Financial Structure of the National Park Service

¶ … financial structure of the National Park Service (NPS). It reviews their operations, discussing how they generate revenue and manage their financing. The paper also reviews their financial performance along with their organizational structure.

The NPS had its beginning when Congress set aside the watershed of the Yellowstone River "for the benefit and enjoyment of the people" with the Yellowstone National Park Act of 1872. The actual system of national parks administered under a federal bureau began with the creation of the NPS on August 25, 1916 when President Woodrow Wilson signed the Organic Act. Established under the U.S. Department of the Interior, the NPS was responsible for protecting the 40 national parks and monuments then in existence (Smith, 2011).

There was no single agency providing unified management of the varied federal parklands until an Executive Order in 1933 transferred 63 national monuments and military sites from the Forest Service and War Department to the NPS. This action was a significant step in the development of today's truly national system of parks, a system that includes areas of historical, cultural, scientific, and scenic importance. Currently additions to the NPS are generally made through acts of Congress, and likewise national parks can be created only through such acts. The NPS today is made up of more than 380 areas that cover more than 83 million acres in 49 states, the District of Columbia, American Samoa, Guam, Puerto Rico, Saipan, and the Virgin Islands (Smith, 2011).

The NPS is under the executive branch of the U.S. Government, Department of the Interior, headed up by Secretary of the Interior Ken Salazar, a member of the Cabinet of the President. Reporting to Salazar is the NPS Director, with headquarters located in Washington D.C. The Comptroller, who reports to the Director, has the following departments reporting to him: Accounting Operations Center, Budget Formulation, Budget Execution, Budget Construction, Property Management, Audits and Accountability, and GSA Space (Headquarters Organization 2005).

The NPS develops a budget each February for the next fiscal year which starts October 1. The budget defines NPS goals and objectives, as well as the funding necessary to accomplish them. The NPS budget is rolled up into the budget for the Department of the Interior, and then with the rest of the Executive Branch, and then submitted to Congress for review and approval. The following data shows the most recent funding and employee levels:

FY2011 (request) $3.14 billion 21,501 employees

FY 2010 $3.16 billion 21, 574 employees

FY 2009 $2.92 billion 20, 876 employees (Budget, 2010)

In addition to appropriated funds, the NPS is authorized to collect and retain revenue from specific sources:

Recreation fees: approximately $190 million per year

Park concessions franchise fees: approximately $60 million per year

Filming and photography special use fees: approximately $1.2 million per year

An additional source of funds is provided by the National Park Foundation, NPS' Congressionally chartered national philanthropic partner which donates money, property and time to the NPS (Budget, 2010).

NPS revenues derive primarily from park visitors. In 2010, the NPS was host to 281.3 million visitors, a decrease of 1.5% from 2009. The 2011 forecast projects an increase of 1.7% to 286.2 million visitors, with 2012 forecasts for a 1% increase to 288.9 million guests (Public Use Statistics Office, 2011). A significant source of NPS revenues is entrance fees. Repanshek reports that entrance fees revenues across the NPS dipped slightly in 2010 by comparison with 2009; NPS officials are uncertain as to what caused the decline (Repanshek, 2011).

In 2010, fees from park specific passes, daily entrance fees, various interagency fees, and commercial fees totaled $125,776,233, a decrease from $129,640,627 in 2009, according to figures tracked by Jan Moore, NPS' fee program manager in Washington D.C. Only 139 of the NPS' 394 units collect entrance fees (Repanshek, 2011).

Daily entrance fees showed the biggest decline, dropping from $84.5 million in 2009 to $78.5 million in 2010. Moore does not know whether three fee-free weekends last year accounted for most of that decline. According to Moore, "Yes, we know there are some losses, but the things that affect visitation are so variable: weather, gas prices, competing recreation and leisure activities, overall travel and trip expenses, park closures, etc." Moore is convinced however that free days play a role in increasing visitation throughout the year due to increased publicity for the NPS (Repanshek, 2011).

In addition to fees, NPS makes money from concessions. Along with other NPS divisions, the Commercial Services Program administers more than 500 concession contracts that in total gross over $1 billion annually. NPS concessioners employ more than 25,000 people in a variety of fields during peak seasons, providing services ranging from food service and lodging, to whitewater rafting adventures and motor coach tours. Concessioners fill a vital role in helping the NPS carry out its mission by offering services to park visitors which are not directly provided by the government. By using the private sector as a partner in park operations, the NPS broadens the economic base of the region and communities surrounding the parks (About Us, 2011).

Direction of financial analysis of the Commercial Services Program is set at the national level through policy development and regulation. Oversight activities include franchise fee analysis, financial feasibility analysis, market studies, sale and transfer reviews, and financial product reviews. Financial technical support includes review, approval, and statistical compilation of annual financial reports along with special account tracking and reporting. (Financial Analysis, 2011).

All concession contracts require that concessioners submit an annual report that includes a statement of income, balance sheet, detail of gross receipts, operational statistics, special account annual reconciliation, and special account project expenditures. This process has become increasingly automated, allowing for improved access to data, timely and accurate reporting, more robust financial analysis, and improved responses to external stakeholders (Financial Analysis, 2011).