GAO Faults Forest Service for Fee Demo

By secretly taking money from non-Fee Demo funds, the Forest Service has spent $15 million to raise $15 million in Fee Demo receipts.

-Michael Zierhut, Free Our Forests (FOF)Forest

A new report by the Government Accounting Office (GAO) has found fault with the Forest Service's participation in the Congressional Fee Demo program. The report is available online at http://www.gao.gov/new.items/d03470.pdf.

In both American Whitewater's analysis of the report, and an analysis by Free Our Forests, it appears that the Forest Service is spending at least one dollar for every dollar it collects to manage the Fee Demo program.

The Forest Service's reported gross Fee Demo revenue for FY 2001 was over $35 million (p.6). From this figure subtract the reported cost of collection, $5,051,000 (p. 9), the $10 million of appropriated funds used to support the fee demonstration program (p.32), and the $4.6 million in user-fees previously collected at sites that produced fee income prior to becoming fee-demonstration sites [i.e., campgrounds, boat launches, etc. After these adjustments to gross are made, all of Forest Service fee-demo sites in all of the USA generated a total net increase in fee revenues of a mere $15 million or about the same amount required to collect the funds. This calculation does not include administrative costs, which can not be calculated due to incomplete reporting by the Forest Service. Inclusion of those administrative costs would likely push the net revenue from the Fee Demo much lower.

Some of the faults identified by the GAO are included below, the paragraphs that these quotes were drawn from are included afterwards:

Ø "[W]e did find that the Forest Service does not provide consistent information on where fee revenue is being spent." (page 3)

Ø "The Forest Service does not have a process for measuring the impact of fee demonstration expenditures on reducing the deferred maintenance backlog." (page 4)

Ø "[W]hile acknowledging that it has a significant deferred maintenance problem, the agency has not developed a reliable estimate of its deferred maintenance needs." (page 4)

Ø "Although the Forest Service tracks its fee revenues and expenditures separately from other appropriated funds, it does not accurately account for some fee collection costs. Specifically, the Forest Service does not report total revenues and fee collection costs related to discounts that vendors receive for selling recreation passes directly to the public." (page 5)

Ø "[T]he accuracy of program-wide information depicting the amounts of fee revenues spent for various categories is questionable" (page 5)

Ø '[W]e found that the information that the Forest Service provides on categorizing expenditures is not consistently reported. First, the fee program managers do not allocate their expenditures into the spending categories in a systematic manner. Second, the Forest Service fee revenue expenditure reporting categories overlap" (page 16)

Ø "[T]he Forest Service officials stated that their accounting system is not set up to track expenditures into these categories. Local fee program managers, who compile the fee revenue expenditure data, use various methods to record their expenditures. " (page 16)

Ø "[I]n the absence of forest managers having a consistent and systematic method for tracking and recording the expenditure amounts by spending category, the accuracy of the spending information in the agency's annual report is questionable." (page 16)

Ø "Another concern affecting the spending information in the agency's annual report is the subjectivity of the spending categories themselves… expenditures for fee enforcement activities and fee collections may also be reported inconsistently… These inconsistencies further affect the consistency of the Forest Service's reporting of where fee revenues are actually spent." (page 17)

Ø "[T]he agency does not have a process for measuring how much has been spent on deferred maintenance or its impact on reducing its deferred maintenance needs. In addition, while the agency acknowledges that it has a significant deferred maintenance problem, it has not developed a reliable estimate of its deferred maintenance needs. As a result, even if the agency knew how much fee revenue it is spending on deferred maintenance, it would not know if its total deferred maintenance needs are being reduced." (page 19)

Ø "[T]he amount of agency expenditures for deferred maintenance cannot be determined nor can the agency determine whether the backlog of deferred maintenance needs is being reduced." (page 21)

Ø "Although the Forest Services accounting system should capture all revenues and expenses, program officials were not aware at the time the system was developed that vendor discounts should have been captured… Excluding vendor discounts from the cost of collection is also inconsistent with federal financial accounting standards..." (page 25)

Ø "The Forest Service practice of allowing vendor discounts results in inaccurate fee revenue and expenditure reporting… [B]oth fee revenues and fee collection costs are underreported. Because of inaccurate reporting of fee revenues and collection costs, the Forest Service has no assurance that it is in compliance with the recreational fee demonstration legislation requirement only allowing 15 percent of fee revenues to be used for fee collection costs" (page 25)

Ø "[T]he Forest Service accounting system does not track administrative overhead costs for the Recreational Fee Demonstration Program or any other individual program within the agency. As a result the agency cannot determine these costs." (page 32)

SELECTED QUOTES

FROM GAO REPORT (GAO-03-470, APRIL 2003)

Based on the most recent Forest Service data available, in fiscal year 2001, the agency spent 29 percent of its fee demonstration revenue expenditures on visitor services and operations, including trash collection, campfire programs, and visitor satisfaction surveys; 21 percent on maintenance of facilities, such as repairing comfort stations and fixing roofs; and 17 percent on fee collection. The remaining 33 percent was spent on such activities as enhancing facilities, protecting resources, and enforcing laws. The legislation authorizing the fee demonstration program permitted the participating agencies to spend fee revenues on all of these kinds of on-site activities as long as the expenditures contributed to enhancing the visitor experience or helped protect, preserve, or enhance resources. We reviewed the activities of nine demonstration sites in three different regions to verify that the fee revenues were actually being spent in accordance with the authorizing legislation for the program and agency spending priorities. We found no inconsistency. However, we did find that the Forest Service does not provide consistent information on where fee revenue is being spent. At each of the sites we reviewed, officials told us that deciding which category a particular expenditure falls into is a subjective judgment that is not necessarily consistent among sites. For example, the repair of an aging restroom facility could be categorized as either "maintenance," or a facility enhancement that could fall into the "other" category.[1]

The Forest Service does not have a process for measuring the impact of fee demonstration expenditures on reducing the deferred maintenance backlog. According to the Forest Service, the agency does not track the extent to which fee demonstration expenditures have been used for deferred maintenance for a number of reasons including the temporary nature of the program and because the agency is not required by the fee program legislation to measure the impact of fee demonstration revenues on deferred maintenance. Further, while acknowledging that it has a significant deferred maintenance problem, the agency has not developed a reliable estimate of its deferred maintenance needs… [L]ike the Forest Service, the Park Service has not yet developed a reliable estimate of its deferred maintenance needs.[2]

The Forest Service keeps its fee demonstration revenue in two different Treasury accounts separate from its other appropriated funds, as required by the authorizing fee program legislation. Eighty percent of its fee revenues are maintained in an account for expenditure without further appropriation at the site where the fees were collected and 20 percent of its fee revenues in another account for expenditure on an agencywide basis without further appropriation. Although the Forest Service tracks its fee revenues and expenditures separately from other appropriated funds, it does not accurately account for some fee collection costs. Specifically, the Forest Service does not report total revenues and fee collection costs related to discounts that vendors receive for selling recreation passes directly to the public.[3]

The Forest Service is responsible for managing over 192 million acres of public lands in the United States. In carrying out its responsibilities, the Forest Service traditionally has been a decentralized organization, in which its programs are administered through 9 regional offices, 155 national forests, and over 600 ranger districts (each forest has several districts). The Forest Service implemented the Recreational Fee Demonstration Program in fiscal year 1996 with four demonstration sites that generated $43,000 during the year.1 The program has steadily grown over the past 5 years and covers 87 sites, in 80 national forests, that generated over $35 million in fiscal year 2001. A demonstration site may consist of an individual forest; a group of forests, such as the National Forests in Texas; or a specific area or activity within a forest, such as Mount St. Helens National Volcanic Monument in the Gifford Pinchot National Forest in Washington.[4]

On the national level, the most recently available information indicates that about one half of the fee revenues were being spent for visitor services and maintenance activities. However, because the agency relies on subjective determinations by local forest managers to categorize its expenditures, these determinations are not consistent among sites. Accordingly, the accuracy of program-wide information depicting the amounts of fee revenues spent for various categories is questionable.[5]

The Nantahala River Gorge, one of the sites in the National Forests of North Carolina fee demonstration project, is a world-class whitewater river that attracts about 250,000 people annually. In fiscal year 2001, the site generated about $208,000 in fee revenues through user fees and special use permits for commercial outfitters. During that year, the site spent over $292,000 in fee revenues, which included revenues generated from prior years. Nantahala Gorge officials spent most of their fee revenues to upgrade or enhance facilities for serving visitors. For example, they spent about $150,000 by providing handicap accessibility, improving visitor safety, and eliminating erosion and sedimentation of the Nantahala River by constructing a concrete surface for launching boats and rafts on the river. The following figure shows the enhanced boat-launching area.[6]

However, we found that the information that the Forest Service provides on categorizing expenditures is not consistently reported. First, the fee program managers do not allocate their expenditures into the spending categories in a systematic manner. Second, the Forest Service fee revenue expenditure reporting categories overlap.

The Forest Service reports its fee demonstration expenditures using spending categories largely corresponding to those identified in the legislation authorizing the demonstration program. These categories are visitor services and operations, maintenance, interpretation and signing, facility enhancement, resource preservation and enhancement, security and enforcement, and cost of collection. However, the Forest Service officials stated that their accounting system is not set up to track expenditures into these categories. Local fee program managers, who compile the fee revenue expenditure data, use various methods to record their expenditures. At the sites we visited, we found that local managers relied on a variety of financial information sources such as project work plans and job code summary reports, as well as reviewing bills and receipts, as a basis for allocating their expenditures into the reporting categories. Further, one manager stated that he also interviewed his staff on work performed and the time they devoted to various tasks to estimate the amount of fee revenues spent in each reporting category. Accordingly, in the absence of forest managers having a consistent and systematic method for tracking and recording the expenditure amounts by spending category, the accuracy of the spending information in the agency's annual report is questionable.[7]

Another concern affecting the spending information in the agency's annual report is the subjectivity of the spending categories themselves… expenditures for fee enforcement activities and fee collections may also be reported inconsistently. For example, we found that some sites we visited reported fee enforcement activities as part of their "cost of collections." However, other sites reported fee enforcement activities as part of their expenditures for "security and enforcement." These inconsistencies further affect the consistency of the Forest Service's reporting of where fee revenues are actually spent.[8]

The Forest Service has used a portion of its fee program revenues to help address its deferred maintenance backlog. However, the agency does not have a process for measuring how much has been spent on deferred maintenance or its impact on reducing its deferred maintenance needs. In addition, while the agency acknowledges that it has a significant deferred maintenance problem, it has not developed a reliable estimate of its deferred maintenance needs. As a result, even if the agency knew how much fee revenue it is spending on deferred maintenance, it would not know if its total deferred maintenance needs are being reduced.[9]

However, even though the Forest Service is spending a portion of its fee revenues in this area, the agency does not specifically track how much it spent on deferred maintenance. So, expenditures like the trail maintenance at Nantahala Gorge are reported as a "resource preservation and enhancement expenditure." Because the Forest Service uses this approach, the amount of agency expenditures for deferred maintenance cannot be determined nor can the agency determine whether the backlog of deferred maintenance needs is being reduced.[10]

Forest Service officials told us that there are a number of reasons why the agency has not developed a process to track deferred maintenance expenditures from fee demonstration revenues. First, the agency chose to use its fee demonstration revenue to improve and enhance on-site visitor services rather than to invest its fee demonstration revenues for developing and implementing a system for tracking deferred maintenance spending. Second, the fee demonstration program is temporary and it is unclear at this time whether the Congress will make the program permanent. As a result, agency officials said that this uncertainty makes them question the wisdom of developing an additional process for tracking deferred maintenance. Finally, the agency was not required by the fee program legislation to measure the impact of fee revenues on deferred maintenance. They have chosen not to do so.[11]

The federal agencies participating in the Recreational Fee Demonstration Program are required by the authorizing legislation to maintain fee revenues in separate Treasury accounts and to account for fee expenditures separately from other appropriated funds. Consistent with this requirement, the Forest Service accounts for its fee revenues and expenditures separately from other appropriated funds, even when using fee demonstration revenues along with other appropriated funds… Although the Forest Service generally tracks its fee revenues and expenditures separately from other appropriated funds, it does not accurately account for some fee collection costs.[12]

Forest Service officials in the Pacific Southwest and Pacific Northwest regions did not record the vendor discount and did not count vendor discounts as part of their fee collection costs. Although the Forest Services accounting system should capture all revenues and expenses, program officials were not aware at the time the system was developed that vendor discounts should have been captured. Forest officials at the locations where this was occurring could not tell us the total amount of vendor discounts that the agency has permitted. Excluding vendor discounts from the cost of collection is also inconsistent with federal financial accounting standards and the U.S. Department of Agriculture financial manual. These standards require that total revenues and expenses be reported.

The Forest Service practice of allowing vendor discounts results in inaccurate fee revenue and expenditure reporting. Because the vendor retains the discount rather than the Forest Service first collecting all fee revenues and then paying the vendor out of these revenues, the amount of fee revenues that the forest receives is reduced. In addition, the vendor discounts are not included as part of fee collection costs. Thus, both fee revenues and fee collection costs are underreported. Because of inaccurate reporting of fee revenues and collection costs, the Forest Service has no assurance that it is in compliance with the recreational fee demonstration legislation requirement only allowing 15 percent of fee revenues to be used for fee collection costs.[13]

[I]t appears that the fee demonstration revenues were used to supplement rather than supplant recreation program funds.[14]

Forest Service officials estimate that in 2001 the agency spent about $10 million of appropriated funds to support the fee demonstration program.[15]

[T]he Forest Service accounting system does not track administrative overhead costs for the Recreational Fee Demonstration Program or any other individual program within the agency. As a result the agency cannot determine these costs. Fee program expenses that could be considered administrative overhead are comprised of the cost of collecting fees and expenditures for routine program operations provided at the fee demonstration sites-such as on-site management support, site operation and maintenance planning activities, and conducting on-site visitor surveys. In fiscal year 2001, the Forest Service spent approximately $5.1 million in fee revenues for fee collection. In addition, the national fee program manager estimates that a small percentage of the $8.6 million spent for fee program operations in fiscal year 2001 could also be considered administrative overhead.[16]

The Forest Service pays for its annual national meeting of fee demonstration program managers and staff using other recreation appropriated funds although agency officials told us that some attendees may use fee demonstration program funds if it is part of their training program.[17]

PLEASE WRITE YOUR CONGRESSMAN

AND SENATORS!

Please take a minute to write or call your Congressman and your State's Senators to share your opinion about forest fees. Call the Congressional switchboard at (202) 224-3121

to be connected. Here's a list of Senators from the major Western States that have forest fees, with their phone numbers and addresses.

WESTERN SENATORS

CA - Barbara Boxer (202) 224-3553;

112 Hart, Washington, DC 20510

CA - Dianne Feinstein (202) 224-3841;

331 Hart, Washington, DC 20510

OR - Gordon Smith (202) 224-3753;

404 Russell, Washington, DC 20510

OR - Ron Wyden (202) 224-5244;

516 Hart, Washington, DC 20510

WA - Maria Cantwell (202) 224-3441;

717 Hart, Washington, DC 20510

WA - Patty Murray (202) 224-2621;

173 Russell, Washington, DC 20510

ID - Larry Craig (202) 224-2752;

520 Hart, Washington, DC 20510

ID - Michael Crapo (202) 224-6142;

111 Russell, Washington, DC 20510

UT - Robert Bennett (202) 224-5444;

431 Dirksen, Washington, DC 20510

UT - Orrin Hatch (202) 224-5251;

104 Hart, Washington, DC 20510

MT - Max Baucus (202) 224-2651;

511 Hart, Washington, DC 20510

MT - Conrad Burns (202) 224-2644;

187 Dirksen, Washington, DC 20510

CO - Wayne Allard (202) 224-5941;

525 Dirksen, Washington, DC 20510

CO - Ben Nighthorse Campbell (202) 224-5852;

380 Russell, Washington, DC 20510

AZ - Jon Kyl, (202) 224-4521;

730 Hart, Washington, DC 20510

AZ - John McCain (202) 224-2235;

241 Russell, Washington, DC 20510

ON THE PHONE (A brief phone message is adequate.)

* Tell your Senator or Congressman's staff that you've seen the GAO Report about Fee Demo on our National Forests (the Report's number is GAO-03-470);

* Tell them why you're calling about it - (example) The Forest Service is unaccountable for the fee money they've spent. - Forest fees make so little money - and are so unpopular - that they need to be terminated this summer;

SAMPLE LETTER (Please vary it somewhat from this sample version!)

Dear Senator...,

I've seen the GAO Report on the Recreation Fee Demo Program on our National Forests and do not believe this program should be reauthorized since the Forest Service is not accountable for the money the Agency has raised with forest fees.

The Forest Service has been supplementing their fee revenues with $10 million in appropriated tax dollars, which means they spent $15 million in 2001 to raise $15 million, when Congress limited Fee Demo's cost of collection to 15% of revenues.

Will you find out for me the total amount of appropriated dollars that the Forest Service has used on forest fees since 1996 and what it was spent on?

(Add why you personally oppose forest fees.)

Yours,

Sincerely,

(PLEASE PRINT YOUR NAME AND ADDRESS VERY CLEARLY.)