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Report to Congressional Committees: 

November 2005: 

Valles Caldera: 

Trust Has Made Some Progress, but Needs to Do More to Meet Statutory 
Goals: 

GAO-06-98: 

GAO Highlights: 

Highlights of GAO-06-98, a report to congressional committees. 

Why GAO Did This Study: 

In 2000, Congress authorized the purchase of the Valles Caldera (the 
Caldera) in north-central New Mexico. The Valles Caldera Trust (Trust), 
a wholly owned government corporation, is to become financially self-
sustaining and to manage the Caldera for multiple purposes while 
sustaining the land’s valuable natural resources. GAO was mandated to 
assess the progress the Trust is making in meeting its statutory goals. 

What GAO Found: 

The Trust has made progress in meeting its goals to preserve and 
protect the Caldera for future generations as well as to provide for 
public recreation and sustained yield management. Specifically, it has 
(1) established a basic organization with about 25 staff; (2) drafted 
policy and procedures and contracted with the Department of the 
Interior’s National Business Center for accounting services; (3) begun 
engineering and construction efforts to address infrastructure 
problems—roads, water systems, fences, and buildings; (4) established 
interim grazing and recreation programs; and (5) implemented an 
adaptive management approach that focuses on making management 
decisions based on scientific data. 

The Trust, however, still has much work to do to meet its goals, 
including achieving a financially self-sustaining operation. 
Specifically, the Trust has not yet developed the following: 

* Strategic and performance plans with measurable goals and objectives. 
For example, the Trust must decide on the level of activities (e.g., 
grazing, hiking, and hunting) that will be allowed without seriously 
harming the land’s resources, and yet will still provide sufficient 
recreational activity and sustained yield management. The Trust also 
must select additional opportunities for generating revenues, such as 
securing private donations. 

* Plans to manage program risks. The Trust has not addressed program 
risks, including fire and legal liabilities. For example, the Trust 
lacks a fire plan, which would outline a decision-making process for 
responding to fires, and has not obtained liability coverage. Because 
it did not have a fire plan, the Trust spent about $338,000 in May 2005 
to suppress a fire, which, in the opinion of the Forest Service Region 
3 Fire Manager, could have been left to burn because the fire did not 
threaten any key resources or public infrastructure. Also, because it 
has not obtained liability coverage, the Trust has restricted the 
number of Caldera visitors. 

* Mechanisms for monitoring progress. Among other things, the Trust has 
not had annual financial audits and has not prepared performance 
reports that would help it assess its progress toward meeting its 
financial and other goals. 

The Trust’s efforts to raise the revenues needed to bring it closer to 
meeting its financial self-sustainability goal could be undermined by 
one or more of these issues. Frequent turnover in Board members and key 
staff has contributed to the problems experienced to date. 

What GAO Recommends: 

To help ensure that the Trust meets its goals and establish a more 
effective management control program, GAO recommends that the Trust’s 
Board of Trustees develop (1) a strategic and performance plan that 
identifies measurable goals and objectives for protecting and 
preserving the Caldera, providing recreation, sustaining yield, and 
becoming financially self-sustaining; (2) a plan for becoming 
financially self-sustaining; (3) periodic performance monitoring and 
reporting that enable Congress and the Trust to track progress in 
achieving program goals; and (4) a plan to fill vacant positions. GAO 
also recommends that the Board obtain the required financial audit for 
2005 and report on the status of the audit in its 2006 annual report to 
Congress. 

In commenting on the draft report, the Board generally agreed with 
GAO’s recommendations. 

To view the full product, including the scope and methodology, click on 
the link above. For more information, contact Robin Nazzaro at (202) 
512-3841 or nazzaror@gao.gov 

[End of section] 

Contents: 

Letter: 

Results in Brief: 

Background: 

The Trust Is Making Progress toward Preserving and Protecting the 
Caldera and Providing Recreation and Sustained Yield Management: 

The Trust Has Much Work to Do to Meet Its Statutory Goals: 

Conclusions: 

Recommendations for Executive Action: 

Trust Comments and Our Evaluation: 

Scope and Methodology: 

Appendixes: 

Appendix I: Comments from the Valles Caldera Trust: 

Appendix II: Guiding Principles of the Valles Caldera Trust: 

Appendix III: GAO Contact and Staff Acknowledgments: 

Tables: 

Table 1: Level of Livestock Grazing on the Caldera, Calendar Years 2002 
through 2005: 

Table 2: Public Participation in Recreation Programs, Calendar Years 
2002 through 2004: 

Table 3: Revenue Collected, by Program Activity, Fiscal Year 2004: 

Table 4: The Trust's 15-Year Strategy for Achieving a Financially Self- 
Sustaining Operation: 

Table 5: Turnover of Key Trust Staff in 2004 and 2005: 

Figures: 

Figure 1: Valle Grande Viewed from Redondo Peak: 

Figure 2: The Caldera, Santa Fe National Forest, and Bandelier National 
Monument: 

Figure 3: Valles Caldera Trust's Proposed Organization, as of September 
2005: 

Figure 4: Portion of the Main Access Road to the Caldera after 
Rehabilitation: 

Figure 5: Historic Commissary on the Caldera: 

Figure 6: Inventory and Monitoring Sites on the Caldera: 

Figure 7: Fenced Riparian Area on the Caldera: 

Abbreviations: 

Control Act: Government Corporation Control Act: 

EIS: Environmental Impact Statement: 

NBC: National Business Center: 

NEPA: National Environmental Policy Act: 

Preservation Act: Valles Caldera Preservation Act: 

Results Act: Government Performance and Results Act: 

StARS: Stewardship Action Record System: 

Letter: 

November 16, 2005: 

Congressional Committees: 

The Valles Caldera Preservation Act (Preservation Act) of 2000 
authorized the federal government's purchase of about 89,000 acres of 
privately owned land in north-central New Mexico, known as the Baca 
Ranch.[Footnote 1] The federal government acquired this property, 
referred to as the Valles Caldera (Caldera) for about $97 million. 
Scientifically, the Caldera has served as a model for geological 
studies of this and other volcanic areas around the world. Culturally 
and historically, the Caldera has had religious significance for Native 
Americans since prehistoric times because of its plentiful water 
resources in an otherwise arid region and because it provided a major 
source of black volcanic glass (obsidian), which was widely used for 
tools and weapons. Recreationally, the Caldera's landscape is noted for 
its opportunities for hiking, cross-country skiing, backpacking, 
bicycling, hunting, and fishing. Commercially, it provides ranchers 
with forage for livestock. Since the Caldera's acquisition through 
fiscal year 2005, the Valles Caldera Trust (Trust), established under 
the Preservation Act, has received about $16 million in federal funding 
to operate and maintain the Caldera. 

As stated in the Preservation Act, the Trust is to be governed by a 
Board of Trustees (Board) responsible for managing the Caldera as a 
national preserve. Until the Trust could be organized, however, 
management of the Caldera was provided by the U.S. Department of 
Agriculture's Forest Service. The Secretary of Agriculture was to 
transfer management responsibility to the Trust once the Board was able 
to conduct business and provide for essential management services. The 
transfer occurred in August 2002. The Preservation Act also charged the 
Trust with managing the land to achieve a number of goals, including 
the following: 

* protecting and preserving the Caldera's scientific, scenic, historic, 
and natural values, including rivers and ecosystems, and 
archaeological, geological, and cultural resources for future 
generations; 

* providing opportunities for public recreation; 

* providing for sustained yield management of the ranch for timber 
production and domesticated livestock grazing insofar as those were 
consistent with its other responsibilities; and: 

* becoming financially self-sustaining within 15 years of the purchase 
date--that is, by 2015. 

The Preservation Act also established the Trust as a wholly owned 
government corporation subject to the Government Corporation Control 
Act (Control Act).[Footnote 2] The Trust is also subject to the 
Government Performance and Results Act (Results Act).[Footnote 3] Under 
the Control Act, the Trust must obtain independent annual financial 
audits and report annually to Congress. Under the Results Act, the 
Trust must prepare a strategic plan and an annual performance plan with 
measurable goals and objectives, and submit annual performance reports 
to Congress and the President. 

The Preservation Act requires GAO to provide two reports to Congress on 
the Trust's activities: an interim report 3 years after the Trust 
assumed management responsibility and a final report 4 years later. For 
this interim report, we examined the (1) Trust's accomplishments since 
its inception and (2) work that remains for the Trust in order to meet 
its goals under the act, including the goal of becoming financially 
self-sustaining. 

To address these issues, we analyzed information and interviewed 
officials from the Forest Service and the Trust on the programs and 
activities the Trust has initiated since assuming management of the 
Caldera. We also analyzed documents, financial records, and other 
information, and visited the site to observe the actions taken to date 
toward meeting the Trust's statutory obligations. In addition, we 
analyzed the requirements of the Control Act and the Results Act for 
government corporations. The financial statements of the Trust have not 
been independently audited. We conducted limited testing of these data 
and discussed these data with key Trust officials. We describe issues 
related to these financial data in the body of this report. We assessed 
and determined that the nonfinancial data, such as participation in 
recreation activities and levels of livestock grazing, were 
sufficiently reliable for the purposes of this report. We conducted our 
work from January 2005 through October 2005 in accordance with 
generally accepted government auditing standards. 

Results in Brief: 

Since 2000, the Trust has made progress in meeting its goals of 
preserving and protecting the Caldera for future generations as well as 
of providing for public recreation and sustained yield management. To 
advance these goals, the Trust established a basic organization with 
about 25 staff and drafted policy and procedures--including guiding 
management principles and a management framework; it also contracted 
with the Department of the Interior's National Business Center for 
accounting services. On the Caldera, the Trust began engineering and 
construction efforts to address infrastructure problems--roads, water 
systems, fences, and buildings--to make the Caldera more accessible for 
resource management, recreation, and commercial uses. In addition, 
since 2002, the Trust has granted access to the public through its 
interim grazing and recreation programs. To preserve the land and 
implement environmental protection requirements, the Trust uses science-
based adaptive management--an approach under which management decisions 
are based on site-specific scientific data, evaluated for impact, and 
adjusted in response to these evaluations. 

Despite the progress made, the Trust has much work to do to meet its 
goals under the Preservation Act, including achieving a financially 
self-sustaining operation. Specifically, the Trust has not yet 
developed the following: 

* Strategic and performance plans with measurable goals and objectives 
for (1) protecting and preserving the scientific, scenic, historic, and 
natural values of the Caldera; (2) providing opportunities for public 
recreation; (3) providing for sustained yield management of the ranch 
for timber production and domesticated livestock grazing; and (4) 
becoming financially self-sustaining. Strategic and performance 
planning processes can help highlight mission conflicts for decision 
makers. For example, the Board must decide on the level of activities 
(e.g., grazing, hiking, and hunting) that will be allowed so as to not 
seriously harm the land's resources, yet provide sufficient 
recreational activity and sustained yield management, and must select 
additional opportunities for generating revenues, such as securing 
private donations. 

* Plans to manage program risks, including losses due to fire and legal 
liabilities that could undermine the Trust's ability to meet its goals. 
For example, the Trust lacks a comprehensive fire plan outlining a 
decision-making process for responding to naturally occurring fires. As 
a result, the Trust spent about $338,000 in May 2005 to suppress a fire 
that could have been left to burn because it did not threaten any key 
resources or public infrastructure, in the opinion of the Forest 
Service Region 3 Fire Manager. The Trust has not obtained liability 
coverage because it is uncertain of its legal authority to do so. As a 
result, the Trust has restricted the number of visitors to the Caldera. 

* Mechanisms for monitoring progress, such as annual financial audits 
required by the Control Act and performance reports required by the 
Results Act, would help the Trust assess its progress toward meeting 
its financial and other goals. 

Any one or a combination of these problems could undermine the Trust's 
efforts to raise the revenues needed to bring it closer to meeting its 
self-sustainability goal or other goals. Also, the Trust has 
experienced significant turnover of Board members and key staff, which 
has contributed to delays in implementing the goals under the act. 

To establish a more effective management control program, we are 
recommending that the Board develop a strategic and performance plan 
with measurable goals and objectives, a plan for becoming financially 
self-sustaining, performance monitoring mechanisms, and a plan for 
timely replacement of personnel, prior to devoting additional resources 
to other activities. We are also recommending that the Trust obtain an 
audit of its 2005 financial statements and report the results to 
Congress. 

In commenting on a draft of this report, the Board generally agreed 
with the accuracy of the findings, validity of the conclusions, and 
soundness of the recommendations. The Board also provided additional 
information regarding its efforts to address strategic planning, 
program risks related to fire and legal liabilities, Board member and 
staff turnover, and financial self-sustainability. With regard to the 
issue of financial self-sustainability, the Board disagreed with our 
statement that financial self-sustainability was not a priority and 
noted that this goal is considered to be of equal priority to other 
goals it has to achieve. To avoid ambiguity, we revised the language in 
the report to state that the Trust considers the self-sustainability 
goal as one of many goals of equal priority. We also added language in 
the report stating that the Trust can use its own funds to purchase 
liability insurance. 

Background: 

About 1.2 million years ago, a volcano erupted and collapsed inward, 
forming the crater now known as the Valles Caldera, in north-central 
New Mexico. This geologically and ecologically unique area covers about 
89,000 acres of meadows, pine forests, hot springs, volcanic domes, and 
streams that support elk herds and other wildlife and fishery 
resources. Figure 1 shows a view of Valle Grande from Redondo Peak, the 
highest elevation within the Caldera. 

Figure 1: Valle Grande Viewed from Redondo Peak: 

[See PDF for image] 

[End of figure] 

The Caldera comprises the formerly private lands known as the Baca 
Ranch and is almost entirely surrounded by the Santa Fe National Forest 
and Bandelier National Monument. Figure 2 shows the location of the 
Caldera in relation to the Santa Fe National Forest and Bandelier 
National Monument. 

Figure 2: The Caldera, Santa Fe National Forest, and Bandelier National 
Monument: 

[See PDF for image] 

[End of figure] 

The owners of the Baca Ranch operated it as a working ranch, providing 
grazing for their own cattle and, for a fee, for livestock owned by 
other parties. According to the Preservation Act, the working ranch 
arrangement was to continue after the federal government purchased the 
ranch. In managing the Caldera, the Trust is to protect and preserve 
the land while attempting to achieve a financially self-sustaining 
operation. "Financially self-sustaining," as defined by the act, means 
that management and operating expenditures--including trustees' 
expenses; salaries and benefits; administrative, maintenance, and 
operating costs; and facilities improvements--are equal to or less than 
proceeds derived from fees and other receipts (including interest on 
invested funds) for resource use and development. Appropriated funds 
are not to be considered. To carry out its duties, the Trust has the 
authority to solicit and accept donations of funds, property, supplies, 
or services from any private or public entity; negotiate and enter into 
agreements, leases, contracts, and other arrangements with any 
individual or federal or private entity; and consult with Indian tribes 
and pueblos on matters that may affect them. 

The Trust is managed by a nine-member Board. The President appoints 
seven members, and the other two members are the Supervisor of the 
Santa Fe National Forest and the Superintendent of the Bandelier 
National Monument. Of the seven presidential appointees, who are 
selected in consultation with the New Mexico congressional delegation, 
five must be New Mexico residents. Appointees are to be selected based 
on their expertise or experience. Generally, one individual must be 
appointed with knowledge of or experience in each of the following: (1) 
livestock and range management; (2) recreation management; (3) 
sustainable management of forest lands for commodity and noncommodity 
purposes; (4) financial management, budget and program analysis, and 
small business operations; (5) cultural and natural history of the 
region; (6) nonprofit conservation organizations concerned with Forest 
Service activities; and (7) state or local government activities in New 
Mexico, with expertise in the customs of the local area. Board members 
are generally appointed to 4-year terms and can be reappointed; 
however, no Board member may serve more than 8 consecutive years. The 
Trustees select a chairman from the Board's members. An executive 
director, who is hired by the Board, oversees the Trust's day-to-day 
operations. The Board must hold at least three public meetings a year 
in New Mexico. 

Under the Control Act, the financial statements of a government 
corporation must receive an independent financial audit annually in 
accordance with generally accepted government auditing standards. In 
addition, agencies must submit annual management reports to Congress 
that include a statement of financial position, a statement of 
operations, a statement of cash flow, a budget report reconciliation, a 
statement on management controls, a report on the results of the annual 
financial audit, and other necessary information about the operations 
and financial condition. 

The Results Act requires agencies to develop strategic and performance 
plans, measure performance, and report annually to Congress. The 
Results Act shifts the focus of an agency's operations from reporting 
on activities toward achieving results. It requires a results-oriented 
strategic planning process with clearly defined strategic objectives 
linked to measurable performance goals and the collection of 
information to monitor and evaluate the programs. A strategic plan 
should contain the organization's mission statement and strategic 
goals, a description of the means and strategies that will be used to 
achieve the goals, a description of the relationship between annual 
performance goals and the organization's strategic goal framework, the 
identification of key factors that could affect achievement of the 
strategic goals, a description of program evaluations used in preparing 
the strategic plan, and a schedule for future program evaluations. The 
annual performance plan articulates measurable goals for the upcoming 
fiscal year that are aligned with an organization's long-term strategic 
goals. The annual performance report compares an organization's 
performance with performance goals for the past year.[Footnote 4] 
Implementation of the Results Act requirements enables managers to 
improve accountability, effectiveness, service delivery, and internal 
management, and to provide better information to Congress. 

A more effective management control program, as we have defined it for 
the purposes of this report, would encompass the requirements of the 
Control Act and the Results Act. These requirements include, among 
other things, (1) a strategic plan, (2) performance plans with 
measurable goals and objectives, (3) the identification and mitigation 
of program risks, (4) performance monitoring and reporting, and (5) 
annual audits. 

The Trust Is Making Progress toward Preserving and Protecting the 
Caldera and Providing Recreation and Sustained Yield Management: 

As required under the Preservation Act, the Board has taken steps to 
establish and implement management policies to achieve the goals of 
preserving and protecting the Caldera and providing for public 
recreation and sustained yield management. In particular, the Board (1) 
established a basic organization, (2) began to address infrastructure 
problems, (3) granted limited access to the public through its interim 
grazing and recreation programs, and (4) established an adaptive 
management framework. 

The Board Established the Trust Organization: 

Between January 2001--the Board's first meeting--and September 2001, 
the Board met regularly and held listening sessions with the general 
public to obtain views on how the Caldera should be managed. 
Separately, the Board met with representatives of local Indian tribes 
and pueblos. Using the information from these sessions, in December 
2001, the Board issued 10 guiding principles for future decision 
making. These guiding principles, which are listed in appendix II, 
include a commitment to fair and affordable access for all permitted 
activities. At the same time, however, the Board stated that it would 
emphasize the quality of Caldera experiences over quantity, which could 
limit activities and fees. 

From January 2001 through August 2002, the Forest Service served as the 
interim manager, and the Board and employees from the Forest Service 
and other federal agencies conducted the Trust's work. In October 2001, 
the Board hired its first employee, an executive director. During that 
year, the Trust's office was located at the Santa Fe National Forest 
offices. The Trust officially assumed management of the Caldera in 
August 2002, after it provided for essential management services, 
including establishing staff, beginning business operations, and 
adopting management policies and procedures. During 2002, the Board 
drafted personnel and procurement policies and procedures as well as 
policies for environmental protection. It also drafted a tribal access 
and use policy to ensure access to the Caldera for religious and 
cultural purposes, as authorized by the Preservation Act. By the end of 
fiscal year 2002, the Trust had 7 employees, including business and 
resource managers. At the time of our review in 2005, the Trust was 
reorganizing under a new executive director and employed about 25 
permanent and limited-term employees. Figure 3 shows the Trust's 
proposed organization, as of September 2005. 

Figure 3: Valles Caldera Trust's Proposed Organization, as of September 
2005: 

[See PDF for image] 

Note: As of October 2005, the Board had not officially approved this 
organizational proposal. 

[End of figure] 

In addition, the Trust published its final management framework in May 
2005. This document, entitled The Framework and Strategic Guidance for 
Comprehensive Management, describes the history and natural features of 
the Caldera, the goals of the Preservation Act, and the Trust's 
approach for land stewardship, decision making, and public involvement. 
It further describes a range of potential public uses of the Caldera, 
from hunting and fishing to hiking and camping. 

From its inception through fiscal year 2003, the Trust maintained its 
financial accounts on the Forest Service's financial system. However, 
in 2003, the Board decided to obtain an independent financial system 
for the Trust. The Trust contracted for financial services on the 
Oracle Federal Financial System managed by the Department of the 
Interior's National Business Center--an option the Trust considered to 
be more cost-effective than developing a system in-house.[Footnote 5] 
Beginning with fiscal year 2004, the Trust maintains its financial 
information on that system. 

Infrastructure Surveyed and Potential Solutions to Problems Identified: 

Shortly after the federal government assumed ownership of the Caldera, 
the Trust learned that the existing infrastructure--roads, buildings, 
fences, and water treatment facilities--was seriously degraded and 
would have to be rehabilitated before it could provide public access to 
the Caldera. The Trust began the rehabilitation work in 2002. 

Roads. The Caldera has an estimated 1,200 miles of roads, including 200 
miles for the main access roads. Most of these roads had been 
constructed with little planning or engineering and had been used to 
support logging operations. They could not be readily used to support 
administration, ranching, recreation, and other needs. In 2002, 3.5 
miles of Road 1, the main access road, and five key bridges were 
upgraded to all-weather commercial gravel standards; work on the this 
road was completed in 2003. Road 2--a 10.2-mile access road--was 
upgraded in 2004 and 2005. Road work will continue as needs are 
identified and resources become available. Figure 4 shows a portion of 
the main access road to the Caldera after rehabilitation. 

Figure 4: Portion of the Main Access Road to the Caldera after 
Rehabilitation: 

[See PDF for image] 

[End of figure] 

Buildings, fences, and other facilities. From 2002 to 2005, the Trust 
conducted minor maintenance on the ranch buildings used to house 
employees. In 2002 and 2003, the Trust repaired the Caldera's 54 miles 
of boundary fence and installed restricted access signs. In 2004, it 
assessed the layout and condition of 64 miles of interior fences. The 
height of the fences was shortened in many areas to allow for elk 
movement. The Trust also installed scenic vistas and kiosks on New 
Mexico Highway 4, the main access road to the Caldera, to allow public 
viewing of the Caldera. Other facilities--such as livestock corrals-- 
were also assessed and rehabilitated. Figure 5 shows a historic 
building constructed in 1909 and used as a commissary where ranch hands 
could purchase supplies on the Caldera. 

Figure 5: Historic Commissary on the Caldera: 

[See PDF for image] 

[End of figure] 

Water treatment facilities. When the federal government acquired the 
Caldera, the existing water treatment facility was not functioning and 
the Caldera did not have potable water. Rehabilitating the system 
became a top priority for the Trust. Repairs to the water collection 
and filtration system were completed in 2004, and work was ongoing to 
repair the water distribution system in 2005. As currently scheduled, 
potable water will be available in the spring of 2006. 

The Trust Implemented Interim Grazing: 

According to the Preservation Act, the Trust is to provide for 
livestock grazing consistent with the other purposes of the act. The 
grazing program, begun in 2002 as a 5-week drought-relief program, has 
been operating under an interim livestock management plan, which is 
effective through calendar year 2005. Until it can develop a more 
comprehensive strategy, the Trust has established an interim grazing 
program that allows grazing for between 1 and 2,000 cattle, depending 
on the condition of the forage. This level is lower than the private 
owners had allowed--up to 6,000 cattle during the spring, summer, and 
fall grazing seasons. Table 1 shows the level of livestock grazing 
through 2005 (estimated) by calendar year. 

Table 1: Level of Livestock Grazing on the Caldera, Calendar Years 2002 
through 2005: 

Components of the grazing program: Cow-calf pairs;
2002: 703;
2003: 305;
2004: [A];
2005 (estimated): [A]. 

Components of the grazing program: Conservation Stewardship Program 
(number of cattle);
2004: 205;
2005 (estimated): 198. 

Components of the grazing program: Replacement Heifer Program;
(number of cattle);
2003: 375;
2004: 461;
2005 (estimated): 402. 

Components of the grazing program: Duration of grazing season (months);
2002: 1.25;
2003: 4;
2004: 4;
2005 (estimated): 4. 

Components of the grazing program: Animal unit months[B];
2002: 879;
2003: 2,270;
2004: 2,621;
2005 (estimated): 2,354. 

Source: GAO analysis of Trust data. 

[A] The Trust replaced the cow-calf pair program in 2004 with the 
Conservation Stewardship Program, which requires grazing applicants to 
demonstrate that they have conservation initiatives on their own land. 

[B] An animal unit month (AUM) is the computed amount of forage 
(vegetation such as grass and shrubs) that a cow and her calf eat in a 
month. 

[End of table] 

Two of these grazing programs--Conservation Stewardship and Replacement 
Heifers--are designed, in part, to introduce local ranchers to more 
prudent management practices. Under the stewardship program, which 
replaced the cow-calf program, applicants have to demonstrate that they 
will implement projects on their own lands to improve the condition of 
the range while their cattle graze on the Caldera. The largest 
participant in the program, the Pueblo of Jemez, implemented major 
range improvements on its own lands, such as reseeding and resting 
rangeland. The Replacement Heifer Program allows ranchers to graze 
heifers on the Caldera and have the heifers bred with the Trust's 
registered bulls, which are certified to produce calves with low birth 
weights. The program is designed to improve the genetics of local herds 
and to protect the heifers from dying or suffering other complications 
when they give birth. 

The Trust Has Established Interim Recreation Programs: 

The Trust granted limited public access through recreation programs 
beginning in 2002. Recreation activities offered have included, for 
example, hunting, fishing, hiking, cross-country skiing, snowshoeing, 
sleigh rides, wagon rides, and horseback riding. In most cases, the 
Trust charged fees for access to the Caldera. Table 2 shows the level 
of public participation in the various recreation programs from 
calendar years 2002 through 2004. Participation in recreation 
activities is expected to increase for 2005. As shown in table 2, the 
Trust offered limited recreational opportunities in 2002--a total of 
1,920 participants. However, in 2004, participation in recreation 
activities increased more than fourfold over the 2002 level. The 
fishing program hosted the most visitors over the period, or 
approximately 26 percent of total visitors. Elk hunting/antler 
collection and hiking were also popular, each representing about 21 
percent of visitor participation, followed by wagon/sleigh rides at 
about 15 percent. 

Table 2: Public Participation in Recreation Programs, Calendar Years 
2002 through 2004: 

Public participation: Fishing permits and clinics;
2003 participants: 1,785;
2004 participants: 2,107;
Total participants by activity, 2002 through 2004: 3,892. 

Public participation: Elk hunting and elk-antler collection;
2002 participants: 1,470;
2003 participants: 1,040;
2004 participants: 689;
Total participants by activity, 2002 through 2004: 3,199. 

Public participation: Hiking;
2002 participants: 200;
2003 participants: 1,296;
2004 participants: 1,620;
Total participants by activity, 2002 through 2004: 3,116. 

Public participation: Wagon and sleigh rides;
2002 participants: 250;
2003 participants: 447;
2004 participants: 1,520;
Total participants by activity, 2002 through 2004: 2,217. 

Public participation: Van and group tours;
2003 participants: 353;
2004 participants: 1,306;
Total participants by activity, 2002 through 2004: 1,659. 

Public participation: Mountain biking;
2004 participants: 440;
Total participants by activity, 2002 through 2004: 440. 

Public participation: Horseback riding (equestrian program);
2004 participants: 215;
Total participants by activity, 2002 through 2004: 215. 

Public participation: Skiing and snowshoeing;
2003 participants: 64;
2004 participants: 142;
Total participants by activity, 2002 through 2004: 206. 

Public participation: Stargazing lectures;
2003 participants: 71;
2004 participants: 70;
Total participants by activity, 2002 through 2004: 141. 

Public participation: Seminars, workshops, and overnight photo 
excursions;
2004 participants: 87;
Total participants by activity, 2002 through 2004: 87. 

Public participation: Bird watching;
2003 participants: 14;
2004 participants: 14;
Total participants by activity, 2002 through 2004: 28. 

Public participation: Total participants;
2002 participants: 1,920;
2003 participants: 5,070;
2004 participants: 8,210;
Total participants by activity, 2002 through 2004: 15,200. 

Sources: Valles Caldera Trust staff and annual reports to Congress. 

[End of table] 

Fishing and fishing clinics. Two streams on the Caldera are suitable 
for fishing. In 2003, the Trust granted fishing access to 1,785 
participants on a first-come, first-served basis. With increased demand 
in 2004, the Trust used a lottery system to award access to 2,107 
participants. In addition, the Trust hosted youth and adult fishing 
clinics in both years. 

Elk hunting and antler collection. The Trust worked with the New Mexico 
Department of Game and Fish to set the numbers of available elk-hunting 
licenses and used a lottery and auction to award licenses. 
Participation in elk hunts has declined each year because of the New 
Mexico Department of Game and Fish decided to decrease the number of 
hunting licenses available to sustain a viable elk herd. In addition to 
the elk hunt, the Trust has offered area youth groups the opportunity 
to collect antlers shed by elk each year. These groups sell the 
antlers, which are generally used to make decorative items, such as 
lamps, and the groups use the proceeds to support nonprofit programs. 

Hiking. Beginning in 2002, the Trust provided guided hiking through a 
contractor to enable public access to the Caldera before it developed 
the infrastructure needed for general public access. In 2003 and 2004, 
the Trust implemented its own hiking program, expanded the activity 
boundaries for hiking, and established unguided hikes as an option. In 
2005, the Trust increased the number of trails available for hikers on 
the Caldera. In total, the Trust now has 24 miles of trails available 
for hikers. 

Wagon and sleigh rides. The Trust offered horse-drawn wagon and sleigh 
rides to visitors. The horse-drawn rides allow greater access to areas 
in the Caldera. Wagon rides can occur year-round, while sleigh rides, 
of course, need sufficient snowfall. Participation in wagon and sleigh 
rides has increased more than sixfold, from 250 in 2002 to 1,520 in 
2004. Also in 2004, the Trust donated wagon rides on the Caldera as a 
prize for a charity auction. 

Other recreation. In 2003, the Trust added van tours, snowshoeing, 
cross-county skiing, bird watching, and stargazing lectures. In 2004, 
the Trust implemented an equestrian program, so that riders could 
transport their own horses to the Caldera for rides on designated 
trails. Over 200 riders participated. Also in 2004, the Trust added 
mountain biking, group tours and seminars, workshops, and overnight 
photo-and bird-watching excursions. 

The Trust Set Up a Science-Based Adaptive Management Framework: 

The Trust is using a science-based adaptive management framework for 
the Caldera, which many believe to be a potentially effective approach 
to managing the land. Under this approach, the Trust will make land 
management decisions on the basis of scientific research and 
monitoring, taking into account the public's views and federal 
environmental requirements. The foundation of this management approach 
is inventorying natural resources, monitoring environmental changes 
that result from the Trust's programs, conducting research that will 
primarily help manage the Caldera's resources, and complying with 
federal environmental requirements. 

Inventories. Little information was available about the Caldera's 
resources when the federal government acquired the Caldera. As a 
result, in 2001, the Trust--using volunteers and employees detailed 
from other federal agencies--began to inventory the Caldera's 
vegetation and forest, wildlife and fisheries, geology, and other 
resources. Some of these baseline inventories have several components. 
For example, the wildlife inventory includes components by species, 
such as mammals, reptiles, and fish. Some inventory components have 
been completed, while others are still ongoing and are scheduled to be 
completed during 2007. Figure 6 shows the current inventory and 
monitoring locations on the Caldera. 

Figure 6: Inventory and Monitoring Sites on the Caldera: 

[See PDF for image] 

[End of figure] 

In addition, about 5 percent of the Caldera has been surveyed for 
cultural resources. As a result of recent surveys, 25 previously 
unknown historic properties have been discovered. For example, 
scientists have identified prehistoric sites showing evidence of 
toolmaking using obsidian. The cultural inventory is ongoing, and its 
completion date has not been established because future construction 
plans are uncertain. According to the Caldera's cultural program 
coordinator, planned surveys can be delayed because of the need to 
survey areas slated for construction, such as roads. 

Monitoring. The monitoring program is intended to assess the impact 
that grazing, fishing, forest thinning, prescribed fire programs, and 
other activities have had on the Caldera. For example, the Trust is 
monitoring areas it has fenced along streambeds to prevent elk and 
cattle grazing in order to better understand the impacts of grazing on 
areas that are not fenced off. Figure 7 shows a fenced riparian area on 
the Caldera. The Trust is also monitoring the effects of natural and 
nonprogrammatic factors, such as changes in climate and species 
populations, especially nonnative populations. For example, as part of 
this program, the Trust established five weather stations to monitor 
rainfall, snowfall, wind, and temperature as well as five stations to 
monitor stream water quality. 

Figure 7: Fenced Riparian Area on the Caldera: 

[See PDF for image] 

[End of figure] 

Research. The research program benefits both the management of the 
Caldera and public land management. For example, hydrological research 
funded by the National Science Foundation through the University of 
Arizona will provide information to aid in the day-to-day management of 
the Caldera and will also contribute to the understanding of hydrologic 
systems overall. This research will enable scientists to understand how 
much rain the Caldera's lands absorb and predict the amount of runoff 
into streams and rivers. As more data become available, scientists can 
predict the impact of rain and drought on water quality and forage 
availability on the Caldera and use the information to drive future 
management decisions for grazing and recreation. 

Environmental compliance and public participation. The Trust must 
comply with the National Environmental Policy Act (NEPA), which 
requires federal agencies to assess the likely environmental impacts of 
any major actions they propose. If the agency determines that a 
proposed activity will significantly affect the quality of the human 
environment, it must prepare an environmental impact statement (EIS). 
An EIS specifies, among other things, the purpose of and need for the 
proposed action, its environmental consequences, and the comparison of 
alternatives to the proposal. 

Federal agencies, in addition to complying with the Council on 
Environmental Quality's regulations for implementing NEPA, develop 
agency-specific procedures. Before the Trust adopted its NEPA 
procedures in July 2003, it used the Forest Service's procedures to 
ensure NEPA compliance.[Footnote 6] Under the Forest Service 
procedures, the Trust categorically excluded interim fishing, hiking, 
road maintenance, and hazardous-fuel reductions from the general 
requirement to develop an environmental assessment or impact statement 
because it was determined that the actions would have no significant 
impact on the human environment. Under the Forest Service regulations, 
the Trust conducted environmental assessments of the interim grazing, 
noxious-weed eradication, and prescribed burns and did not find that 
these activities significantly affected the Caldera. The Trust expects 
to complete an environmental impact statement before establishing a 
permanent grazing program in 2007. 

The 2003 procedures are intended to efficiently and effectively 
implement NEPA and create a collaborative working relationship between 
the Trust and tribal governments, citizens, and federal, state, and 
local authorities.[Footnote 7] To obtain public views and to track and 
report the Trust's land management actions, the Trust is developing an 
Internet-based system--the Stewardship Action Record System (StARS). 
Once functional (expected at the end of 2005), StARS will allow public 
review and comment on all actions taken and provide the public with 
opportunities to monitor the results of ongoing efforts. StARS 
proposals have been developed for public recreation, grazing, 
infrastructure development, research projects, and fire management. The 
Trust is also exploring ways to distribute information to the public 
and obtain comments without using the Internet. 

According to the President's Council on Environmental Quality, the 
Trust's NEPA procedures clearly integrate progressive NEPA compliance 
with principles of adaptive management and environmental management 
systems.[Footnote 8] The council also stated that the procedures allow 
for uncertainty in the decision-making process because actions are 
monitored and revised as more information becomes available. 

The Trust Has Much Work to Do to Meet Its Statutory Goals: 

Despite the progress made, the Trust has much work to do to meet its 
mandated goals under the Preservation Act. Specifically, the Trust 
lacks (1) strategic and performance plans and programs to ensure that 
revenue streams are sufficient to achieve financial self- 
sustainability, (2) plans to minimize program risks from fire that 
could damage resources and legal liabilities that could result in 
catastrophic losses and reduced visitor use, and (3) mechanisms for 
monitoring progress in meeting its financial and other obligations, 
including annual audits and performance reporting. These shortfalls 
could be addressed through a more effective management control program, 
as envisioned in the Control and Results Acts. Frequent turnover of 
Board members and key staff also contributed to delays in implementing 
the components of an effective management control program. Without a 
more effective management control program, the Trust cannot adequately 
plan and implement programs or monitor progress toward meeting the 
mandated goals of the Preservation Act. 

The Trust Has Not Developed Strategic and Performance Plans with 
Measurable Goals and Objectives: 

The Trust has not developed strategic and performance plans as required 
under the Results Act. Specifically, it has not developed a strategic 
plan that not only outlines its mission and goals but also describes 
how it will achieve and revise its goals and objectives, how 
performance goals relate to the organization's strategic goal 
framework, and how it will conduct program evaluations. In 2005, the 
Trust published its Valles Caldera National Preserve Framework and 
Strategic Guidance for Comprehensive Management. This document provides 
useful information about the history of the Caldera, background on the 
Trust, and general goals, but discusses issues in terms of 
possibilities and in a broad and philosophic manner instead of applying 
a methodical and analytical approach to strategic planning. Board 
members stated that they did not prepare a strategic plan because they 
believed that the NEPA compliance process had to be completed before 
they could publish a plan. However, agencies are not required to 
prepare an EIS prior to formulating a strategic plan. 

The Trust has not developed an annual performance plan with measurable 
goals for the activities it allows on the Caldera, which would help it 
determine whether it is accomplishing the overall strategic goals. For 
example, the performance plan could support the overall strategic goal 
to provide recreational opportunities by establishing annual measurable 
goals for the Trust's recreation activities. An example of a measurable 
goal could be to increase public participation in hiking activities by 
10 percent per year until the Trust has determined that the allowed 
level of hiking will not impair or damage the Caldera and is consistent 
with the other goals under the Preservation Act. The performance plan 
could also support the strategic goal to protect and preserve the 
Caldera, which could contain a measurable goal to restore and expand a 
specific number of wetland acres per year. However, the Trust cannot 
agree on the balance that should be struck between the activities that 
should occur on the Caldera and the impact of these activities on the 
land in order to achieve its overall goals of resource protection, 
recreation, sustained yield management, and financial self- 
sustainability. 

To become financially self-sustaining by 2015, the Trust needs to 
generate enough revenue to pay for its operations and maintenance as 
well as infrastructure development costs. The Trust's main revenue- 
generating activities are hunting, fishing, special events such as 
mountain biking, and grazing. Table 3 shows the revenue generated, by 
program activity, for fiscal year 2004. 

Table 3: Revenue Collected, by Program Activity, Fiscal Year 2004: 

Program: Hunting;
Revenue: $245,885. 

Program: Fishing;
Revenue: $62,793. 

Program: Special events;
Revenue: $45,699. 

Program: Grazing;
Revenue: $42,728. 

Program: Hiking;
Revenue: $28,744. 

Program: Souvenirs, books, maps;
Revenue: $13,256. 

Program: Donations;
Revenue: $841. 

Program: Other[ A];
Revenue: $60,137. 

Program: Total;
Revenue: $500,083. 

Source: Valles Caldera unaudited data. 

Notes: The Trust's financial statements remain unaudited as of the date 
of this report. 

[A] Other includes lodging, filming, and other revenues generated by 
credit card payments not specifically identified to programs. 

[End of table] 

To date, however, the Board has not developed sufficient revenue 
streams to cover its program costs or developed performance goals for 
becoming financially self-sustaining. Specifically, managers estimated 
that the grazing program lost about $55,000 in 2004 but have not 
computed the gain or loss for other programs. With total revenues of 
about $500,000 and total expenditures in excess of $5 million in fiscal 
year 2004, it is apparent that programs were operating at a loss. The 
Board does not plan to change the operation of revenue-generating 
programs until the Trust complies with NEPA. 

According to the Valles Caldera National Preserve Framework and 
Strategic Guidance for Comprehensive Management, the Trust considers 
the financial self-sustainability goal as one of many goals of equal 
priority. Furthermore, according to the framework, the Trust cannot set 
a date for achieving financial self-sustainability--established as a 
goal to be accomplished by 2015 in the Preservation Act--because its 
federal land stewardship obligations do not allow it to operate grazing 
and recreation activities at a level that puts natural resources at 
risk. Therefore, the framework states, it may be reasonable to continue 
appropriations to cover environmental stewardship costs, such as those 
for environmental assessments and resources inventories, while the 
balance of the Trust's programs operate in a self-sustaining manner. 
While financial self-sustainability may not be attainable in the long 
run, we believe it is premature to assume that appropriations will 
continue to be needed after the Trust's 15th year of operation--the 
time period established to achieve the goal of self-sustainability. 
Moreover, the Trust is directed to report to Congress in its 14th year 
if the achievement of self-sustainability by its 15th year is 
unrealistic. In the meantime, the Trust has an obligation to continue 
to develop a strategy and implement a plan to become financially self- 
sustaining. 

The Preservation Act also requires the Trust to report to Congress on 
how and when the Trust will become financially self-sustaining. That 
is, the Trust is to provide Congress with a schedule of decreasing 
appropriations that demonstrates how it will achieve financially self- 
sustaining operations by 2015. Such a schedule should, at a minimum, 
quantify the annual appropriations as well as other projected revenue 
sources needed through 2015 and demonstrate that these sources of 
income will meet or exceed the expected program operations and 
maintenance costs during that time frame. However, the Trust has only 
presented the three-phased strategy shown in table 4 to achieve that 
goal. As the table shows, the Trust's Schedule of Decreasing 
Appropriations does not include financial information to show how the 
appropriations will decrease each year. 

Table 4: The Trust's 15-Year Strategy for Achieving a Financially Self- 
Sustaining Operation: 

Phase: I. Institution building (2001-2005);
Goal: To develop the staff and tools needed to manage the preserve;
Task: Hire and organize staff, develop science-based management 
mechanisms, and institute real-time accounting controls. 

Phase: II. Infrastructure development (2005-2010);
Goal: To develop the infrastructure needed to support land stewardship, 
public access, and receipts generation;
Task: Obtain appropriations and develop infrastructure, including 
roads, trails, facilities, and permanent recreation and public access 
programs. 

Phase: III. Program refinement (2010-2015);
Goal: To cultivate alternative sources of funds and streamline programs 
to permit decreasing appropriations;
Task: Implement previous phase business plans, which evaluate potential 
sources of funds such as access and activity fees, grants, sustained 
utilization of resources, private fund-raising, retail and 
merchandising activities, and special events. 

Source: GAO analysis of the Board's Schedule of Decreasing 
Appropriations. 

[End of table] 

The Preservation Act also authorized the Trust to solicit and accept 
donations of funds, property, supplies, and services. The Trust has 
received some donations, primarily volunteer labor. Through 2005, cash 
donations totaled about $56,000, $50,000 of which was earmarked to pay 
the salary of a full-time employee to coordinate volunteer efforts. 
However, the Trust has not developed a plan for outreach to 
philanthropic organizations. For example, charitable organizations 
supporting national parks have been established to solicit donations to 
help support park needs. The Trust has discussed this option but has 
not actively pursued it. 

The Trust Has Not Addressed Risks Potentially Posed by Fire and Legal 
Liabilities: 

The Trust has not addressed program risks, including fire and legal 
liabilities that could undermine its ability to meet its financial 
obligations.[Footnote 9] The Trust completed a fire management plan in 
2004 that adopts, by reference, the federal National Fire Plan. 
According to the National Fire Plan, agencies need a fire management 
plan to outline a decision-making process for responding to naturally 
occurring fires.[Footnote 10] Such a plan lays out the conditions under 
which fires must be suppressed or allowed to burn to benefit 
resources.[Footnote 11] The Caldera's plan, however, has not addressed 
fire management to benefit resources, only the management of prescribed 
fires. Without a plan to manage fires for resource benefits, all 
naturally occurring fires on the Caldera must be suppressed, and 
suppression can be costly.[Footnote 12] For example, in May 2005, a 
fire on the Caldera burned about 82 acres before being suppressed--at a 
cost of about $338,000. In the opinion of the Forest Service Region 3 
Fire Manager, this fire could have been left to burn because it did not 
threaten any key resources or public infrastructure. Extended periods 
of drought and high fire risk in northern New Mexico could easily 
deplete the Caldera's financial resources because suppression costs are 
high. 

The Trust does not have liability coverage to protect against injuries 
on the Caldera because it was uncertain whether it could acquire such 
insurance using appropriated funds. Moreover, as a government 
corporation, the Trust did not believe it could access the federal 
judgment fund, a fund in the U.S. Treasury used for the payment of 
final judgments against the United States. This lack of liability 
coverage and uncertainty led the Trust to take a cautious approach to 
implementing programs and increasing public access. According to the 
Board, in June 2005 the Trust clarified these issues with its legal 
counsel, who determined that legislation might be necessary to access 
the judgment fund but that it could use its own funds to purchase 
liability insurance. 

The Trust Has Not Developed Required Mechanisms for Monitoring Progress 
in Meeting Financial and Other Goals: 

The Trust has yet to develop the mechanisms needed to monitor progress 
in meeting its financial and other obligations under the Preservation, 
Control, and Results Acts. These mechanisms include an annual financial 
audit to ensure the credibility of reported financial information and 
an annual performance report that describes progress toward achieving 
its annual performance goals. Without these mechanisms, the Trust, 
Congress, and other stakeholders cannot determine whether the Trust is 
on a course to meet all of its goals. 

Annual Audits. The Control Act requires annual financial audits for 
government corporations' financial statements by an independent, 
external auditor selected by the head of the corporation. The results 
of the audits are to be reported to the head of the government 
corporation and to Congress. The Board has yet to conduct an audit 
because it has not produced auditable financial statements. 

In 2003, the Trust contracted with an independent accounting firm for 
auditing services, including an audit of the (1) statement of financial 
position of the Trust and (2) related statement of activities and cash 
flows, as of September 30, 2003. However, according to the Trust's 
former business manager, the audit firm recommended that the audit be 
postponed until 2004 since the Trust's financial records had only 
recently been established on the new financial system operated by the 
National Business Center. The Trust agreed with this recommendation. As 
of October 2005, the Trust had not contracted with an independent firm 
to audit its annual financial statements. Also in 2003, the Trust 
contracted with another firm to review the payroll process and controls 
for each of the revenue sources and to recommend improvements. 
According to Trust managers, in fiscal year 2005, financial policies 
and procedures were still not in place and financial statements had not 
been produced. The managers told us that they were in the process of 
establishing management controls and attempting to reconstruct prior 
years' expenditures in preparation for their first external audit. 

Annual Performance Reports. The Control, Results, and Preservation Acts 
require the Trust to report annually to Congress on certain aspects of 
its operations. Collectively, these acts require a statement of 
financial position, a statement of operations, a statement of cash 
flows, reconciliation to the budget report, a management controls 
statement, a report on a financial statement audit, and reports on 
annual performance. The annual reports to Congress the Trust has 
prepared for fiscal years 2001 through 2004 under the Preservation Act 
describe the interim programs the Trust has implemented and summarize 
the prior years' accomplishments. The Trust may not have been able to 
prepare annual reports to Congress that address requirements of the 
Control Act partly because the Trust has not produced a budget report 
or financial statements. In addition, because the Trust has not 
developed annual performance plans with performance goals, it has not 
produced a performance report required by the Results Act. 

Turnover of Board Members and Staff Contributed to Delays in 
Implementing Components of a More Effective Management Control Program 
Needed to Meet Statutory Goals: 

Effective management of an organization's workforce--its human capital-
-is essential to achieving results and an important part of internal 
control. Operational success is possible only when the right people for 
the job are on board and are provided the right training, tools, 
structure, incentives, and responsibilities. Management should ensure 
that it obtains a workforce with the required skills that match those 
necessary for achieving organizational goals. As part of its human 
capital planning, management should also consider how best to retain 
valuable employees, plan for their eventual succession, and ensure 
continuity of needed skills and abilities. Excessive or unexpected 
turnover of staff can indicate problems with an organization's 
management control program and contribute to delays in implementing 
programs needed to achieve established goals. 

Throughout its short history, the Trust has experienced significant 
turnover among Board members and staff. According to the Preservation 
Act, three of the initial Board members are appointed for 2 years, 
while four other Board members are initially appointed for 4-year 
terms. All subsequent appointments to these positions are for 4 years. 
At the end of the first 2-year term, the Board operated for about 5 
months before the President appointed replacements. In January 2005, 
four more board members completed their terms, and the Board operated 
for 4 months before the President appointed three of the four 
replacements. As of October 2005, the President had not appointed 
anyone for the fourth position, which has now been vacant for about 10 
months. 

The Trust has also experienced high turnover among key staff. The 
Trust's first executive director served 18 months, resigning as 
director in March 2004. The position remained vacant for about 7 months 
while the Trust searched for a replacement. Although this position was 
filled in October 2004, the executive director resigned after 10 months 
of service. Other key positions became vacant in 2004 and 2005, 
including the Trust's controller, business manager, programs director, 
chief administrative officer, communications manager, and cultural 
program coordinator. As of October 2005, the executive director, 
programs director, chief administrative officer, cultural resources 
coordinator, and geospatial information systems coordinator positions 
remained vacant. The business manager position was abolished. Table 5 
shows the turnover of key Trust staff in 2004 and 2005 and the current 
status of these positions. 

Table 5: Turnover of Key Trust Staff in 2004 and 2005: 

Key positions: First executive director;
Date hired: Oct. 2001;
Date vacated: March 2004;
Replacement hired: Oct. 2004. 

Key positions: Second executive director;
Date hired: Oct. 2004;
Date vacated: Sept. 2005;
Replacement hired: Vacant. 

Key positions: Controller;
Date hired: July 2002;
Date vacated: Nov. 2004;
Replacement hired: Sept. 2005. 

Key positions: Programs director;
Date hired: June 2005;
Date vacated: Sept. 2005;
Replacement hired: Vacant. 

Key positions: Cultural resources coordinator;
Date hired: Sept. 2003;
Date vacated: Aug. 2005;
Replacement hired: Vacant. 

Key positions: Communications manager;
Date hired: Jan. 2003;
Date vacated: May 2005;
Replacement hired: Vacant. 

Key positions: Business manager;
Date hired: June 2002;
Date vacated: Apr. 2005;
Replacement hired: Position abolished. 

Key positions: Chief administrative officer;
Date hired: Dec. 2004;
Date vacated: Sept. 2005;
Replacement hired: Vacant. 

Key positions: Geospatial information systems coordinator;
Date hired: Aug. 2003;
Date vacated: Sept. 2005;
Replacement hired: Vacant. 

Source: GAO analysis of the Trust's personnel records. 

[End of table] 

According to some stakeholders we spoke with, the turnover of Board 
members and other key staff has contributed to the Trust's inability to 
develop a strategic and performance plan with measurable goals and 
objectives as well as to delays in implementing programs. For example, 
the NEPA environmental assessment related to the grazing program was 
postponed when four Board members completed their 4-year terms in 
January 2005. Some staff stated that the lack of consistent leadership 
and the lack of progress in organizational and program development has 
contributed greatly to staff turnover. 

Conclusions: 

To meet the mandated management goals of the Caldera, the Trust faces 
multiple challenges--balancing conflicting goals and objectives for 
resource development and use with preserving and protecting these 
resources for sustained future recreational enjoyment of the Caldera. 
While the Trust has made some progress in achieving its mandated goals, 
its further progress is in doubt because it has not developed a well- 
defined management control program, which is collectively encompassed 
in the mandates governing the Caldera's operations. Such a program 
would include strategic and performance plans, measurable goals and 
objectives and monitoring plans, annual performance reports, and a 
strategy for achieving financial self-sustainability. These mechanisms 
would help provide greater accountability for achieving results and 
enhancing decision making. Furthermore, an effective management control 
program--to include human capital initiatives designed to retain needed 
skills and provide timely replacement of lost skills--can ease the 
effects associated with turnover in the Board and staff. 

Achieving financial self-sustainability by 2015 is only one of many 
goals and objectives set forth in the Preservation Act, but it is key 
to the Trust's success in managing and operating the Caldera without 
federal funds. The Trust assumes that it may have to continue to rely 
on federal funding after 2015, but this assumption is premature because 
the Trust has not focused on the actions it needs to take to become 
self-sustaining, such as expanding or establishing new revenue- 
generating programs or identifying other nonfederal revenue sources 
(donations). Furthermore, without developing programs to minimize risks 
associated with implemented programs, the Trust cannot manage the 
uncertainty surrounding liability and fire suppression costs, which 
could undermine its efforts to achieve financial self-sustainability. 
Finally, without an independent financial statement audit, the Trust 
cannot demonstrate to Congress and other stakeholders that it is 
developing a sound financial base and that reported financial 
information is credible. 

Recommendations for Executive Action: 

To help ensure that the Trust meets its goals under the Preservation 
Act and to improve management oversight, accountability, and 
transparency under the Control Act and the Results Act, we are making 
the following seven recommendations to the Valles Caldera Board of 
Trustees. 

To establish a more effective management control program, we recommend 
that the Board develop: 

* a strategic and performance plan that identifies measurable goals and 
objectives for protecting and preserving the Caldera, providing 
recreation, sustaining yield, and becoming financially self- 
sustaining; 

* a plan for becoming financially self-sustaining that includes 
financial information detailing how and when the Trust will try to 
achieve this goal; 

* mechanisms for periodic performance monitoring and reporting, 
including annual performance reports that enable Congress and the Trust 
to track progress in achieving the Trust's program goals and 
objectives; and: 

* a plan for the timely replacement of key personnel. 

To increase accountability to Congress and other stakeholders, we also 
recommend that the Board: 

* obtain the annual financial statement audit for 2005, 

* provide a status report or the auditor's final opinion on the Trust's 
financial condition in its January 2006 annual report to Congress, and: 

* arrange to conduct future annual financial audits in a timely manner. 

Trust Comments and Our Evaluation: 

We provided the Valles Caldera Board of Trustees with a draft of this 
report for review and comment. The Board provided written comments that 
are included in appendix I. The Board generally agreed with the 
accuracy of the findings, validity of the conclusions, and soundness of 
the recommendations. It also provided additional insights into four 
specific areas. First, it stated that it has, over the last several 
years, engaged in extensive strategic planning sessions to lay the 
foundation for developing more detailed operating plans once the 
highest level strategic planning work is completed and sufficient 
experience has been obtained in conducting interim programs. It also 
said that it has adopted, in 2005, a set of strategic goals, the 
achievement of which is both measurable and time specific. We 
acknowledge that in 2005 the Board announced four broadly stated 
strategic goals. However, as stated in the report, the Trust has not 
developed strategic and performance plans that include all required 
elements of the Results Act, which provides a methodical and analytical 
approach to strategic planning. 

Second, with regard to risks posed by fire and legal liabilities, the 
Board said it was in the process of completing a Fire Use Plan that 
addresses the use of management-ignited fire as well as the use of fire 
originating from natural ignitions and that Congress has adopted 
legislation to provide the Board with access to federal fire 
suppression funds. These actions will enhance the Board's ability to 
evaluate natural ignitions and apply the appropriate management 
response. We agree that it is important to complete the Fire Use Plan, 
which, according to the Board, will be finalized by May 2006. As 
mentioned in the report and in the Board's comments, having a sound 
fire management plan will provide greater assurance that proper 
management actions are taken in the event of a wildland fire. The Board 
also said it has pursued clarification of whether the Board can access 
the federal government's judgment fund and has obtained a legal opinion 
from an independent firm that concludes that legislation might be 
necessary to access the judgment fund but that the Trust could use its 
own funds to purchase liability insurance. We revised the report to 
include this clarification and agree that the Trust should use its own 
funds to purchase liability insurance. 

Third, the Board agreed that the timely appointment of Board members 
and the management of its human resources are essential to achieving 
positive results. In this regard, it mentioned that it has revised its 
bylaws to effect the orderly transition of Board members, so as to 
mitigate the impact of possible delays in the appointment process. It 
also said it had adopted a new organizational structure and performance 
review process for employees. The change in the Board's bylaws has the 
effect of allowing the Board to make important decisions in the absence 
of a full Board due to delays in appointments of Board members. We 
agree this is important given that the replacement of Board members is 
out of its control. The Board also recognized that it has experienced a 
relatively high level of Trust employee turnover, which it said has 
"occurred in a constructive fashion, void of grievances or formal 
complaints." Nonetheless, the fact remains that high turnover, 
particularly of key employees, can cause disruption to an organization 
and affect its ability to accomplish established goals. As the report 
states, an effective management control program has a process in place 
for the timely replacement of key personnel lost to turnover. 
Establishing such a process is within the purview of the Board and 
important to effective management of an organization's human capital. 

Finally, the Board stated that while the Trust was fully committed to 
the goal of financial self-sustainability, the Trust recognizes that to 
obtain that goal, it needs to streamline required federal overhead 
stemming from compliance with federal laws and statutes and to control 
administrative and operating costs. It said it was committed to 
developing the management plans required for conversion of financially 
attractive programs to regular status and acquiring capital resources. 
Furthermore, it stated that the Board takes the goal of financial self- 
sustainability seriously and on par with other provisions of the 
Preservation Act and thus disagreed with the implication in the report 
that it did not consider the financial self-sustainability goal as a 
priority. Because the Board's published management framework, entitled 
Valles Caldera National Preserve Framework and Strategic Guidance for 
Comprehensive Management, states that the Trust considers the financial 
self-sustainability goal as only one of many goals, to avoid ambiguity, 
we revised the report's language to state that the Trust considers the 
self-sustainability goal as one of many goals of equal priority. 
Regardless, the seriousness of the Board's actions in addressing this 
goal would, as mentioned in the report, be further enhanced by 
demonstrating a more aggressive approach to identifying additional 
revenue sources that would help the Trust come closer to achieving 
financial self-sustainability. 

Scope and Methodology: 

We obtained and analyzed information from the Trust on its activities, 
relevant laws, regulations, program documents, and related materials, 
and met with Trust officials responsible for major activities, such as 
recreation, resource inventorying, construction, and financial 
management. Since the Caldera was initially under the management of the 
Forest Service, we interviewed Forest Service officials and reviewed 
available documentation supporting activities undertaken during this 
time. We also visited the Caldera to observe the actions taken to date 
toward meeting the Trust's statutory goals. The financial statements of 
the Trust have not been independently audited. We conducted limited 
testing of these data and discussed these data with key Trust 
officials. We describe issues related to these financial data in the 
body of this report. We assessed and determined that the nonfinancial 
data, such as participation in recreation activities and levels of 
livestock grazing, were sufficiently reliable for the purposes of this 
report. We conducted our work from January 2005 through October 2005 in 
accordance with generally accepted government auditing standards. 

We are sending copies of this report to interested parties. We will 
also make copies available to others upon request. In addition, this 
report will be available at no charge on GAO's Web site at [Hyperlink, 
http://www.gao.gov]. 

If you or your staff have any questions about this report, please 
contact me at (202) 512-3841 or [Hyperlink, nazzaror@gao.gov]. Contact 
points for our Offices of Congressional Relations and Public Affairs 
may be found on the last page of this report. GAO staff who made major 
contributions to this report are listed in appendix III. 

Signed by: 

Robin M. Nazzaro: 
Director, Natural Resources and Environment: 

List of Committees: 

The Honorable Pete V. Dominici: 
Chairman: 
The Honorable Jeff Bingaman: 
Ranking Minority Member: 
Committee on Energy and Natural Resources: 
United States Senate: 

The Honorable Richard Pombo: 
Chairman: 
The Honorable Nick J. Rahall II: 
Ranking Minority Member: 
Committee on Resources: 
House of Representatives: 

[End of section] 

Appendixes: 

Appendix I: Comments from the Valles Caldera Trust: 

Valles Caldera Trust: 
2201 Trinity Drive Suite C: 
Los Alamos, NM 87544 T 505-661-3333: 
F 505-661-0400 vallescaldera.gov: 

October 31, 2005: 

Robin M. Nazzaro: 
Director: 
Natural Resources and Environment: 
United States Government Accountability Office: 
Washington, D.C. 20548: 

Dear Ms. Nazzaro: 

Thank you for the opportunity to review and comment on the report 
entitled Valles Caldera: Trust Has Made Some Progress, but Needs to Do 
More to Meet Statutory Goals (GAO-06-98). The Board of Trustees of the 
Valles Caldera Trust acknowledges the general accuracy of the findings, 
the general validity of the conclusions, and the general soundness of 
the recommendations contained in the report, without fully endorsing 
the content of the report. As examples, the Trust wishes to provide the 
following additional insights into four specific areas addressed in the 
report. 

The Trust Has Not Developed Strategic and Performance Plans with 
Measurable Goals and Objectives: 

The Trust has adopted a logical and sequential approach to planning 
involving extensive public input. The first step in that process was to 
complete the statutorily required comprehensive program for the 
management of the land, resources, and facilities within the Valles 
Caldera National Preserve, published in 2005 as the Framework and 
Strategic Guidance for Comprehensive Management. A second fundamental 
step in the Trust's strategic planning efforts, the Valles Caldera 
National Preserve Master Plan for Interpretation, was also completed in 
2005 and is in the process of being placed on the Trust's website. 
During the past several years, the Board of Trustees has engaged in 
extensive strategic planning sessions to lay the foundation for 
developing more detailed operating plans once the highest level 
strategic planning work is completed and sufficient experience has been 
obtained in conducting interim programs to permit the preparation of 
more specific annual operating plans. This approach is evidence of the 
Trust's commitment to adaptive management in all phases of its 
operations. Also, in 2005, the Board of Trustees adopted a set of 
strategic goals, the achievement of which is both measurable and time 
specific. 

The Trust Has Not Addressed Risks Potentially Posed by Fire and Legal 
Liabilities: 

The Trust is in the process of completing a Fire Use Plan that 
addresses the use of management ignited fire as well as the use of fire 
originating from natural ignitions. In Fiscal Year 2005, the U.S. 
Congress adopted legislation to provide the Trust with access to 
federal fire suppression funds. This action, coupled with the adoption 
of the Fire Use Plan, will greatly enhance the Trust's ability to 
evaluate natural ignitions and apply the appropriate management 
response. The process of determining the appropriate management 
response to a natural ignition requires thought beyond simply 
considering whether there is a threat to key resources or public 
infrastructure. The opinion of the Region 3 U.S. Forest Service Fire 
Manager stated in the report that the May 2005 fire "could have been 
left to burn" is at best an educated guess. Absent a full analysis of 
all of the factors involved with that particular fire and completion of 
the standard decision tree at the various required stages of such an 
analysis, whether that fire would have met the conditions necessary to 
be placed under a fire use strategy is uncertain. 

Resolution of liability issues is of paramount importance to the future 
of the Preserve. In Fiscal Year 2005, the Trust aggressively pursued 
clarification on the question of the Trust's ability to qualify for 
access to the permanent judgment fund of the federal government for 
payment of judgments or compromise settlements. Furthermore, the Board 
of Trustees sought an independent legal opinion that concluded the 
Trust could use its own funds to procure general liability insurance 
from private providers. 

Turnover of Board Members and Staff Contributed to Delays in 
Implementing Components of a More Effective Control Program Needed to 
Meet Statutory Goals: 

The Trust agrees that the timely appointment of Board members and the 
management of its human resources are essential to achieving positive 
results. 

In reference to the "significant turnover among Board members," all 
Trustees appointed to the Board since the formation of the Trust have 
served their full terms on a voluntary basis. The timely appointment of 
Board members by the President falls clearly outside of the control of 
the Trust. To mitigate the impact of possible delays in the appointment 
process, the Board has set in place measures, such as modifying the 
Trust's Bylaws to effect the orderly transition of Board officers. 

With regard to the Trust's management of human resources, while 
retention of valuable employees is essential to success, the converse 
is also true. During the formative years, the Trust will most likely 
progress through a number of phases as adaptive management is applied, 
not only to the ecological conditions of the Preserve, but also to 
matching employees to the skills required for achieving organizational 
goals. While the Trust has experienced a relatively high level of 
employee turnover, that these changes have occurred in a constructive 
fashion, void of grievances or formal complaints is evidence of the 
Trust's management acumen. As a further sign of the Trust's management 
adaptability, the Board, in concert with senior management, developed 
in 2005 a new organizational structure and performance review 
process for employees. 

The Trust Has Not focused on the Actions It Needs to Take to Become 
Self-Sustaining: 

The Valles Caldera Preservation Act of 2000 (the "Act") clearly 
challenges the Trust to be financially self-sustaining defined as 
management and operating expenditures equal to or less than proceeds 
derived from fees and other receipts for resource use and development 
and interest on invested funds. While the Trust is fully committed to 
the goal of financial self-sufficiency, the Trust also recognizes that 
streamlining required federal overhead, those costs stemming from 
compliance with federal laws and statutes, will be a key component in 
successfully attaining that goal. An example of the Trust's commitment 
is the development of an innovative approach to compliance with the 
National Environmental Policy Act, which has been endorsed 
enthusiastically by the President's Council of Environmental Quality. 

The Board of Trustees recognizes that a second important component of 
achieving financial self-sufficiency is careful attention to 
controlling administrative and operating costs. To this end, the Trust 
is committed to maintaining a compact and highly flexible staff as well 
as conducting operations and discharging its stewardship 
responsibilities without redundancy, free of bureaucratic processes to 
the maximum practical extent, and with strict adherence to rigorous 
cost-control principles, while constantly striving to implement 
innovative management strategies. 

The Trust continues to have a critical need for early capital 
investments to develop the infrastructure and programs necessary to 
attain future financial sustainability. In the absence of substantial 
capital expenditures to date, the Trust has evaluated various interim 
programs and initiatives to determine their financial viability. The 
Trust is committed to developing the management plans required for 
conversion of financially attractive programs to regular status, as 
well as acquiring expanded capital resources. 

Transcripts of the Congressional debate prior to the passage of the Act 
reveal considerable discussion about the intent and the interpretation 
of the financial sustainability goal. Much of the discussion centered 
on whether achievement of this goal was a mandatory requirement or 
merely a target. Notwithstanding this uncertainty, the implication in 
the report that the Trust does not consider the financial self-
sufficiency goal as a priority is inaccurate. The present Board of 
Trustees has clearly stated at several public meetings in 2005 its 
intent to take the challenge of achieving financial sustainability very 
seriously and on par with all of the other provisions of the Act. The 
Board approaches this task with energy, enthusiasm, and dedication. 

As the Trust gains experience in managing the Preserve, the Board of 
Trustees fully intends to document federal rules and regulations that 
in the view of the Trust are inappropriate, incompatible with the 
provisions of the Act, or unduly burdensome, particularly in the 
context of achieving financial self-sufficiency. Section 108(f)(4) of 
the Act specifically affords this opportunity to the Trust. 

In closing, the Trust appreciates the professionalism displayed by the 
GAO examiners in conducting their investigation. 

On behalf of the Board of Trustees, 
Sincerely, 

Signed by: 

Tracy S. Hephner:
Chairperson: 

[End of section] 

Appendix II: Guiding Principles of the Valles Caldera Trust: 

1. Future generations. Administer the Preserve with the long view in 
mind, directing efforts toward the benefit of future generations. 

2. Protection. Recognizing that the Preserve imparts a rich sense of 
place and qualities not to be found anywhere else, commit to the 
protection of its ecological, cultural, and aesthetic integrity. 

3. Integrity. Strive to achieve a high level of integrity in the 
stewardship of the lands, programs, and other assets in the Trust's 
care. This includes adopting an ethic of financial thrift and 
discipline and exercising good business sense. 

4. Science and adaptive management. Exercise restraint in the 
implementation of all programs, basing them on sound science and 
adjusting them consistent with the principles of adaptive management. 

5. Good neighbor. Recognizing the unique heritage of northern New 
Mexico's traditional cultures, be a good neighbor to surrounding 
communities, striving to avoid negative impacts from Preserve 
activities and to generate positive impacts. 

6. Religious significance. Recognizing the religious significance of 
the Preserve to Native Americans, the Trust bears a special 
responsibility to accommodate the religious practices of nearby tribes 
and pueblos, and to protect sites of special significance. 

7. Open communication. Recognizing the importance of clear and open 
communication, commit to maintaining a productive dialogue with those 
who would advance the purposes of the Preserve and, where appropriate, 
to developing partnerships with them. 

8. Part of a larger whole. Recognizing that the Preserve is part of a 
larger ecological whole, cooperate with adjacent landowners and 
managers to achieve a healthy regional ecosystem. 

9. Learning and inspiration. Recognizing the great potential of the 
Preserve for learning and inspiration, strive to integrate 
opportunities for research, reflection, and education in the programs 
of the Preserve. 

10. Quality of experience. In providing opportunities to the public, 
emphasize quality of experience over quantity of experiences. In so 
doing, and in reserving the right to limit participation or to maximize 
revenue in certain instances, commit to providing fair and affordable 
access for all permitted activities. 

[End of section] 

Appendix III: GAO Contact and Staff Acknowledgments: 

GAO Contact: 

Robin M. Nazzaro, (202) 512-3841 or [Hyperlink, nazzaror@gao.gov]: 

Staff Acknowledgments: 

In addition to the contact named above, Roy Judy, Assistant Director; 
Christine Bonham; Doreen Feldman; Lisa Knight; Tom Kingham; Julian 
Klazkin; Allen Lomax; Cynthia Norris; Judy Pagano; Dawn Shorey; Carol 
Herrnstadt Shulman; and Maria Vargas made key contributions to this 
report. 

(360525): 

FOOTNOTES 

[1] Pub. L. No. 106-248, Title. I. 

[2] 31 U.S.C. § 9100 et seq. 

[3] Pub. L. No. 103-62 (1993). 

[4] OMB, Preparation and Submission of Strategic Plans, Annual 
Performance Plans, and Annual Program Performance Reports, Circular No. 
A-11, part 6 (Washington, D.C., June 2005). 

[5] Interior's National Business Center (NBC) uses its information 
systems to provide computer-processing services to other federal 
agencies. Under cross-servicing agreements, NBC develops and operates 
administrative and financial systems (including payroll/personnel, 
administrative payments, accounts receivable, property management, and 
accounting) for the Department of the Interior as well as for more than 
30 other federal organizations. 

[6] 68 FR 42460 (July 17, 2003). 

[7] 68 FR at 42462. 

[8] Letter from the Chairman, Council on Environmental Quality, to the 
Chairman, Valles Caldera Board of Trustees (Oct. 22, 2003). 

[9] Program risks can be addressed in the strategic plan required by 
the Results Act and incorporated into the management control statement 
required by the Control Act. 

[10] The National Fire Plan is not a single document but rather several 
strategic documents that clarify wildland fire management strategies, 
activities, and priorities. 

[11] Resource benefit, also referred to as wildland fire use, involves 
the management of naturally ignited wildland fires to accomplish 
specific resource objectives outlined in the agencies' fire management 
plans. 

[12] Recently enacted legislation requires the Secretary of 
Agriculture, in consultation with the Trust, to develop a plan to carry 
out fire preparedness, suppression, and emergency rehabilitation 
services on the Caldera. See 16 U.S.C. § 698v-6(g); Pub. L. No. 109-54 
§ 432(a). 

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