Report 2004-126 Summary - August 2005

Off-Highway Motor Vehicle Recreation Program: The Lack of a Shared Vision and Questionable Use of Program Funds Limit Its Effectiveness

HIGHLIGHTS

Our review of the Off-Highway Motor Vehicle Recreation Program (OHV program) revealed that:

RESULTS IN BRIEF

The Off-Highway Motor Vehicle Recreation Program (OHV program) was created to better manage the growing demand for off-highway vehicle (OHV) recreation while protecting California's natural and cultural resources from the damage that can occur from indiscriminate or uncontrolled OHV recreation. Under the supervision of the Department of Parks and Recreation (department), the Off-Highway Motor Vehicle Recreation Division (division) administers the OHV program. The division provides opportunities for OHV recreation at the eight state vehicular recreation areas (SVRAs) it operates and on local and federal government agency land the division supports through its grants and cooperative agreements program (grants program).

The OHV program and the division are funded by the Off-Highway Vehicle Trust Fund (OHV trust fund), primarily through collection of the fuel tax, registration fees for off-highway vehicles, and entrance fees at the SVRAs. The Off-Highway Motor Vehicle Recreation Commission (commission) provides avenues for public input, offers policy guidance to the division, and approves the division's grants and cooperative agreements with public entities that provide OHV recreation opportunity. The commission also approves the division's capital outlays. The governor and the Legislature appoint the commissioners, who represent varying interests in OHV recreation and serve staggered four-year terms.

The OHV program attempts to balance two potentially competing interests—OHV recreation and protection of California's natural and cultural resources from the negative impact of OHV recreation. Plans developed in collaboration with these interests, such as strategic plans, can be vital in ensuring that all interests are satisfactorily addressed and the appropriate compromises reached. However, the commission and the division have not formally adopted a shared vision for the OHV program, nor have they developed the goals and strategies necessary to meet that vision. In addition, because the division and the commission view the operations of the SVRAs as distinct from the grants program, they do not collaborate on the planning for each. In the absence of a shared vision and goals, the commissioners, the division, and stakeholders in the OHV program compete for the more than $50 million collected from OHV recreationists each year to serve their diverse interests and further individual agendas, potentially resulting in an inefficient use of funds and discord among the interested parties.

Although required by the law to do so by January 1, 2005, the division has not yet completed its strategic planning process to identify future OHV recreation needs. The division prepared a final draft of a strategic plan in March 2005, but it used an abbreviated planning process that did not include some important elements. For example, missing from the division's strategic planning process is a comprehensive evaluation of the external and internal factors that could affect its ability to successfully implement the OHV program, such as the demand for OHV recreation by vehicle type and location, and the organizational, environmental, and legal issues that might affect the program. As a result, the division's draft strategic plan does not adequately address these issues.

In addition, the commission and the division have not collected the necessary data or prepared the required reports to successfully complete its strategic planning. For example, the division has begun but has not yet completed a new fuel tax study that will provide information on the number and types of off-highway vehicles engaged in OHV recreation and the destinations and types of recreation sought by OHV enthusiasts. Moreover, the commission and division have not completed required reports that should define the principal reasons people use off-highway trails and vehicles and the appropriate level of funding for the OHV program's components.

Without a comprehensive strategic plan, the division's budgets are not guided by agreed-upon goals and strategies for achieving them. Rather, the division prepares its support, capital outlay, and local assistance budgets based more on historical spending levels and available funds than on achieving goals or meeting the needs of the OHV program.

In the absence of a formally adopted strategy, the grants program lacks direction, and commissioners vote to approve grants and cooperative agreements based on their individual interests. As a result, the applicants for the grants program are often unaware of the commission's priorities, and the funding issued by the grants program is not done to achieve a balanced OHV program. According to the recipients that receive the largest grants and cooperative agreements, the U.S. Forest Service (Forest Service) and the federal Bureau of Land Management, unclear guidance on the commission's priorities presents challenges for them when applying for funds from the grants program.

The commission's accountability for its funding decisions could be improved. The law currently requires the commission to provide a biennial report on certain elements of the OHV program, including the status of the program and its natural and cultural resources and the results of the division's strategic planning process. However, the law does not require the commission to report its strategies and priorities, and how it awards OHV trust fund money to meet the legislative intent of the OHV program.

Some spending requirements in the law may impede the ability of the commission and the division to implement a vision for the OHV program. Based on a consensus reached by the stakeholders in 2002 that was adopted into the law, the division is required to spend the portion of fuel tax revenue attributable to unregistered off-highway vehicles and deposited in the Conservation and Enforcement Services Account (conservation account) for restoration, conservation, and enforcement. That portion was about 61 percent of the OHV program's total revenue in fiscal year 2003-04 revenues. However, there is disagreement among the commission, the division, and the stakeholders about whether this spending requirement contributes to a balanced OHV program.

Although the commission's chair, vice chair, and the division's deputy director could not point to documented evidence to show the need for the funds, about 16 percent of the OHV program's total revenues for fiscal year 2004-05 were required by law to be spent on restoring land damaged by OHV activity. However, because the division has not been able to satisfy the spending requirement, since January 2003 it has accumulated an obligation to use unspent conservation account funds totaling more than $15.7 million. Part of this obligation is $8.3 million in unspent funds designated for restoration. According to the department's deputy director of administration, the division has not reserved the unspent cash to pay for this obligation in the future; thus, it may present a substantial financial burden.

Further, the law is not clear on the use of restoration funds. The present practice among the commission and division is to require areas and trails to be permanently closed to OHV recreation before restoration funds can be used. However, the law does not support this practice, especially with respect to restoration funds that are used on federal lands. Rather, it states that when soil conservation standards or wildlife habitat protection standards are not being met in any portion of an OHV recreation project area that is supported by a cooperative agreement, the area that is out of compliance must be temporarily closed until those standards are met. Thus, according to the law, if restoration funds are provided through cooperative agreements, the restored land may be reopened to OHV recreation once soil standards and wildlife habitat protection standards are met.

The division and the department have used money from the OHV trust fund for questionable purposes. Specifically, for three of its recent land acquisition projects, with planned costs totaling $38 million, the division and the department could not provide analyses that showed the value of these purchases to the OHV program. The division has purchased Deer Creek Hills, and Onyx Ranch and Laborde Canyon are still under consideration, and based on the available documentation, these projects do not appear to be the best use of the funds in implementing the OHV program. In each case, project land will be devoted largely to protecting or preserving natural or cultural resources with a relatively small portion or no portion at all available for OHV recreation.

In fiscal year 2003-04 the department began using the OHV trust fund to pay for some of the costs to operate park districts that are not SVRAs. The department believes that charging the OHV trust fund $3.6 million for these costs in fiscal year 2003-04 and $2.7 million during the first three quarters of fiscal year 2004-05 is appropriate because it interprets the law to mean vehicle use on any unpaved road in the state park system is eligible for OHV program funding. However, we think the department's interpretation is inconsistent with the Legislature's clear intent for the OHV program and with provisions of law that limit the use of the OHV trust fund. Thus, we question the propriety of the charges. Moreover, because the department allocates its overhead costs based on direct costs to programs, the OHV trust fund was charged an additional $437,000 in fiscal year 2003-04 alone for the questionable costs we found.

Despite the significance of these charges, the department could not provide adequate support to justify charging them to the OHV trust fund. This lack of adequate support for its costs is particularly disconcerting because, according to the department's deputy director of administration, it plans to use a more recent review that we found was inadequately supported as a basis for its future charges to the OHV trust fund for the cost of these activities.

For various reasons the division has increased its use of contracts over the past five years, with a peak in fiscal year 2002-03. We found that the division has used contracts paid from the OHV trust fund for questionable purchases of goods and services, including the unauthorized chartering of private aircraft. The division also violated rules that govern the use of contracts, including 80 instances of splitting a series of related tasks into multiple contracts to avoid competitive bidding procedures and regulatory oversight. Further, the division has not adequately analyzed its operations to determine if either using existing staff or hiring additional employees would be less expensive than contracting for staff-related work and ongoing needs. Most of these contracting problems occurred in fiscal years 2001-02 and 2002-03, but some were more recent.

The division's management of the funds expended through the grants program needs improvement. The division does not adequately track the funds it advances to grantees; therefore, it cannot ensure that advanced funds are used only for allowable activities and that unused funds are returned to the OHV trust fund. For example, we identified $881,000 in outstanding advances due to be repaid by several recipients for which the division had not enforced the return of unspent funds or could not obtain documentation regarding how those funds had been spent. In one of these instances the division advanced about $566,000 to Los Angeles County more than 13 years ago but has received no documentation indicating how the grant funds were used.

In addition, the division does not ensure that all completed grants and cooperative agreements are audited, and it does not always promptly resolve audit findings or follow up on ineligible costs that an audit identifies. Our review of 12 audit reports found that the division has not collected approximately $598,000 in ineligible costs related to three audits. Finally, the division circumvented state controls and violated state contracting rules when entering into cooperative agreements totaling $2.2 million with a federal agency, and it extended the period during which some of the funds were available to be spent.

RECOMMENDATIONS

To ensure that the OHV program is adequately balanced between OHV recreation opportunity and environmental concerns as the Legislature intended, the division and the commission should develop a shared vision that addresses the diverse interests in the OHV program. Once developed, the division and the commission should implement their vision by adopting a strategic plan that identifies common goals for the grants program and the SVRAs, taken as a whole, and specifies the strategies and action plans to meet those goals.

The division should complete its strategic plan for the SVRA portion of the OHV program by performing a thorough assessment of external and internal factors; collect the data needed to focus its efforts; and develop the action plans, spending plans, and performance monitoring plans to implement its strategic plan.

To make efficient use of division staff's time and provide appropriate guidance to applicants for the grants program, the commission should develop and communicate priorities based on a strategy for using the grants program to promote a balanced OHV program.

To improve accountability, the Legislature should consider amending state law to require the commission to annually report the grants and cooperative agreements it awards by recipient and project category and how the awards work to achieve the shared vision that it and the division develop.

The division and commission should evaluate the current spending restrictions in the law to determine whether they allow for the allocation of funds necessary to provide a balanced OHV program and seek legislation to adjust those restrictions if necessary.

The Legislature should consider amending the Public Resources Code to clarify whether using OHV trust fund money to restore land damaged by OHV recreation requires that the land be permanently closed to off-highway vehicles.

The division should develop and implement a process of evaluating land acquisition projects to ensure that they provide a strategic benefit to the OHV program. This process should include appropriate analysis of the costs and benefits of a proposed land acquisition, including an assessment of the need for additional land for OHV recreation.

To ensure that money from the OHV trust fund is used appropriately, the Legislature should amend the law to clarify the allowable uses of the fund.

The division should take steps to ensure that its contracting practices comply with state contracting requirements, and the department should better monitor the division's contracting practices.

The division should manage the grants program more efficiently by keeping track of funds advanced to recipients, ensuring that all grants and cooperative agreements receive annual fiscal audits and performance reviews, following up on audit findings, and collecting ineligible costs, discontinuing its practice of reallocating unspent grant funds among Forest Service districts, and improving its grants database.

AGENCY COMMENTS

The Resources Agency and the department generally agree with our recommendations, but note that they do not entirely agree with our concerns with the department's land acquisition strategy and the use of OHV trust fund money to pay some of the costs of operating non-SVRA state parks. Instead of a consensus response from the commission, the seven commissioners chose to provide individual responses that contain positions that had varying levels of agreement and disagreement with our conclusions and recommendations.