FRANKFORT — Kentucky is known for perhaps the best and most extensive state park system in the nation – but it’s not very efficient, according to the findings of an audit by the office of State Auditor Crit Luallen.

That study shows the system lost $31 million last year and unless the Commerce Cabinet better markets and manages the system, those losses are likely to continue to grow.

“The park system as a whole will never be self-sustaining,” said Luallen, a former Secretary of Tourism during the administration of Gov. Brereton Jones. “But the goal ought to be to make them as financially viable as possible.”

Her audit covered the period from fiscal year 2000 to 2007, during which time expenditures at the parks reached $88 million while revenues reached only $57 million in 2007. During that period of time, state funding from the general fund remained relatively static at around $29 million. And since 1995, $316 million has been spent on renovation and expansion of state parks.

But operating losses grew by 14 percent since 2000 and earlier this year the parks system sought an additional $5 million appropriation from the legislature.

Luallen said the park system contains small, non-revenue sites such as historical shrines and smaller “day-parks” which do not feature lodging, dining or other revenue producing activities. Thus it is important that the 17 larger, resort parks generate more revenue in support of the entire system.

“The park system needs increased marketing and a strategic plan to improve its revenues and economic im-pact,” Luallen said. “Parks marketing has been considerably underfunded.”

Much of the problem, the audit indicates, is declining patronization of revenue producing activities at the parks, such as lodging, dining and golf. For example, according to data in the audit, customers played 15,000 fewer rounds of golf in 2007 than in 2000 at state park courses even though there were five new golf courses opened during that period.

The number of meals and the number of nights of lodging at resort parks also decreased over the same time period. In 2000, seven parks realized a profit on each meal served, ranging from 25 cents to $1.56. But last year, only one park — Natural Bridge —realized a profit of 20 cents per meal. As much as $7 per meal was lost at Buckhorn Lake. Overall, parks went from an average profit of 3 cents per meal in 2000 to a loss of $1.60 per meal last year.

“We’re right to be concerned if we're investing hundreds of millions of dollars to improve the facilities, but our numbers are actually going down every year,” Luallen said. “If activities continue to decline, we simply cannot maximize the economic impact of the parks.”

She suggested the Commerce Cabinet, in which the parks department is housed, devote more money from the 1 percent lodging tax revenues to market the state parks, both in and outside of Kentucky. Currently, the marketing budget for the state park system is $480,000 a year, much smaller than in other states.

She also suggested a comprehensive analysis of room rates to increase use and revenues. That might include package rates and seasonal rates, she said. Vendor contracts should be reviewed to determine if costs can be reduced.

Luallen said high gasoline prices may present state parks an opportunity for more business as people in the area from which the parks draw most of their patrons take shorter vacation trips. That includes the states of Indiana, Illinois, Ohio, Michigan, Missouri and Kentucky. But only, she said, if they maximize their economic impact and market to that audience.

Ronnie Ellis writes for CNHI News Service and is based in Frankfort. Reach him at rellis@cnhi.com.