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Department of Interior

Recommendations and Actions

DOI04: Promote Entrepreneurial Management of the National Park Service

BACKGROUND

The National Park Service (NPS) in the Department of the Interior (DOI) was established in 1916 to "promote and regulate the use of the national parks...by such means as will leave them unimpaired for the enjoyment of future generations.''[Endnote 1] In the face of urgent internal needs and growing demands on its resources, NPS will have difficulty accomplishing this mission without increased revenues. Since present deficit reduction efforts make expanded federal appropriations unlikely, NPS must enhance revenues on its own by embracing an entrepreneurial management strategy. By reforming the nature, level, and collection of fees, updating concession contracts, and increasing voluntary partnerships, NPS would enhance enjoyment of the parks in the present and future.

The vital needs of NPS must be met or the parks will be impaired for future generations. NPS has an estimated backlog of projects totalling $5.5 billion. By its current account, NPS calculates backlogged projects totalling: $500 million each in natural resource, cultural resource, and operational maintenance projects; $1.8 billion in transportation and housing construction; $1.8 billion in building and utility construction; and $400 million in park operations.2 Current appropriations cannot meet these challenges confronting NPS. These fiscal shortfalls reflect pressing, fundamental needs which must be addressed to protect the national parks from continued deterioration.

Beyond these operational needs of the present lie the emerging demands of the future, demands which call on NPS to respond with a new vision. The long-term viability of the parks will depend not just on repaving roads, but on promoting alternative transportation; not just on improving facilities, but on redesigning them for the next century; not just on stretching customer service, but on revitalizing it with information-age technology. These specific reforms, and many others, must serve a holistic effort to integrate the natural and cultural resources of the parks within a single management strategy. The strategy and the vision behind it will require fiscal support not presently available.

Reform in the nature, level, and collection of fees in the national parks holds strong potential for addressing the unmet needs of NPS. Currently, the NPS charges fees for admission/entrance to the parks on a per-person and per-vehicle basis. Concessionaires pay the NPS a portion of their revenues in the form of franchise fees. Other fees include recreational user fees and special use permit fees. Despite the immense challenges facing NPS and the costs they entail, public access to the national parks is virtually free of charge. Of 367 NPS sites, 182 require no entrance fees at all, and only 15 impose the maximum allowable admission rate of $5 per vehicle and $3 per person. (Three parks are permitted to assess $10/vehicle and $5/person for admission: Yellowstone, Grand Teton, and Grand Canyon.)

The problem is not just that current fee levels are low, but that the array of assessed fees does not account for the many special demands that users impose on the parks.[Endnote 3] These demands not only include high-risk activities involving search-and rescue, commercial filming, and bike and foot races, but also everyday pursuits such as fishing, hiking, and biking. Each activity places strains on the infrastructure, staff, and resources of the sites that go beyond those associated with simple entry and observation, yet these additional costs are passed on to special users only in part, or not at all. Present fees cover only 5 percent of annual park operating costs.

Higher and more specialized fees must be identified and collected where appropriate. Unfortunately, present policy gives NPS unit managers little incentive to do so, since most of their revenues pass directly to the Treasury and they see little direct benefit. To reinvigorate collections, incentives must be introduced to make individual parks more entrepreneurial in their operations. Allowing the parks to keep a portion of fees and allocate the funds without undue constraint would represent an empowering first step. To protect less popular parks, a percentage of individual revenues should be contributed to a central trust with the authority to assist the entire park system as needed.

NPS must complement its efforts to increase revenues with a program to improve collection efficiency. Currently, fees are collected and permits are issued by rangers at various visitor contact points. This procedure diverts scarce NPS employees from more specialized tasks and can significantly slow admissions. In smaller areas, remote locations, urban areas, and off-peak time periods, manual collection becomes highly inefficient and is sometimes foregone altogether.

Therefore, 119 National Parks do not collect entrance fees because doing so would be economically infeasible. If visitation to the parks grows by three million annually, as expected, using rangers as cashiers will be increasingly difficult.

To reduce its dependence on manual processing, NPS should explore the use of barrier-free admissions based on automated entry equipment and off-site ticket sales. The new system could offer an array of ticket options available "any time, anywhere.'' Several specific pilots already exist, such as the vending machines at Carlsbad Caverns, the Duck Stamp program of the Fish and Wildlife Service, and several credit-card payment schemes. These experimental programs should be compared to present practices relating to operation and maintenance costs, customer satisfaction, safety issues, and frequency of fraud. If successful, they could provide a useful complement to traditional collection approaches.

Concession contracts, like fees, can provide much needed revenues for an entrepreneurial NPS. Receipts from concession franchise fees must be actively pursued by NPS. In the past, NPS has viewed these contracts not as fiscal assets but as customer service obligations. Due to isolation, short tourist seasons, and large capital requirements, some concessions have been essentially subsidized. Reaching agreement with vendors has been a difficult process. The cumulative result: average net return to the government has remained under three percent of gross concession revenue. By the end of fiscal 1994, 142 concession agreements will have expired. NPS should seize this opportunity to promote competition, expedite renegotiations, and boost the government's return. To prevent revenues from being lost during the renegotiation period, NPS should have the means to expedite its renewal program.

Private donations, even more than park fees and concession contracts, represent a source of untapped revenue for NPS. NPS should make the most of these voluntary contributions.

Although over 200 nonprofit groups and countless corporations give money to the parks, NPS remains rigidly constrained in its dealings with them. At present, NPS has no authority to solicit funds and may enter into cooperative agreements with nonfederal partners only when authorized by law. It also lacks the fiscal means needed to fully pursue an incentive program for donors, such as the successful Challenge Cost Share Program of 1993 which asked donors to match $2 million of federal money with $2 million of their own. An entrepreneurial NPS needs to have enhanced legal and financial flexibility to solicit donations.

The NPS needs to take full advantage of opportunities to increase revenues. Visitors, businesses, and contributors are able and, in most cases, willing to do more.

ACTIONS

1. The Secretary of the Interior should submit legislation giving NPS the authority to set fees at all parks subject only to broad policy oversight.

One-half of all additional fee revenues should be allocated to NPS through the budget and appropriation process, until expended, for backlog projects and new initiatives. Remaining revenues should be returned to the Treasury. To ensure accountability, the legislation should hold NPS to strict performance standards based on demonstrated results in program output and project execution.

2. The NPS should explore barrier-free admissions based on automated entry equipment and off-site vending of tickets and permits.

NPS should designate a small set of parks as two-year "Advanced Fee Collection Demonstrations'' beginning in 1994.

3. The NPS should accelerate its concession reform and renewal program.

NPS should take aggressive interim measures to complete the renegotiation of its concession contracts, calling for special appropriations and outside expert support as necessary. Concession contracts which expire by 1994 should be renegotiated by 1995. This would allow NPS to begin higher collections and receipts in fiscal year 1995. One- half of new revenues from concessions contracts should return to the parks of their origin, the remaining half should be used at the Secretary's discretion for backlog projects and park reform.

4. Legislation should be enacted to enhance the legal and financial flexibility of NPS fund-raising.

This legislation should authorize up to $25 million for NPS Challenge Cost Share Program over the next five years. It should also authorize the Secretary to solicit and accept gifts of money and property, under guidelines developed by the Secretary, for all park purposes and allow NPS to enter partnerships with non-federal organizations when it is to the government's benefit or will increase government efficiency. To support these enhanced activities, NPS should set up a special partnership and fund-raising unit to coordinate and maximize its charitable receipts.

5. NPS should continue its reform efforts to meet emerging, long-term needs of the national parks with a holistic, new vision.

One immediate area for exploration should be customer service, which could be improved substantially but inexpensively through entrepreneurial measures. A 900 phone number, for example, could provide information on fees, permits, reservations, and transportation while generating revenue.

IMPLICATIONS

The future viability of these nationally significant resources hinges on embracing entrepreneurial measures now. The recommendations in this issue are not a panacea, but they do represent a step in the right direction to infuse NPS with fiscal resources sorely needed to fulfill its mission.

These recommendations would result in a two-fold increase in park entrance fees. Today, the average walk-in entrance fee is $2.50 and $4.25 by car (includes all occupants). The exception is in three heavily used parks: Yellowstone, Grand Teton, and Grand Canyon, which charge $5.00 by foot and $10.00 by car. For the three exception parks, fees would increase to $8.00 per walk-in. Vehicle fees would be eliminated.

In addition, children 16 and younger would continue to get free entrance into the parks. Seniors, however, would no longer be entitled to have free access to all parks for life but would be charged 50 percent of the park fee. Thus a family visiting Yellowstone Park could spend a week at the park for approximately $16.00.

FISCAL IMPACT

These recommendations should generate new revenues totalling $993 million over six years. The portion of the new revenues contributed by entrance fees, concessions, and private donations would be about $590 million, $122 million, and $281 million respectively. Half of entrance fee revenues will be used for addressing backlogs and new park reforms. The other half will be returned to the Treasury.

      Budget Authority (BA), Outlays, and Revenue
		(Dollars in Millions) 
 
 Fiscal Year
 
      1994   1995   1996   1997   1998   1999   Total
 
 BA*
       0.0       30.0   53.0     77.0     86.0   86.0   332.0
 
 Outlays.
       0.0       12.0   30.0     56.0     73.0   83.0   254.0
 
 Revenues
      70.0     123.0 182.0  206.0   206.0  206.0  993.0
 
 Change in FTEs
	 0        0        0        0          0          0       0

* These figures show full-time equivalent (FTE) reductions from the fiscal year 1994 President's budget due to NPR recommendations.

ENDNOTES

1. See Act to Establish a National Park Service, and For Other Purposes, 16 USC 1 (August 25, 1916).

2. See U.S. Department of the Interior, Office of Inspector General, Protection of Natural Resources, National Park Service, Report No. 92-I-1422 (Washington, D.C., September 1992). See also U.S. Department of Interior, Office of the Inspector General, Maintenance of the National Park System, National Park Service, Report No. 92-I-455 (Washington, D.C., February 1992).

3. See U.S. Department of the Interior, Office of the Inspector General, Recreation Fee Charges and Collections, National Park Service, Report No. 93-I- 793 (Washington, D.C., March 1993).

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