Director's Remarks to the Natural Resources Commission
January 10, 2008

There has been much discussion recently about the fund balance in the DNR's Game and Fish Protection Fund.

There is indeed a $10 million fund balance, and that's caused a great deal of controversy.

People aren't angry about not having to layoff conservation officers.

People aren't angry about not having a license increase.

People are angry about the department's failure to communicate appropriately and in a timely fashion that there was no longer an immediate need for a hunting and fishing license fee increase.

I appreciate and understand and agree we should have done a more thorough job of communicating our balance. And for that, I take full responsibility and apologize.

At this point, I think it might be helpful to talk about how we ended up with a higher-than-anticipated balance in the Game and Fish Protection Fund.

There are three reasons we finished the fiscal year with a larger fund balance than expected.

First, the DNR realized significant savings by adhering to the Governor's executive directives to freeze hiring, trim travel and reduce other forms of spending.

Second, there was an increase from the projected number of hunting licenses sold. We had projected a 1.7% decrease, based on sales trends over the past several years. A portion of the increase was due to recruitment efforts, such as the introduction of the apprentice licenses and the lowering of the hunting age which occurred in 2006.

Third, the interest and earnings on investments from the Game and Fish Protection Trust Fund experienced better returns than were forecasted.

To sum it up, we did not spend our full appropriation and our revenue came in higher, which gave us a larger than anticipated fund balance.

One of the issues that has caused such anger and controversy is timing when did we know?

In December 2006, we projected a balance of $3.8 million at the end of our fiscal year that would end September 30, 2007.

In March 2007, executive directives were issued that severely constrained our spending.

That constrained spending resulted in $4.1 million worth of savings.

In October 2007, we announced at our NRC meeting that we were projecting a revised balance of $7.8 million in the Game and Fish Protection Fund.

While we projected a balance of $7.8 million at the end of fiscal year 2007, we also projected at this time a deficit of $2.5 million by the end of fiscal year 2008 and an even bigger deficit–$13 million–at the end of fiscal year 2009.

This is an example of when we should have done a better job of making sure we were being heard about the fund balance, our financial situation was changing, and that there may not be an immediate need for the license package.

Instead, we believed that to best manage the resource, we needed to continue to pursue a two-year budget reduction strategy based on the projected deficits for the next two fiscal years.

That reduction strategy included layoffs.

In late November, we closed the books with a $10 million fund balance in the Game and Fish Protection Fund. At that time, it became crystal clear that neither layoffs nor additional revenue was necessary to remain solvent for another year.

While trying to ascertain why our fund balance was higher than our projections, I notified Chairman Charters.

On December 10, I met with my leadership team to notify them that they need not implement their reduction plans.

That same day, Rodney Stokes and I called each of the recently hired 14 conservation officers to let them know they would not be laid off.

I sent out an email to all DNR employees on December 11 and also addressed the topic at a legislative committee meeting that same day.

On December 13, I sent an email to the license package work group discussing the fund balance.

So, where do we go from here?

I recognize these events have created a gap between our stakeholders, you-the NRC-and the department, and I acknowledge the need and our desire to bridge that gap and regain trust and rebuild credibility.

Our budget is my top priority.

The crux of the issue is we need to improve how we communicate internally and externally.

I have implemented monthly meetings with all the chiefs to make sure we track our budget, make timely decisions and manage our budget as it deserves.

These monthly updates will be provided to the NRC and the work group members, and will be made available to anyone else who is interested.

We will be working to better manage our budget, spend our appropriation and rebuild programs for the future.

One step taken in that direction occurred yesterday when Keith and I met with the Governor and were successful in getting her commitment to allow us to hire employees in a timely fashion and to give us some relief from the spending constraints.

We are also currently working to develop better, more realistic projections of expenditures based on spending patterns rather than on appropriated levels.

We will develop better, more realistic projections of revenue…and that may require outside help.

We welcome any analysis or outside review, the first of which is from the Senate Fiscal Agency.

As always, we offer full disclosure of all department financial information.

This situation has created credibility problems for the Department, for the NRC and for each of us personally.

I am committed to fixing the problem.

I know you all agree that there is too much at stake to lose sight of the fact that we need to find long-term, stable funding for conservation to ensure our natural heritage for the next generation and beyond.