Today, Forest Service management of the national forests is besieged by conflict from without and beset by uncertainty from within. Even as it approaches its centennial, the agency's very survival seems in doubt.

Public debate over national forest management is both appropriate and useful. Yet the current conflicts have escalated, in some cases, to the point of violence, while agency morale has dropped precipitously. In the long run, such polarization is bad for the national forests, bad for the communities and forest users who depend on them, and bad for the wildlife and natural ecosystems that are found within them.

To find ways to help the Forest Service survive and thrive into its second century, several groups of people drawn from the environmental community, the timber industry, other user groups, and the agency itself began meeting and corresponding in 1997. This is the final report and recommendations of one of those groups, which calls itself the "Forest Options Group."

Areas of Discussion

In response to this question, discussion focused on governing structures and the budgetary process. Governing structures include the ways that local forest managers get their annual and month-to-month guidance and direction. The budget provides the means for managers to fund their activities.

The Forest Options Group agreed that current governing and budgeting systems are the source of many of the core problems with the Forest Service. Top-down governance structures promote polarization and discourage people from working with the agency at the local level because of the risk that a higher level would overturn their decisions. The budgetary process encourages people to view both the national forests and federal funds as a commons, available mainly to those who stake their claims.

Budgeting and Governance Systems

• Open bucket appropriations would fund forests out of tax dollars but allow local managers, not Congress or higher levels in the agency, to set priorities and determine where funds would be spent.
• Gross receipts would allow forests to charge more user fees and fund the forests out of those fees rather than out of appropriations from tax dollars.
• Net receipts would also allow more user fees but would let managers keep only the net receipts, thus discouraging the cross-subsidizing of unprofitable activities with profitable ones.
• Special funds, perhaps derived from receipts, could be used to promote the non-market stewardship activities, such as watershed rehabilitation, ecosystem protection, forest health and restoration, or other public goods.

• A forest trust, similar to state land trusts, would make a trustee responsible for producing revenues for a beneficiary and for preserving the corpus of the trust.
• A board of directors could be appointed by the secretary of agriculture or elected by national forest permit holders, including anyone willing to buy an annual use permit.
• A collaborative board made up of representatives of a broad array of interest groups could be appointed en bloc by the secretary of agriculture.
• A forest could be managed by a private or non-profit group.

Pilot Forests

1. All pilot forests will nominally report to an Office of Pilot Projects rather than to the regional office of the geographic region in which they are located;
2. All will have open-bucket budgeting;
3. All are relieved from following the Forest Service Manual, Handbook, or memo direction;
4. All except pilot 2 may charge user fees subject to valid existing rights; and
5. All except pilot 2 have a safety net equal to half their historic budget.

1. Entrepreneurial Budgeting: The forest is funded out of its net receipts. Forest managers set user fees with no other changes in governance. Twenty percent of gross receipts go into a special fund dedicated to nonmarket stewardship activities.
2. Collaborative Governance: A collaborative board oversees the operations of the forest, approving the annual budget and operating plan. Other than open-bucket budgeting, the budget process is unchanged.
3. Collaborative Planning: A collaborative board writes the forest plan. When the plan is done, the forest will be funded out of three-quarters of its gross receipts, with any excess of the forest's share of gross receipts over the historic budget to be dedicated to facilities maintenance and nonmarket stewardship.
4. Forest Trust: The forest is made into a legal trust with a board of trustees appointed by the Secretary of Agriculture and state governor. The trustees are obligated to preserve the corpus of the trust and to produce revenue for the beneficiaries, which include local counties and a nonmarket stewardship fund to be managed by an outside entity. The forest itself is funded out of half of its gross receipts.
5. Gross Receipts/Rate Board: The forest is funded out of three-fourths of its gross receipts. A rate board sets forest user fees to insure against monopolistic pricing and take equity considerations into account.

   The Forest Options Group recommends that at least one test be made of each of these pilots. But other ideas or combinations of ideas may be worth testing as well. The pilot advisory committee could accept other pilot proposals from forests while insuring that a full range of pilots is tested.

Summary Table of Pilot Characteristics

                                Budgeting Characteristics
Governing                 Status      Open     Gross      Net
Characteristics            Quo       Bucket   Receipts  Receipts
Status Quo                Control              5 (75%)      1
Collaborative board                   2, 3*   3* (75%)    
Trust with appointed board                     4 (50%)  
Trust with collab. board
Trust with elected board

* Pilot 3 is funded out of appropriations until its forest plan is completed, then it is funded out of gross receipts.

Implementation

All of these pilots should lead to significant improvements in land stewardship and public satisfaction with the forests, while reducing taxpayer burdens. Yet five years may not be long enough to determine which structure or combination of structures works best. The Forest Options Group recommends that forests be given options to renew the pilots for five more years. Eventually, however, the group expects that some combination of these pilots will form the nucleus for reform of the entire National Forest System.