Index Executive SummaryBudget Process, Budget CycleReview ProcedureBudget AdoptionAuditCapital BudgetRecent Fiscal Context and HistorySeveral ODNR Divisions EvaluatedFleet ManagementSeasonal Workforce StrategiesPark Operations and Recreation - Overnight StaysParks and Recreation Operations - Lodge OwnershipParks and Recreation Operations - Investment Potential CapitalWildlife Licensing and ParticipationFish Farm OperationsBoat Registration OperationsIncome EstimationPark Revenue SourcesExecutive SummaryThe charge of the Ohio Department of Natural Resources (ODNR) is to oversee the use, preservation, and conservation of the Ohio Department of Natural Resources state. There are twelve divisions in the ODNR: Forestry, Parks and Recreation, Soil and Water Resources, Natural Areas and Preserves, Say No to Plagiarism. Get a tailor-made essay on "Why Violent Video Games Shouldn't Be Banned"? Get an original essay Vessels, Wildlife, Geological Survey, Bureau of Coastal Management, Mineral Resources Management, Oil and Gas Resource Management, and Engineering. ODNR is responsible for protecting Ohio's wildlife, forests and other natural areas, state parks, inland lakes and waterways, geologic and mineral resources, and the Lake Erie coastline.[1] Overall, the Ohio Department of Natural Resources is responsible for more than 590,000 acres of land, including 74 state parks, 21 state forests, 136 state nature preserves and 138 designated natural areas. Additionally, the Department oversees more than 120,000 acres of inland waters, 7,000 miles of streams, 481 miles of the Ohio River, and 2.25 million acres of Lake Erie.[2] It serves more than 11.5 million Ohioans and more than 200 million tourists annually with approximately 2,000 employees. To meet the requests requested by the Ohio Department of Natural Resources, their appropriations have been set by the Governor and the Office of Budget and Management at approximately $342.9 million dollars in fiscal year 2016 and $346.5 million dollars in fiscal year 2017, for a total of $689.4 million over the two-year period. The proposed changes to appropriations increased fiscal year 2016 by 5.4 percent over fiscal year 2015 and currently funds for fiscal year 2017 are 1.0 percent higher than the proposed fiscal year budget 2016. This fiscal review serves to explore spending patterns within the Ohio Department of Natural Resources, highlight trends within the budget, and analyze the effectiveness of where the department is spending its money using performance measures. Budget Process, Budget Cycle We could not find any information about the internal procedures of the Ohio Department of Natural Resources, but externally the Ohio DNR budget is developed like the budgets we have studied in this course. There is an executive preparation phase, a legislative consideration phase, an execution phase and an audit phase. In the executive budget phase, ODNR works to prepare a budget that will be reviewed by the Ohio Office of Budget and Management and the governor of Ohio for presentation in the executive summary by the governor. The Ohio Legislature will review the presented budget and make revisions and changes as they deem necessary. The governor of Ohio can then impose vetoes on budget items, where he can veto any line in the budget before it is finally enacted. After the budget is approved, the Ohio DNR has the ability to execute and spend the money. During the audit, the auditor's officeState accounts can audit the agency and see if the agency is using the funds as indicated in their budget and if it is benefiting Ohioans and others they serve. The Ohio Department of Natural Resources, as a state agency, is part of Ohio's biennial budget. The Ohio state budget is prepared by the Governor and the Directors of the Ohio Office of Budget and Management, John Kasich and Timothy Keen. The current approved budget is from the 2016-2017 fiscal years. For Ohio, fiscal years run from July 1 to June 30 with the Governor presenting his executive budget in early February, within four weeks of his organization in early January of each odd-numbered year. This means agency budgets are built before the fall deadline. The “Operating Budget Guide” is sent to agencies, by the OBM, in early July so they can begin the process and prepare to submit their budgets on time. To ensure that the budget can be approved in time to be reviewed and enacted, state agencies must submit their budgets nearly two years before they take effect. For the 2016-2017 fiscal year budget, state agencies were required to submit their "Professional and Regulatory Councils Budget and Language Requests [-] on September 17, 2014, Other Non-Government Agencies' Budget and Language Requests [ -] on October 10, 2014,” and finally, “Government, legislative, and judicial agencies, as well as constitutional officials, [were] required to submit budget and language requests to the OBM [-] on October 31, 2014.” Review ProcessThe internal review process was unattainable for our group, but after the budget was presented by the Director of the Ohio Department of Natural Resources to OBM, the review processes become clear. The process for operating budgets begins in the middle of each even-numbered year, when the OBM requests each agency's budget.[3] The OBM then “reviews the request and holds meetings and budget hearings with the agency as necessary.” [4] Next, the OBM “works with the Governor and his staff to make preliminary budget recommendations,” which “are shared with agencies and may be submitted by them to the Governor.” [5] Finally, the Governor presents the ODNR budget and all other agency requests as an executive budget to the Ohio General Assembly.[6] When the General Assembly receives the budget, “Legislative Service Committee staff draft the Governor's budget proposal in the form of a legislative act,” which is then “presented to the House of Representatives by the Chairman of the Finance Committee.” [7]Hearings are held before the House Finance Committee on operating appropriations bills where amendments may be made.[8] After the House passes the budget, the same process occurs in the Senate and it is then approved and sent to the governor to be reviewed one final time and then enacted.[9] Budget AdoptionThe internal budget adoption process was not found for the Ohio DNR, but once finalized it is sent to the Office of Budget and Management for analysis. They will make recommendations to the Governor for consideration, and he will then “conduct a review process to determine the content of his Executive Budget for submission to the General Assembly.” [10] The budget is then reviewed and adopted by the Ohio Legislature. The General Assembly will then return the budget to the Governor for a final review in which he can veto certain portions of the budget. When the governor signs the budget, the ODNR as well as all other agencies, receive their budgetshalf-yearly operations. Audit There was no transparency that the Ohio Department of Natural Resources had internal audit procedures but there were external ones. Ohio Revised Code (ORC) § 117.46 requires the Ohio State Auditor to conduct performance audits of at least four state agencies for each budget biennium. There are over 170 state agencies.[11] With these measures in place, there is a risk that agencies will remain unchecked for more than 85 years or 42 biennial budgets. The ODNR was fortunately selected for a review in FY 2013-14 and FY 2014-15. In their audit, the state sought to review "six distinct application areas, including capital planning and budgeting, parks and recreation operations, seasonal workforce strategies, wildlife licensing and participation, fleet management, and operations of fish farming, but the ODNR" required the addition of a seventh and final application area, Watercraft Logging Operations." [12] To facilitate auditing, "The U.S. Government Accountability Office develops and promulgates standards of government audits that provide a framework for performing high-quality audit work with competence, integrity, objectivity and independence to provide accountability and help improve government operations and services", commonly referred to as GAGAS, or generally accepted government audit standards. [13] These audits are performance-based audits, meaning they examine “specific requirements, measures, or defined business practices” to provide an objective analysis.[14] The Auditor's Office worked closely and openly with the ODNR to discuss enhancements and enhancements. The final report, once completed, was shared with the agency. We found no revenue set aside during the budget analysis, but we could not find any original ODNR reports before they were sent to the Governor and OBM. Capital BudgetThe Ohio Department of Natural Resources, as a state agency, has a separate capital budget. Issuing a biennial capital budget is a simpler and shorter process than issuing an operating budget.[15] Capital budgeting “takes place in the context of another activity: the preparation of the state's six-year capital improvement plan.” [16] Every two years it is “updated by the OBM based on recommendations it receives from relevant state agencies.” [17]This process tends to begin “in the late summer of each odd-numbered year, when the OBM distributes guidance to agencies for the preparation of both the Capital Budget and the Six-Year Capital Improvement Plan.” [18] The process for capital budgets is the same as for operating budgets. Requests are processed by the OBM, sent to the Governor for approval, and then sent to the Legislature, but this process takes weeks rather than months.[19] In 2014, the Governor awarded ODNR $88.5 million in his capital budget for improvements to state parks.[20] We could not find any Ohio DNR capital budget requests due to a lack of transparency. The internal processes for the Ohio Department of Natural Resources could not be located, but the external process for Ohio state agencies was adopted by the General Assembly and is mandated by the Ohio Constitution, Article II, Section 22 , which states: No money may be withdrawn from the state treasury except by virtue of a specific allocation established by law; and no appropriation shall be made for a period exceeding two years. This makes it clear that state agencies must submit a budget every two years to the legislature forapproval. They cannot directly present their budgets to the legislature because the director of ODNR is not the chief executive branch officer for the State of Ohio. the Governor is. This is why the ODNR director presents his or her budget to the Governor and the Office of Budget and Management, which works for the Governor. The OBM will then present its proposals and revisions to the Governor for a final presentation to the Ohio Legislature. After review, the Governor receives the revised budget and has the power to veto specific lines and issue the budget. The line item veto was established in 1912. [21] While we could not find any original documents from the Ohio Department of Natural Resources, the documents we analyzed were performance-based styles. The ODNR released a 2015 annual report discussing all aspects of their agency. They highlighted new projects and improvements for each division the agency oversees. For example, when discussing improvements in 2014, the report states that nature education is “one of the goals of state nature preserves. Department staff increased public programming in fiscal year 2015, reaching hundreds of people across the state.” [22] In the Legislative Services Committee's budget analysis, there were also features of performance-based budgeting like those found in the ODNR Commission's 2015 report. When the Governor presents his budget, it is in line-item form. It's no longer performance style. This is important because the governor of Ohio has the privilege of a budget line item veto, where, before the budget is enacted, he can veto any budget line. There is little transparency provided by the Ohio Department of Natural Resources. In analyzing the budget process, we found that ODNR does not publish a publicly viewable budget in an accessible manner. After reviewing their online site, ohiodnr.gov, there was not a link that provided any light on their budget process, nor could we find past or current budgets. There was an article that discussed the governor's allocation of funding for their capital budget, but it only listed ideas for how it could potentially be used. We tried contacting agency administrator Susan Erb, who is the tax specialist for the Ohio DNR, but she did not get back to us. To gain insight into ODNR's budget, we found an audit performed by the State Auditor in February 2015, the Legislative Services Commission's Analysis of ODNR's Proposed Budget for Fiscal Year 2016 and Fiscal Year 2017 and Governor Kasich's Fiscal Year 2016 and Fiscal Year 2017 Executive Budgets. The lack of transparency made it difficult for us to make a clear and accurate assessment of their budget process. As noted in most subsections of the budget process review, we were unable to find or locate any internal information about the Ohio DNR's budget processes. We do not know how decisions are made in budget development, nor do we know the internal procedures or internal controls in place. All answers to the budget process for the Ohio Department of Natural Resources come from general information that applies to all state agencies in Ohio. Recent Fiscal Background and History The Ohio Department of Natural Resources consists of 2,089 employees, 1,555 of whom are temporary staff and 534 project employees. To fully understand the scope of the department's budget, it is important to look at howhas expanded in recent years. In fiscal year 2011-2012, the department's operating expenses were approximately $270.96 million; In the fiscal year 2012-2013 expenses amounted to 299.91 million; In fiscal year 2013-2014, $326.10 million; and in fiscal year 2014-2015 expenses reached $326.61 million. Over the past four years, expenses have increased 20.5% to a whopping $55.65 million. That said, there was a minimal increase of $510,000 between the 2013-14 and 2014-15 fiscal years, which is seemingly boring compared to the sizable increases of $28.95 and $26.19 million between the fiscal year 2011-12/12-13 and fiscal year 2012-13/13. -14 respectively. Over this four-year time frame, the vast majority of funds (75.2%) went directly to three main areas of the department: the General Revenue Fund, the State Special Revenue Fund, and the Wildlife Fund Group. During this time the General Revenue Fund received $94.68 million per year and focuses primarily on parks, while the state Special Revenue Fund received $72.24 million for maintenance and equipment expenses, and the Wildlife Fund received $62.97 million in payroll, mostly for payroll, maintenance and more. operating expenses. Multiple ODNR Divisions Evaluated There are many divisions of the Ohio Department of Natural Resources whose budgets are briefly explained and evaluated in this report. They are listed below: Fleet Management ODNR's Fleet Management sector focuses on providing vehicle appropriations for each operating unit within the department. The number of vehicles used by each operating unit (as of 2014) is shown in the table below: The majority of vehicles used by these different divisions were ½- and ¾-ton pickup trucks, as well as SUVs. The rate and cost of maintenance for the different vehicles used are provided in the table below, but it is difficult to obtain an accurate analysis of the costs and performance as there is little or no data regarding other "direct and indirect costs for maintenance, repairs and fuel for each vehicle” (16). Lack of information on vehicle costs prevents us from establishing an adequate measure of performance. Therefore, the recommendation here would be to ensure that all costs and performance measurements are recorded in the future so that we can analyze the efficiency of the vehicles and the department as a whole. Furthermore, this division is not maximizing the use of idle and broken down vehicles. Many vehicles had been left unused for between “201 and 434 days waiting for new hires” when this performance evaluation was performed (18) were the department to dispose of vehicles that are impractical to repair, it would save $16,601 (18). If idle vehicles were reassigned to other areas instead of purchasing new ones, you could avoid paying up to $156,222, as illustrated below (18).(19). Finally, if the department got rid of the 34 unnecessary patrol vehicles, it would earn $41,719 and “reduce annual expenses by 44,579” (21). It is therefore that the recommendation here would be to sell or dispose of idle vehicles or reallocate them for use in other areas to reduce the costs associated with purchasing new ones. The final area where the division can save money is by instituting a more aggressive fleet cycling plan. Recognizing “a vehicle life cycle of 6 years and/or 90,000 miles,” analyzing the most efficient vehicle to operate by determining “the current cost per mile compared to that of newer vehicles” and recovering vehicles near the end of their life “to capture as much residual value as possible” thedepartment could save $683,565 (38). Seasonal Workforce Strategies It's important to first look at the costs associated with worker wages, particularly those in the Natural Resources Specialist and Natural Resources Worker categories. The auditor's office has shown that unemployment expenses, paid by the department, amount to approximately $252,000 (42). This means that by reducing your unemployment expenses you have a great opportunity to save money. By playing with the hourly requirements for NRS and NRW under Collective Bargaining Agreement (CBA) standards, the auditor's office has provided several solutions that could save money in the long run. (51). Each of these solutions would be more sustainable and more efficient than the current seasonal work system. It is also worth mentioning that in this case there were few clear performance measures in place for department leaders, making it difficult to hold administrators accountable and efficiently manage resources within ODNR. Clear performative measures that directly relate to the data associated with who accomplished what should be established. Parks and Recreation Operations - Overnight Stays There are currently a number of rules associated with establishing a fixed price for overnight stays through the Parks Department. While these regulations may not result in a direct, measurable cost to the department, they limit the flexibility needed to establish competitive and efficient pricing. By increasing parks' flexibility, it leaves the department with two options to increase revenue: raise prices for sold-out nights or raise prices for nights when accommodations are not sold out. The auditor's analysis of which would be more profitable is shown in the following table: (86). Clearly, it would be very beneficial to have the flexibility to increase prices for non-sold out nights. Parks and Recreation Operations - Lodge Properties Gross revenue for lodge properties decreased substantially from 2001 to 2013, as seen in the chart at the top of next page: (99). The auditor's office looked at which parks were operating efficiently (generating cash flow) and which were operating inefficiently (those responsible for losses). “Maumee Bay, Salt Fork and Shawnee” were the most productive, generating $1,218,590 in CY 2013. Hueston Woods, Mohican and Punderson were also productive, but only produced a total of $66,846 (107). Oak Burr and Deer Creek reported huge losses of $426,956 (107). This data is critical to seeing what parks are and aren't effective at bringing in money. These lodge properties should be managed and monitored in order to map their performance over the years, making cuts where necessary and allocating more funds to lodges that successfully meet their performance metrics. Additionally, the concession-based model currently used by lodges provides long-term cash flow, but there are other options that would maximize “financial performance, including; solicit matching funds from dealers, extend the duration of contracts and implement alternative contract structures” (119). So while the current operating system of the Parks Department's Lodge Property Division is effective, it could do more to generate revenue. Parks and Recreation Operations - Potential Capital Investment The Parks and Recreation Operations Department sees inefficiency in the way it currently operates. Some cabins at campgrounds make huge profits, while the profitability of others is sorely lacking. Even if it doesn't directly concern the budget2013-2014, it is important to consider potential investment opportunities to increase revenue and reduce losses within the Parks Department. By investing in specific cabins that are performing well, the Parks Department could see “an immediate value gain of $41,244,069” (142). “Disposing of the 29 cabins experiencing an operating loss rather than investing in renovations” would result in “a one-time cost reduction of $3,830,900” (142). For complete operational and investment profiles of individual Ohio cabins, please refer to the Performance Audit. Wildlife Licensing and ParticipationThe general concerns associated with the Wildlife Licensing and Participation Division have to do with the low costs of hunting and fishing licenses, as this constitutes the cost of the division's primary source of revenue outside of federal aid. The breakdown of income sources is illustrated in the following pie chart:(235). By increasing the price of “annual resident and nonresident fishing licenses to $23.00 and $48.00, respectively,” the ODNR could see an increase of $1,748,000 per year (253). “By increasing the nonresident deer permit fee” to $38.00, the department could raise an additional $254,175 per year (260). Fish Hatchery Operations ODNR fish farming is competitive and efficient, “especially when producing at high volumes” (288). They could see an increase in efficiency if fish farming operations obtained largemouth bass from an outside supplier and should see a net gain of $54,944 (288). Boat Registration Operations The vast majority of revenue brought in by the Boat Registration Division comes from state fuel tax and federal grants. Together, these two made up 80.9% of the division's revenue, with an additional 18.3% coming from registration and title fees (290). RTS, or Registration and Titling Section, reported a revenue increase of $267,995 between fiscal year 2011 and last year 2013 (296). Likewise, “total operating cost has decreased over the past three years while registrations have increased” as seen below: (299). Therefore, the vessel registration division is earning more money than it spends while operating efficiently. Income Estimation While attempting to perform a performance audit, the Ohio State Auditor's Office ran into a number of obstacles. The report proposed that ODNR attempt to eliminate organizational barriers, streamline delivery, and promote clear lines of authority and responsibility. (7). The economic effect of these barriers was not directly assessed by the performance budget, but further assessment was proposed for the following areas: prescribed divisions, prescribed positions and ambiguous wording. Having both divisions and prescribed positions could have a negative impact on efficiency as it could “negatively reinforce organizational silos” and increase the overall size and costs of the organization due to the presence of multiple tactical, support and leadership structures sharply separated" (7). The ambiguous wording poses a potential problem as it appears to grant “significant authority to unsupervised division heads,” while also potentially reinforcing “organizational silos,” preventing ODNR from being effective. The department could also benefit from establishing an “asset management” approach similar to that of the National Park Service (NPS). The ODNR currently uses the OAKS Asset Management module, but this system is "not used consistently across alldivisions nor informatively with respect to the actual asset management needs of the Department or divisions" (223). [The objective] of asset management is to "concentrate investments from all sources of maintenance funds on high-performance resources national park priorities to address critical deferred maintenance and code compliance needs” (222). A successful asset management system such as the one implemented by the NPS could prove invaluable in evaluating future allocation of appropriations for the ODNR. , and it is absolutely a recommendation that could aid future success. As stated previously, the Ohio Department of Natural Resources ( ONDR) has a total of 2,089 employees performing day-to-day operations -time, permanent and temporary and another 534 part-time and full-time temporary, intermittent, seasonal, temporary and project employees. With an appropriately sized staff for a state government department, operating expenses can increase rapidly and thus increase the demand for revenue. In fiscal year 2011-2012, total operating expenses were $270.96 million and $299.91 million in fiscal year 2012-2013. ODNR was allocated $326.10 million and $326.61 for fiscal year 2013-2014 and fiscal year 2014-2015, respectively (ODNR Performance Audit, February 2015). This section of our analysis will cover how ODNR collects revenue from a variety of different sources and examine different revenue trends and variations, as well as challenges that ODNR may face in the future. Sources of Parks Revenue There are three funds within ODNR that average 75.2 percent of all department expenditures and appropriations: the General Revenue Fund, the State and Special Revenue Fund Group, and the Wildlife Fund Group. The General Revenue Fund represents an average of $94.68 million per fiscal year, or about 30.9% of the total. The Parks Division is the largest division using this fund, averaging $30.03 million per fiscal year (ODNR Performance Audit, February 2015). Within the state special revenue funds group, “State Park Operations” represents $28.54 million of the $72.24 million in funds per fiscal year. This fund represents 23.6% of the department's total expenditures and appropriations. According to the Ohio Legislative Service Commission (LSC), "these funds are used to cover the majority of the Division's maintenance and equipment expenses, as well as payroll...this item is supported by the State Park Fund, which receives revenue from various revenue-generating functions of [Parks]…the primary source of revenue was camping fees (39.3%), followed by cabin rentals (14.6%), self-operated retail (13, 9%), port permits (9.8%), concession agreements (4.4%) and golf course green fees (4.4%)” (ODNR Performance Audit, February 2015). This fund also includes funding sources such as land leases, vacation rentals, group housing sales, private donations, 75% of proceeds from timber sales from state park lands, and other taxes and fees. The Wildlife Fund Group represents an average of $62.97 million or 20.7% of the total per fiscal year, with the “Wildlife Conservation Division” averaging $54.74 million per fiscal year. According to LSC, "this item is the primary source of operational support for the Division's programs and content, the majority of personnel, maintenance, and other costsDivision operations” (ODNR Performance Review, February 2015). This division is funded primarily by revenue from the sale of hunting and fishing licenses, as well as federal funding from the U.S. Fish and Wildlife Service (FWS) under the Pittman-Robertson Wildlife Restoration Act and the Dingell-Johnson Sport Fish Restoration Act. (ODNR Performance Audit, February 2015). The Performance Audit outlines how ODNR manages 74 parks across Ohio, which vary in size and purpose. These parks provide a fair amount of the total revenue received by the ODNR. The larger parks attract national and international visitors by offering amenities such as lodges and cottages, camping; boating; and access to resources with historical, natural and/or cultural significance. Smaller parks attract local and regional visitors and focus on providing daytime amenities such as picnic areas, hiking, and fishing access. Many of these services are provided free of charge to users, while some, such as accommodation and camping, require a fee. The revenue collected from these services is used in part to cover the operating costs of the services. ODNR parks offer a variety of overnight stays. The main options available are lodges, campsites, cabins and unique “getaways”. ODNR owns all lodges and 185 cabins, which are operated by third-party concessionaires (ODNR Performance Audit, February 2015). Table 5-1 shows the Parks' self-managed overnight stays for calendar year (CY) 2013. As can be seen in the table, the Parks managed 9,543 individual overnight stays in CY 2013, mostly weighted toward campgrounds; 95.5% or 9,118 of the total. Campgrounds and cabins make up the majority of the parks' self-managed inventory, as well as self-generated revenue; 98.6% and 96.2% respectively (ODNR performance check, February 2015). Electric campsites clearly dominate total revenue for self-managed overnight lodging with more than $11 million and an inventory of 4,000 units compared to other lodging. However, it should be noted that, within these two categories, ODNR and Parks leadership have expressed concerns that current shortfalls are impacting the ability to meet customer needs competitively. Specific concerns have been raised regarding an insufficient number of full hooked campsites and an inventory of aging cabins that is no longer sufficiently capable of attracting customers and meeting their needs efficiently and effectively (ODNR Performance Audit, February 2015) . The ODNR has a limited number of properties that can be used for these purposes. In the coming years, new strategies will need to be implemented to keep up with the demand for electric campsites. It should be noted that on a daily basis, the median Preferred Cabin, the most common cabin offering, earns over eight times, or $30.48, more daily revenue than the median Electric Campsite, the most common camping offering (see Table 5 -3 below). The ODNR also collects revenue from a variety of taxes and fees arising from mining, oil and gas. Take the following table for example: The table above shows the State Revenue Special Fund Group's revenue that was collected from registration fees for mining purposes. This item is used to administer safety tests and precautions for mine workers in Ohio (LSC Redbook Analysis of the Executive Budget Proposal Department of Natural Resources, 2013). We found it interesting that in fiscal year 2010 and fiscal year 2011 there was no or minimal funding allocated to a service that would appear to be very necessary. However, in fiscal year 2012, more money was granted and in the fiscal year 2015.