Incentive Subaccount—to be used for specified because of data challenges.) The large number purposes, including new fee collection equipment of unpaid park visitors is due to several reasons. and projects to improve the experiences of visitors. First, as indicated above, about half of the parks A district that does not exceed its target does do not charge a day use fee at all. In some cases, not receive an allocation under the program. In this is due to difficulties collecting fees because of 2014-15 (the most recent data available), most the park’s physical set up. For example, Old Town districts exceeded their targets—only five fell short. San Diego State Historic Park is an urban park However, it is unclear whether increased revenue with many entry points where visitors can walk for these districts was due to the revenue generation onto the grounds. Second, many parks charge program or other factors (such as an improving only for parking, so visitors that walk, bike, or economy— resulting in greater attendance and take public transportation into a park do not fee revenue). The average amount retained by each pay fees. For many parks, there is public parking successful district was $333,000, which is roughly available on nearby streets that park visitors can 3 percent of the average district’s operating budget. utilize and walk into the park for free. Third, some Chapter 39 also created and transferred bond funds groups—such as veterans, the elderly, and school to the State Park Enterprise Fund to be used for groups—can get fee exemptions. Many visitors to infrastructure and facility improvement projects Sutter’s Fort State Historic Park, for example, are designed to increase revenue. 10 Legislative Analyst’s Office www.lao.ca.gov AN LAO REPORT ISSUES WITH THE PARKS’ FEE-SETTING POLICY In reviewing state park user fees, we identify natural features, scenic landscapes, historical several issues that merit legislative consideration. monuments, and wildlife habitat—are located in Specifically, we find that (1) charging fees to park state parks. For example, Natural Bridges State users is appropriate, (2) setting these fees requires Beach features a naturally occurring mudstone consideration of trade-offs with other park goals, bridge that was formed over a million years ago (3) the lack of a statewide fee policy framework and was carved by the Pacific Ocean over time. can lead to disparities throughout the state, and The park also provides habitat for nearly 150,000 (4) there is not currently a standard process to set monarch butterflies that migrate as far as 2,000 or adjust fees. We describe each of these findings in miles to the park. Another park, Hearst San more detail below. Simeon State Historical Monument, contains publisher William Randolph Hearst’s 115-room Charging Fees to Park Users Is Appropriate “Hearst Castle,” designed by California architect State parks often serve a variety of purposes. Julia Morgan. These resources are an important Some of these purposes directly benefit users while part of California’s cultural identity and history, others benefit the general public. Most, however, and it is reasonable for some of the costs associated provide a mix of benefits to both park visitors and with preserving and maintaining these resources to the state. be supported by a broader segment of Californians Users Derive Direct Benefits and Drive through public funding sources, such as the Some Costs. Historically, the Legislature has General Fund. recognized that park user fees are one appropriate Most Park Services Benefit Both Individual source of funding to support state parks. User Park Users and the Public. The majority of fees have traditionally played a significant role activities performed by state parks provide a mix of in supporting the park system, though the both individual and public benefits. For example, amount of park operations expenditures covered rangers patrolling the parks can provide assistance by fees has fluctuated over time. Relying on to park visitors but they also protect park resources user fees to fund park operations makes sense. from vandalism, theft, or other harm. It makes Park users receive direct benefits from visiting sense to pay for these activities with a combination parks, such as recreational opportunities (like of user fees and public funds. hiking and swimming). Moreover, providing User Fee Decisions Involve these benefits drives a significant portion of state Trade-Offs With Other Park Goals operational costs. For example, the provision of well-maintained trails, educational exhibits near Fee Policies Affect the Balance of Revenue, points of interest, and restrooms at trailheads Access, and Preservation Goals. The amount of directly benefit park visitors. In addition, funding that comes from visitors versus public consumers typically pay for recreational activities funds depends on how the Legislature prioritizes and other services that provide direct benefits when the goals of (1) revenue generation to support offered by the private market. park activities, (2) broad public access, and (3) the Parks Also Provide Broader Public Benefits. preservation of natural and historic resources. Many valuable public resources—such as unique While these goals are sometimes complimentary, www.lao.ca.gov Legislative Analyst’s Office 11 AN LAO REPORT they can also sometimes conflict, resulting in Most State Park Systems Are More Reliant trade-offs among them. on Park-Generated Revenue Than California. On the one hand, generating fee revenue States have taken various approaches to the policy helps to support the state park system and fund a decisions inherent in determining the portion wide range of activities and personnel that benefit of operating costs that should be covered by visitors and the public. Fees can also influence park-generated revenue—including fees, as well which parks people visit and when they go. For as certain other revenue sources like payments example, charging lower fees during weekdays from concessionaires. In one state—New or the off-season can encourage users to visit Hampshire—park-generated revenue covers all parks when they are less crowded. Therefore, of park operational costs. Other states—such as fee levels can provide superintendents with a Iowa, Tennessee, and Kentucky—have no day use tool to better distribute park demand in order fees at all (although they do charge camping fees). to reduce overcrowding at popular parks during However, most states fall somewhere in between, peak times and encourage visitorship at less charging park users some amount of fees but not visited parks or during slower periods. This can enough to completely cover all operational costs. In help support resource preservation goals at parks California, the share of operating costs covered by where high visitorship can strain natural habitat park-generated revenue has been about 30 percent or infrastructure. It can also help improve public in recent years. As shown in Figure 5, this was access by providing lower-cost opportunities to visit below the national average of 42 percent in 2014-15, parks that are less popular or during off-peak times. ranking California 30th out of all the states. On the other hand, there are inherent Lack of Statewide Policy Framework trade-offs with park user fees. If fees reach a certain Can Lead to Disparities level, they can potentially reduce access to state parks, particularly for lower-income individuals Currently No Clear Policy Framework. and families. Moreover, the state has an interest Department headquarters and the State Parks and in Californians visiting their natural and cultural Recreation Commission provide districts with resources, learning about their state’s history, only limited guidance on both the policies and and having opportunities for outdoor recreation process districts should use when setting user fees. and associated health benefits. Keeping fees low This includes limited guidance on what specific encourages people of all income levels to visit state factors to consider when setting fees, how to weigh parks. different goals, and how frequently to reevaluate fee Amount of Revenue to Come From Visitors Is levels. Most department and commission policies a Policy Choice. The share of costs that should be are high-level and broad, leaving a lot of room for borne by park users is a policy decision about the interpretation. Additionally, many policies are state’s priorities for the park system. There is not not binding, several years old, and often come necessarily a “right” level of fees or share of costs in the form of memos. For example, the Parks that park users should pay. Instead, the Legislature and Recreation Commission’s official statement must weigh revenue, access, and preservation goals of policy on fees is less than half a page long and to determine what fee levels best balance all three has not been amended since 1994. Moreover, the in order to further its priorities for the state park majority of the commission’s policies are optional, system. stating that the department may establish fees, 12 Legislative Analyst’s Office www.lao.ca.gov AN LAO REPORT Figure 5 States Vary Significantly in Share of Park Operating Costs Covered by Park Generated Revenuesa New Hampshire South Carolina Vermont Washington Indiana Florida Alabama Wisconsin Utah South Dakota Nebraska Michigan Georgia Kansas Kentucky Arizona Colorado Delaware Oklahoma Mississippi Virginia Montana Nevada Arkansas West Virginia National Average Tennessee Ohio Idaho New York North Dakota Oregon Hawaii California New Jersey Alaska New Mexico Texas Iowa Pennsylvania Minnesota North Carolina Massachusetts Maryland Illinois Missouri Louisiana Wyoming Rhode Island Maine Connecticut 10 20 30 40 50 60 70 80 90 100% a Source: National Association of State Park Directors and North Carolina State University. www.lao.ca.gov Legislative Analyst’s Office 13 AN LAO REPORT fees may be adjusted annually, and that fees may example, day use fees can range from free entry be waived or reduced for certain groups or under to $15 for Southern California beaches. Similarly, certain circumstances. The department might camping fees range from $5 to $35 per night for provide park administrators some additional primitive campsites (those with limited amenities) guidance in its Department Operations Manual and from $25 to $75 for camper hook-ups. Figure 6 (DOM), but at the time of publication we were displays the range of fees for different categories of not able to obtain a copy to review. However, parks and camp sites. based on our conversations, it did not seem like Variation Can Affect Achievement of many administrators referred to the DOM when Statewide Goals. Since these differences can determining fees. This lack of clear guidance can result in some park users being charged more than result in variation on how individual parks and others in different areas of the state for similar districts implement fees across the state. experiences, it places a greater financial burden on Differing Approaches Have Resulted in the park visitors that pay more without any clear Inconsistencies. Based on our conversations with policy rationale for doing so. This can potentially various district and park administrators, the lack reduce public access to more expensive parks for of updated and specific fee policies has resulted in some users. Moreover, the state probably does not different interpretations of how park fees should collect the optimal amount of revenue since fee be set and adjusted. They reported taking different collection is concentrated among a smaller group factors into account when making fee-setting of visitors rather than distributed across all visitors. decisions, including visitorship, costs to collect When fees are charged throughout the system more fees, fee levels at nearby parks, and potential local broadly, the state can collect the same amount of opposition to new or increased fees. Some parks also give major consideration to local permitting Figure 6 requirements and historical fee levels. For Wide Range of Fees Within example, some state beaches have had difficulty Park Classificationsa implementing new fees or fee increases due to local resistance and challenges in getting approval from Lowest Highest Fee Fee the Coastal Commission. How park administrators weigh these different factors can significantly Day Use Fees State Park $0 $15 affect final fee decisions. For example, districts that State Recreation Area 0 12 prioritize public access and high visitorship would State Beach 0 15 be more reluctant to increase fees. Other districts State Historic Park 0 12 State Nature Reserve 0 15 prioritize wanting to help support the park system Museum 0 8 financially and do not think fees have a significant Camping Fees impact on their visitorship. Consequently, they are Primitive 5 35 Primitive (boat-in) 20 75 more willing to increase fees or implement new fee Developed 10 45 structures such as hourly rates. Premium 35 60 As a result, there is a wide range of fees Camper hook-up 25 75 Cabin 56 225 throughout the park system even for parks within a Does not include some parks or facilities operated by state park the same classification and same region. For partners. 14 Legislative Analyst’s Office www.lao.ca.gov AN LAO REPORT revenue while charging individual visitors lower 1990-91 when adjusted for inflation. Over time, this fees since more people pay. The variations in park has eroded the total level of resources available to fees can also be confusing for the public if the support state parks since expenses have risen with reasons for differences are unclear or if park visitors inflation. do not know what to expect at different parks. Public Process Not Always Included. There is also variation in the process by which parks adjust Lack of Standard Process to Set or Adjust Fees fees when they choose to do so. Most importantly, No Regular Review of Fees Required. As public input is not always sought. For example, described above, while the commission’s policy some districts reported that they have formal is that the department may adjust fees annually, hearings to solicit public input while others do not. there is no requirement for a regular review or Consequently, the public and Legislature might adjustment of fees. Based on our review of past not be aware of potential changes in fees that are fee schedules, it appears that the vast majority of being considered until after the decision is made parks have not updated their fee levels in at least by the department. This reduces transparency five years. This has resulted in fees not keeping up and limits opportunities for public and legislative with inflation and other cost increases. As shown in input. In addition, a less public process limits the Figure 7, there has been significant variation in fee opportunity of a park to provide the public with a revenue—such as the above-mentioned reduction clear rationale for a fee change, which could affect in fee levels in 2000-01—but the average fee for public support for proposed fee changes. paying visitors has declined by 22 percent since Figure 7 Average Inflation-Adjusted Fee Paid Has Declined Since 1990-91a 2016-17 Dollars $6 5 4 3 2 1 1990-91 1992-93 1994-95 1996-97 1998-99 2000-01 2002-03 2004-05 2006-07 2008-09 2010-11 2012-13 2014-15 a Calculated as total revenue from day use and camping fees per paying visitor. www.lao.ca.gov Legislative Analyst’s Office 15 AN LAO REPORT LAO RECOMMENDATIONS Based on our above findings, we make several fees. Historically, the Legislature has, in effect, recommendations below to improve how state viewed state parks as somewhere in the middle, parks fees are determined and collected. First, we with the parks receiving a mix of public funds and recommend that the Legislature establish a clear user fees. fee policy that would include a determination Weigh Public Funding for Parks Against Other about how much of state operational costs should Budgetary Priorities. In addition to considering be borne by park users. A more explicit policy its goals for state parks, the Legislature will want to would provide clear direction about how the consider the implications of different park fee levels different goals of state parks should be balanced. for its other priorities in the state budget. Since Second, we recommend that the Legislature direct DPR’s main sources of funding are park-generated the commission to create more standardized revenue and the General Fund, subsidizing park statewide guidelines for districts to use when fees and service levels must be weighed against determining fee amounts. This would provide other General Fund priorities. Even if public access the department with a framework that can be to parks is a high priority, it can cost the General applied to achieve more consistent fee decisions Fund and therefore must be weighed against other statewide. Third, we recommend designing a more demands like education, criminal justice, and uniform and transparent fee setting process for health care. DPR headquarters and park districts. This can help Determine Share of Costs to Be Covered by ensure that similar steps are taken to determine Fees. We recommend the Legislature adopt a policy fees across the state. that designates what share of parks operations costs should be covered by user fees. This should be Establish Legislative Fee Policy informed by the Legislature’s broader consideration Determine Policy View of State Parks: How to of the extent to which it views parks as a public Balance Public Benefit Versus Enterprise. In our benefit versus enterprise. (We have recommended view, a key decision for the Legislature to make is a similar method in the past for determining fee to broadly determine how it prioritizes the different levels in the state’s university system.) We find that goals of the state park system. This decision would this approach would have a couple of advantages then guide subsequent fee policy decisions. On the over current practice. First, it would give the park one hand, the Legislature might view state parks system as a whole clear policy direction about what primarily as a public benefit that all Californians amount of fee revenue should be the goal for the should be able to easily access at low or no cost. department each fiscal year. Second, a share of cost This approach would imply lower fee levels and approach could better ensure that the Legislature’s greater reliance on funding parks through the desired funding mix for parks is maintained over General Fund (or alternative funding sources). time. As operations costs rise due to inflation and On the other hand, it might decide to treat state increases in wages, the amount of revenue parks parks more like an enterprise that should be more must earn in order to maintain the target funding self-sufficient and funded by the visitors that benefit makeup would also increase. This can serve as a directly. This approach would imply that a relatively clear signal to the department when fees need to high share of park operations be funded by user be reevaluated. It would also be clear how much 16 Legislative Analyst’s Office www.lao.ca.gov AN LAO REPORT General Fund support needed to be adjusted Provide Incentives for Districts That Align each year. Third, our recommended approach With Legislative Goals. The Legislature can would require DPR and stakeholders to consider design an incentive structure that helps support the potential impact on fees and the General its goals. This would be particularly important if Fund when considering program expansions or the Legislature decides that an increased share of other activities that would result in increased costs should be covered by fees. We find that the expenditures for operations. current incentive for park managers to generate Consider How Best to Transition to Share of revenue is relatively weak because individual parks Cost Approach. There are a couple of important do not retain much of their revenue locally under considerations for the Legislature should it choose the current revenue generation program. While to transition to the share of cost approach that we park districts are able to retain some revenue under recommend. First, the Legislature would want to be the program, the amount retained is often small clear in its policy whether the share of operational relative to their operating budgets and is uncertain costs to be borne by users is the share of (1) direct since it depends on both districts and the overall visitor-driven costs or (2) all operational costs. park system meeting its set targets. Moreover, there Importantly, the costs that are driven directly by is frequently local opposition to increasing fees, park visitors is not currently reported by DPR. The and doing so could potentially decrease visitorship department might need to reach out to districts to the park in the short term. Accordingly, if and staff in the field in order to come up with a the Legislature still wants to pursue the revenue reliable estimate of these costs. We would note that generation goals in statute, we recommend that it the department is currently undertaking an effort consider modifying the current revenue generation to improve its accounting of operational costs that incentive program to allow park districts to might help such an effort. retain a specified share of locally generated park Second, the Legislature would want to consider revenue. Better fiscal incentives could encourage how quickly it wants to transition the parks more creativity at the district level for increasing budget to a share of cost approach. It would also revenues. Some examples seen in Southern be important to allow sufficient time for guidelines California include permitting new special events to be developed and for individual parks to review like concerts and running races, establishing hourly and adjust their fees accordingly, as discussed in parking, and developing innovative amenities more detail below. In addition, if park-generated and concessions such as a wine bar on the beach. revenue needs to increase substantially in order to Allowing districts to retain a share of the revenue cover the desired portion of costs, the Legislature they earn can also increase public support for fees might want to consider strategies to lessen the since the link between the fees paid by visitors and immediate impacts on park users and visitorship. the improvements to the park is clearer. This could include, for example, phasing in fee However, the percentage retained would be increases over time. Conversely, if park-generated based on how strongly the Legislature wants revenue needs to decrease because it covers more to incentivize districts to generate revenue. If than the desired portion of costs, the Legislature the Legislature wants state parks to be more would need to determine other funding sources to self-sufficient and increase revenues, the stronger backfill the reductions in fee revenue. fiscal incentive provided by a higher percentage www.lao.ca.gov Legislative Analyst’s Office 17 AN LAO REPORT would make sense. If the Legislature views state parks within those classification ranges. Parks parks as more of a public benefit and prefers to classifications that focus on recreational activities, support them with public funds rather than user have high levels of development, and offer a lot of fees, then a weaker incentive and lower percentage amenities (such as state recreation areas and state would be more appropriate. In the long run, beaches) should generally charge higher user fees the Legislature could adjust the percent of local since they provide more benefits directly to visitors revenues retained by each district higher or lower and visitors’ activities can drive more of their costs. to the extent that park revenues were falling below Conversely, historic parks or nature preserves that or exceeding the statewide share of cost target. focus on resource preservation should have lower For comparison purposes, under federal policy, fees since most of their activities provide benefits to national parks generally retain 80 percent of their the broader public. locally generated revenues. Once ranges are determined for each We note that allowing districts to retain more classification, we further recommend that the of the revenue earned within their district would guidelines provide instruction for how parks have trade-offs. It would reduce the department’s set their fees within their classification ranges. flexibility to direct funds around the park system In particular, we expect districts to set fees at to its highest priorities, and it would leave less individual parks based on the level of amenities revenue available to direct to those parks that have provided and operational costs at those parks less ability to earn revenue. We find, though, that relative to other parks in the same classification. if implemented effectively, this approach could For example, a state beach with only a parking generate more funding for the parks system overall, lot and small access trail might have a day use including for those other priorities and lower- fee at the low end of the range, and one with revenue parks. rentals, restaurants, modern restrooms, and other accommodations would be at the higher end. Create Standardized Statewide Fee Guidelines Likewise, it makes sense for camping fees to be We recommend that the Legislature direct higher at highly developed types of campsites and the commission to develop and regularly update lower for the types of sites with fewer amenities. detailed fee guidelines to be implemented by We find that this approach would provide for state park districts in order to provide greater more consistency across the parks system, be fairer consistency throughout the state. In our view, these to visitors of similar parks, and spread costs borne guidelines would need to be based on legislative by visitors more evenly across the state. At the direction related to the share of operations costs same time, this approach would provide flexibility that should be borne by park users, as well as in acknowledgment that parks do have significant other legislative priorities. We discuss issues the diversity even within the same classifications and Legislature might wish to consider related to these would allow them to take other factors into account guidelines in greater detail below. such as what visitor amenities are provided and What Fee Amount Should Be Charged for comparisons to what fees are charged at nearby Each Type of Park? We recommend that the fee state, local, and regional parks. guidelines (1) provide acceptable ranges for fees by How Should Users Be Charged Day Use Fees? park classification and (2) then include guidance We recommend that the guidelines direct park for how districts should set their fees for individual districts to consider the most cost-effective ways to 18 Legislative Analyst’s Office www.lao.ca.gov AN LAO REPORT collect fees in their parks. In particular, some parks constraints and opportunities, as well as the costs could benefit from instituting per-user day use of collection. fees in place of or in addition to relying on parking Should All Users Pay the Same Fees? To fees. As discussed above, about two-thirds of park the extent that the Legislature wants to ensure visitors do not pay any day use fees. In part, this is that certain user groups have affordable access because many parks charge day use fees by vehicle, to state parks, it could consider directing the and visitors can often avoid payment by simply commission to incorporate reduced fees and fee parking elsewhere and then walking into the park. exceptions into the guidelines. For example, in the However, visitors that walk in for free generate past the Legislature has determined that student many of the same costs and receive many of the groups should generally not be required to pay same benefits as visitors who drive into the park. day use fees. The Legislature could also direct the Therefore, charging a per-user fee instead could department to offer more park-specific annual better ensure that all visitors pay their fair share of passes (as opposed to just the system-wide and fees. Additionally, increasing the number of visitors few regional passes available currently), which are that pay fees can lower fee levels for everyone while generally cheaper for local users that visit the same providing the same amount of revenue. Lower park frequently. However, it is important to note fees also could help improve public accessibility. that fee exceptions and discounts have trade-offs However, collecting a per-user fee is not always and should probably be used selectively. They result possible or efficient. For example, it could be in reduced fee revenue, meaning either less money difficult at parks that have several entrances. It for parks, increased fees on other visitors, or the could also be difficult where stakeholders are necessity for more General Fund support to sustain not supportive of a per-user fee, resulting in low the same level of operations. payment compliance unless there is adequate When Should Different Fees Be Charged? We enforcement. recommend that the guidelines allow for variable One park that has implemented per-user fees pricing fee structures. For example, the department fairly successfully is China Camp State Historic should be encouraged to implement peak demand Park in San Rafael. In our discussions with staff pricing and hourly parking rates where feasible. at the park, they reported they believed their Hourly fee rates make sense at parks where visitors compliance was relatively high and that most only want to spend a few hours, such as local users paid the fees. Importantly, they felt that residents visiting nearby parks. Peak demand their high compliance rate was partially due to pricing makes sense at parks that are busy during public education campaigns and buy-in from a peak season or on weekends but have lower users that want to support their local state park. visitation during off times. Without visitor support, collecting per-user fees Allowing such variations in fees is currently could be much more challenging and costly. utilized in a few places in the state park system, Where collecting per-user and vehicle fees is not and its expansion could have several advantages. as feasible, other revenue-generating options First, variable pricing can potentially improve could include increasing collections through access by helping reduce overcrowding and concessionaires or charges for services. The providing lower-cost opportunities to visit parks commission’s fee policy should allow flexibility during off-peak times. Second, it can help increase for varying collection methods based on local visitorship and improve the visitor experience by www.lao.ca.gov Legislative Analyst’s Office 19 AN LAO REPORT better distributing demand from times when the Design a More Uniform and park is crowded to times that have historically been Transparent Fee-Setting Process less busy. Third, it can increase revenue if more We recommend that the Legislature specify people visit the park than otherwise would or pay a fee-setting process for park districts and DPR to park in a lot during an off time that might be full headquarters that would be consistent statewide during peak times. and provide the public with notification and It is worth noting, however, that variable opportunities for input. pricing has trade-offs. It can be unpredictable for Specifically, we recommend that the Legislature visitors who might end up facing unexpectedly high require that parks take the following steps to prices if, for example, they arrive on a high-demand adjust fee levels. First, parks should be required to day. Also, variable pricing might require special review and consider fee changes on a regular cycle, equipment to collect, which can drive additional perhaps once every three years. This would ensure costs. Therefore, it would be important for park better consistency and that fee levels keep up with administrators to assess the likely long-term effects inflation and other cost pressures. It would also on revenue and costs at their individual parks allow any changes in legislative direction or fee before investing in new equipment. guidelines to be incorporated in a timely manner. How Much Should Be Charged for Special Second, public participation could be enhanced Events? We recommend that the guidelines require by requirements for public notification and public the department to recover all costs—including hearings when fee changes are being considered. indirect and facility-related costs—related to Third, we recommend that headquarters continue special events in state parks. Special events—such to be required to approve final fee schedules to as corporate events, weddings, and fund-raisers— ensure compliance with any enacted guidelines and are not as related to broad public access to the policies. Fourth, transparency could be enhanced state’s cultural and natural resources as day use by requirements that (1) information on fee and camping. Therefore, in our view, it generally schedules and changes to those schedules be posted does not make sense for the state to subsidize them on the department’s web page for each park and through the General Fund. (2) the department report on enacted fee changes as part of its annual statistical report. CONCLUSION In this report, we make several these recommendations would provide for more recommendations to help ensure that park fees transparency, better reflect legislative priorities, reflect statewide priorities for the park system. and increase consistency across the parks system. Specifically, we recommend (1) establishing a If implemented well, these improvements would legislative fee policy, (2) creating standardized better ensure that sufficient revenues are generated statewide guidelines for determining fee amounts, to maintain and improve the natural and and (3) requiring a consistent and more transparent historic resources of the state parks system for all fee-setting process. We find that implementing Californians now and in the future. 20 Legislative Analyst’s Office www.lao.ca.gov AN LAO REPORT www.lao.ca.gov Legislative Analyst’s Office 21 AN LAO REPORT 22 Legislative Analyst’s Office www.lao.ca.gov AN LAO REPORT www.lao.ca.gov Legislative Analyst’s Office 23 AN LAO REPORT LAO Publications This report was prepared by Ashley Ames and reviewed by Brian Brown. The Legislative Analyst’s Office (LAO) is a nonpartisan office that provides fiscal and policy information and advice to the Legislature. To request publications call (916) 445-4656. This report and others, as well as an e-mail subscription service, are available on the LAO’s website at www.lao.ca.gov. The LAO is located at 925 L Street, Suite 1000, Sacramento, CA 95814. 24 Legislative Analyst’s Office www.lao.ca.gov