DNR’s Response To Outsourcing of License Sales

Here is the response DNR has been sending to those who have written them on the subject of DNR outsourcing license sales. It was first released without a signature, and the letter plus the signature of the DNR Commissioner Noel Holcomb was just posted on DNR’s website.

Thank you for your persistence.

From DNR Commissioner Noel Holcomb:

"There seems to be some significant misunderstandings regarding changes to the new licensing system. First, and there really is no escaping this issue; the current system is dying. The hardware we are using is no longer manufactured, and replacement machines are limited to a relatively small supply that we have in stock. Under the new system there will be three sales channels: walk in retail agents, home/library/other PC Internet sales, and telephone sales. We have been without telephone sales for over a year. Bringing this sales channel back will be a major improvement to license availability. We will have to spend some money to have a system that can provide licenses and account for $20 million in revenues annually. And, there have been no general appropriations for that task. Lump sum funding simply does not exist. We are left with the service charge option which was approved in concept as early as 2001. No one likes to have to use that funding mechanism, but we are out of other options. Under the current pricing structure, $2.75 would be added to the cost of a transaction regardless of how many licenses are being purchased. Even with this charge, I believe that Georgia hunters and anglers will find license prices in Georgia to be a bargain compared to most Southeastern states.

There has been considerable discussion about money going out of state. This issue puzzles me. We do a lot of business with vendors headquartered outside of the State of Georgia. Doing so saves sportsmen’s money by getting the best deal available. If we artificially exclude competition, you can be guaranteed higher costs. Let me share an example. We now print the Popular Guides to Hunting and Fishing Regulations through a vendor in Utah for about $15,000. Some years back these were printed in Georgia; hunting regulations alone cost $50,000. The sportsmen of Georgia are better served by the money going out of state with a $35,000 savings that can now be put on the ground in wildlife management. The same principle holds true for the automated licensing system. Besides, if a company has an in state regional office and an out of state headquarters (some do, not in this case), would we get to consider their bid under an in-state vendors only policy?

There also is considerable misunderstanding regarding private and public information. First, the data collected through the licensing process belong to the Department not to Central Bank. Central Bank cannot use or release this information. Data, like name and address, held by any government agency is public record except for a few special circumstances specifically excluded in law. This legal requirement is not new, and it was not created by DNR or WRD. This requirement comes from Georgia law on open records. For example, names and addresses collected for WMA quota hunt applications have been released for many years. In fact, many organizations, including some highly critical of the new contract, have requested lists like licenses buyers and quota hunt applicants. Names and addresses that WRD collects on an application or at a point of sale are public records. These data have been and will continue to be provided upon request when required by law. The records collected through the old licensing system had certain (but not complete) protections only because name and address was collected through linking with driver license data that has a legal exclusion.

In summary, we are spending $2.2 million to have the ability to sell hunting and fishing licenses, manage associated data, and receive an additional $10 million in associated federal funds. A spin-off benefit is that $550,000 in operations and personnel costs will be shifted from administration to on-the-ground wildlife management.

The money paid by sportsmen and women still comes to the State (less the service charge). License revenues plus some additional general revenues are appropriated to the Department. We raise around $17.5 million with license sales and are appropriated around $28 million annually.

Thank you for allowing me to share my thoughts."

I’m going to comment on the contents of the response. The bold text is the DNR response; words in regular text are my comments.

DNR’s response opens with this paragraph.

There seems to be some significant misunderstandings regarding changes to the new licensing system. First, and there really is no escaping this issue; the current system is dying. The hardware we are using is no longer manufactured, and replacement machines are limited to a relatively small supply that we have in stock. Under the new system there will be three sales channels: walk in retail agents, home/library/other PC Internet sales, and telephone sales. We have been without telephone sales for over a year. Bringing this sales channel back will be a major improvement to license availability. We will have to spend some money to have a system that can provide licenses and account for $20 million in revenues annually. And, there have been no general appropriations for that task. Lump sum funding simply does not exist. We are left with the service charge option which was approved in concept as early as 2001. No one likes to have to use that funding mechanism, but we are out of other options. Under the current pricing structure, $2.75 would be added to the cost of a transaction regardless of how many licenses are being purchased. Even with this charge, I believe that Georgia hunters and anglers will find license prices in Georgia to be a bargain compared to most Southeastern states.

Commissioner Holcomb points to significant misunderstandings but neglects to identify those misunderstandings as he develops the response. But to take his lead, it is reasonable to examine the condition of the current hardware and software for the system. There is no dispute as to the age or unsatisfactory state of the current hardware and software. The system needs to be replaced. According to WRD, the system was designed to last between five and seven. It is now at 10 years old and is limping along. That point is not at issue.

The commissioner then talks about the new system, and describes three channels for the purchase of a license. The first channel identified is the walk-in retail agent. As GON understands the contract between DNR and the Central Bank, Central Bank is the sole vendor of hunting and fishing licenses and boat registration in the state. The sole vendor. As such, they are also the sole decider of how many retail outlets there might be now and in the future… not the commissioner. He signed that power away.

Central Bank will offer some retailers the opportunity to establish retail walk-in points to purchase for licenses. WRD personnel have told GON that no retailers have currently agreed to sell the licenses. Further, we are told that the walk-in location will be responsible for the establishment of a high-speed internet connection and a computer to access the system. Both the connection and the computer will have to be suitable to Central Bank. If the establishment of any of these walk-in vendors is a part of the contract, GON has missed that portion of the contract and would welcome direction from DNR to that portion of the contract for our review. Nor does Commissioner Holcomb mention on the significant down-sizing of the places where walk-in vending will be available.

If the establishment of these retail, walk-in vendors is not in the contract, then as GON understands the contract, Central Bank would not be in violation of the contract if those to whom walk-in sales opportunities we offered declined and there were no walk-in sales venues.

The best proof of this point lies in the fact that DNR’s response did not indicate how many of these walk-in sites there would be. DNR does not know how many there will be. They don’t know because they will not be hiring them. Central Bank is the single-source vendor. Consequently, if anyone else in the state would like to sell a license, they have to meet the stipulations of Central Bank.

GON understands that the “target” number of walk-in locations would be about 20 percent of the existing walk-in locations, or about 225 survivor locations through out the state.
GON further understands that DNR is pushing for that number of walk-in retailers to be increased. But the contract has been signed. Does this mean that the contract is still being negotiated? Are there changes to the contract brewing again? Are sportsmen again uninformed?

As to the significance of telephone sales, the commissioner writes, We have been without telephone sales for over a year. Bringing this sales channel back will be a major improvement to license availability.

One can certainly see how that is going to be true. If 80 percent of the current license sales locations are eliminated, then those purchasers who once used those closed license sales outlets will have to seek another sales avenue. As it happens, phone sales is THE most expense avenue; $4 per call, to acquire a license. Further, this avenue is only available for those who have a credit card. GON agrees that purchase over the phone would be a positive thing, but to use it as a replacement for over-the-counter sales is a poor trade in the eyes of many Georgians.

In the first paragraph above, the commissioner also says, We will have to spend some money to have a system that can provide licenses and account for $20 million in revenues annually. And, there have been no general appropriations for that task. Lump sum funding simply does not exist.

What has been done under the new program? The cost of the program has been removed from the state budget and transferred to the user – that is you. DNR is spending no money for this new program. Sportsmen will be spending about $2.2 million per year.

We are left with the service charge option which was approved in concept as early as 2001.

GON finds this comment potentially most disturbing on two fronts. The first is the implication that DNR tried to get the money and were denied. GON has not yet found a request from DNR to the Governor’s office or the legislature for such funds. We are still looking into that issue. The second concern is the implication that somehow sportsmen should have known that this could happen at any time. Why does Commissioner Holcomb go to the trouble to point out the timing of the creation of this power? It almost seems like the sportsmen are being told to do a better job of reading the fine print.

No one likes to have to use that funding mechanism, but we are out of other options.

What other options? One of the complaints sportsmen are making is that sportsmen are unaware of the consideration of any other options. Clearly, this lack of knowledge of these other options cannot be part of the misunderstanding the commissioner speaks to. It strikes GON as grossly unfair for DNR to keep sportsmen in the dark and then complain that sportsmen misunderstand.

The commissioner continues

Under the current pricing structure, $2.75 would be added to the cost of a transaction regardless of how many licenses are being purchased. Even with this charge, I believe that Georgia hunters and anglers will find license prices in Georgia to be a bargain compared to most Southeastern states.

This DNR logic is the equivalent of “All the other kids are doing it.” Is DNR saying that sportsmen should not complain because the price in other states is higher? One would hope DNR would have a better reason than that to justify any charges or expenses it levies on sportsmen and Georgia businesses.

Then the commissioner changes subjects to out of state.

There has been considerable discussion about money going out of state. This issue puzzles me. We do a lot of business with vendors headquartered outside of the State of Georgia. Doing so saves sportsmen money by getting the best deal available. If we artificially exclude competition, you can be guaranteed higher costs. Let me share an example. We now print the Popular Guides to Hunting and Fishing Regulations through a vendor in Utah for about $15,000. Some years back these were printed in Georgia; hunting regulations alone cost $50,000. The sportsmen of Georgia are better served by the money going out of state with a $35,000 savings that can now be put on the ground in wildlife management. The same principle holds true for the automated licensing system. Besides, if a company has an in state regional office and an out of state headquarters (some do, not in this case), would we get to consider their bid under an in-state vendors only policy?

GON understands the commissioner’s thoughts but finds it is not germane to the concern of sportsmen. This is not a case of the state buying something for Georgians to be brought back to Georgians for the benefit of Georgians. This is a case of the state telling sportsmen that when sportsmen are compelled by law to do business with the state, we have to send our money out of state to do it. Sportsmen view the purchase of a license as an investment in our future and have historically viewed that investment to be in DNR. To send that investment to a bank out of state is not a good deal for sportsmen. To have DNR craft that arrangement in the dark and announce it after the contract has been is salt in the wound.

But the history the Commissioner mentions also needs to be addressed. The state did not always contract with any outside vendor to print and distribute its seasons and regs. When DNR did it themselves, in-house, it cost $50,000 per year to produce and distribute the regs.

Many of you will remember when DNR printed the regs on a single large sheet of white paper and folded it like a map. Everyone called it “the Bedsheet” To read anything, you had to unfold it and find the info you sought. GON found a way to produce for the state a magazine with multiple pages and distribute this superior product to sportsmen at the same price the state was paying for the single-page bedsheet. This was an efficiency step and as the program moved forward, great efficiencies were found. GON did not object to that more-efficient use of our license fees.

This new DNR system is not an increase in efficiency of selling licenses by the state. DNR is abandoning its license-selling roll, keeping its money, and asking sportsmen to pay for its retreat.

Please read, “How the current system works” found farther down in this document. That will help you understand this issue better.

The next paragraph deals with the privacy issue.

There also is considerable misunderstanding regarding private and public information. First, the data collected through the licensing process belong to the Department not to Central Bank. Central Bank cannot use or release this information. Data, like name and address, held by any government agency is public record except for a few special circumstances specifically excluded in law. This legal requirement is not new, and it was not created by DNR or WRD. This requirement comes from Georgia law on open records. For example, names and addresses collected for WMA quota hunt applications have been released for many years. In fact, many organizations, including some highly critical of the new contract, have requested lists like licenses buyers and quota hunt applicants. Names and addresses that WRD collects on an application or at a point of sale are public records. These data have been and will continue to be provided upon request when required by law. The records collected through the old licensing system had certain (but not complete) protections only because name and address was collected through linking with driver license data that has a legal exclusion.

It is not a bank that concerns sportsmen. Sportsmen are concerned that their information might be released.

Data, like names and address, held by any government agency is public record except for a few special circumstances specifically excluded in law. This legal requirement is not new, and it was not created by DNR or WRD. This requirement comes from Georgia law on open records.

Sportsmen can reasonably ask, “If this has been the law, why is our information not already available?”

The fact is that the law is not changing. The commissioner fails to address the issue. Instead, he claims impotence…. an inability to do anything but expose sportsmen who are not now exposed.

The issue that needs to be addressed is this. DNR negotiated a contract with Central Bank and altered the current process sufficiently to expose sportsmen to marketers. Sportsmen can reasonably ask why DNR altered the information-gathering process to the extent that our legal protection from marketers has been removed. Sportsmen can ask for that protection to be reinstated.

As to the commissioner’s example regarding those who hunt on WMAs, GON notes that there is a much smaller population of WMA hunters and they do not represent a market large enough for a marketer to use as a sales campaign group. The entire state license population is an entirely different question. Consequently, GON believes that WRD’s assertion that there has been no harm with the WMA group, and thus no threat to the larger group, is flawed rational. Sportsmen are likely not comforted by that WMA history.

In summary, we are spending $2.2 million to have the ability to sell hunting and fishing licenses, manage associated data, and receive an additional $10 million in associated federal funds. A spin-off benefit is that $550,000 in operations and personnel costs will be shifted from administration to on-the-ground wildlife management.

GON wonders who the “we” in we are spending $2.2 million is. It is clearly not the state, not DNR, not WRD. Sportsmen are being handed an additional $2.2 million in cost without being asked about it before hand. If you take the commissioner on face value, sportsmen will spend $2.2 million per year so DNR can redirect $550,000. Clearly that is not a good deal.

But the deal for the state is even sweeter. Current license retailers are paid a commission for the sales; generally $.60 per license. That money does not go to the state coffers right now. But under the new program, that commission evaporates and all of that commission money goes to state coffers. That amounts to $843,000 per year.

The money paid by sportsmen and women still comes to the State (less the service charge). License revenues plus some additional general revenues are appropriated to the Department. We raise around $17.5 million with license sales and are appropriated around $28 million annually.

This is not a misunderstanding so far as GON can discern. We do, however, note DNR’s phrase.. “we raise”. Does DNR claim it raises this money? Sportsmen pay it because it is the law. But in the context of other state agencies, there is not another major agency in the state that generates so high a percentage of its operating funds from its constituents as does WRD. GON suggests that sportsmen are not getting a deal from the state, rather that the state is getting a MUCH better financial deal from sportsmen than the state gets from other state agencies, compared to the same cost/benefit ratio. The suggestion by DNR that the state is somehow doing sportsmen a favor by providing more money than the license fees contribute is very flawed. In the governor’s budget, he states that for every $1 WRD spends on fishermen, the state benefits by more than $210.

That is an outstanding return.

When you consider that the funds WRD is spending are our funds in the first place, the state’s return on investment is even more breath-taking. Sportsmen are the state’s Golden Goose.

HOW THE CURRENT SYSTEM WORKS

Retailers who wished to sell hunting and fishing licenses contract with the state and lease the machine that generates the license.

The one-time lease cost for that machine in their location.

You go in and buy a license.

That money is the retailers’, and he owes all of it, less his commission (usually $.60), to the state.

The retailer makes a deposit into his local bank account. The state has access to that account with something called an electronic funds transfer (EFT)

As the machine is used to sell licenses, it stores the sales it has registered and keeps them for a week.

At a designated time each week, the machine “Phones in” and uploads its stored sales information to the state system. At that time, the state knows how much money it is owed and calls the retailer’s bank to access the account and “Sweep” the state’s share of the money from the retailer’s account into the state treasury.

GON WANTS YOUR COMMENTS

Please e-mail burch@gon.com with your comments.

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