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Kentucky State Parks update: Improving … but still much ground to cover

By Joel Peyton

Executive Summary

Considerable improvements have been made at Kentucky State Parks since the Bluegrass Institute issued a policy report last year entitled “Mousetraps and Stale Coffee: Making the Case for Privatizing Kentucky State Parks.” This roadmap offered ideas for reducing spending while improving services provided for visitors to Kentucky State Parks.

Numerous improvements made by the parks system during the past year, including outsourcing camping reservations, reducing mowing areas and eliminating unneeded personnel positions will save taxpayers money and improve the quality of service at Kentucky’s state parks.

Although these are great improvements, we offer the following steps that leaders of the Kentucky State Parks should take to further improve services and become fiscally self-sustaining:

• Charge user fees.

Other states, including Vermont – where user fees have allowed the system to become self-supporting – have proven that most people are willing to pay a small price to enjoy a day at a beautiful state park.

• Abandon the golfing business.

Detroit, Los Angeles and New York have gotten their greens out of the red by outsourcing their facilities. The deficit-ridden Kentucky State Park system could also benefit from contracting out its operations and services. However, some Kentucky officials seem determined not only to maintain the 20 government-run state parks’ public courses, but also to build new ones.

• Use competitive sourcing.

Officials could make parks more efficient and effective by opening up state jobs to competition from the private sector. The provider who performs the service best at a competitive price ought to win and taxpayers should reap the benefit from the savings produced through competition.

Taking these steps to adopt best practices from other states and nations will improve the services provided by our state parks, increase their revenue streams and go a long way toward eliminating the system’s $28 million deficit.

Introduction

Millions of visitors make the trek to behold the rustic wonders of Kentucky’s 52 state parks each year. From the beauty of Cumberland Falls to the enormous Natural Bridge, Kentucky State Parks have always provided guests with an unforgettable scenic experience.

But the commonwealth’s parks have not always been managed effectively, which has resulted in a deficit-ridden system.

In 2004, George Ward became a man on a mission after Gov. Fletcher made him Commissioner of the state’s Department of Parks. In April 2004, Ward, who is now the secretary of the Commerce Cabinet, which oversees the state parks department, and former Commerce Secretary Jim Host announced that they planned to increase the amount of money spent by park visitors, eliminate wasteful spending and run the system more like a business and less like a typical government agency. 1

To assist their efforts, the Bluegrass Institute published a policy report last year – “Mousetraps and Stale Coffee: Making the Case for Privatizing Kentucky State Parks” – that focused on the management and fiscal condition of the commonwealth’s parks system.

The report offered a reminder of the inefficiencies of government-run operations, especially when compared to private-sector practices. It addressed the park system’s $29 million annual deficit and lack of response to customers’ complaints.

As a microcosm of the parks’ overall poor performance, the report noted that the newly branded coffee machines that had been placed in the lobbies of the state’s 17 resort parks were broken and offered cold cups of coffee.

Improving …

Since that report was published, the department has gotten rid of Starbucks in the lobbies and made other changes. Still, more improvement is needed in order to make substantial progress in eliminating the system’s large – and continuing – deficit.

First, this update reports on improvements that Ward has introduced to our state parks’ system. It concludes by offering ideas – based largely on other states’ best practices – that will result in further cost savings and better service for visitors to Kentucky State Parks.

Camping reservations

In the past, Kentucky State Parks did not take camping reservations, leaving campers to take their chances on a first-come, first-served basis. This policy discouraged campers from driving hundreds of miles only to pull into a campground where every spot was taken.

This problem was solved earlier this year when Kentucky’s state parks began accepting reservations online and by phone for the system’s 32 campgrounds through a service outsourced to ReserveAmerica.

By April, more than 7,000 camping reservations – of which 40 percent were made online – had been secured for 35,000 nights. Ward estimates that $574,000 was generated by camping reservations and walk-in customers alone during the first two months of operation. 2

Another benefit of outsourcing is that customers can now make reservations and get answers to their questions, including information about campsites, maps, facilities and available services from the ReserveAmerica Web site and call center.

In the past, many employees working at the park system’s phone switchboards did not have sufficient information to answer callers’ questions. Or, calls transferred to a campsite’s phone were not answered because workers were engaged in other duties.

Minimal mowing

To further trim costs, the department now mows fewer acres of grass in state parks.

More than 400 fewer acres are being mowed and more than 600 acres are allowed to grow in places where parks department employees had previously provided upkeep. Doing so will help Kentucky State Parks achieve its goal of displaying more wilderness-type areas.

Ward estimates these steps will save around $90,000 annually in equipment, maintenance and fuel costs. 3

Leaner workforce

Another cost-saving step requires Kentucky State Parks’ managers to justify the number of seasonal employees employed.

In the past, managers simply rubber-stamped funding for the number of employees it funded the previous year. Managers must now provide evidence that their manpower requests are based on genuine needs, not tradition.

This new policy has resulted in 162 fewer seasonal hires between 2004 and 2006. Also, Ward reports that the parks system is operating with more than 100 fewer permanent full-time merit employees than it was just two years ago. The total savings in salary and benefit costs from cutting both the seasonal and full-time workforce amounted to nearly $300,000. 4

… more ground to cover

While the changes implemented by Ward and his team have made up some ground, the Kentucky State Park system remains an economic drain on taxpayers. In order to become a self-sustaining operation – meaning that revenues generated by the parks equal the facilities’ expenses – the department should take the following steps:

Implement user fees

A meager entrance fee would offer the commonwealth’s state parks – especially the non-resort facilities – a source of revenues. Similar policies in other states lead us to believe that most visitors would be willing to pay a few dollars to enjoy Kentucky’s beautiful parks.

For example, Vermont’s state parks, which received nearly 40 percent of its budget from general funds during the 1980s, became self-sustaining in 1993 and have remained so ever since. To cease being a drain on Vermont’s general fund, that state’s parks system increased fees, improved marketing efforts and dedicated some revenues to a rainy day fund used to provide for emergency maintenance expenses during the periods of inclement weather occurring in the state each winter. 5

These fees are especially helpful in providing non-resort parks with limited revenue streams the funds to make badly needed improvements or renovations. Perhaps Kentucky could follow the example of the National Park Service, which implemented a user-fee program and allowed participating parks to keep 80 percent of the revenues collected from those fees. 6

Abandon the golfing business

Governing Magazine once dubbed government-run golf courses as “the most non-essential of non-essential public services.” 7 Kentucky’s policymakers apparently disagree.

Many of the Kentucky State Parks’ 20 golf courses operate at a deficit. Yet some lawmakers believe not only should government remain in the golf business, it should build more state-run greens. For example, funding for a new golf course at Cumberland State Park is included in this year’s state budget. 8

While there have been improvements – such as eliminating the state’s previous practice of giving away 32,000 free rounds of golf worth $500,000 annually – the parks’ courses remain in the red. 9

This deficit will not be eliminated as long as government operates these courses. Instead, private operators should be enlisted to operate and maintain Kentucky State Parks golf courses, which would result in smoother operations and better courses.

Evidence from Los Angeles, Detroit, New York, Chicago and San Francisco shows that after contracting such services out, the private sector generally improves the quality of golf courses while returning excess funds to city governments.

In Los Angeles, revenues at five of the six links turned over to the private sector increased between 24 percent and 400 percent during their first year as privately operated facilities. Also, Detroit has received annual profits of more than $250,000 by contracting with a private company that now manages the city’s public-turned-private golf courses. In addition, this private firm invested more than $2.3 million in improvements. 10

Likewise, Kentucky State Parks officials should contract out its links, which would help get them out of the red and reduce the load on taxpayers.

Introduce competitive sourcing

Kentucky State Parks could improve services and save taxpayers money by introducing a process known as competitive sourcing, in which private providers compete to deliver public services presently delivered by public employees.

The best performer provides the service at a competitive price. Consequently, when public employees win the contest and keep their jobs, the state can both save money and improve its service through increased efficiencies.

Other parks systems that have implemented competitive sourcing have greatly reduced the cost of maintenance and housekeeping services previously carried out almost exclusively by government workers.

For example, British Columbia reaped such savings after the country’s parks system contracted out its entire maintenance and operations in 1992, which produces annual financial savings of 20 percent.

Neither the service provided by the parks nor the facilities themselves suffered. In fact, more than 80 percent of visitors rated the facilities and services as “excellent” or “above average” six years after the private sector began operating and maintaining the province’s parks. 11

Competitive sourcing has also improved services and cut costs at various federal agencies.

During the 1980s, for example, the U.S. General Services Administration (GSA) reduced its maintenance costs nearly 50 percent by contracting out custodial services in federal office buildings. Also, in 2001, the U.S. Navy reported more than 400 contracts won by the private sector through competitive outsourcing yielded cost savings of nearly 40 percent. In addition, the Department of Defense (DOD) has averaged cost savings of around 30 percent as a result of contracting out operations and activities to private firms. 12

If such large bureaucracies can significantly reduce their costs by interjecting competition for public services, taxpayers would likely benefit from similar policies being applied to state agencies such as the parks system.

Eliminate park pork

While our state parks must be properly maintained, the department’s ultimate goal should be to make its facilities self-sustaining. Taxpayers simply should not be required to subsidize the vacations private citizens take.

Without competition, parks have little incentive to improve as long as lawmakers blindly pour more money into the system without the expectation of any real returns. During both the 2005 and 2006 General Assembly sessions, millions of dollars were appropriated as “pork” renovation funds. If taxpayers remain the revenue stream of last resort for state parks, the system cannot improve.

It is encouraging to see some movement toward privatization at some of the state’s facilities. The Kentucky Horse Park, which is not technically a state park but is overseen by the Commerce Cabinet, has engaged a private developer to build and manage a new $30 million resort hotel. As a result, the state will obtain a new hotel on the site without forcing taxpayers to pick up the tab. 13

However, legislators and officials are still wasting too many funds on state parks and facilities similar to the horse park. For example, despite predictions of a large deficit, not only is a new park – Herrington Lake State Park – being developed near Lancaster, state officials have announced no plans to contract out either services or construction projects.

If the state is determined to build a new park, some measure of fiscal responsibility – in the form of allowing the private sector to compete for jobs and services – should govern.

Kentucky has just such an opportunity at Herrington Lake. Rather than spend more than $16 million on a new lodge and $5.1 million on new campground facilities, the parks department should follow the Kentucky Horse Park’s example by contracting with a private company to build, own and maintain its facilities.

Not only would taxpayers be spared the cost of constructing the project, but privatizing the lodge and other facilities would go a long way toward eliminating the park’s predicted annual $386,000 shortfall. On the other hand, if the private contractor cannot cost justify building the facilities, maybe taxpayers shouldn’t be forced to take the risk either. 14

Conclusion

Taxpayers should be grateful that officials managing Kentucky State Parks have made some strides toward improving operations, providing better services and introducing new cost-saving measures in the form competitive outsourcing.

However, much more should be done. Parks officials need to lower the system’s annual deficit that hovers around $28 million. They should keep in mind that other park systems have dramatically improved their fiscal standing by opening the door to more participation by the private sector.

By following a similar path, officials and lawmakers can help Kentucky State Parks – the most picturesque in the nation – offer better services to their visitors while simultaneously easing the burden on taxpayers.

Endnotes

1. “Promotion, Profits and Politics” by Susan Gosselin, Lane Report, April 2004.

2. Letter from Commerce Secretary George Ward, April 7, 2006.

3. Ibid.

4. Ibid.

5. “Funding the National Park System: Improving Services and Accountability with User Fees” by Adam Summers, Reason Foundation, April 2005.

6. Ibid.

7. “Government Greens in the Red” by David Owisany, Buckeye Institute, April 29, 2005.

8. “Kentucky State 'Porks' System,” Bluegrass Institute, April 20, 2006.

9. “Fair play on Kentucky’s links,” Bluegrass Institute, July 12, 2005.

10. “Government Greens in the Red” by David Owisany, Buckeye Institute, April 29, 2005.

11. “Privatization Opportunities for Washington State Parks” by Jeff Hanson, Washington Policy Center, January 2000.

12. “Improving Government Performance through Competitive Contracting” by Ronald D. Utt, Heritage Foundation, June 25, 2001.

13. “Equestrian games a gamble” by Jim Warren, Lexington Herald-Leader, Oct. 24, 2005.

14. “Update to the 2001 Feasibility and Economic Impact Analysis of a Proposed State Park and Lodge Construction at Herrington Lake” by Dr. William Hoyt, Anna Stewart, Vladyslav Sushko, Jennifer Burnett, University of Kentucky, Feb. 2006.

Categories: Government, Kentucky; Privatization

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The Bluegrass Institute is an independent research and educational institution offering free-market solutions to Kentucky's most pressing problems.

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