The Entrepreneurial Service Delivery Program

Northern Virginia Regional Park Authority

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Introduction

Faced with declining park visitation and an expense structure that was exceeding revenues, the Northern Virginia Regional Park Authority (NVRPA) faced the kind of difficult choices that many government entities have faced. There were three main options:

• Seeking additional appropriations from the six local governments that make up the organization.
• Scaling back operations to mirror the declining park usage.
• Approaching the delivery of conservation and recreation services in a business-like manner.

It chose the latter option, and from 2005 to 2006 transformed the organization into a market-focused, entrepreneurial public agency.

Because of this transformation, NVRPA park usage is now increasing at an annual growth rate of more than 10 percent. Rather than drawing from its reserves, as in 2003 and 2004, NVRPA now meets all of its financial obligations and accelerated reinvestment in park facilities in 2006. The central ingredient in the transformation of the organization was to develop a culture of innovation and high performance.

While the programs and activities of most park agencies draw more than 50 percent of their operating budget from tax dollars, a good measure of the financial soundness of the NVRPA is that it draws 80 percent of its operating revenues from its enterprise operations. This high level of self-sufficiency is unique in the country, and it provides a high return on investment for the public tax dollars that the local governments in Northern Virginia contribute to the NVRPA.

The Problem

The NVRPA was created in 1959 with the mission of protecting open space and natural and historically significant areas. The park system today has grown to 21 parks encompassing 10,256 acres. The NVRPA is a special purpose governmental body that is guided by a twelvemember board, appointed by its six jurisdictional members. Its jurisdiction includes a population of more than 1.6 million people. The parks serve the residents of these jurisdictions as well as many other visitors. A recent park user survey found that almost 30 percent of the patrons come from outside of the member jurisdictions.

In 2003, the NVRPA faced a funding crisis. During the late 1990s, it had allowed its staff and associated overhead to outgrow its revenues. Then, between 2002 and 2003, the usage of its facilities declined precipitously, and along with that usage, its revenues. Between FY 2002 and FY 2003, overall user fee revenues decreased by 18 percent, and Enterprise Fund operating income dropped from more than one million dollars to an operating loss. There were a number of novel factors that may have lead to this dramatic drop: poor weather, 9/11, and a series of sniper attacks in 2002. Moreover, park usage had been declining across the country. United States National Park Service data show that between 1992 and 2005, the number of overnight campers at national parks dropped by 26.5 percent, and overall park usage was down significantly. For example, the usage of state parks in California dropped 11 percent between 2002 and 2005. Many other states and regions have experienced similar declines. In 2006, Richard Louv’s best-selling book Last Child in the Woods focused national attention on the decline of outdoor activity among today’s youth.

Because of this sudden shortfall, the NVRPA had to borrow from its reserves in 2003 and 2004 to make ends meet, and defer preventative maintenance throughout the park system, which only further reduced the appeal of the facilities to potential park patrons.

The Solution

The NVRPA’s Entrepreneurial Service Delivery Program had three aims: cutting expenses, increasing revenues, and making the organizational culture more entrepreneurial.

In 2005, the NVRPA streamlined the organization, reducing positions. This contributed to an almost eight percent drop in operating costs for personnel between 2004 and 2006 (see exhibit 1). Additionally, the vehicle fleet was reduced by ten percent and an energy conservation policy was implemented to control expenses and lead by example.

Having costs under better control, the NVRPA turned to making its services more attractive to the public and marketing those services effectively. It focused on two of its potentially most lucrative services: golf and camping.

Halfway through FY 2005, it created a golf membership program that allowed frequent players to purchase season passes for unlimited play at NVRPA courses. These were priced to promote play during non-peak demand times. Augmented by an aggressive marketing program, including advertisements in golfing publications, wide distribution of a new brochure, and a greater presence at Virginia Tourism Centers, there was an increase of 12 percent in golf rounds between 2005 and 2006, with a $579,000 increase jump in total golf revenues (see Exhibit 2).

Towards the end of the same year, NVRPA took its first steps toward improving the camping facilities. The Park Authority added rustic cabins and expanded hook-ups for recreational vehicles and wireless internet access at both of the NVRPA’s two campgrounds, allowing the public to select from a wider range of camping experiences and comfort levels. These new amenities were marketed through print advertisements, the internet, and camping directories. NVRPA also developed new camping literature that emphasized the attractiveness to families of a camping facility so close to the nation’s capital. Between 2005 and 2006, there was increase of almost 3,000 new camping reservations (more than 10,000 campers) and a jump in revenues of $136,000 (27 percent). In 2006, camping revenues exceeded expenses for the first time in decades (see Exhibits 3 and 4).

Finally, the NVRPA initiated employee achievement awards in 2006 to reward innovation, cost savings, safety, creative programming, and being a team player. These awards were designed to promote the entrepreneurial values that are most important to the long-term performance of the organization. Prior to this, awards had only been given for years of service. In the words of Paul Gilbert, the executive director of the NVRPA, “In surveys done of the staff, board, and external stakeholders, one of the recurring themes was an appreciation for the non-bureaucratic, nimble nature of the NVRPA. With the employee achievement awards, we are now recognizing this strength and reinforcing this important element of our organizational culture.”

By cutting expenses before moving on to making investments in operations and infrastructure, the NVRPA was able to free up money for those investments. Between 2005 and 2006, it raised the share of its operating revenues from enterprise operations from 79.34 percent to 80.16 percent. However, in fact, most of the money for these investments came out of its $4 million annual capital budget. It was money well spent. The annual average of the capital investments in golf courses and campgrounds compared to the increase in revenue from 2005 to 2006 shows that the campground improvements yielded a 66 percent return on investment (ROI) and the golf course improvements yielded a remarkable 224 percent ROI (see Exhibit 5).

The NVRPA was able to revamp its public information spending with new brochures and new strategies for information distribution with little added cost but, as we have seen, greatly enhanced results.

As a direct result of the improved performance of the agency, the NVRPA was able to reinvest more than $800,000 in surplus operating income at the end of 2006 into capital maintenance. In the words of Dennis Rust, the Manager of NVRPA Central Maintenance, “For many years, maintenance was deferred in a short-sighted effort to save money. As a result of our reinvestment in maintenance, everything works as it is supposed to do. These improvements will make our parks more popular than they have ever been. We will also save money in the long run with our preventative maintenance program that fixes small problems before they become large ones.”

Future Plans

With the success of the 2006 campground improvements, plans for 2007 include the addition of playgrounds, refurbishing restrooms, an expansion of the advertising in the major camping directories, and continuing to reduce energy consumption.

The NVRPA is also in the middle of an extensive study of its current and future retirement plan benefits. Like many public agencies, it has a defined benefit plan that is getting increasingly expensive. While it wants to honor its financial commitment to current employees in its plan, it also wants to find less expensive ways to fund them.

Finally, it is in discussions with other local governments in Northern Virginia about joining the NVRPA. If those discussions materialize, it could mean a substantial expansion of the park system.

Application to Massachusetts

The Massachusetts state park system faces the twin challenges experienced in Northern Virginia—a stagnating or declining park visitation rate and an expense structure that exceeds revenues.

Visitation at the Massachusetts state parks facilities for fiscal year 2006 is estimated to be just over 33 million. Of that number, 32.4 million were day visitors and 734,000 were overnight camping visitors. It has remained more or less flat, marginally beating national parks in Massachusetts, whose use has declined from more than 10 million visitors in calendar years 2001 and 2002 to 9.2 million visitors in 2003. This was the lowest number of annual visitors since 1986.

The revenue base of the Massachusetts state park system is far less dependent on camping and other customer-based revenues than is the park system in Northern Virginia. The agency in charge of the parks, the Department of Conservation and Recreation (DCR), receives funding for its annual operations and capital needs from several state and non-state sources. Overall funding in fiscal year 2006 can be broken down as follows:

• 35 percent of all spending came from annual legislative appropriations from the General Fund.
• 50 percent represents capital authorizations (44 percent of which was subject to the sale of bonds).
• 14 percent of spending came from non-state sources (federal and trust).

The operating budget, however, depends heavily on appropriations. More than 90 percent of the DCR’s operating budget comes from either annual operating or supplemental operations, and less than 10 percent from retained revenues.

The DCR’s assets are enormous and unsustainable given its revenue stream. They include pools, splash pools, golf courses, skating rinks, parks, camping grounds, water infrastructure, beaches, seawalls, dams, bridges, parkways, and buildings. The need for additional revenue is considerable, with a deferred maintenance backlog that has been estimated as between $750 million and $1.2 billion.

Some business practices have been implemented by the DCR to increase revenues:

• Raising fees.
• Creating public-private partnerships that range from philanthropic collaborations to long-term lease arrangements for some of its key capital assets (most notably skating rinks).
• Introducing an Annual ParksPasses program, which offers volume access to park facilities across the state for a discounted price.
• Making technological upgrades such as the internet-based campground reservation systems known as the Outdoor Recreation Management System (ORMS), which in 2006 enabled over 40,000 camping reservations to be made, generating $4 million in revenue.
• Working with municipal partners to re-invent closed or failing swimming facilities to create modern family aquatic centers that improve service and reduce maintenance and maintenance costs.

However, for the most part, the DCR has focused less on revenue generation than on increasing use of the state parks by various populations. Attempts to increase visitation include the following:

• The introduction of new themes and activities. For example, the Great Park Pursuit program is a six-week outdoor adventure for families and teams in which participants visit a different state park each Saturday to learn about natural resources.
• Creating partnerships with other institutions. For example, it has implemented a collaboration with local libraries called “Use Nature as Your Library.” Public libraries across the state are given free ParksPasses for their library patrons. Special programs were arranged with the libraries as part of the promotion.
•  A push to increase volunteerism. For example, the DCR is collaborating with the state Americorps to sponsor a “Park Serve” day. This year, 1,300 volunteers participated at more than 50 locations.
• Providing better access to the disabled. For example, the Universal Access Program provides outdoor recreation opportunities in state parks for visitors of all abilities through site improvements, specialized adaptive recreation equipment, and accessible recreation programs.

Clearly, these are all worthwhile efforts. However, even together they make only a minor dent in the real problem: how to bring revenues and expenses into alignment. Unlike the NRVPA, the DCR depends on other agencies for the bulk of its funding, and much of its revenue goes back to these same agencies. It, therefore, has little incentive to either make itself more efficient or invest the money saved through efficiency in improving its programs to enhance its revenue stream. It will be difficult for the DCR to make itself into a market- focused, entrepreneurial public agency unless it, like the NRVPA, faces many of the same market pressures as a private business.

Conclusion

Traditionally, the government has funded park facilities and assumed that the public will find and use them. However, given the enormous and growing range of alternatives, and the scarcity of leisure time, especially shared family leisure time, park systems need to work just as hard and smart as their competition does. They need to offer great services to the public and market them just like all the other products and services competing for the public’s free time.

Contact the Author:

Resource List:

• The NRVPA website: http://www.nrvpa.org
• Massachusetts Department of Conservation and Recreation website: http://www.mass.gov/dcr