Minnesota Office of the Legislative Auditor
Program Evaluation Division


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Game and Fish Fund


March 1991

License fees from anglers and hunters are deposited into a separate account in the state treasury known as the Game and Fish Fund. Revenues of the fund are dedicated to pay for the activities of the Department of Natural Resources (DNR) Fish and Wildlife Division as well as certain other department expenses. Over the last decade, license fees have risen faster and more frequently than in the past. Concerns among legislators over the rate of increase and the makeup of the fund's revenues and expenditures led the Legislative Audit Commission to direct a study of the fund's status. The audit commission sought answers to the following questions:

  • How have Game and Fish Fund revenues and expenditures changed over time?
  • Has DNR charged appropriate amounts to the Game and Fish Fund for administration and other departmental expenses?
  • Does the department have appropriate financial controls over the fund?

In order to address these questions we interviewed DNR managers, reviewed budgetary and financial records, interviewed officials from other states and the U.S. Fish and Wildlife Service, and our financial auditors reviewed certain of the fund's financial transactions.


Game and Fish Fund revenues have grown from $10 million in 1975 to over $45 million in 1990. The fund receives most of its revenue from license fees paid by hunters and anglers. As the figure shows, the fund currently receives about 72 percent of revenues from license fees, 23 percent from federal grants (up from 12 percent in 1975), and 5 percent from other sources.

Over one million fishing licenses were sold in license year 1989 generating about $13 million in revenue. Almost 800,000 hunting licenses and 200,000 waterfowl and pheasant stamps were sold, generating $14 million in revenue. In addition, 130,000 Minnesotans bought combined or sportsmen's licenses adding $2.3 million in revenues. Most of the revenue comes from just a few types of licenses, primarily the resident fishing and deer licenses. Resident deer licenses account for $9 million in revenue, 62 percent of all hunting receipts or 85 percent of non-dedicated receipts. Overall, about 87 percent of license revenues in 1989 were collected from state residents.

As shown below, when the fishing license surcharge is included, resident fishing license fees have increased slightly in constant dollars since 1962. Without the surcharge, license fees have declined slightly over the last thirty years. Demand for resident fishing licenses is relatively inelastic with respect to their price. The number of fishing licenses sold has remained about the same despite recent price increases since the early 1980s. However, some sports groups believe that license fees have become high enough to discourage casual participants.

In constant dollars the resident deer firearms license costs about the same as it did in 1962, but the non-resident deer license fee has decreased 60 percent.

Minnesota residents' license fees are comparable to those charged in neighboring states, with the exception of the fishing license. The resident angling license cost 17 percent more than the regional average and will increase one dollar in license year 1991. Non-resident license fees are also comparable with the exception of the small game and the basic angling license, which are slightly below those charged in neighboring states. DNR is proposing that the Legislature raise each of these fees in the 1991 legislative session.

Federal funds have risen substantially over the last decade, because of an expansion of the Wallop-Breaux Sport Fish Restoration aids, the addition of a senior fishing license, and a slight increase in Minnesota's share of wildlife aids. The Wallop-Breaux expansion of sport fish restoration funds in 1984 and the 1990 budget reconciliation act provisions have increased the state's federal fishing aids substantially. As the result of 1990 changes, federal fishing aid is likely to increase well over $2 million in the next few years.

The sale of senior fishing licenses has increased federal aids because 60 percent of the state's allocation is based on the number of licensed anglers. Minnesota has sold approximately 105,000 of the $4.00 senior licenses in each of the last three years. Approximately one-third of the senior citizens buying a license requested a refund. In addition to processing costs, each refund costs the fund approximately $4.70 in federal aid as well as the $4.00 license fee.

Some have suggested that the refund is a social policy unrelated to hunting and fishing and that the cost of the refund should be borne by the General Fund. However, if the General Fund were to reimburse the Game and Fish Fund for the senior license refunds, federal regulations would still prohibit additional federal aid accruing to the state.


As the first figure on the next page shows, the primary expenditures from the Game and Fish Fund are for fish and wildlife programs and the enforcement program. Total fund expenditures reached almost $45 million in 1990. Expenditures on fish management in 1990 were over $14.4 million and expenditures on wildlife management were over $10.7 million.

Total fund expenditures have risen in nominal and constant dollars. The second chart shows that fund expenditures have more than doubled in constant dollars since 1962.

Expenditures for the fish management program measured in constant dollars were at a historic high in 1990. The basic wildlife program's constant dollar expenditures are 38 percent higher than in 1975, but lower than in the late 1970s and early 1980s.

  • Despite the name of the fund, a large portion of expenditures -- approximately 44 percent in 1990 -- were on programs other than fish and wildlife management.

It is these other fund expenditures not directly for fish and wildlife programs that most concern anglers, hunters, and legislators concerned about the fund's solvency.

One of the largest programs financed from the Game and Fish Fund is the enforcement program, costing over $8.2 million in 1990. The rationale for partially financing the enforcement program from the fund is that conservation officers' activities primarily benefit hunters and anglers. The enforcement program is an integral part of fish and wildlife management, but it also provides benefits to the general public.

The proportion of the enforcement division's budget that has come from the fund has changed over the years. The proportion rose from 58 percent in 1981 to 82 percent in 1984. This has had a substantial effect on the fund's status during the 1980s. For example, if the enforcement division had been 60 percent financed from the fund, approximately $13 million would have been available for other purposes. The 1989 Legislature reduced the percentage of the enforcement budget paid from the fund to 70 percent based on a study of how enforcement officers spent their time. If the division had been financed at the 70 percent level during the 1980s, the fund balance would be $5 million higher today.

We examined the enforcement division timekeeping system and conservation officer daily logs. Based on our review, we estimate that in 1990 about 68 percent of conservation officers' time was spent on activities relating to the Game and Fish Fund. Our review suggests that the timekeeping system provides a reasonable estimate of how much time conservation officers spend on Game and Fish Fund related activities, although the fund may be financing slightly more than its proportional share of enforcement expenditures.

Another major expenditure item from the fund is the administrative overhead and support costs of the department. In fiscal year 1990, these amounted to about $7.6 million or about 17 percent of fund expenditures. These costs include a portion of the commissioner's office, financial management, computer services, statewide indirect costs, the attorney general and state auditor's fees, regional administration, field services, real estate management, and engineering services.

There is no definitive standard for how much various funds should contribute for departmental administrative support services. How much is paid by any fund for any program is determined by the Legislature during the appropriations process. Our review suggests that the Game and Fish Fund is not paying more of its fair share of departmental support costs. For example, the percentage of departmental support costs paid for the Fish and Wildlife Division (about 17 percent) is less than its proportion of the department's total budget (about 26 percent) or its proportion of DNR's total salaries (about 23 percent).

In our view the decision about what proportion of overhead costs to pay for from the Game and Fish Fund should be kept separate from the actual expenditure of the funds. It would be very awkward and administratively inefficent if DNR were to try to match funding sources exactly to each expenditure category. Instead, the department pays for some administrative activities completely from one source of funding and others completely from other financing sources. Although this can cause confusion and questions among license holders about why the Game and Fish Fund is paying for certain activities, it is a reasonable response by the department.

Another expenditure that some have questioned are payments made to local governments in-lieu-of-taxes. Payments in-lieu-of-tax are made by DNR mainly to counties and townships to reimburse for property taxes that they would have received if DNR had not acquired the land for public purposes. The Game and Fish Fund makes payments in-lieu-of-tax on lands acquired for wildlife management areas. Payments in-lieu-of-tax for other natural resource land, such as forests, scientific and natural areas, and parks, are made from the General Fund. In 1990, DNR paid a total of almost $5.3 million in-lieu-of-taxes. Most of the total, over $4.5 million, was paid from the General Fund. In lieu-of-tax payments from the Game and Fish Fund amounted to about $722,000 in fiscal year 1990. In-lieu-of-tax payments have grown slightly in recent years because of the addition of lands bought for wildlife management areas with Reinvest in Minnesota (RIM) funds. We estimate that in 1991 the fund will pay approximately $17,000 in additional in-lieu-of-tax payments on the lands added by RIM.

The rationale for making payments from the Game and Fish Fund is that the license fees should pay the in-lieu tax for land acquired for public hunting grounds and wildlife refuges. An opposing argument is that these lands are also used by non-anglers and hunters, and that the payments should be consistent for all lands acquired by the department. There are currently no charges to non-hunters for using wildlife areas. The Governor's Citizens Commission to Promote Hunting and Fishing recommended in December 1984 that in-lieu-of-tax payments be made from the General Fund.

Another new expenditure from the fund has been payments to Indian tribes to settle past treaty obligations. Settlement agreements have been negotiated with the Leech Lake, Grand Portage, and Fond du Lac Bands of Chippewa Indians. The state and the Game and Fish Fund could be making payments soon to the Fond du Lac and Mille Lacs Bands. The Game and Fish Fund currently pays for 20 percent of the cost of the settlement agreements totalling about $1 million in fiscal year 1991. No additional revenues were targeted to the fund to pay for these settlements, so the net effect on the fund since 1981 has been additional payments of $8.3 million. Some have argued that the total cost of these treaty settlements should be borne by the General Fund, since they are a societal obligation. Others maintain that hunters and anglers are the primary beneficiaries of the settlements, so they should share in making the payments.

Financial Management

We were asked to review the Game and Fish Fund in part because of concern that DNR might be expending game and fish money on DNR activities unrelated to the fund's purpose. Our financial auditors tested expenditures and transfers from the Game and Fish Fund accounts and found that the expenditures were made in conformance with financial controls required by state statutes. In short:

  • We found no evidence that DNR was spending Game and Fish Fund money on unallowed department activities.

The only exception to this was the department paying unemployment compensation from the Game and Fish Fund to several employees whose salary had been paid from other funds. The department has stated that it will change this practice. In general, we found that expenditures were appropriately reviewed before being paid by the Financial Management Bureau.

A program evaluation we conducted in 1986 and previous financial audit reports noted problems in federal aid administration. Specifically, our previous report found that DNR was not submitting reimbursement requests often enough and it did not have a letter of credit arrangement with the U.S. Fish and Wildlife Service resulting in slower reimbursement and less investment income. We were also concerned with the department's ability to adequately track and control the accrual of costs allowable for reimbursement.

We found in this review that:

  • The administration of federal aid had improved dramatically as a result of the implementation of a new cost accounting system and changes in DNR's procedures.

We also reviewed the department's projections for the future fund balance. The chart shows the department's fund balance projections through 1997. The department estimates that the fund balance will be negative beginning in fiscal year 1996. We regard the department's projection, with some exceptions, as a reasonable estimate of the Game and Fish Fund's status, although, all such projections are sensitive to changes in assumptions. For example, the department's projection assumes three percent inflation but if inflation were actually 5 percent then the fund balance would turn negative in 1995. We also note that it is possible the fund could be liable for as much as $700,000 per year in additional payments to Indian tribes. Although the fund projections do not fully account for recent increases in federal aids or potentially greater restritution payments, it is likely that DNR will be seeking increases in resident license fees in in the 1993 or 1994 legislative sessions to offset potential fund deficits in 1995 or 1996.

We found that statutory restrictions on expenditures associated with semi-dedicated receipts are ambiguous. It is unclear exactly what expenditures of the department the Legislature sought to restrict. Our financial auditors concluded that DNR is technically in compliance with the spending restrictions, but it is actually spending other funds on restricted activities. DNR maintains that it is impossible to run the special purpose programs without incurring costs in excess of the statutory limits. If the Legislature wants to hold the department accountable for spending only a certain percentage of stamp and surcharge revenue on administrative costs, then:

  • The Legislature should clarify statutory restrictions on the expenditure of semi-dedicated receipts. The Legislature should also consider raising the limit on administrative expenses.



Office of the Legislative Auditor ♦ Room 140, 658 Cedar St., St. Paul, MN 55155