Auditor General calls for PA Game Commission to fix its finances, monitor gas and oil lease revenues

depasquale

Auditor General Eugene DePasquale

HARRISBURG — Auditor General Eugene DePasquale announced the results of his performance audit of the Pennsylvania Game Commission, along with a recommendation that the commission should strengthen its financial oversight and hold gas and oil companies accountable for lease royalty payments.

The audit also questioned the Game Commission’s assertion that it cannot factor the Game Fund’s current balance — more than $72.8 million as of 2018 — as part of developing its budget or making other financial decisions.

“The Game Commission must take a careful look at how it manages all of its finances,” DePasquale said in a press release. “Beyond the nearly $73 million balance in the Game Fund, we found there was an additional $6.5 million in various escrow accounts – which the commission’s financial officer didn’t even have knowledge of the specific accounts, balances, or purposes until my audit.”

DePasquale’s audit, which covered July 1, 2014 through June 30, 2017, recommends that the Game Commission work with the Governor’s Budget Office to place its seven escrow accounts under the control of the state Treasury Department, where there is more transparency.

DePasquale also said the Game Commission must do a better job tracking the millions of dollars it earns from leasing land to gas and oil producers, noting that the agency does not monitor or verify leasing royalties to ensure it collects all the money it is owed.

“Essentially, the commission is relying on gas and oil companies to say how much money they owe,” DePasquale said. “I find the lack of fiscal controls to be particularly troubling at a time when oil and gas royalty revenues doubled, rising from $9.3 million in 2015 to $19.2 million in 2017.

“The commission never levied interest penalties on delinquent payments and did not enforce the submission of annual production reports, which could have provided an extra layer of accountability.”

DePasquale said the Game Commission’s failure to log and promptly deposit royalty checks upon receipt created a risk of loss or potential theft of public funds.

“We found instances where checks were deposited several weeks after they were stamped received, including one which was not deposited for 63 days,” DePasquale said. “In general, the accounting of royalty payments was so poor that my auditors could not determine if the commission was receiving all the money it was due.”

DePasquale also noted the Commission is doing a better job of managing the sale of timber harvested on State Game lands. The commission generated $22.8 million in timber sales from 2015 to 2017, following the provisions in the Forestry Manual and Game and Wildlife Code.

During the audit period, the total number of hunting licenses sold was trending downward. For the three-year audit period, annual license sales averaged $35.4 million.

“Because license sales account for about a third of total commission revenues, the agency should focus on retaining existing hunters and getting former hunters back into the field,” DePasquale said. “The commission is making an effort, but seems to be struggling to address a long-term decline in the sport of hunting – much of it apparently driven by changing demographics.”

In a statement issued after DePasquale announced the results of his audit, the Game Commission noted that it has already implemented some of his recommendations, and agreed to work toward implementing most of the others.

The only recommendation with which the Game Commission disagreed involves the documentation of employee hours related to a requirement in the Game and Wildlife Code.

“Section 521 of the code requires $4.25 from each resident or nonresident license sold, and $2 from each antlerless license sold, be used for habitat improvement,” the Commission said in its statement. “The Game Commission has always complied with this requirement, and routinely sets aside significantly more than the required amount to use for habitat improvement, with the salaries and benefits of some habitat-management employees covered under the set-aside.

“The Auditor General’s report recommended those employees’ holiday, sick and annual leave should not count toward the set-aside, but the Game Commission contends these costs are benefits related to the cost of habitat work, and nothing in Section 521 excludes these costs.

Otherwise, the Auditor General’s recommendations will be implemented, if they have not been already.”

Game Commission Executive Director Bryan Burhans said audits like the one that recently was completed always are beneficial. By identifying areas where improvement can be made, the agency can become better as a whole, he said.

“To do our best for Pennsylvania’s wildlife and citizens, we must work as efficiently and effectively as possible,” Burhans said. “Nearly all the recommendations offered by the Auditor General’s office will further improve the Game Commission’s operations and we have started to implement them. I’d like to personally thank Auditor General Eugene DePasquale and his staff for their thorough and professional review of our agency. No matter how big or small, wildlife wins with every improvement we make.”

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