Zoo, Inc.; D. Haarmeyer and E.Larsen

THEFREEMAN IDEASON LIBERTY Zoo, INC. By David Haarmeyer and Elizabeth Larson W hat do you do with a homeless pea cock? Zookeepers had to deal with such problems when the Petting Zoo at Manhattan's Central Park closed in 1991 because of New York City's budget trou bles. Most of the petting zoo's inhabitants found new homes with local families. For tunately for both zoo animals and the chil dren who visit them, many cities are privat izing their zoos rather than letting the gates close for good. For years, private zoological societies worked alongside city zoo officials, raising funds and running education programs and concession stands . Now, as local govern ments are forced to rein in runaway budgets, zoological societies are taking charge of operating entire zoos. Nearly 40 percent of the 165 American zoos accredited by the American Zoological Association-among them, zoos in Fort Worth, Cincinnati, New Orleans, San Diego, and Jackson, Missis sippi-are run by private, nonprofit societ ies. And that figure is on the rise: Officialsin Boston, Pittsburgh, Milwaukee, Fresno, California, and Birmingham, Alabama, among other U.S. cities, are now considering privatization as well.

The success of privately financed and managed zoos should not be surprising. After all, running a zoo is foremost a prob lem of managing resources. Like large cor porations, good zoos operate by balancing a number of potentially conflictingobjectives: education, research, conservation, and rec reation. Shutting off the flow of subsidies from general taxpayers (many of whom may David Haarmeyer is a policy analyst at the Reason Foundation. Elizabeth Larson writesfor Reason magazine. not have a taste for zoos) makes good management essential, benefiting both a zoo's animals and its patrons. The fact that privately operated zoos may spend only what funds they raise necessi tates cost-effective operations-managers who keep their eyes on the bottom line-as well as creativity-more exotic animals, grander housing that actually looks like the plains of the Serengeti or the jungles of Brazil, high-tech, hands-on experimental displays for kids that are fun and educa tional. In striving to please zoo patrons, good zookeepers will improve the well being of their animals, ensuring not only clean concession areas but clean zoo cages.

Financial independence brings two other important aspects to zoo management. In addition to revenue from admissions and concessions, zoos depend on donations from local families, corporations, and non.. profit groups. These sources tend to donate more to private organizations than to gov ernment programs, over which donors have little control. Unlike government, which has a notoriously short time horizon, private zoos offer stability. Donors can be confident that the large sums they contribute for long-term projects will be used properly. \ In contrast to non-zoo-Ioving taxpayers, who have little interest in how bureaucrats run "their" zoo, those individuals and cor porations who donate time and money to a zoo have a strong interest in seeing that it is well run and in holding zoo managers ac countable for their decisions. Like major shareholders of corporations, these zoo stakeholders are often board members and play an important role in monitoring the zoo's management and financial affairs.

22 The Philadelphia Zoo: A Model of Private Operation Although privatizing zoos appears to be a trend for the '90s, private zoos have been around for decades. The oldest zoo in the United States-the Philadelphia Zoo, oper ated since 1859 by the Philadelphia Zoolog ical Society-has given supporters of pri vately operated zoos something to crow about for many years. The society's efficient management and imaginative exhibits make it the obvious model for zoo officials con sidering privatization today. Not a penny of the Philadelphia Zoo's $14-millionoperating and capital budgets for 1991 came from government coffers. Instead, the zoo depended on admission fees (76 per cent of revenues), memberships, corporate support, and special events to keep its budget balanced. Society members have come up with such creative annual fundraisers as the Zoobilee! party, the Teddy Bear Rally, the Ben Franklin Look-Alike contest, and the Run Wild at the Zoo 10-kilometer race.

And to continue attracting patrons, mem bers of the Philadelphia Zoological Society have made their zoo more than just a park with caged beasts. For children of any age, the 42-acre Philadelphia Zoo is an adven ture. One of the more spectacular exhibits is the Treehouse. Visitors walk past gigantic fiberglass frog eggs and a mammoth tree or through monstrous replicas of bees and honeycombs. You imagine that you've shrunk to the size of the creatures whose "environment" you're exploring, and you can feel and smell exactly what it's like. Bear Country and the World of Primates offer other close-up views of life in the animal kingdom. The Philadelphia Zoological Society has had so much success running its own zoo that the group has formed a for-profit man agement-consulting subsidiary, which now helps other zoos put their finances in order. Rick Biddle, chief operating officer of the Zoological Society, points to a new $8 million aquarium across the river in Cam den, New Jersey, as one of the subsidiary's latest success stories. The society will be 23 taking over operation of this underwater zoo as well.

America's oldest zoo is not the only model for officialsconsidering privatization. Southern California is home to what is probably the best-known private zoo in the United States. Since opening in 1922, the San Diego Zoo and Wild Animal Park have been in the hands of the San Diego Zoolog ical Society. Thanks to the society's nearly 200,000 members-the world's largest zoo membership-only two percent of the zoo and park's $480-million operating budget comes from the local government. More than 18,000visitors came out for the grand re-opening of the recently privatized Fort Worth Zoo last spring. An editorial in the Fort Worth Evening Star-Telegram hailed the "new primate house, the Asian Falls with its 40-foot waterfall and the nat ural environment that has been created for some of the world's most wonderful crea tures," as well as one local family whose generous donations to the zoo made many of the renovations and new exhibits possible.

The paper's editorial staff also pointed out that while many might have originally thought privatizing meant restricting access to the public, privatization of the Fort Worth Zoo encouraged "the generosity of a few private citizens" and, thanks to their dona tions, the zoo has actually "been opened to more people than ever before. " Not all zoos have cut themselves ofIfrom public funds cold turkey, however. In 1978, officials in Knoxville, Tennessee, turned over the city zoo to the private, nonprofit Knoxville Zoological Society. It was under stood at the time, says the zoo's director, Ted Beattie, that the zoo would eventually become completely self-supporting. The so ciety now receives just $400,000 (about 12 percent) of its $2.9-million annual operating budget from the Knoxville city government. Another privatized zoo that has all but weaned itself from public funds is the Au dubon Zoo and Aquarium in New Orleans.

The Audubon Institute Inc. runs the zoo and aquarium on a $20-million annual operating budget with 600 employees. The city has given the Audubon Institute about $1 million 24 THE FREEMAN • JANUARY 1993 over the last three years, none of which was used to balance the books; it has all gone to capital improvements. Audubon Institute officials hope to turn their zoo into "a regional Smithsonian" and are planning a breeding center for endangered species. While a few such private zoos still accept government subsidies, most believe that get ting government out of the zoo business is in their long-term interest. In Boston, the state operated Franklin Park Zoo will soon be turned over to the Commonwealth Corpora tion, which willwork alongsidethe Common wealth ZoologicalAssociation. State employ ees of the zoo, which currently has a $2.85 millionbudget, are expected to be employed eventually by the private corporation.

The Problems of Mixing Public and Private Management Predictably, government zoo officials aren't always eager to hand over the reins. As a result, some zoos have developed co-management/ownership arrangements between government officials and private, nonprofit zoological societies. If the expe rience of the Los Angeles Zoo is any indi cation, however, mixing public and private managers can be just as messy as letting government do the job alone. The much-publicized power struggles be tween the Greater Los Angeles Zoo Asso ciation and the L.A. Recreation and Parks Commission resulted in the resignation in November 1991 of the Association's presi dent, Bruce Nasby, who had raised paid associationmembershipsfrom80,000to some 135,000 during his 3~I2-year tenure. The lion's share of the responsibility for running the L.A. Zoo has returned to the city gov ernment, but the Zoo Association continues to lend a hand: the Association contributes some $9 million to the zoo's $25-million annual budget and is still in charge of the concession stands. With both private and public keepers still involved in managingthe L.A. Zoo, accountability is diffused and the source of contention remains.

At the Metrozoo in Miami, Florida, ten sion between the zoo's public keepers and private fundraisers has been growing for nearly a decade. The Zoological Society of Southern Florida thinks city officialsput too much emphasis on salaries and employee benefits and too little on zoo maintenance and promotion. Of the zoo's $7.6-million operating budget for 1990, 68 percent went for salaries and benefits. And $2.9 million of the budget came in the form of subsidies from the county coffers. The Zoological Society, on the other hand, has had no trouble raising funds to improve life for the animals and attracting more visitors. In 1985, with 43,000 mem bers, the society built the zoo's $1-million animal hospital. By 1990, society member ship had nearly doubled to 71,000, and the organization was able to contribute $1.1 million toward the new $1.32-millionAsian River Life exhibit. Society president Sherrill Hudson hopes to make the Metrozoo as good as or better than the private San Diego Zoo. "We need to do a lot of fundraising," she told the Miami Herald. "There's no question that everywhere people are skeptical about giv ing money. over to the government. The private sector could do it, though. We could build the zoo out in five to seven years."

Bill Bird, director of the local County Park and Recreation Department, dismisses the notion that any private group could finish the Metrozoo in that amount of time. At most, public officials see the possibility that someday both the county and the soci ety might operate the zoo together "as a hybrid creature." Private zookeepers are successfully reju venating troubled zoos because, unlike their public counterparts, they have clear incen tives to manage their zoos as they would a business. As with any business, the cus tomer is king, and with today's heightened awareness of environmental issues, zoo pa trons want to visit animals that are healthy and well cared for. Because funding is directly tied to the satisfaction of a zoo's visitors, private zoos are proving them selves not just better at balancing their budgets but at acting as caretakers of ani mals and teachers of men. 0 THEmEEMAN IDEASON LIBERTY STATE HEALTH INSURANCE REGULATIONS by Eric-Charles Banfield M any government policies, notably those separating consumers from sup pliers, distort the economics of health in surance, and prevent market forces from addressing the problems. Yet regulators considering "reforms" promise to give us only more of the same. Better remedies exist, and Congress is taking note.