Interim Joint Committee on State Government
Call to Order and Roll Call
The fourth meeting of the Interim Joint Committee on State Government was held on Wednesday, October 23, 2013, at 12:00 Noon (CDT) in the picnic pavilion at Lake Malone State Park, Belton, KY. Representative Brent Yonts, Chair, called the meeting to order, and the secretary called the roll.
Present were:
Members: Representative Brent Yonts, Co-Chair; Senator Stan Humphries; Representatives Dwight Butler, Will Coursey, Derrick Graham, Mike Harmon, Kenny Imes, James Kay, Martha Jane King, Mary Lou Marzian, David Meade, Brad Montell, Tom Riner, Bart Rowland, Steven Rudy, and Ken Upchurch.
Guests: Elaine Walker, Kentucky Department of Parks; Molly Caldwell, Kentucky State Parks Foundation; Joseph House; Bobby Allen; Melody Vaught; and Donald Phelps.
LRC Staff: Judy Fritz, Brad Gross, Greg Woosley, and Peggy Sciantarelli.
Approval of Minutes
Due to lack of a quorum, approval of the minutes of the September 25 meeting was deferred until the November meeting.
Subcommittee Report
The subcommittee report of the Task Force on Elections, Constitutional Amendments and Intergovernmental Affairs was deferred until the November meeting.
The Kentucky State Parks System
Representative Yonts said the meeting is being held at Lake Malone to draw attention to the plight of the state parks—particularly the small parks—to hear concerns of local citizens, and provide an opportunity for committee members to experience the beauty of Lake Malone. In response to a letter he received from Jo Ann Griffin relating to conditions at Lake Malone, he said that he, Representative King, and other legislators have begun to focus on the funding needs of the parks system. Lake Malone formerly had 27 employees but now has only a part-time manager and two part-time contract laborers, who have done a tremendous job.
The first guest speaker was Department of Parks Commissioner Elaine Walker. (Subsequent to the meeting, she provided paper copies of her presentation for distribution to the entire committee.)
Commissioner Walker said the parks are an economic driver in the state, particularly in distressed areas. The goal of the parks continues to be to provide all citizens access to some of the most beautiful land in the Commonwealth. The Department of Parks has been and continues to be in serious financial trouble. Escalating personnel and business costs and an eroding customer base have brought the situation to the critical stage. There have been numerous attempts to reverse this course, but until revenue issues are addressed, the customer base will continue to erode, thus affecting the future of the parks. The department has developed a strategy for the future that will help manage some of the challenges.
General Fund receipts from FY 2004 through FY 2013 have remained relatively flat—in the $28-$30 million range. Two supplemental $5 million appropriations in 2008 and 2010 were quickly absorbed. In addition, receipts have diminished from a high of over $55 million in 2007 to a low of $48 million in 2012. Contributing factors were a downturn in the economy, a change in visitor vacation patterns, declining guest services, and a reduction in government sector conference and meeting business. Personnel costs have escalated despite a significant reduction in full-time staff and cuts in the number of hours worked by field staff. Retirement and health insurance costs peaked in FY 2011, though personnel had decreased. Today, those costs alone are almost $12 million. In addition, from 2000 to 2007, at the same time that revenue and receipts were shrinking, the department was dealing with a dramatic increase in new construction: six 18-hole golf courses; one 9-hole golf course; expansion of one 9-hole course to 18 holes; four pro shops; three conference centers; two meeting facilities; two campground grocery stores; and one visitor center. No added funding was received for maintenance. Costs associated with one 18-hole golf course, under a five to seven year replacement schedule, average $2.5-$3 million. Operating and maintenance funds for these new structures have been reduced from $11 million in FY 2000 to approximately $5 million in the current biennium.
The department has been unable to meet the standard life cycle for replacement of most infrastructure. Repair dollars have been stretched to a level that can lead to complete breakdown of boilers, chillers, and wastewater treatment plants. The department cannot meet the industry standard that typically requires replacement of in-room amenities, furnishings and linens every five to seven years.
Technology challenges are dramatically impacting services. Critical software, particularly in the resort parks, is so outdated that the department is facing a cost of about $150,000 simply to upgrade basic hardware until a new system can be created. It requires 11-13 clicks to make a reservation on the department’s web site; the industry standard is three to five clicks. Park reservations cannot be booked through programs like Travelocity and Expedia. To address these problems requires a new, multi-faceted property management system, upgrading of 13 parks telephone systems, installation of wireless in many facilities, and upgrades in the point-of-sales systems at a projected cost of about $4 million.
Commissioner Walker commended both central office and park staff as being among the finest in state government. She said increased efficiency of operation and a change in culture have been achieved since development of the 2010 Kentucky State Park Operations Strategic Plan, but outside forces continue to affect the ability to maintain and grow. To decrease expenditures over the last several years, the department transferred three parks to the Constitution Square, Ben Hawes, and Benham-Lynch local governments, repurposed four golf courses, and reduced full-time staff by 23 percent from 1,071 in 2007 to 814 in 2013.
A number of years ago, week hours for parks field staff were reduced from 40 hours to 37.5 hours. Because of the seasonal nature of park operations, the department has been given authority to reduce field staff during the off season based on business needs. Weekly hours for workers have been cut by as much as 20 percent during the winter months, going from 37.5 to 30 hours. This has hurt morale and diminished the level of services. The department has advised staff that they will remain at 37.5 hours during the winter season, with the goal of maintaining that as the new normal. The impact of this measure has dramatically improved morale of field staff.
The department is endeavoring to develop more public-private partnerships. There is an agreement with Golf Now to provide tee time reservations at the golf courses, along with promoting and marketing the courses. The Kentucky State Parks Foundation is a key partner. The department is also working closely with Friends groups, which are concerned citizens who work together to support their local parks.
During strong economic times Lake Malone State Park had as many as nine full-time employees. Staffing this year is equivalent to 4.5 full-time staff, prior to Labor Day, including two maintenance people, a part-time boat ramp attendant, one campground attendant, and an interim park manager. Volunteers have also been utilized to care for the campground area at Lake Malone and other park campgrounds. Four areas at Lake Malone have been designated wildlife management areas. This reduces mowing and enhances wildlife habitat and growth of native grasses and wildflowers. At Lake Malone 2012 was a difficult transitional year, but many improvements have been made in 2013.
Commissioner Walker recognized in the audience Teresa Wells, the interim Park Manager, and thanked her and other park staff for doing a great job. She said gas tanks at the boat ramp have opened for the first time in three years. The campground was 100 percent booked on its improved camp sites at least three-quarters of the season. This occupancy was aided greatly by the Friends Group. Lake Malone, like other recreation parks, is generally open April 1 through October 31 with limited seasonal operations.
Commissioner Walker said the parks need an increased revenue stream. The need to focus on maintenance and related health and safety issues has limited the ability to address other areas. The department needs assistance in pursuing public-private partnerships and continuing efforts to streamline operations. The ability to partner with the private sector can be cumbersome. For example, when someone offered to donate free mowing at one of the smaller parks in return for harvesting some of the hay, it took two months to complete the required Request for Proposals (RFP) process. Kentucky has a wonderful park system with valuable and faithful employees and customers. It is important to preserve the natural and historic sites so that they will be available to all Kentuckians and attract visitors from around the nation. The state park system plays a significant role in the economy for rural communities. Investing in the parks is good business sense. The economic impact from state parks was more than $840 million in 2011.
Representative Yonts thanked Ms. Wells and other employees who were present for their service. He pointed out that underfunding of the parks have led to the closing of area businesses. He also emphasized the valuable role of partnerships.
Representative Montell asked about potential opportunities for future public-private partnerships to maintain and operate the lodges and golf courses. Commissioner Walker said the cost to operate one of the golf courses is $330,000 each year. Two of the 16 courses are close to breaking even. The 9-hole course at Rough River recently closed because it was not profitable. The private sector is not interested in park operations that are not profitable. An optimal way to structure private sector involvement would be to provide land at no cost for the private sector to build, operate, and maintain a facility, with a percent of profits returned to the parks system. In other words, the focus should be to stop looking to the private sector to take over existing facilities and to instead ask what the private sector would like to create. The RFP for a canopy/zip line tour left open the choice of park in which to locate it. One response was received to the RFP, and the department believes the canopy tour will generate a revenue stream.
Representative Riner asked about innovative strategies employed by other states. Commissioner Walker said she is a member of the National Association of State Park Directors. There is a constant flow of information, and the members work with their partners to learn best business practices. Kentucky is unique in that few other state park systems have as many resort parks and golf courses. Representative Riner said Kentucky might be able to offer things that other states do not. He suggested that a shooting range centered around the traditional Kentucky long rifle might attract visitors. Commissioner Walker said the parks are expanding their archery and shooting ranges wherever possible. She will soon be conducting a planning session with staff and park managers to hear their ideas.
Responding to questions from Representative Graham, Commissioner Walker said she does not have total knowledge of the new constructions mentioned earlier because they were initiated prior to her tenure, but most were projects requested by the legislature. The department did not necessarily receive additional funds for their operation and maintenance. The 23 percent cut in full-time staff included both field and central office staff. The Frankfort office has several vacancies, but existing staff have worked hard to cover those additional responsibilities. The department has a little over 800 full-time staff. A few resort parks continue 7-day operations and may supplement with temporary staffing. The goal is to maintain a staffing level for parks to continue operating during reduced winter hours, supplemented as necessary during the off season. Volunteer support from communities is key to the success of the parks system. Representative Graham said the state parks are a treasure of the Commonwealth, and he commended Commissioner Walker and all parks staff.
Responding to questions from Representative Rudy regarding the golf courses, Commissioner Walker said none are operating in the black, although one could be considered profitable if calculated on a seasonal basis. This is not unusual, however; none of Bowling Green’s three golf courses operated in the black during her tenure as mayor. The two courses that are close to being profitable are at Dale Hollow and My Old Kentucky Home State Parks. Where allowed by local ordinance, the sale of alcoholic beverages is proving beneficial, particularly at Jenny Wiley. Currently three resort parks and two recreation parks are allowed to sell alcohol; two additional parks are under consideration.
When Representative Upchurch asked about the financial status of the parks and golf courses and the future outlook, Commissioner Walker said the department’s budget appropriation was about $28 million, with revenue estimated at approximately $48 million. Though striving to stay within budget, the department currently is somewhat over budget. The golf courses cost a little more than $2 million to operate; specific data is available for each course. One 18-hole course runs a deficit of $200,000-$300,000. The department is still in the process of financing some of the golf courses and cannot close them. Nine-hole courses were closed at Kenlake and Rough River. The department is looking at repurposing the Rough River location, which has promising potential. Possibly a partnership with the private sector can be developed to generate revenue at the golf courses.
Senator Humphries said, in his opinion, the parks that sell alcohol should retain revenue from those sales. Commissioner Walker said, technically, those receipts go into the total parks budget, but they are used to support the operation of those specific parks.
Senator Humphries said he has heard park visitors comment that they expected a more manicured appearance. He also asked about the need to address health and safety issues at the parks. Commissioner Walker said the necessity to use maintenance pool dollars for upkeep of boilers, chillers and wastewater treatment limits the ability to meet the industry standard for upgrading furnishings. Maintenance needs though have benefited from the assistance of community volunteers.
Representative Meade asked about technology needs and the inability to coordinate with online travel booking agencies. Commissioner Walker said the department plans to issue an RFP next week for a property management system. The goal is to work with companies who would provide hardware and software to enable the parks to improve booking and electronic communication, in return for a set fee or percentage of transaction. If this is not successful, the department will be requesting additional funds to upgrade its 20-year-old technology system.
Representative Yonts asked about status of the parks relative to the 2008 budget. Commissioner Walker said the department was much better off in 2008 and would clearly benefit from additional revenue. Representative Yonts expressed appreciation for the presentation and for the good work the department is doing in spite of a limited revenue stream.
The next guest speaker was Molly Caldwell, President, Kentucky State Parks Foundation. She said she was hired in June 2013 and has so far met with park managers, visitors and Friends groups at 30 parks. A bequest from a northern Kentucky fan of Kentucky state parks helped create the Foundation in 2006. Since that time there has not been any large fundraising effort. The mission is to protect, promote, enhance and advocate for the natural, historical and cultural resources of Kentucky's state parks and historic sites. She is working to promote partnerships with corporate and individual investors. Her task would not be possible without help from local supporters. The Foundation is promoting awareness and is sponsoring an October 24 event at Keeneland. The Foundation works with the Friends groups and accepts grants on a quarterly basis. At this time $350,000 in applications has been received, and nearly $200,000 of that money has been funded. The Foundation also has a goal to help Friends groups attain 501(c)(3) status. This status is currently being sought by the Friends of Lake Malone, and they are working closely with the Lake Barkley Friends group. Responding to a question from Representative Yonts, Ms. Caldwell said that a group of committed volunteers may apply for grant funding from the Foundation without having 501(c)(3) status.
The third invited speaker was Joseph House, a resident of Greenville, Kentucky, who owns a construction company and is employed as a registered nurse at the hospital in Madisonville, Kentucky. Mr. House said he is a regular visitor of Kentucky state parks. He complimented the beauty of Kentucky Dam Village State Park and food at the lodge restaurant but said there was a shortage of dining room personnel, who he learned were day laborers not employed by the state. During his visit to Rough River State Park, the dining room was well staffed. Citing his experience as a businessman, he suggested that the department outsource unprofitable operations to the private sector. Lifts should be installed at the Lake Malone and other park marinas so that disabled visitors are able to enter and exit the boats. The cabins at Kentucky Dam Village would benefit from refurbishing; however, he was pleased that he was able to negotiate his room rate there. Muhlenberg County has a federally funded Job Corps program that might be an option to assist with maintenance at Lake Malone and save money for the Commonwealth. The legislature and citizens of Kentucky must work together to promote ways to preserve the parks and make them profitable. Representative Yonts recalled a past RFP for building cabins at Lake Malone that received no response. He emphasized the importance of structuring an RFP so that it will attract private sector bidders.
Representative King, who has lived at Lake Malone since 1962, said it has a unique history. The residents understand that the relationship with the state has changed over the years. A pivotal time was during a previous administration when funding was cut, the marina was closed, and the Department of Fish and Wildlife Resources began assessing fees at the park. She understands the funding problem and said that she and the other local residents are ready and willing to work with the department for the benefit of Lake Malone.
Citizen Testimony
Representative Yonts read a prepared statement from Kenny Higgins, a resident of Greenville who was invited to testify but could not be present. In his statement, Mr. Higgins said he was an employee of Lake Malone State Park for 35 years and served as superintendent from 1977 until retiring in 2006. At its highest level of employment during his tenure the park had as many as 27 employees, including lifeguards and boat dock employees. Since 2004 the park has lost approximately 20 employees and now has only a part-time assistant manager and two temporary contract laborers. For the first time in history there is no full-time park manager or full-time water/sewer operator. Because there is no ranger there are fewer visitors to the campgrounds. A wildflower trail created by the donation and work of retired school teachers and community leaders is now overgrown and has been designated a wildlife area, effectively being abandoned. An area that was formerly well kept and used for picnics was turned into a wildlife area, security lights were removed, and it was closed at night time, bringing many complaints from citizens. A former club house that had a grocery store, a park office, and living quarters for the superintendent developed structural problems and was torn down but was not rebuilt as promised. The beach area no longer has lifeguards, a nurse’s station, or first aid station. Trash frequently builds up. The lake once had two pontoon boats, eight paddleboats and 10 fishing boats. One pontoon was damaged by a falling tree, and the other boats were transferred to other parks. The boat dock can sell gas and fishing supplies; however, it has a sign on the door with a number to call if gas is needed, and the office is often left unattended. The campground facility is frequently not occupied, and there is often no cell phone service. In the 1970s the state condemned 25 acres above the boat and beach house area and paid $104,000 for the property. The land was never developed and has been essentially abandoned. Another 50 acre tract that was formerly leased to farmers and brought in annual revenue of about $2,000 has become unusable. Without success, various groups have asked that this tract be used for horse or RV trails.
The land for Lake Malone State Park was donated, but the park is being allowed to fade away. Because the Parks Department has failed in its mission, a nearby golf course, housing project, country store, and RV park have failed. The park has been dying, and that has affected profits not only for the park but also for the surrounding community that has devoted many years to keeping it alive. Mr. Higgins closed by saying he believes that, with help, the park can become the thriving park it once was.
Three other local citizens spoke and urged support of Lake Malone State Park: Bobby Allen, pastor at Belton Beechmont General Baptist Church, Beechmont, Kentucky; Melody Vaught, Belton, Kentucky; and Donald Phelps, a Friends of the Park member.
Mr. Phelps said the group has attempted to get the Department of Parks to have tornado-damaged timber harvested; the only response has been, “We are working on it.” Representative Yonts asked Commissioner Walker whether an RFP can be issued for this purpose. She apologized for the delay and said the department is now in the process of resolving that issue.
Adjournment
Representative Yonts announced that members who wish may take a riding tour of the park on a low-level trailer, courtesy of Darrin Benton, a Muhlenberg County magistrate. With business concluded, the meeting adjourned at 2:38 p.m.