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Why Is Privatization Bad For State Parks?

It is important to note that privatization initiatives are NOT restricted to turning operations of parks over to for profit companies. Privatization also occurs whenever park fees (such as parking, day use, camping, boat launch facilities, etc.) are increased to a level that effectively restricts ANY citizen from visiting and enjoying a park. It is not universal access when fees prohibit any portion of the public from affording the park access. Granted, we are in a time when parks are no longer free. However, the current concern within the Department of Parks and Recreation (DPR) to find the highest price for “service” that a park unit can bear is indeed a form of privatization, whether operated by a for-profit company or the park service itself.

The Delayed but Forthcoming PROS Consulting Report and its implications:

The position of the Department of Parks and Recreation is that “The PROS/CHM contract is not about privatization. It is about business planning.” (10-23-12, Mr. Roy Stearns). It would be encouraging if that statement could be taken at face value. However, to accept such a claim would entail ignoring a long history of PROS Consulting reports to park departments, from the city and county level to the state parks level. Before we critique the record of the work product of PROS Consulting, however, it is important to step back and consider context and nature of the problems state parks face in the current political and economic environment.

How have State Parks fared in the current economic and political climate? In a word, state parks have been treated poorly. Over the last three decades state parks have experienced a steady erosion of general fund taxes to support park operations. In the 1970s, the state park system received close to 90% of its operational funds from the general fund allocation (taxes) within the state budget. Currently, the level of support is at 29% and falling. The trend line is clear. Without strong advocacy state parks cannot count on any continued and predictable level of general fund support. This abandonment of support flies in the face of the economic benefits that state parks provide ($4.3 billion), from the local level up to the statewide level. The time is approaching when state parks cannot depend on any support from general fund taxes. Throughout the current funding crises, strategies for funding state park operations have emphasized, almost exclusively on ways to increase revenues for day use, parking, camping etc. The other principle focus has been upon individual/corporate donor financial support and volunteer action. By one estimate, there are at least 40,000 individuals annually who pitch in at entrance kiosks, at visitor centers, at clean-up days, and for trail maintenance work. The list of the many ways volunteers provide vital service is long and impressive.

The passage of AB42, AB1589, and SB1478 all focus on ways to increase fees paid by visitors/users. Granted, some increases may be justified. Nevertheless, at current levels of recovery, fully 70% of park users do not pay for day use, especially at state beaches or other units that cannot be secured in a way to insure fee collection. The sum of every initiative, therefore, has been on capturing more revenue from those who visit parks. Such initiatives go so far as to propose establishing fee collection points at many state beaches that currently are not generating revenue through parking. Fourteen north Counties beaches, for instance, may become accessible only for an $8 parking fee, a level that is universally criticized as grossly excessive. Most visitors to the Mendocino Headlands at the shore’s edge, for instance, spend less than a half hour to take in the scenery and then leave. There are indeed many examples where “commoditizing” a park unit is simply counterproductive. Not everything can, or should, bear a price tag to be enjoyed. Nevertheless, that is the trend within the current rush to establish “cost centers and pricing strategies” across the board.

We did not get to this difficult set of circumstances overnight. The last ten years have been especially problematic. During the last decade, where has been the strong advocacy, the political will, to make a compelling case for state parks funding, even at levels far reduced from those of the 1970s? If, indeed, state parks are to remain accessible to all Californians, and not just those who have the means to “pay-to-play”, general fund support is a necessary component. One could be forgiven for suggesting that some, not all, within the state bureaucracy seem to have forgotten that state parks are a PUBLIC TRUST. The state long accepted its responsibility to support park operations through modest level of taxes. Unlike state prisons, or water projects, or high speed rail, or even most social programs, state parks more than earn their keep. They not only deserve taxpayer support, parks also give back benefits to California citizens far in excess of what it costs to maintain them. Every single visitor to a state park, and last year there were over 80 million visitors, inherently understands that that it is foolish to monetize the benefits

(recreational, psychic, emotional, quality family time, you name it).

In recent years, there have been a number of schemes launched to increase revenues for state parks, especially the ill-fated Proposition 19. State Park and California State Parks Foundation executives are quick to point out that the failure of Proposition 19 indicates a lack of broad taxpayer support for parks. The contrary is true. Proposition 19 was written in such a way that it did not guarantee that all of the vehicle registration fees ($18 per car) would go to state parks. California citizens rejected the initiative not because they do not value parks. They rejected it because they understood that, at $18 per vehicle, the average household could be paying $54 annually. They rejected it because they did not believe that all of the monies would indeed go to parks. Failing to pass such a flawed proposition had one almost immediate effect, the threat, for the first time in the 100 year life of state parks, to institute a broad based closing of state park units. Governor Schwarzenegger went so far as to propose 200 parks needed to be closed. That was not only insulting to many, but it was views as the proverbial blunt instrument with which to batter parks. Throughout the turmoil surrounding state park funding, there has been little, if any, sign of a well-reasoned and firm political will to protect, preserve, and insure universal access to state parks for all Californians. To date the question remains: Where is the will to be found to protect state parks funding and the access Californians have come to expect?

Privatization It is time we turned to the claim that privatization is indeed a direction that State parks is moving toward and that PROS Consulting may well be a key tool to that end. Mr. Stearns says that “We (the DPR) have heard loud and clear from legislators and the public that that is not where they want us to go.” Mr. Stearns insists that there is a need “to take a hard look at our current business practices.” If the latter is true, that the “business practices” need to be reviewed, and in all likelihood improved, is DPR saying that within the well-paid professional staff at DPR headquarters the talent does not exist. The headquarters staff is certainly well-paid and would be offended at the suggestion that it simply does not have the ability or wherewithal to conduct a thorough and fair review of operations. Nor would it resist implementing improvements that serve to put state parks on a sounder footing. Even so, the decision has been made to turn the task over to PROS Consulting/CHM.

Task 1, reference page 9 of the January 30, 2012 contract, provides for “Data Collection/Cataloging.”

This function may well be necessary. However, the data will come from within state park records. The service provided by PROS Consulting, essentially, is not to create existing data, rather it is to put it within a template that facilitates identifying what PROS characterizes as service categories (Core, Important, and Value Added/Visitor Supported.).

The three-tiered categorization identified in the contract is a common element within PROS Consulting reports. Category 1: Core Services are those which “the agency must provide to meet its mission, and statutory and/or regulatory obligations.” In sum, core services, the protection and preservation aspects of park operations, are those which are “largely supported by taxes with little or no cost-recovery.” By isolating “core services” at state park units, PROS Consulting identifies those elements and functions as not subject to pricing policies, in short they cannot be monetized. It is doubtful, based on a review of existing PROS reports, that effective strategies to insure continued general fund support for such core services will be addressed in the recommendations of the final report. Thus, as the business model is imposed on park operations/functions, through imposing a document like “Resource Guide for Cost Management and Financial Planning,” the core functions of state parks are almost certain to be blurred, if not outright abandoned. The core functions, after all, do not fit into a cost recovery/revenue producing matrix. Core services are outside the scope of examination as to how to improve “important” or “value added services.”

The second and third legs of the PROS Consulting classification are the “Important Services” and Value Added/Visitor Supported Services.” “Important Services,” are those “should provide” elements of a park unit. “Important Service in PROS terms are “conditional.” They may add benefit to the park visitor’s experience but are not essential. Nevertheless, there is potential to price such important services. The contract does not elaborate the distinction between an “Important Service” and a Value Added/Visitor Supported Service. One can reasonably discern that an “Important Service” category would include staffing a visitor center, providing campfire talks, acting as a trail guide, providing a Junior Ranger program, providing signage throughout the park as to what to see or what to be careful of, etc. It may also include such vital services as security and safety, typically provided by park rangers and professional staff.

The third, and for our purposes the all important category is “Value Added/Visitor Supported Services.” This category is “Heavily or fully supported by earned revenues.” PROS Consulting clearly views the obligation of parks to provide such services as optional. “Services the agency may provide when they are fiscally sustainable through visitor support; add value above and beyond what is required or expected of the agencies core functions; are easy opportunities to integrate alternative providers and operators into providing services at one or more sites.”

It is this third category of service which by any measure clearly relates to privatization. The services within this category are by definition visitor parking fees, camping fees, boat rentals, marinas, lodging facilities, RV facilities. Let me emphasize what the focus of this third category is by restatement: “Services the agency may provide when they are fiscally sustainable through visitor support; add value above and beyond what is required or expected of the agency’s core functions; are easy opportunities to integrate alternative providers and operators into providing services at one or more sites.” This is the smoking gun.

To “integrate” into parks “alternative providers and operators,” which PROS recognizes as “easy opportunities” is nothing more nor less than the privatizing of the revenue generating elements of a state park. The campgrounds, parking, boating services, RV services, and even on-site sales through a store or visitor center are the “easy opportunities” that attract for-profit providers.

There is a fundamental flaw in this approach. PROS Consulting promises to provide “the tools to manage…costs and financial resources at the park level,” to quote Elizabeth Goldstein. What irony then, is at work here. The report seeks to identify “easy opportunities.” If such opportunities are indeed the main revenue components within state parks, the very revenues vital to maintaining a park operation, why on earth turn them over to a for-profit operator? The only thing accomplished by giving up such revenues is to further erode/weaken the parks ability to develop a sustainable funding program.

Elizabeth Goldstein insists, “I am not a privatizer.” I want to take her at her word that she is not a privatizer, either in disposition or deed. Why, if that is indeed true, was the PROS Consulting contract underwritten, to the tune of $175,000 by California State Parks Foundation? Why, when the flurry of Requests for Proposals (RFPs) went out to for-profits for bids did CSPF ignore the implications of privatizing state parks? While the public was kept abreast of donor and volunteer efforts to keep parks open, not one word was said about for-profit initiatives to operate selected parks, thus depriving them of their revenue elements. Indeed, five state parks are now under agreement, giving over revenue producing functions to for-profit companies, such as American Land and Leisure. Why has CSPF said absolutely nothing, at least to the public, about the loss of such revenues to parks? One can, for instance, look up CSPF provided timeline of the park closures. The timeline has not one entry about the repeated RFPs that were sent out to for-profit companies for bids. There is not one mention of the scandalous “vacation buyout program” which was uncovered as early as April, 2012. The CSPF launched, in January a “Defend What’s Yours” campaign, yet there is no mention of the initiatives to privatize the revenue elements of 5 state parks. In this fiscal year alone, it is likely that state parks will lose more revenue from the already signed operator agreements than the total sum of “grants” that CSPF has been able to provide to keep some state parks open. To date, there has been no outcry that, to use a legislator’s phrase, “the low hanging fruit” is there for the taking by companies that are out to make money.

Privatizing revenue producing elements of state parks, for rock-bottom “rents” that may in fact not be realized, is on the face of it bad business for state parks. The Brannan Island agreement is one such example. The loss of revenues at the five state parks already under agreement will not benefit the sustainability of those units. Putting in place a new pricing program, based in part on PROS Consulting recommendations, will in all likelihood lead to restricting access to a segment of the California public (taxpayers) who may well benefit most. Working families and people of limited or fixed income means will be negatively impacted. By implementing the “Value Added/Visitor Supported” “pay-to-play” ethos embedded in the PROS Consulting approach. To quote the PROS contract, the revenue enhancement program stresses the need to “Seek opportunities to improve the financial sustainability of the Department including evaluating expenditures and increasing current and new sources of revenue.” Such a prescription will, I believe, the move the department even further along the path toward privatizing our state parks. It certainly is not designed to focus on strategies designed to win continued support from general funds.

Is it possible that those within DPR and CSPF believe that they are doing the right thing and that they do not want state parks to be privatized? Of course. There are those in DPR and CSPF who do not want to see parks privatized and some have become lulled into believing the rhetoric that decries privatization. Nevertheless, privatization is here. It is a fact. Five state parks leased out to for-profit operators cannot be simply ignored or swept under forest duff. Nor can the contractual language and focus of the PROS consulting contract be ignored. PROS, of course, cannot be blamed. It does what it does. Any client, however, must be aware that from the outset the bias is pro-business. The bias is couched in the language of value added, cost recovery, and making each unit pay its way. What is missing is the service ethic, which admittedly puts revenue generation second and not paramount. The pro-revenue model cannot help but seek the highest revenue at the lowest cost possible. That is why it is called commoditization of The Commons.

State parks cannot and should not be run strictly as a business, not if we want to retain universal access for all Californians and the public. State parks are not just another revenue-based opportunity, with services made available at the maximum possible price. State parks are a public trust. As a public trust they do depend upon the tax dollars of citizens who value and use them. The state cannot abandon them, while at the same time spend billions to lock people up, export water from one part of the state to another, and build trains that will ultimately provide benefit to the few. State Parks are visited by over 80 million people a year. Not one visitor would argue that park operations should be strictly on a cash-on-the-barrel-head basis, or that the revenue elements be parceled out to profit making companies, while the non-revenue generating (core) functions remain the responsibility of the DPR. A revenue depleted system cannot honor its mission.

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