State Auditor ReportsIn three reports spanning a decade, the State Auditor has documented unending problems with the state's small boat harbors. Reports from Office of the Auditor, State of Hawai'i
2001 State Auditor's Summary(see http://www.state.hi.us/auditor/Overviews/2001/01-09.htm for summary) (see http://www.state.hi.us/auditor/Reports/2001/01-09.pdf for full report) OFFICE OF THE AUDITOR STATE OF HAWAII Audit of the Management of State Boating Facilities by the Department of Land and Natural Resources Report No. 01-09 Summary Small boat harbors and boating facilities are part of the State's ocean recreation and coastal areas programs established in Chapter 200, Hawaii Revised Statutes, and managed by the Department of Land and Natural Resources' Division of Boating and Ocean Recreation (boating division). Their proper maintenance and operation allow people to benefit from the state's natural resources by engaging in recreational boating, commercial and personal fishing, and maritime related business operations. Residents and visitors alike use boating facilities to participate in ocean-based activities like yacht races, canoe regattas, ocean swimming, and surfing and board sailing contests. Inadequate management of state boating facilities has been a recurring problem. Our prior audits in 1993 and 1998 reported on these deficiencies. In our present audit, we found that little had changed in the poor conditions of these state boating facilities. The boating program's mismanagement and neglect have deteriorated facilities to the point where their continued use threatens public safety. Many facilities need major repairs and face permanent closure if not addressed. For example, 64 of 338 boating slips at the Ke`ehi boating facility are closed for safety and liability reasons. The closure also results in a loss of revenues of almost $100,000 per year. We also noted sections of the Wai`anae and Kailua-Kona boating facilities were closed for the same reasons. Such problems have resulted partly from poor planning, an insufficient fee structure, paying a disproportionate share of the department's enforcement expenses, and funding programs with special fund moneys that should be supported by general funds. For example, the fee for the State's highest mooring rate is only $4.10 per foot of vessel at Ala Wai Harbor. Whereas, Ko Olina Marina, a private facility, charges $9. Other private facilities charge as little as $2.18 per foot, but also require initiation and application fees, dues, and food and beverage minimums. The boating division has identified several additional revenue sources such as increasing commercial business operations but without the support from the Board of Land and Natural Resources. There are also 750 parking spaces at the Ala Wai Harbor that are free to the general public. We observed that most of those using the free spaces were not accessing boats in the ocean. Some were carrying construction tools and others were dressed in hotel uniforms. We also found that the boating division lacks adequate controls to ensure the accuracy and integrity of its financial affairs. The boating division is still unable to accurately determine the cost of operating its boating facilities. In addition, inventory and cash collection controls are inadequate. Our sample of the boating division's inventory found six of 100 items missing, at a value in excess of $5,000. We also found another 40 inventory items that were missing State of Hawaii identification tags. In addition, delinquent user fees (now totaling approximately $500,000) continue to increase. Finally, in the midst of current boating program problems, consideration is being given to transferring the program to the Department of Transportation. We conclude that administrative deficiencies within the land department need to be corrected before such a decision is made. Recommendations and Response We recommended that the Division of Boating and Ocean Recreation develop realistic strategic plans to address both the short and long term problems of the boating program. This includes addressing the needed repairs in the boating facilities and increasing a currently insufficient revenue stream for the boating program. We recommended the boating division address operational deficiencies in the state boating facilities by ensuring that necessary funding for repair and maintenance projects is available; the boating program receives its fair share of enforcement; and all persons moored in state boating facilities possess current mooring permits, vessel inspection certification, and vessel registrations. We also recommended that the boating division improve controls over its financial activities by ensuring expenditures are properly classified, establishing a better inventory system, segregating duties for cash collection, improving efforts to collect delinquent user fees, and requiring more audits of its commercial permit holders. Until these administrative deficiencies are addressed, consideration of transferring the boating program to another agency should be deferred. The Department of Land and Natural Resources concurred in general with the conclusions and recommendations in our report. Despite differences in opinion, the department stated that the report provides a solid base and positive direction for the improvement of state boating facilities in a fiscally responsible manner. The department strongly disagreed with our finding that the Board of Land and Natural Resources and Division of Boating and Ocean Recreation mismanaged and neglected the State's boating program. The department also offered additional information and points of clarification. The Department of Transportation also concurred with the findings and recommendations of the report and offered specific comments regarding key issues that were discussed. The department noted that while it is concerned with the condition of the State's boating program, the boating program should "first look internally to resolve its issues rather than seeking safe harbor within the Department of Transportation." 1998 State Auditor's SummaryOFFICE OF THE AUDITOR STATE OF HAWAII Audit of the Management of Small Boat Harbors and Boat Ramps Report No. 98-11 Summary For some time, various groups, including the Legislature, the Office of the Auditor, and the boating community have been critical of the management of small boat harbors and boat ramps in Hawaii. In response to this growing concern, the 1997 Legislature, through House Concurrent Resolution No. 153, H.D. 1, requested the Auditor to conduct an audit of the management of state run small boat harbors and boat ramps. As centers of economic activity, small boat harbors are important assets to the State. Their proper maintenance and operation allow Hawaii residents to benefit from the state's natural resources by engaging in recreational boating, commercial and personal fishing, and small business operations. Proper management of small boat harbors and boat ramps has been a long-standing problem for the Department of Land and Natural Resources. Our office has pointed out in past audits that the administration and operation of small boat harbors and boat ramps are deficient in several areas. Some of these problems include the lack of a comprehensive boating program for the State, unsafe conditions in the small boat harbors, inadequate security, and unreliable financial information on the revenues and expenditures. In this audit we found the management of small boat harbors and boat ramp continues to be plagued with problems. The Board of Land and Natural Resources, which is responsible for the overall administration of Hawaii's boating program, has not sufficiently improved and directed that program. Harbors are unsafe, in need of repair, and boaters fail to receive adequate services. In addition, we found the Department of Land and Natural Resources has not adequately managed the small boat harbors and boat ramps. The boating program lacks clear guidance, boating regulations are not enforced, and the true cost of operating individual boating facilities is unknown. Finally, we found that the department needs to correct strategic and operational deficiencies before attempting to evaluate alternative management practices such as privatizing the small boat harbors. For example, the role and function of small boat harbors must be clarified, and the department must be able to accurately account for expenditures and project budgeting needs. Recommendations and Response We recommend that the Board of Land and Natural Resources establish a comprehensive statewide boating program to include the establishment of a strategic plan, statewide standards for the minimum services to be provided at each of the boating facilities, and a multi-year program and financial plan addressing the need for repairs at the boating facilities. We also recommend the Department of Land and Natural Resources, in conjunction with the Division of Boating and Ocean Recreation, establish adequate management and financial controls that would include a policies and procedures manual, clear and concise administrative rules, clear procedures for issuing permits and conducting vessel inspections, and a financial accounting system that is able to track all expenditures and account for all moneys owed to the division. Finally, we recommend that the department delay the implementation of alternative forms of management until it has corrected the strategic and operational deficiencies identified in our current report. The Department of Land and Natural Resources generally agrees with the findings and recommendations. The department states that the efforts to explore alternative forms of management such as privatization of facilities, community-based management, or even the proposed Hawaii Maritime Authority, were externally driven. The department basically disagrees with our recommendation to delay the implementation of alternative forms of management until it has addressed its strategic and operational deficiencies. It notes that while operational deficiencies need to be corrected, it intends to recommend an alternative management scheme to the Board of Land and Natural Resources if such a scheme to correct these deficiencies can be identified. We disagree with the department. The overall direction of the program, or the desired end, needs to be addressed first before the State can determine the most effective and advantageous means, or form of management, for the boating program. 1993 State Auditor's Summary(see http://www.state.hi.us/auditor/Overviews/1993/93-24.htm for original) OFFICE OF THE AUDITOR STATE OF HAWAII Study of the Financing of the Small- Boat Harbors and Boat Ramps Program of the Department of Land and Natural Resources Report No. 93-24 Summary House Concurrent Resolution No 430, House Draft 2, requested the Office of the Auditor to conduct a comprehensive study of the revenue and service operations of all state-run small boat harbors and boat ramps." The resolution specifically requested an itemized review of program expenditures and revenues, and the degree to which services provided by the Department of Land and Natural Resources (DLNR) are satisfactory. The study was conducted by the Office of the Auditor and the certified public accounting firm of Nishihama & Kishida, CPA's, Inc. Small boat harbors are designed for recreational boating activities, the landing of fish, and commercial vessel activities. The department currently operates 18 small boat harbors and 12 launching ramps in all four counties. Our study found that the statewide boating program needs improvement. Facilities and services vary from harbor to harbor and many are inadequate. Boater dissatisfaction with the facilities and services is widespread. In addition, small boat harbors and launch ramps lack adequate security. Harbor staff are not on duty during weekends and holidays, harbor agents lack authority to enforce boating rules, and DLNR has little control over the marine patrol that is supposed to provide security for the program. We found management of the boating program continues to be divided between the Department of Transportation (DOT) and DLNR causing problems in program operations. Needed positions have not been established or remain unfilled and repairs must often wait until DOT personnel have time to make the repairs. A clearly defined program could help resolve many of the problems we noted. Currently the program is only defined in statute and communicated through confusing and unwieldy rules. A more detailed budgeting and accounting system is also needed. A well developed boating program plan should include statewide standards for facilities and services, policies on how program costs are to be financed, and a timetable for achieving the standards. We found the accounting controls for the boating program to be inadequate. For example, the department has not ensured that cash handling duties are segregated, established controls over cash receipts, ensured timely deposits of cash collections, or developed written accounting procedures. Recommendations and Response We recommend that the Legislature consider transferring the marine patrol from the Department of Public Safety to the DLNR. If the Legislature chooses not to act on this recommendation, DLNR should be allowed to hire or contract for its own security personnel. We also recommend that the DLNR develop a comprehensive statewide boating program that describes and sets statewide standards for facilities and services to be provided, defines policies for setting fees to finance these costs, and establishes goals and milestones for bringing facilities and services up to standard. The plan should also address security needs, administrative rules, and the need for a comprehensive financial and budgeting system. We recommend that the department make the transfer of functions from the Department of Transportation a priority. In addition, the department should correct problems with its internal accounting controls by improving cash handling and processing procedures, reconciling internal collection records with the State's FAMIS system reports, preparing written accounting procedures, reconciling security deposits per harbor records to the department's trust fund for security deposits, and properly recording fixed assets in the State's fixed asset inventory records. The department generally concurs with our findings and recommendations. It believes it may not yet be appropriate to transfer the marine patrol to DLNR— it would like to wait and see the results of implementation of a new memorandum of agreement concerning the marine patrol. The department also agrees with our recommendation to improve its internal accounting controls. It has retained the services of a consultant to help develop a new accounting system. In its response, the department pointed out some clarifying language which we incorporated in the report. It has removed the abandoned waste containers and dilapidated catwalk pictured on pages 7 and 8 respectively. |
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