Coyote Blog

Many of you may be familiar with threatened closures of state parks in many states in the country.  Due to budget issues, state parks budgets have been slashed for years, and in many cases state parks are litterally falling apart due to deferred maintenance.  Now, faced with further budget cuts, states are in the process of closing many state parks.  Arizona has already announced a closure list, and California is expected to release a closure list this week.  States including Washington, Texas, Florida, New York, and New Jersey are all actively discussing park closures.

Far larger than any state parks agency, in fact the largest public recreation agency in world (by total number of sites) is the US Forest Service, which operates campgrounds, picnic areas, hiking trails and boat launches in nearly every nook and cranny of the country.  Yesterday, in President Obama's new budget, the President proposed drastically slashing the US Forest Service (USFS) recreation budget.  This is no surprise, as the USFS has had its recreation budget eroded for decades.

But despite these cuts, most USFS recreation sites will remain open.  There is no talk, as in the states, of wholesale closures.  There is, in most USFS recreation sites, no growing accumulation of deferred maintenance.  In fact, even if Congress and the President shut down the government (as happened under Bill Clinton and may happen this year), many USFS recreation sites, unlike nearly every other Federal facility, will remain open.

Why?  Because decades ago, the USFS was forced to find and adopt a new model for managing its recreation sites, a model that could easily keep most state parks open if states were willing to consider it.  To understand this opportunity, we first need to look at the traditional model for running public parks.

Traditional Model

The traditional model for running public parks and recreation sites has two components:

• Use of high cost government labor to run park operations.  Beyond just being high cost (in absolute wages and benefits) this labor is generally not well-matched to the task.  For example, state employees are hired for 12-month-a-year jobs, even when park visitation is highly seasonal.  In addition, college environmental science and parks management grads are employed whose interests are not well-matched to mundane tasks that dominate park operations, such as cleaning bathrooms and picking up trash.
• Providing free or very low cost access. Most state parks offer free or below-market public access fees for day use parks or campgrounds.  While it makes sense for agencies to offer free options for the public in their portfolio of parks, offering subsidized pricing at every park creates a huge need for appropriated funds (particularly given their high operating costs).  While this subsidized access seems to be a public benefit, it actually works against the public as general fund appropriations dry up and maintenance has to be deferred and parks have to be closed.

One step several states have taken is to abandon the second part of this model by charging market pricing, and even above-market pricing.  Arizona State Parks generally charges market-level pricing for park entry, but as budgets got tighter they actually doubled entry fees to as much as $20 per car to park  at certain popular parks.  California has done the same thing, increasing the price of no-hookup camping as high as $30 a night, when pricing of similar campsites in, say, the USFS in California typically run no higher than $18-$20 a night.  The reason for this is their very high cost operations model, and even these higher fees have not headed off park closures in these states.

A New Model

About 30 years ago, the USFS began experimenting with a new model for running its recreation sites.  I can't say that the USFS did this willingly, and even today there are many in the agency who long for the day when they can return to the traditional model.  In fact, necessity, in the form of Congressional legislation combined with declining appropriated funds for recreation, really forced the change.  Today, over half of USFS recreation facilities are run under this new model, and if weighted by visitation, the number surely would be over 90%.

The model includes these two key elements:

• Use of low-cost private labor for operations.  Thirty years ago the USFS began using private operators to run campgrounds and busy day use facilities under a concession arrangement, meaning the private operator collected all revenue and paid all expenses for the site, and paid the USFS a fee for the privilege of doing so.  With the stroke of a pen, sites that required appropriated money to operate suddenly were money makers for the USFS.  As a further refinement, Congress gave the USFS the authority (and the incentive) to apply the fees they earned from campground and park operators to maintenance and improvement projects in the recreation facilities themselves.
• Charging market-based use fees.  In this program, private operators charge market-based fees (which must be approved by the USFS) that fully cover their costs AND allow for a payment back to the USFS.  Recreation sites in this program no longer require public appropriations at all -- they are entirely self-sustaining.  That is why many USFS recreation sites will remain open even if the government shuts down

As both the public agency and private operators have gained knowledge about the program, this model has continued to be improved.  For example, early on the USFS merely offered the largest facilities to private managers.  However, they soon learned that if they continued to do so, they might be worse off budget-wise because they would be left with many small, expensive facilities to manage themselves.  As a result, the USFS has learned to offer private operators packages or bundles of recreation sites, that generally include all the sites in one geographic area, big and small.

It is important to understand that this is merely a lease arrangement -- this is not a stealth way to dispose of public lands into private hands.  These are highly structured arrangements that require the private operator to conform to numerous restrictions.  In particular, the private operator may not change or add facilities, services, operating hours, or fees without the agency's written permission.  No one, in other words, is out there building a McDonald's in front of Old Faithful under this arrangement (there are several other very predictable critiques of this model, which hare answered here).

One added benefit of this arrangement is that, though there are some bad private operators, in general facilities are actually run better under this model.  One reason is that maintenance and operations are fully funded, so no skimping is required.  Another reason is that since they are paid with park revenues (rather than some flat fee), private operators benefit from, and therefore have the incentive to encourage, higher visitation.  Finally, the skills and preferences and background of most private workers are better matched to the routine operating tasks required.  As a result, most privately operated public parks get good reviews for their quality.   As just one example, this independent site ranks public campgrounds in Arizona -- in this survey, three of the top five sites are run by a private concessionaire in the USFS program, while none are operated by our state parks agency.

The Future

As I mentioned earlier, there are many people both inside the USFS and in the general public that long to return the traditional model -- Agency leaders would love to have the prestige that would come from larger headcounts and budgets;  public employees unions would generally rather see parks closed than have further precedents for private management established; and certain recreation user groups would prefer that taxpaying non-users pay for their recreation.

But the bankruptcy of the traditional model is likely here to stay.  Current budget problems in state parks is not simply a product of this recession -- for example, here in Arizona, park maintenance was under-funded even in the good times.  The reality of government is that non-discretionary expenditures (e.g. health care, entitlement, pensions) are growing far faster than the economy and are going to totally consume government budgets.  Discretionary spending, particularly in the case of things like parks that can support themselves with fees, is going to continue to be crowded out.

If you are interested in this model, you can find out more at this site  (just scan down the page).  We are planning a national conference on private management of public parks as a way to keep parks open, and you can sign up for information on the conference here.  And, as usual, you are always welcome to email me at the link on this site.

New Jersey under Christie continues to be a leader in challenging traditional government models.   I discuss and link to some of the findings over at my privatization blog, including some interesting findings on recreation.  This is from Reason's Len Gilroy:

Park management concession agreements: Having written numerous articles in recent months suggesting that states embrace the private operation of state parks"”something relatively "new" to states, but common at the federal level"”it was particularly rewarding to see the Task Force embrace the concept, recommending that the state should enter into one or more long"term concession agreements with private recreation firms for the operation and management of all state parks. Annual savings to the state were estimated to range between $6-8 million annually, a significant sum relative to overall park spending. This is the boldest, most sweeping call for state park privatization that I've personally ever seen at the state level, and Gov. Christie and NJ State Parks have an opportunity to blaze a new and transformational path forward on state parks management that policymakers in every state should be watching closely.

Over at my Park Privatization blog, I look at an article in the Huffpo on privatization.  Apparently, the city of Chicago made at least five or six horrible contracting mistakes in outsourcing its parking meters, mistakes a private enterprise of any level of professionalism would never make.  The Huffpo's conclusion -- these mistakes by the city government are proof that privatization is a bad idea and that government needs to retain its size, scope and power.

Cross-posted from Park Privatization

Len Gilroy of the Reason Foundation links my Glenn Beck interview and then goes deep on park privatization issues.  Check it out.  Potentially the biggest benefit to the public:

Appropriation risk: State parks operating under a concession no longer bear the appropriation risk that we're seeing play out in real life across the country, as parks get axed from state budgets amid rampant state fiscal crises (some examples include California, New York and Louisiana). Really, this is more of a risk that's eliminated, rather than transferred to the concessionaire (see revenue risk discussion above), so revenue/demand risk and appropriations risk are really two sides of the same coin.

See my discussion with Glenn Beck of my proposal to keep Arizona state parks open on my park privatization blog here or at Beck's site here.   My first TV interview, and I guess I jumped in the deep end.

I answered questions about the interview mechanics here, but one other thing people asked about - I don't know Mr. Beck nor have I had any contact with him until his staff called me out of the blue for an interview.  With the exception of Terry Gilberg at KFYI, I haven't even been interviewed by any of the local media so it was odd, and exhilarating, to jump right to a national stage.

Talking about park privatization around 5:40 Eastern (though the segment has gotten bumped once before).

I have started a new blog because, you know, I don't have enough to do already.  To some extent this is a reaction to a lot of interest I am getting on the topic of recreation privatization, and in part because the nature of climate blogging has changed of late to requiring one to keep up with a fast flow of stories, and I just don't have the time.  Anyway, the new blog is called Park Privatization.  I hope those who are interested in the topic find it compelling.  If nothing else, at least with this post Google will now find it.  I will still post here regularly and on the climate blog as often as I can.

In opposition to a proposal for park privatization in Utah:

Mary Tullius, director of the Division of State Parks and Recreation, doesn't think so.  She says the state prides itself on giving Utah families affordable destinations like state parks. And if those destinations were made private, the quality would suffer.

"History has told us that whenever you privatize something people are so focused on making money that they don't pay attention to the infrastructure or to the maintenance of the facility. What happens after five years and they've run something and they haven't taken care of it and they turn back to the state? And then the state has a much bigger problem," she said.

This is hilariously wrong.  As readers probably know, my business is the private operation of public parks.  The number one problem we have in taking over government parks is that they are usually terribly run down.  By the time the government is finally willing to turn to private companies for help (generally in the category of "last resort") the government has typically been ignoring the capital maintenance needs of the parks for years.  As I have written before, government is terrible about appropriating sufficient amounts of capital maintenance dollars.  We see it in everything from parks to the Washington metro.

Nowadays, as a condition of taking over the operation of public parks, our company is generally asked to make a large up-front contribution to tackling deferred maintenance in the park.  In fact, in our newest contract with the Tennessee Valley Authority, we actually have rebuilt the entire park and campground from the ground up.

I am sure there are some private operators who have let things run down, but in general this has occurred when the public authority has insisted on giving the operator a series of 1-year contracts rather than a real 10-20 year contract.  Who is going to replace the roof if the contract only lasts for another 6 months.  On the other hand, who is going to fail to keep things nice if he knows he is going to be there for another 15 years?

I hear this kind of rant from people within the government all the time.  They seem to believe it, but it is hard to find an example where it is true.  When I worked for an oil company, they planned on having to totally rebuild their retail stations every 20 years or so.  What legislature plans for this kind of expenditure?

My current proposal to keep a number of Arizona State Parks open is here.