Program Review and Investigations Committee




<MeetMDY1> August 1, 2013


Call to Order and Roll Call

The<MeetNo2> Program Review and Investigations Committee met on<Day><Day> Thursday,<MeetMDY2> August 1, 2013, at<MeetTime> 10:00 AM, in<Room> Room 171 of the Capitol Annex. Representative Fitz Steele, Chair, called the meeting to order, and the secretary called the roll.


Present were:


Members:<Members> Senator Christian McDaniel, Co-Chair; Representative Fitz Steele, Co-Chair; Senators Tom Buford, Perry B. Clark, Julie Denton, Ernie Harris, Jimmy Higdon, Dorsey Ridley, and Dan "Malano" Seum; Representatives Dwight D. Butler, Leslie Combs, Jim DeCesare, Terry Mills, Ruth Ann Palumbo, Rick Rand, and Arnold Simpson.


Legislative Guests: Representative Dennis Horlander.


Guests: Steve Glenn, Commission Vice-Chair, Kentucky Department of Fish and Wildlife Resources; Jonathan Gassett, Commissioner, Kentucky Department of Fish and Wildlife Resources; Benjy Kinman, Deputy Commissioner, Kentucky Department of Fish and Wildlife Resources; Matt Sawyers, Deputy Secretary, Tourism, Arts and Heritage Cabinet; Mona Juett, Office of Intergovernmental Affairs, Tourism, Arts and Heritage Cabinet.


LRC Staff: Greg Hager, Committee Staff Administrator; Chris Hall; Colleen Kennedy; Van Knowles; Lora Littleton; William Spears; Joel Thomas; Stephanie Love, Jessica Sapp, Graduate Fellows; Ashlee McDonald, Kate Talley, Committee Assistants.


Approve minutes for July 11, 2013

Upon motion made by Representative Simpson and a second by Senator McDaniel, the minutes of the July 11, 2013, meeting were approved by voice vote, without objection.


Staff Report: Kentucky Department of Fish and Wildlife Resources

Christopher Hall and Tosha Fraley presented the report. Mr. Hall said that staff were directed to examine the Department of Fish and Wildlife Resource’s (DFWR) governance, organization, and funding. The department is attached to the Tourism, Arts, & Heritage Cabinet (TAHC) for administrative purposes. The cabinet does not have an active role in department policy decisions. The department is governed by a nine-member commission, which acts as a regulatory body and as an advisory board. The commission hires the administrative head of the department. The commission consists of one representative each from nine wildlife districts. Sportsmen in each district nominate five individuals and submit their names to the governor, who selects one and appoints that individual to a 4-year term subject to Senate confirmation.


A conclusion of the report is that within TAHC, other entities are governed by a commission or board in a manner similar to DFWR. Specifically, the Kentucky Horse Park is governed by a 15-person commission whose members are appointed by the governor. The commission appoints an executive director to serve as the chief administrator of the park. The Kentucky State Fair Board is governed by a 15-member board, which appoints a president to serve as the chief executive officer. The Kentucky Historical Society is governed by a 22-member executive committee. A difference in the governance of these entities is that TAHC has no formal representation on the Fish and Wildlife Commission, but the secretary is a voting member on the Horse Park Commission and is a nonvoting member of the State Fair Board. The governor is a member of the State Fair Board and sits on the Kentucky Historical Society’s executive committee, but is not a member of the Fish and Wildlife Commission.


LRC staff compared DFWR's governance to surrounding states, concluding that Kentucky is similar to some states whose fish and wildlife agencies are also stand-alone entities that are governed by a commission. One difference is that Kentucky appears to be the only state in which sportsmen play an active role in nominating members of the agency’s governing body. Specifically, Kentucky is similar to Missouri, Tennessee, and Virginia in that their fish and wildlife commissions set department policy, regulations, and advise the department on actions it should take. These commissions also hire someone to serve as the administrative head of the agency.


Mr. Hall said that DFWR has a commissioner, deputy commissioner, and seven division directors. By statute, the commission is required to meet quarterly in Frankfort. These are open meetings, which are scheduled one year in advance to allow for members of the public to plan their attendance. The commission has an administration, education, and policy committee; a fisheries committee; and a wildlife committee.


A conclusion of the report is that the department is structured and organized so that ideas are reviewed at multiple levels before coming to the full commission for a final vote and that there are multiple avenues for receiving public input.


The three standing committees serve as a first step in the commission approval process. Ideas for regulatory changes, new projects, or research programs typically come from department field staff or Kentucky’s sportsmen. These ideas are passed along to the appropriate division director, who works with the relevant committee members to create a viable proposal. The proposal then goes to the department commissioner, who places it as an agenda item on the next scheduled committee meeting, which typically are held one month before the quarterly meeting of the full commission. Once committee members have discussed a proposal, they can request additional information from staff or forward the proposal to the full commission as an action item at the next quarterly meeting. As such, the public has a least one month to comment on proposals before they go to the full commission.


DFWR does not document the list of items that require approval by the full commission. Recommendation 1.1 of the Program Review report is that “The Kentucky Department of Fish and Wildlife Resources Commission should adopt bylaws that detail operating procedures and guidelines, including procedures used for reimbursing the department commissioner’s travel expenses.”


Based on a review of meeting minutes from the past 3 years, DFWR has been consistent in terms of the items it brings before the commission for approval. These include new administrative regulation and changes to existing regulations; land acquisitions, sales, or transfers; the annual legislative agenda and proposals; and issuance of special permits to nonprofit wildlife conservation organizations.


In 2006, the commission asked the department to develop a 5-year strategic plan to better define the agency’s mission, goals, and objectives. A team consisting of the department’s executive staff, the commission chair, and the chairs of the three standing committees solicited ideas for nearly a year, including through town hall-style meetings to gain input from the public. The department drafted a strategic plan and the commission approved it. The current plan is for FY 2013 – 2017. Nearly all of its objectives have measurable outcomes. Division directors provide regular progress reports on the 5-year strategic plan to the standing committees and to the full commission.


SB 64, enacted in 2010, amended KRS 150.061 to require the department commissioner to be hired under a defined-term contract not to exceed 4 years. A contract was drafted and approved by the commission in June 2010. This contract was not signed by the TAHC secretary or general counsel and did not receive approval from the Secretary of the Finance Cabinet. According to TAHC officials, the contract did not move forward because it included provisions that did not comply with procurement policy. The same officials stated that in October 2010 the original contract was revised to meet procurement policy, but that the contract was never executed. In April 2013, Program Review staff requested a copy of the contract from Government Contract Review Committee staff. According to TAHC officials, it was at this point that they learned that the October 2010 revised contract had never been executed through the eMARS approval process. DFWR and TAHC officials moved to enter the contract into the state’s procurement system, which was completed on May 2, 2013. The contract has since been on the agenda of the Government Contract Review Committee, but has been deferred for the past two meetings.


SB 64 also required an annual review of the department’s commissioner. According to several commission members, they have conducted an annual review since 2010. These reviews occur in closed session, as required by KRS 150.061, so there is no documentation of the discussion or the outcomes.


Under KRS 150.061, the department commissioner is entitled to reimbursement for actual and necessary travel expenses. His annual travel budget is approved by the commission and the TAHC secretary. Out-of-state travel must receive prior approval from the commission and cabinet secretary. At least during the tenure of the current and previous commission chairmen, upon returning from both out-of-state travel and trips within Kentucky, the department commissioner must submit a form accompanied with receipts to the commission chair, who reviews the documents and signs off on the reimbursement. None of the current commissioner’s travel reimbursement requests have been denied.


Ms. Fraley said that a conclusion of this report is that the department’s annual revenue is usually larger than expenditures. Revenue and expenditures for the department are approximately $50 million per year. From FY 2007 to FY 2011, the department had larger revenues than expenditures each year. In FY 2012, the department’s expenditures totaled approximately $57.2 million, $4.5 million more than revenue. The difference was attributable to FY 2012 capital projects and accumulated capital projects from previous years.


Another conclusion is that the department does not receive money from the state general fund, and the majority of the department’s funding is from hunting and fishing license sales and federal programs. These two sources of revenue accounted for 81 percent of total revenue in FY 2012.


In FY 2012, the department collected approximately $26.4 million in hunting and fishing license fees, one-half of the department’s total revenue. The department receives federal revenue through reimbursement. In FY 2012, Kentucky collected approximately $16.6 million from the federal government. These funds must be used for federally approved projects. In FY 2012, boating registration fee revenue totaled $3.6 million, 7 percent of total revenue. In FY 2012, program income revenue was $1.5 million, 3 percent of total revenue. Other sources of income in FY 2012, added up to $4.6 million, 9 percent of total revenue.


The department’s overall revenue has steadily increased over the past 6 years with two exceptions. In FY 2008, revenue decreased slightly because of a drop in federal funds. Revenue decreased in FY 2010 because FY 2009 revenue was particularly high. Federal grant revenue source has fluctuated, peaking in FY 2009 and FY 2011. Program income over the last 6 years is small and relatively erratic. There has been little or no growth in revenue from hunting and fishing license sales and motor boat registration.


In FY 2012, expenditures totaled approximately $57.2 million. The Wildlife Division and the Law Enforcement Division accounted for 45 percent of total expenditures.


Another major conclusion in this report is that in FY 2012, 84 percent of the department’s revenue was subject to federal regulation.


Many of the department’s expenditures are tied to federal funds. In FY 2012, the department received approximately $16.6 million in federal reimbursements. Total expenditures from these federal funds were $14.7 million. The federal agencies that provide funds to the department also provide oversight to ensure that the funds are being used as intended. Most programs require matching state funds. Generally, each program specifies the types of activities and costs that may be funded under the program. States receiving wildlife or sport fish restoration funds must pass legislation restricting the use of hunting and fishing license fees to the administration of the state’s fish and wildlife agency. States that divert these fees to other purposes risk losing future funding or control of projects under the program. Ms. Fraley described the largest federal programs that the department implements.


The department administers Kentucky’s Wetland and Stream Fee-In-Lieu-Of Mitigation Program (FILO). The US Corps of Engineers sets the fees and the department uses the revenue to repair and protect streams and wetlands in parts of the state. Under the agreement between the department and the US Corps of Engineers, fees paid into the program for a project that adversely affects a stream or wetland must be used for mitigation projects within the same water basin. Recent changes to the agreement require that fees be used within 3 years of when they are paid. FILO revenue and expenditures are separate from the department revenue and expenditures. In FY 2012, FILO revenue was approximately $19.5 million and expenditures were approximately $8.4 million.


Another conclusion of the report is that the department is required to have federal and state audits. According to recent audits, the department is in compliance.


Among the audits described by Ms. Fraley is the annual audit of DFWR by the Auditor of Public Accounts. This audit has been required by statute since 2010. This audit ensures there is no commingling of funds, requires program income to be specified by type, checks internal controls, and requires the auditor to submit a report to the Joint Committee on Natural Resources and Environment. According to recent audits, the department is in compliance, but it has received some recommendations, mostly pertaining to a lack of expenditure documentation. The department developed and implemented corrective action plans in response.


Senator McDaniel said that he would like more information on the evaluation of the commissioner. He asked why there is no record of findings and whether there could be a summary at least.


Mr. Hall said that it is up to the department as to whether to provide some kind of record of a closed session. He was unsure of the legal issues involved in publishing something from a closed session.


Representative Simpson said that typically evaluations are in the personnel file. He asked whether such a file exists in this case.


Mr. Hall said that LRC staff asked whether there were records of the evaluation. He was unsure as to whether relevant information existed but was not provided.


Senator Higdon said that one of the conclusions of the report is that there were audit recommendations referring to a lack of documentation. He asked why there was no recommendation in the Program Review staff report addressing this.


Ms. Fraley replied that the issues subject to the audit recommendations have been corrected.


Representative Steele said that the federal government controls the FILO money. It is down because of the federal government's current war on coal. Stream projects have to meet water conductivity standards that are unreasonable.


Mr. Gassett said that the commission has been considering what can be done with bylaws in recent years. The commission can implement the recommendation in the report.


Representative Simpson asked whether Mr. Gassett evaluates his employees and, if so, whether documentation is placed in their personnel files.


Mr. Gassett responded that all full- and part-time merit employees are evaluated. Gubernatorial appointees are not evaluated. He was in that category until Senate Bill 64 was enacted. He has a personnel file, but, to his knowledge, it does not contain any formalized evaluation.


In response to a question from Representative Simpson, Mr. Gassett said that he was appointed by the commission with the approval of the governor.


In response to a question from Representative Simpson, Mr. Glenn said that, speaking for himself, he would not have a problem with including information about the evaluation in the personnel file. He would not include all the details of what was handled in closed session. He does not think that anyone would have a problem of having an overview of what happened in the file. Such a requirement could be part of the bylaws.


In response to questions from Senator McDaniel, Mr. Gassett said that the commission meets quarterly, and that the next meetings would be August 14 and in December. Committees meet before the quarterly meetings.


Senator McDaniel said that he would like the commission to review the recommendation in the report concerning bylaws and respond to the following meeting of Program Review, which would likely be May 2014.


In response to a question from Senator McDaniel, Mr. Gassett said that a lack of growth of hunting and fishing revenue is widespread in the U.S. This is an improvement from a decade ago when such revenue was declining. There are multiple reasons. There is increased competition for time. He mentioned the increase in organized sports for children. There is now a core group of hunters and anglers. The average age of participants is increasing.


In response to a question from Senator McDaniel, Mr. Gassett said that there are no major problems with herd size due to a lack of hunters. An exception is that the bear season is being increased because of more problems with bears.


In response to questions from Sen. McDaniel, Mr. Gassett said that an example of a FILO transaction would be a highway project that will cross a stream or wetlands area. The environmental impact can be mitigated on site or in an adjacent area. The third option is to make a payment for the estimated cost of mitigation. This transfers the burden from the entity doing the project to the FILO program. The 3-year time limit became a requirement last year. Funding for FILO projects before that are not subject to the 3-year limit.


Mr. Kinman said the department has yet to face the issue of what happens if a FILO project’s funds are not spent in 3 years. Mr. Gassett said that the plan is to meet the requirements.


In response to a question from Senator McDaniel, Mr. Gassett said that in deciding which land to purchase, areas are identified that would be of high value to sportsmen. The department tries to get larger tracts of land, at least 1,000 acres. If the property is smaller, it is preferable that it be adjacent to property already owned by the department. The department has been successful in getting external funding for acquisitions.


Mr. Kinman described a $6.6 million acquisition that was done with only $50,000 in revenue from fishing and hunting licenses.


Senator McDaniel said that the Louisville Bats relationship mentioned in the report is not the best outlay of funds.


Mr. Gassett said that the department no longer does this. The rationale was to reach out to youth. The department sold licenses at booths and rented the Jumbotron for advertising. Any other benefits that the department received were part of a marketing package.


In response to questions from Senator Higdon, Mr. Gassett said that most audits of the department have been clean. The department develops a corrective action plan when there is a finding.


In response to a question from Senator Higdon, Mr. Gassett said there is a potential long-term revenue problem due to an aging population. The department will be making minor adjustments to license fees.


In response to a question from Senator Higdon, Mr. Glenn said that having sportsmen play an active role in nominating commissioners works well. Mr. Gassett said that Kentucky is the envy of other states for its nomination process.


Representative Steele said that other reasons for the downturn in license sales to youth are the widespread use of cell phones and playing video games.


Representative Mills said that he visited Camp Earl Wallace last year and was impressed. The department should invest more resources in the camps to get more youth involved in outdoor activities.


Mr. Gassett said that a new initiative is to provide a youth sportsman license as part of the camp fee.


Representative Mills said that Duck Dynasty is coming to the state fair. A public service announcement would be a good idea as a way to encourage more interest in outdoor activities among young people.


In response to questions from Representative Steele, Mr. Gassett said that the department funds three camps with 5,000 participants. The department also funds equipment for outdoor activities at Trooper Island.


Representative Steele said that archery programs should be pushed more in schools. There should be more hands-on demonstrations in schools to educate students about elk.


In response to questions from Representative Simpson, Mr. Gassett said that the department has sometimes tried to survey out-of-state elk hunters to get an idea of the economic impact of the activity. There is economic impact from hunters from other parts of the state too. There have been no surveys of the many people who come to see elk, not hunt them. There are no other large animals that used to live in Kentucky that would be suitable to reintroduce to the state. Among smaller animals, he would like to see larger grouse and quail populations.


In response to a question from Representative Simpson, Mr. Gassett said that when the elk program started 15 years ago, Kentucky got elk from six states.


Representative Steele asked for Mr. Gassett’s view of reports of sightings of big cats in Kentucky.


Mr. Gassett said that until a few years ago, it was legal to own a big cat in Kentucky. It is against state law to kill a big cat. There have been no documented cases of a sighting of a wild, big cat in Kentucky. There are sightings of them in other states, so it is possible that they could show up in Kentucky. Cats that would come here from Florida are federally protected.


Senator Harris encouraged the commission to include a clause in the bylaws to provide for appropriate documentation of the review of the commissioner, which could also be posted online.


Mr. Sawyers thanked the committee for the opportunity for providing information about how the department works.


In response to a question from Representative Simpson, Mr. Sawyers described what the Department of Travel and Tourism does to market the elk district to residents of other states.


Representative Simpson said that his district is near Cincinnati, and he has not seen any such advertising.


Mr. Sawyers said that he would provide details to Representative Simpson on what is being done.


In response to question from Representative Simpson, Mr. Sawyers said that FILO funding cannot be used for this.


Representative Steele said that he was one of the co-sponsors of HJR 11, which passed unanimously [2012 Regular Session]. The resolution requested that the Kentucky Congressional delegation work to amend the Clean Water Act to end the discriminatory standard for water conductivity in Appalachia that prevents the region from setting aside some FILO funding for sewer and straightpipe projects.


Upon motion by Senator McDaniel and second by Representative Simpson, the report was adopted by roll call vote.


The meeting adjourned at 11:30 a.m.