For the Fiscal Years 2018 2019 and TEXAS GENERAL LAND OFFICE GEORGE P. BUSH, COMMISSIONER August 19, 2016 Submitted to the Office of the Governor, Budget Division, and the Legislative Budget Board For the Fiscal Years 2018 2019 and TEXAS GENERAL LAND OFFICE GEORGE P. BUSH, COMMISSIONER August 19, 2016 General Land Office and Veterans’ Land Board 2018-19 Legislative Appropriations Request TABLE OF CONTENTS Statement, Chart, and Certification: Page Administrator’s Statement………………………………………………………………………………………………. 1.A.1 Organizational Chart…………………………………………………………………………………………………….. 1.B.1 Certification of Dual Submission………………………………………………………………………………………... 1.C.1 Budget Overview – Biennial Amounts……………………………………………………………………………………. 1.D.1 Summaries of Request: Base Request by Strategy………………………………………………………………………………………………. 2.A.1 Base Request by Method of Financing (MOF)…………..…………………………………………………………….. 2.B.1 Base Request by Object of Expense (OOE)..…………………………………………………………………………... 2.C.1 Base Request by Objective Outcomes.…………………………………………………………………………………. 2.D.1 Exceptional Items Request…………..…………………………………………………………………………………. 2.E.1 Total Request by Strategy………………………………………………………………………………………………. 2.F.1 Total Request Objective Outcomes..……………………………………………………………………………………. 2.G.1 Strategy Requests: Energy Lease Management and Revenue Audit..………………………………………………………………………. 3.A.1 Energy Marketing…………………………….…………..…………………………………………………………….. 3.A.6 Defense and Prosecution..…………………….…………..…………………………………………………………….. 3.A.10 Coastal and Uplands Leasing……………….…………..…………………………………………………..………….. 3.A.13 Asset Management..………………………….…………..…………………………………………………………….. 3.A.17 Surveying and Appraisal.…………………….…………..…………………………………………………………….. 3.A.21 Preserve & Maintain Alamo Complex……….…………..…………………………………………………………….. 3.A.25 Coastal Management………………………….…………..…………………………………………………………….. 3.A.29 Coastal Erosion Control Grants……………….…………..…………………………………………………………….. 3.A.36 Oil Spill Response…………………………….…………..…………………………………………………………….. 3.A.41 Oil Spill Prevention……..…………………….…………..…………………………………………………………….. 3.A.45 i Veterans' Loan Programs.…………………….…………..…………………………………………………………….. 3.A.49 State Veterans' Homes..……………………….…………..…………………………………………………………….. 3.A.54 State Veterans' Cemeteries…………………….…………..…………………………………………………………….. 3.A.57 Rebuild Housing……...……………………….…………..…………………………………………………………….. 3.A.61 Rebuild Infrastructure...……………………….…………..…………………………………………………………….. 3.A.65 Program-Level Request……………………………………………………………………………………………………. 3.A.1.1 Rider Revisions and Additions Request..…………………………………………………………………………………. 3.B.1 Exceptional Items: Exceptional Item Request....………………….…………..…………………………………………………………….. 4.A.1 Exceptional Item Strategy Allocation..……….…………..…………………………………………………………….. 4.B.1 Exceptional Item Strategy Request…………….…………..………………………………………………………….... 4.C.1 Supporting Schedules: Capital Budget Project Schedule..…………….…………..…………………………………………………………….. 5.A.1 Capital Budget Project Information.………….…………..…………………………………………………………….. 5.B.1 Capital Budget Allocation to Strategies……….…………..……………………………………………………………. 5.C.1 Capital Budget Operating and Maintenance Expenses Detail.………………………………………………………….. 5.D.1 Capital Budget Project: Object of Expense and Method of Financing by Strategy.…………………………………….. 5.E.1 Historically Underutilized Business (HUB).….…………..…………………………………………………………….. 6.A.1 Current Biennium One-time Expenditure.…….…………..…………………………………………………………….. 6.B.1 Federal Funds……………...………………….…………..…………………………………………………………….. 6.C.1 Federal Funds Tracking…....………………….…………..…………………………………………………………….. 6.D.1 Estimated Revenue Collections……………….…………..…………………………………………………………….. 6.E.1 Advisory Committee………………………….…………..…………………………………………………………….. 6.F.1 Homeland Security Funding, Part B: Natural/Man-Made Disaster Expenditures..…………………………………….. 6.G.1 Estimated Total of All Funds Outside the General Appropriations Act Bill Pattern..………………………………….. 6.H.1 10 Percent Biennial Base Reduction Options………………………………………..………………………………….. 6.I.1 Indirect Administrative and Support Costs..….…………..…………………………………………………………….. 7.A.1 Direct Administrative and Support Costs..….…………..…………………………………………………………….. 7.B.1 Summary of Requests for Capital Project Financing……..…………………………………………………………….. 8.A.1 ii Statement, Chart, and Certification The Texas General Land Office 2018-2019 Legislative Appropriations Request from George P. Bush, Texas General Land Commissioner School Land Board Members Hometown Term Expire Date David Herrmann San Ant onio August 2016 G ilbert Burciaga Austin August 2017 Veterans Land Board Members Hometown Term Expire Date Alan L. Johnson Harling en December 2016 Andrew J. Cobos Housto n December 2018 Administrator’s Statement This Texas General Land Office and Veterans’ Land Board (GLO) Legislative Appropriations Request addresses the charges given to the agency. The agency’s responsibilities were first established, by the Republic’s constitution in 1836, to manage the public domain by collecting and keeping records, providing surveys, maps, and issuing titles. Over the years, those responsibilities have been expanded to include oversight for 13 million acres of state lands and mineral rights owned by the Permanent School Fund, for support of the state's public schools; GLO responsibilities include managing state land sales, trades, leases and improvements, as well as the administration of contracts, mineral royalty rates, and other transactions relating to oil and gas leases and real property. To address concerns for Texas veterans, the Veterans Land Board was created by the Legislature in 1946 to provide low-cost land loans to World War II veterans. Services now include housing and home improvement loans, nursing home services, and cemetery services. As concerns for the environment evolved, in 1986 the GLO held the first Adopt-A-Beach Cleanup which continues today. In 1991, the Oil Spill Prevention and Response Act was 1.A. Page 1 of 11 approved, and in 1999 the Coastal Erosion Planning and Response Act (CEPRA) was established. These and other efforts protect, maintain, restore, and enhance environmental quality for Texas land, water, coastal and other natural resources. House Bill 3726, passed in 2011 by the 82nd Legislature, transferred the duty of protecting the Alamo, the Shrine of Texas History, to the GLO and created the ability for the GLO to establish and partner with a qualifying nonprofit organization. The Alamo Endowment was created to raise funds, provide services and other benefits for the preservation and maintenance of the Alamo complex. On July 11, 2015, the GLO entered into a management agreement with Alamo Complex Management (ACM) to manage the daily operation of the Alamo Complex. On October 15, 2015, the GLO, the Alamo Endowment Board and the City of San Antonio entered into an agreement to complete a Master Plan for the future development of the Alamo pursuant to House Bill 2968 passed by the 85th Legislature. In July 2011, the governor designated the Texas General Land Office as the lead state agency for managing disaster recovery grants through the U.S. Department of Housing and Urban Development (HUD). Highly experienced in disaster recovery, the General Land Office coordinated the cleanup of the Texas coast after Hurricane Ike. The agency's management of disaster recovery grants gives local communities a single point of contact, cuts red tape, and reduces administrative costs. In accordance with its charge, the agency’s mission statement is to serve the schoolchildren, veterans, and all people of Texas b y preserving their history, protecting their environment, helping communities rebuild after disasters, and maximizing state revenue through innovative administration and prudent stewardship of state lands and resources. The GLO makes every effort to address its mission through this Legislative Appropriations Request as it seeks to implement the recently submitted FY 2017-2021 Agency Strategic Plan within the parameters of the following statewide objectives for the upcoming •b iennium: • Accountable to tax and fee payers of Texas; • Efficient such that maximum results are produced with a minimum waste of taxpayer funds, including through the elimination of redundant and non-core functions; • Effective in successfully fulfilling core functions, measuring success by achieving the goals set forth in the • state performance measures and implementing plans to continuously improve; Providing excellent customer service; and Transparent such that agency actions can be understood by any Texan. 1.A. Page 2 of 11 Operating Budget Overview and Funding Sources The objectives underlying this budget include effective management of available funds while addressing multiple financial challenges. Th•e challenges facing this agency include the ability to: • Continue the preservation and maintenance of the Alamo and Alamo complex as well as completing and implementing the Alamo master plan; • Ensure quick responses to disasters such as those the state experienced with Hurricane Ike and the Central • Texas Wildfires by making state funds available before federal funding is available; • Implement and complete the Texas Coastal Resiliency Master Plan; Finalize the directive of the 81st Legislature to close Rollover Pass on the Bolivar Peninsula; and Enhance the cybersecurity of the agency. As requested in the Policy Letter from state leadership dated June 30, 2016, the agency’s baseline request for general revenue related (GR and GR-Dedicated) funds has been reduced to 96% of amounts expended in fiscal year 2016 and budgeted in fiscal year 2017. T he 2018-19 Operating Budget request is $232,385,856, a decrease of 43% from the FY 2016-17 Operating Budget of $G4e0n5e,r0a5l7 R,4e0v9e.n Tuhee F augnednscy's operating budget is composed of four major funding sources: are funds appropriated by the Legislature to the agency. The request for this biennium totals $60,423,414, which is 96% of the appropriation last biennium less the lapse of Rider 20 Contingency Appropriation for Disaster Recovery Program plus the transfers for the across the board salary increase. The 4% reduction in GR/GR-Dedicated funding in the amount of $3,764,225 was reduced from the general revenue appropriation base of $5,800,483 to close Rollover PGaesnse. r Tahl eR reevmenaiunein Dge $d2i,c0a3t6e,d2 5F8u insd bsu dgeted for possible increased costs to finalize the closure of the Pass. are funds received by the agency, for a specified use. The request for this biennium totals $F2e9d,e9r1a7l, 9F9u4n dwsh ich includes operational costs for the Alamo and the transfers for the across the board salary increase. are appropriated funds from federal sources. The request for this biennium totals $41,421,142, a decrease of 80%. 1.A. Page 3 of 11 Other Funds are funds from rider appropriations, PSF revenues, loan program revenues, appropriated receipts, and interagency contracts. The request for this biennium totals $100,623,306. 10 Percent Proposed Reduction In the event of a mandated ten percent reduction, the agency would reduce general revenue funding to finalize the Closure of Rollover Pass on the Bolivar Peninsula. The agency received $5.8M to close Rollover Pass in the 2016-17 biennium and this amount will be used for this purpose. The agency made the 4% reduction from this funding base with $2M left in the 2018-19 biennium to finalize the closure of Rollover Pass. Due to increased construction costs since the inception of the project in 2011, the agency budgeted the $2M for possible increased costs to finalize this project. Earned federal funds drawn from the Department of Housing and Urban Development (HUD) as part of the Community Development Block Grant (CDBG) program may be used for reduction. The Federal Government recognizes there is an indirect administrative cost to the GLO to support the federally funded CDBG program. The resulting earned federal funds are deposited into the general revenue fund. The GLO is not required to spend those funds on the CDBG program as they represent reimbursements of the GLO’s indirect administrative support costs. Both general revenue funds appropriated for the preservation, restoration, and operations of the Alamo as well as the GR- Dedicated Alamo Complex Account 5152 are subject to statewide reduction. However, Natural Resources Code, Sec 31.454 directs that the funds in the Alamo Complex Account are to be used only to administer the subchapter and for the preservation, repair, renovation, improvement, expansion, purchase of equipment, operation, maintenance, or to acquire a historical item appropriate to the complex. Therefore, any unspent funds must remain in the Alamo Complex Account 5152. 1.A. Page 4 of 11 Exceptional Items Request Alamo Funding The GLO requests $43.5M in general revenue above the base appropriation of $31.5M for a total of $75M to continue the implementation of the Master Plan and to further address preservation, operation and maintenance needs throughout the Alamo Complex. Since taking over the Alamo in 2011, the GLO has worked to ensure the financial and physical integrity of the Alamo Complex. Current Alamo Complex revenues help fund the daily operations of the complex but do not provide sufficient revenues to address the preservation or technological needs, as well as the innovation and expansion of the Alamo Complex into a world class destination. These resources will be used for operations, innovation, artifact acquisition, property aTceqxuaiss iCtiooans, tbauli Rldeinsigl iceonncsyt rIumctpiolenm, reenntoavtaiotino n and maintenance. The GLO requests $30M in general revenue funds from receipts received for economic damages related to the BP Deepwater Horizon settlement to implement a Texas Coastal Resiliency Master Plan (Master Plan) and fund additional disaster preparedness projects. As part of the Master Plan implementation process, the General Land Office will identify, prioritize and fund projects to provide protection from future hurricanes, and other coastal hazards, including short-term direct impacts to s tate and local infrastructure affected by critical erosion, flooding, and storm surge as well as long-term gradual impacts from Ceroomsimonu annitdy h Daibsiatastt elors Rs.e covery Response and Assessments – The GLO requests $3M in contingent general revenue appropriation for a disaster recovery team to evaluate and assess community long-term recovery needs immediately following a Governor disaster declaration. This appropriation would allow the agency to respond prior to receiving federal disaster recovery grants. These disaster recovery assessments are essential to the federal grant appropriation process. If federal recovery grant funding is received, the agency will reimburse the general revenue fund for these costs. 1.A. Page 5 of 11