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Testimony: 

Before the Senate Committee on Rules and Administration: 

United States Government Accountability Office: 

GAO: 

For Release on Delivery Expected at 10:00 a.m. EST: 

Wednesday, December 12, 2007: 

Smithsonian Institution: 

Status of Efforts to Address a Range of Funding and Governance 
Challenges: 

Statement of Mark L. Goldstein, Director: 

Physical Infrastructure Issues: 

Smithsonian Institution: 

GAO-08-250T: 

GAO Highlights: 

Highlights of GAO-08-250T, a testimony to the Senate Committee on Rules 
and Administration. 

Why GAO Did This Study: 

The Smithsonian Institution (Smithsonian) is the world’s largest museum 
complex. Its funding comes from its own private trust fund assets and 
federal appropriations, with the majority of funds for facilities 
coming from federal appropriations. In 2005, GAO reported that the 
Smithsonian’s current funding would not be sufficient to cover its 
estimated $2.3 billion in facilities projects through 2013 and 
recommended that the Smithsonian Board of Regents, its governing body, 
develop and implement a funding plan. Recently, problems related to a 
lack of adequate oversight of executive compensation and other issues 
have raised concerns about governance at the Smithsonian. 

This testimony discusses GAO’s recently issued work on the 
Smithsonian’s real property management efforts and its efforts to 
develop and implement strategies to fund its facilities projects. In 
addition, it describes preliminary results of GAO’s ongoing work on the 
Smithsonian’s governance challenges. 

The work for this testimony is based on GAO’s September 2007 report, 
Smithsonian Institution: Funding Challenges Affect Facilities’ 
Conditions and Security, Endangering Collections, which included 
recommendations. For ongoing governance work, GAO reviewed Smithsonian 
documents and interviewed Smithsonian officials, academics, and 
representatives of nonprofit associations. 

What GAO Found: 

While the Smithsonian has made some improvements to its real property 
management, the continued deterioration of many Smithsonian facilities 
has caused problems, and the Smithsonian’s real property management 
efforts face challenges. The deterioration of facilities has caused 
access restrictions and threatened collections. In addition, the 
Smithsonian’s estimate for facilities projects increased to $2.5 
billion. While the Smithsonian follows key security practices, 
communication of security information and funding constraints pose 
challenges. The Smithsonian has made significant strides in improving 
its real property portfolio management. However, the Smithsonian 
omitted privately funded projects from its capital plan, making it 
challenging to assess the total funding and scope of projects. GAO’s 
September 2007 report recommended that the Smithsonian increase 
awareness of security issues and include privately funded projects in 
its capital plan. The Smithsonian concurred. 

To address GAO’s 2005 recommendation that the Smithsonian develop a 
funding plan for facilities projects, the Board of Regents created an 
ad-hoc committee that reviewed nine options and chose to request 
increased federal funding. Some of the Smithsonian’s evaluations of the 
nine funding options were limited in that they did not always provide 
complete analysis, fully explain assumptions, benchmark with other 
organizations, or consider combining options to increase revenue. GAO’s 
September 2007 report recommended that the Smithsonian more 
comprehensively analyze funding options and report to Congress and the 
Office of Management and Budget on a funding strategy. The Smithsonian 
concurred. The Board of Regents recently established a prioritized list 
of funding options. 

Preliminary results of GAO’s ongoing work on broader governance issues 
indicate that the Board of Regents has made some changes to strengthen 
governance, such as more clearly defining the Regents’ oversight 
responsibilities and improving access between the board and key members 
of senior management. The board is also studying whether changes to its 
size and composition would strengthen governance. GAO’s preliminary 
work suggests that the Board appears to have taken some positive steps 
toward governance reform, but that success will depend in part on how 
Regents embrace their new responsibilities and on their level of 
engagement. 

Figure: Facilities Problems Include Leaks in the National Zoological 
Park's Sea Lion Pool and the Roof of the National Museum of African 
Art: 

This figure is a combination of two photos with facility problems. One 
is of the Sea Lion Pool, and the other is the roof of the National 
Museum of African Art. 

[See PDF for image] 

Source: (left to right): GAO and Smithsonian Institute. 

[End of figure] 

To view the full product, including the scope and methodology, click on 
[hyperlink, http://www.GAO-08-250T]. For more information, contact Mark 
L. Goldstein at (202) 512-2834 or goldsteinm@gao.gov. 

[End of section] 

Madam Chairman and Members of the Committee: 

Thank you for the opportunity to testify before you today on our work 
on the Smithsonian Institution (Smithsonian). The Smithsonian has been 
referred to as America's museum, as its museums hold and provide access 
to irreplaceable national collections in American and natural history, 
art, and other areas. Since its beginning, the Smithsonian has evolved 
into the world's largest museum complex and research organization; two 
of its museums on the National Mall in Washington, D.C., are the most 
visited in the world. The act establishing the Smithsonian in 1846 
provided, among other things, that the business of the Smithsonian be 
conducted by a Board of Regents. 

In recent years, the National Academy of Public Administration (NAPA), 
the Smithsonian, and we have reported on the deterioration of the 
Smithsonian's facilities and the threat posed by this deterioration to 
the Smithsonian's collections. For example, in April 2005, we reported 
that the failing condition and closure of the Smithsonian's 1881 Arts 
and Industries building on the National Mall was the most significant 
example of a broad decline in the condition of the Smithsonian's 
facilities portfolio.[Footnote 1] Moreover, we reported that structural 
deterioration and failing systems in Smithsonian museums and other 
facilities presented serious long-term risks to the Smithsonian's 
collections. The Smithsonian's annual operating and capital program 
revenues come from its own private trust fund assets and federal 
appropriations; however, the majority of funds for facilities come from 
the Smithsonian's federal appropriations. 

As the Smithsonian's chief decision-making body, the Smithsonian Board 
of Regents is responsible for the long-term stewardship of the 
Smithsonian's mission, which includes maintaining the Smithsonian's 
facilities and collections, as well as ensuring that the Smithsonian 
has a funding strategy that provides sufficient funds to support these 
activities. In April 2005, we reported that the Smithsonian's current 
funding would not be sufficient to cover its estimated $2.3 billion in 
facilities projects through 2013 and recommended that the Smithsonian 
Board of Regents develop and implement a funding plan to address the 
Smithsonian's facilities projects. In April 2007, we testified before 
this committee that the Smithsonian's estimate for facilities' projects 
had increased.[Footnote 2] 

Recently, it has come to light that in addition to the challenge of 
addressing the Smithsonian's facilities needs, the Board of Regents 
faces other governance challenges. In the past year, following a report 
from the Smithsonian's Inspector General to the Board of Regents on the 
Smithsonian's former Secretary's compensation package and expenses, the 
former Secretary resigned. In response to concerns about the 
Smithsonian's governance raised by the former Secretary's compensation 
and expenses, as well as other issues, two studies were conducted, one 
by the Board of Regents' Governance Committee and the other by an 
Independent Review Committee (IRC) created at the request of the Board 
of Regents. Among the findings of these studies were that the roles and 
responsibilities of Regents were not clearly defined; under the former 
Secretary of the Smithsonian, key senior officials such as the General 
Counsel, Inspector General, and Chief Financial Officer were isolated 
from the board; and the Regents did not routinely receive or request 
information necessary to support vigorous deliberation, well-reasoned 
decision making, and adequate oversight. Both studies included 
recommendations. The Board of Regents adopted all 25 of the Governance 
Committee's recommendations and stated that the IRC recommendations 
were for the most part encompassed by the Governance Committee 
recommendations.[Footnote 3] 

In my statement today, I will be focusing on the results of our recent 
study--Smithsonian Institution: Funding Challenges Affect Facilities' 
Conditions and Security, Endangering Collections[Footnote 4]--and on 
preliminary results of our ongoing work on governance issues facing the 
Smithsonian. My statement focuses on three topics: (1) the 
Smithsonian's real property management efforts, including the condition 
of the Smithsonian's facilities, costs of facilities' projects, and 
efforts to improve real property security and portfolio management; (2) 
the extent to which the Smithsonian has developed and implemented 
strategies to fund its revitalization, construction, and maintenance 
projects as we recommended in 2005; and (3) some preliminary results of 
our ongoing work on governance changes being made by the Smithsonian's 
Board of Regents to address recent governance problems. 

We conducted our work for this testimony from October to December 2007 
in accordance with generally accepted government auditing standards. 
Our testimony regarding the Smithsonian's real property management is 
based on our September 2007 report on the Smithsonian's facilities and 
information provided by Smithsonian officials on steps taken to develop 
a funding plan for facilities projects. Our testimony regarding 
preliminary results of our ongoing work on the Smithsonian's governance 
changes is based on our review of Smithsonian and other documents, and 
interviews with Smithsonian Regents and officials, including all museum 
directors. In addition, we conducted a literature search to help 
identify governance experts and organizations that had recently 
undergone governance reforms. We identified and interviewed ten 
specialists on nonprofit or museum governance, including academics and 
representatives of associations dedicated to nonprofit governance. We 
also reviewed literature on nonprofit governance to identify common 
nonprofit governance practices, and we met with several organizations 
that had some characteristics similar to those of the Smithsonian and 
that had recently undergone governance reforms. For more information on 
the scope and methodology of this testimony and our ongoing work on 
governance issues, see Appendix 1. 

Summary: 

* While the Smithsonian has made some improvements to its real property 
management, the continued deterioration of many facilities has caused 
problems, the cost estimate for facilities projects has increased, and 
the Smithsonian's security and real property portfolio management 
efforts face challenges. The Smithsonian has made a number of 
improvements to its facilities, but the deterioration of many 
facilities has resulted in access restrictions and continued to 
threaten collections and cause other problems, according to museum and 
facility directors. For example, a lack of temperature and humidity 
control at National Air and Space Museum storage facilities has caused 
corrosion to historic airplanes and increased the cost of restoring 
these items for exhibit. In another example, leaks in the National 
Zoological Park's sea lion and seal pools as of July 2007 were causing 
an average daily water loss of 110,000 gallons, with a water 
replacement cost of $297,000 annually. The Smithsonian's cost estimate 
for facilities projects from fiscal year 2005 through fiscal year 2013 
has increased since April 2005 from about $2.3 billion to about $2.5 
billion for the same time period. Regarding security efforts, the 
Smithsonian follows key security practices but faces challenges related 
to ensuring that museum and facility directors are aware of important 
security information and funding constraints. Some museum and facility 
directors cited an insufficient number of security guards to protect 
assets due to funding constraints and stated that in the absence of 
more guards, some cases of vandalism and theft have occurred. In 
another area, the Smithsonian has made significant strides in its real 
property portfolio management efforts. However, the Smithsonian omitted 
privately funded projects from its capital plan, making it challenging 
to comprehensively assess the funding and scope of projects. In our 
September 2007 report, we recommended that the Smithsonian increase 
awareness of security issues and include privately funded projects in 
its capital plan. The Smithsonian concurred with these recommendations. 

* Funding constraints are clearly a common denominator with regard to 
the Smithsonian's security and real property management, but while the 
Board of Regents has taken some steps to address our 2005 
recommendation to develop a funding plan for the Smithsonian's 
facilities projects, its evaluation of funding options has been 
limited. In 2005, the Board of Regents created an ad-hoc Committee on 
Facilities Revitalization, which, after reviewing nine options 
developed by Smithsonian management, requested increased federal 
funding. We found that some of the Smithsonian's evaluations of the 
nine funding options were limited in that they did not always provide 
complete analysis, fully explain specific assumptions, or benchmark 
with other organizations. Also, some options were dismissed because 
independently they would not generate enough revenue, but the 
evaluations did not consider combining options to increase revenue. In 
our September 2007 report, we concluded that if the Smithsonian does 
not develop a viable strategy to address its estimated $2.5 billion in 
facilities projects, its facilities and collections face increased 
risk, and the ability of the Smithsonian to meet its mission will 
likely decline. We therefore recommended that the Smithsonian Board of 
Regents perform a more comprehensive analysis of alternative funding 
strategies beyond principally using federal funds to support facilities 
and submit a report to Congress and the Office of Management and Budget 
describing a funding strategy for current and future facilities needs. 
The Smithsonian concurred with the report's recommendations. Recently, 
the Smithsonian Board of Regents has taken some additional step towards 
developing a funding plan for facilities' projects. According to a 
Smithsonian official, at the Board of Regents' November 19, 2007, 
meeting, the chair of the Committee on Facilities Revitalization, which 
became a standing committee in June 2007, reported to the board on the 
committee's activities. The Regents then concurred with a prioritized 
list of funding options presented by the committee, which includes 
establishing a national campaign to raise private sector funds for 
Smithsonian programs and facilities, among other things. 

* Preliminary results of our ongoing work indicate that the Board of 
Regents has made some changes to strengthen governance, but governance 
challenges remain. As of December 2007, the Board of Regents or the 
Acting Secretary had largely implemented 12 of the Governance 
Committee's 25 recommendations. The board had taken steps towards 
implementing the other 13 recommendations, including, among other 
things, arranging for the implementation of some recommendations to be 
studied further and establishing target dates for implementation that 
range from December 2007 to mid 2008. The 12 recommendations 
implemented by the board include, for example, more clearly defining 
the roles and responsibilities of Regents and regent committees, 
improving access between the board and key members of senior 
management, and strengthening management policies regarding conflicts 
of interest. The board is also studying whether changes to the size and 
composition of the board would strengthen governance and how to 
effectively engage the Smithsonian's advisory boards. Governance 
experts and others we spoke with said that, in general, the board 
appears to have taken some positive steps toward governance reform. 
However, according to the literature we reviewed and governance experts 
we interviewed, success will depend in part on how Regents embrace 
their new responsibilities and on their level of engagement, as good 
governance results from a board that consists of active and deeply 
engaged members. We will continue to address these issues in our 
ongoing work, in which we are assessing the Board of Regents' 
governance changes and how the board is addressing long-term governance 
challenges facing the Smithsonian. We expect to report on these issues 
in 2008. 

Background: 

Congress established the Smithsonian in 1846 to administer a large 
bequest left to the United States by James Smithson, an English 
scientist, for the purpose of establishing, in Washington, D.C., an 
institution "for the increase and diffusion of knowledge among men." In 
accepting Smithson's bequest on behalf of the nation, Congress pledged 
the "faith of the United States" to carry out the purpose of the 
trust.[Footnote 5] To that end, the act establishing the Smithsonian 
provided for the administration of the trust, independent of the 
government itself, by a Board of Regents and a Secretary, who were 
given broad discretion in the use of the trust funds. The Board of 
Regents currently consists of nine private citizens as well as members 
of all three branches of the federal government, including the Chief 
Justice of the United States, the Vice President, and six congressional 
members, three from the Senate, and three from the House of 
Representatives.[Footnote 6] 

Over the last 160 years, the Smithsonian's facilities inventory has 
expanded to include 19 museums and galleries, 9 research centers, a 
zoo, and other facilities--most located in or near Washington, D.C. The 
major buildings owned by the Smithsonian range in age from about 160 
years old to less than 1 year old, with most of the facilities' growth 
occurring since the 1960s. (See figure 1.) The Smithsonian's growth 
will continue with the construction of an aircraft restoration area-- 
phase 2 of the National Air and Space Museum Steven F. Udvar-Hazy 
Center[Footnote 7]--and the design and construction of a National 
Museum of African American History and Culture, authorized by Congress 
in 2003. Beyond this, there has been Congressional interest in 
developing a National Museum of the American Latino.[Footnote 8] 

Figure 1: Growth in Major Facilities Owned by the Smithsonian 
Institution, in Square Feet: 

This figure is a chart showing growth in major facilities owned by the 
Smithsonian Institution, in square feet. The X axis represents the 
year, and the Y axis represents square feet in millions. 

[See PDF for image] 

Source: Smithsonian Institution. 

Note: This figure tracks the square footage for all owned and leased 
buildings as they were added to the inventory over time. Only the major 
facilities are named in the figure, although the square footage of 
smaller buildings is included. Also, in November 2005, the Smithsonian 
Institution sold the Victor Building. 

[End of figure] 

Although the Smithsonian is a trust instrumentality with a private 
endowment, it is largely funded by federal appropriations. In fiscal 
year 2006, the Smithsonian's operating revenues were about $947 
million, of which about 65 percent came from federal appropriations. 
The facilities capital appropriation, which was about $98.5 million in 
fiscal year 2006, provides funds for construction and revitalization 
projects. The salaries and expenses appropriation, which was about 
$516.6 million in fiscal year 2006, includes funding for the program 
activities of each museum and research center; rents; utilities; and 
facilities' operations, maintenance, and security costs. The remaining 
operating revenues come from the Smithsonian's private trust funds. 
These are of two types: 

* Restricted trust funds--which made up 29 percent of the Smithsonian's 
operating revenue in fiscal year 2006--include such items as gifts from 
individuals and corporations that specify the purpose of the funds. 
Restricted funds have been provided for some facilities' construction 
projects and enhancements related to revitalization projects. 

* Unrestricted trust funds--which made up 6 percent of the 
Smithsonian's operating revenue in fiscal year 2006--include income 
from investment earnings and net proceeds from business activities, and 
can be used to support any Smithsonian activity. The Smithsonian 
typically has used unrestricted trust funds for fundraising, some 
salary costs, and central administration costs. Although the 
Smithsonian can use unrestricted trust funds for any purpose consistent 
with the Smithson Trust and therefore could use them for facilities 
revitalization and maintenance, it has not done so. Smithsonian 
officials stated that the unrestricted trust fund budget is small and 
that if these salary and central administration costs were not paid for 
with unrestricted trust funds, they would have to use federal funds or 
eliminate positions or programs to cover these expenses. 

Despite Some Improvements, Deteriorating Facilities Threaten 
Collections, and Security and Real Property Portfolio Management 
Efforts Have Strengths and Limitations: 

With regard to real property management, the Smithsonian has made a 
number of facilities improvements since our 2005 report, but the 
continued deterioration of many facilities has caused access 
restrictions and threatened the collections, and the Smithsonian's cost 
estimate for facilities projects has increased. The Smithsonian follows 
many key security practices to protect its assets but faces 
communication and funding challenges. The Smithsonian has taken steps 
to improve its real property portfolio management but faces challenges 
related to funding constraints and its capital plan. 

Some Facilities Improvements Have Occurred, but Deteriorating 
Facilities Have Caused Problems and the Cost Estimate for Facilities 
Projects Has Increased: 

The Smithsonian improved the condition of a number of facilities since 
our 2005 report. For example, the Smithsonian completed its 
revitalization of the Donald W. Reynolds Center for American Art and 
Portraiture, which houses the Smithsonian American Art Museum and the 
National Portrait Gallery. The Smithsonian also completed the 
construction of Pod 5, a fire-code-compliant space, to store alcohol- 
preserved specimens of the National Museum of Natural History. Many of 
these specimens are currently stored within the museum building on the 
National Mall in Washington, D.C., in spaces that do not meet fire-code 
standards. Collections are scheduled to be moved to Pod 5 over the next 
2 years. 

At the same time, problems with the Smithsonian's facilities have 
resulted in additional access restrictions and damage and have 
continued to threaten collections and cause other problems, according 
to museum and facility directors: 

* At the National Air and Space Museum, power capacity issues caused by 
inadequate electrical systems have forced the museum to occasionally 
close galleries to visitors. 

* A lack of temperature and humidity control at storage facilities 
belonging to the National Air and Space Museum has caused corrosion to 
historic airplanes and increased the cost of restoring these items for 
exhibit. 

* Chronic leaks in the roof of the Cultural Resources Center at 
Suitland, Maryland, which was completed in 1998 and opened in 1999 to 
hold collections of the National Museum of the American Indian, have 
forced staff to place plastic over several shelving units used to store 
collections, such as a set of wooden boats that includes an Eskimo 
kayak from Greenland and a rare Yahgan dugout canoe from Tierra del 
Fuego, according to officials at this facility (see fig. 2).[Footnote 
9] The plastic sheeting limits visitors' visual access to the boats 
during open houses, which provide Native Americans and other groups 
with access to the collections. 

Figure 2: Plastic Sheeting Covering Native American Boats to Prevent 
Water Damage at the Smithsonian Institution's Cultural Resources 
Center: 

This figure is a photograph of plastic sheeting covering Native 
American Boats to prevent water damage at the Smithsonian Institution's 
Cultural Resources Center. 

[See PDF for image] 

Source: Smithsonian Institution. 

[End of figure] 

* Leaks in a skylight since 2005 have at times forced the National 
Museum of African Art to cover the skylight with plastic to protect the 
building and its collections (see fig. 3). 

Figure 3: Leaking Skylight Over the National Museum of African Art: 

This figure is a photograph of a leaking skylight over the National 
Museum of African Art. 

[See PDF for image] 

Source: Smithsonian Institute. 

[End of figure] 

* Leaks in the National Zoological Park's sea lion and seal pools as of 
July 2007 were causing an average daily water loss of 110,000 gallons, 
with a water replacement cost of $297,000 annually (see fig. 4). 

Figure 4: Sea Lion Pool at the National Zoological Park: 

This figure is a photograph of the sea lion pool at the National 
Zoological Park. 

[See PDF for image] 

Source: GAO. 

[End of figure] 

According to Smithsonian officials, repairs to some of these problems 
are scheduled to take place over the next several years. 

The Smithsonian's cost estimate for facilities projects from fiscal 
year 2005 through fiscal year 2013 has increased since April 2005 from 
about $2.3 billion to about $2.5 billion for the same time period. 
According to Smithsonian officials, this estimate includes only costs 
for which the Smithsonian expects to receive federal funds, and it 
could increase further. According to Smithsonian officials, the 
increase in this cost estimate was due to several factors. For example, 
Smithsonian officials said that major increases had occurred in 
projects for the National Zoological Park and the National Museum of 
American History because the two facilities had recently developed 
master plans that identified additional requirements.[Footnote 10] In 
addition, according to Smithsonian officials, estimates for 
antiterrorism projects had increased due to adjustments for higher 
costs for security-related projects at the National Air and Space 
Museum, and the increase in the cost estimate also reflects the effect 
of delaying corrective work in terms of additional damage and 
escalation in construction costs. 

Security Efforts Include Following Key Security Practices but Face 
Challenges: 

The Smithsonian follows key security practices to protect its assets, 
but it faces two key challenges, one related to ensuring that museum 
and facility directors are aware of important security information and 
the other related to funding constraints. The Smithsonian follows key 
security practices we have identified in prior work,[Footnote 11] such 
as allocating resources to manage risk by contracting for a risk 
assessment report. This report, which includes individual assessments 
for over 30 Smithsonian facilities, was completed in 2005. The 
Smithsonian performs risk assessments for its facilities every 3 to 5 
years to determine the need for security enhancements. 

Despite these efforts, we found that nine museum and facility directors 
we spoke with were unaware of the contents of the Smithsonian's risk 
assessment report. The Smithsonian's Office of Protection Services 
(OPS) is responsible for operating programs for security management at 
Smithsonian facilities. However, some museum and facility directors' 
lack of awareness of the risk assessment report limits their ability to 
work with OPS to identify, monitor, and respond to changes in the 
security of their facilities. 

Furthermore, some museum and facility directors cited an insufficient 
number of security officers to protect assets due to funding 
constraints. We found that the overall number of security officers had 
decreased since 2003, at a time when the Smithsonian's square footage 
had increased. Some of the Smithsonian's museum and facility directors 
said that in the absence of more security officers, some cases of 
vandalism and theft have occurred. In addition, two museum directors 
stated that it has become more difficult for them to acquire 
collections on loan because lenders have expressed concern with the 
lack of protection. In our September 2007 report, we recommended that 
the Smithsonian increase awareness of security issues. The Smithsonian 
concurred with this recommendation. 

Real Property Portfolio Management Efforts Include Improvements but 
Face Challenges: 

Faced with deteriorating facilities and an increased cost estimate for 
facilities projects, the Smithsonian has taken steps to improve the 
management of its real property portfolio but faces challenges related 
to funding constraints and its capital plan. The Smithsonian's 
centralized office for real property management, known as the Office of 
Facilities Engineering and Operations (OFEO), has made significant 
strides in several areas related to real property portfolio management, 
including improving real property data, developing performance metrics, 
and refining its capital planning process. 

At the same time, however, funding constraints have presented 
considerable challenges to OFEO's efforts. For example, while a 
majority of museum and facility directors stated that OFEO does a good 
job of prioritizing and addressing problems with the amount of funds 
available, several museum and facility directors expressed frustration 
that projects at their facilities had been delayed. In addition, OFEO 
officials stated that a lack of sufficient funds for maintenance has 
limited their ability to optimally maintain equipment, leading to more 
expensive failures later on. 

The Smithsonian has omitted privately funded projects from its capital 
plan and its estimate of $2.5 billion for facilities projects through 
2013, making it challenging for the Smithsonian and other stakeholders 
to comprehensively assess the funding and scope of facilities projects. 
In recent years, private funds have played an important role in funding 
some of the Smithsonian's highest-priority construction and 
revitalization projects, making up 39 percent of the Smithsonian's 
capital funds for facilities projects for fiscal years 2002 through 
2007. Smithsonian officials noted that the majority of these private 
funds were donated for the construction of new facilities--namely, the 
National Museum of the American Indian and the National Air and Space 
Museum Steven F. Udvar-Hazy Center--and said there is no assurance that 
private funds would make up a similar percentage of the Smithsonian's 
funds for capital projects in future years. However, other 
organizations we visited during our review include both private and 
public investments in their capital plans to inform their stakeholders 
about the scope of projects and the extent of such partnerships used to 
fund capital needs. As a result, our September 2007 report recommends 
that the Smithsonian include privately funded projects in its capital 
plan. The Smithsonian concurred with this recommendation. 

The Smithsonian Has Taken Some Steps to Address Our Recommendation 
Regarding Funding Strategies, but Its Evaluation of Funding Options Has 
Been Limited: 

Funding constraints are clearly a common denominator with regard to the 
Smithsonian's security and real property management, but while the 
Board of Regents has taken some steps to address our 2005 
recommendation to develop a funding plan to address its facilities 
revitalization, construction, and maintenance needs, its evaluation of 
funding options has been limited. In September 2005, an ad-hoc 
Committee on Facilities Revitalization established by the Board of 
Regents reviewed nine funding options that had been prepared by 
Smithsonian management for addressing this estimated funding need. The 
nine options are briefly described in Table 1. 

Table 1: Nine Funding Options Evaluated by the Ad-Hoc Committee on 
Facilities Revitalization: 

Funding option: Federal income tax check-off contribution; 
Description: Federal income tax returns would include a check-off box 
to allow taxpayers to designate funds to the Smithsonian's facilities. 

Funding option: Heritage treasures excise tax; 
Description: An excise tax would be created, and possibly levied on 
local hotel bills, to generate funds for the Smithsonian's facilities. 

Funding option: National fund-raising campaign; 
Description: The Smithsonian would launch a national campaign to raise 
funds for its facilities. 

Funding option: General admission fee program; 
Description: The Smithsonian would institute a general admission charge 
to raise funds for critical but unfunded requirements. 

Funding option: Special exhibition fee program; 
Description: The Smithsonian would charge visitors to attend a select 
number of special exhibitions as a means to raise funds to meet 
critical but unfunded requirements. 

Funding option: Smithsonian treasures pass program; 
Description: The Smithsonian would design a program through which 
visitors could purchase a Smithsonian treasures pass with special 
benefits, such as no-wait entry into facilities or behind-the-scenes 
tours, to raise funds to meet critical but unfunded requirements. 

Funding option: Facilities revitalization bond; 
Description: The Smithsonian would borrow funds such as through a 
private or public debt bond for the Smithsonian's facilities. 

Funding option: Closing Smithsonian museums; 
Description: The Smithsonian would permanently or temporarily close 
museums to the public in order to generate savings to help fund its 
facilities. 

Funding option: Increasing Smithsonian appropriations; 
Description: The Board of Regents and other friends of the Smithsonian 
would approach the Administration about a dramatic appropriations 
increase to fund Smithsonian's facilities. 

Source: Smithsonian Institution. 

[End of table] 

After reviewing materials on these nine options prepared by Smithsonian 
management, the ad-hoc committee decided to request an additional $100 
million annually in federal funds for facilities over its current 
appropriation for 10 years, starting in 2008, for a total of an 
additional $1 billion. To implement this recommendation, in September 
2006, several members of the Board of Regents and the Secretary of the 
Smithsonian met with the President to discuss the issue of increased 
federal funding for the Smithsonian's facilities. According to two 
members of the Board of Regents, this option was selected because the 
board believed that the revitalization, construction, and maintenance 
of Smithsonian facilities are federal responsibilities. According to 
Smithsonian officials, it is the position of the Smithsonian, based on 
an historical understanding, that the maintenance and revitalization of 
facilities are a federal responsibility. Smithsonian officials pointed 
out that as early as the 1850s, the federal government has provided 
appropriations to the Smithsonian for the care and presentation of 
objects belonging to the United States. The President's fiscal year 
2008 budget proposal included an increase of about $44 million over the 
Smithsonian's fiscal year 2007 appropriation, far short of what the 
Smithsonian requested, and it is not clear how much of this proposed 
increase would be used to support facilities. 

Our analysis of the Smithsonian's evaluations of the eight other 
funding options, including the potential benefits and drawbacks of 
each, showed that the evaluations were limited in that they did not 
always include a complete analysis, fully explain specific assumptions, 
or benchmark with other organizations--items crucial to determining 
each option's potential viability. For example, the Smithsonian's 
analysis of a general admission fee option included an adjustment of 
annual net gains to account for losses in revenue at restaurants and 
stores. However, the Smithsonian's materials did not discuss whether 
other museums had experienced such losses after establishing admission 
fees. We spoke with six other museums and a zoological park that stated 
that instituting or increasing admission fees did not decrease the 
amount of money visitors spent in restaurants and stores. In addition, 
although several of the nine options were dismissed because 
independently the options would not generate the amount of revenue 
required to address the Smithsonian's facilities projects, the 
evaluation did not consider the potential of combining options to 
generate more revenue. 

In our September 2007 report, we concluded that if the Smithsonian does 
not develop a viable strategy to address its growing cost estimate for 
facilities projects, its facilities and collections face increased 
risk, and the ability of the Smithsonian to meet its mission will 
likely decline. We therefore concluded that the Board of Regents' 
stewardship role obligates it to consider providing more private funds 
to meet the funding requirements of its overall mission. We recommended 
that the Smithsonian Board of Regents perform a more comprehensive 
analysis of alternative funding strategies beyond principally using 
federal funds to support facilities and submit a report to Congress and 
the Office of Management and Budget (OMB) describing a funding strategy 
for current and future facilities needs. The Smithsonian concurred with 
this recommendation. 

Recently, the Smithsonian Board of Regents has taken some additional 
steps towards developing a funding plan for facilities' projects. 
According to a Smithsonian official, at the Board of Regents' November 
19, 2007, meeting, the Chair of the Committee on Facilities 
Revitalization, which became a standing committee in June 2007, 
reported to the board on the committee's activities. These activities 
included several meetings and conversations, including some with 
Smithsonian management, and the consideration of some new papers on 
funding options. The papers contained information on some previously 
identified options as well as on some new options. A Smithsonian 
official acknowledged, however, that these papers did not provide 
comprehensive analysis and that many were not significantly different 
from the previous materials. According to a Smithsonian official, the 
Smithsonian determined that it did not wish to spend resources further 
analyzing all options but instead will analyze those the board has 
decided to pursue. According to a Smithsonian official, at this 
November 19 meeting of the Board of Regents, the Regents concurred with 
a prioritized list of funding options that was presented by the 
committee. This list includes establishing a national campaign to raise 
private sector funds for Smithsonian programs and facilities, a request 
that Congress match funds raised in the national campaign with 
additional appropriations, and several other options.[Footnote 12] 

Preliminary Results Suggest that the Board of Regents Has Made Some 
Changes to Strengthen Governance, but Governance Challenges Remain: 

According to preliminary results of ongoing work, as of November 2007, 
the Board of Regents had largely implemented 12 of the Governance 
Committee's 25 recommendations. The board had taken steps towards 
implementing the other 13 recommendations, including, among other 
things, arranging for the implementation of some recommendations to be 
studied further and establishing target dates for implementation that 
range from December 2007 to mid 2008. The 12 recommendations 
implemented by the board include, for example, more clearly defining 
the roles and responsibilities of Regents and regent committees, 
improving access between the board and key members of senior 
management, and strengthening some policies regarding conflicts of 
interest and executive expenses. The board is also conducting studies 
on whether changes to the size and composition of the board would 
improve governance, how to effectively engage the Smithsonian's 
advisory boards, and executive compensation. Governance experts and 
others we interviewed stated that in general, the board appears to have 
taken some positive steps toward governance reform. However, according 
to the literature we reviewed and governance experts we interviewed, 
success will depend in part on how Regents embrace their new 
responsibilities and on their level of engagement, as good governance 
results from a board that consists of active and deeply engaged 
members. 

The Board Has Implemented Several Changes to Improve Governance: 

The board reports that it has largely implemented 12 of the 25 
recommendations of the Governance Committee. Appendices II and III 
provide summaries of the implementation status of the Governance 
Committee and IRC recommendations. The following are descriptions of 
some of the key recommendations that have been implemented. 

* Duties and responsibilities of Regents and regent committees have 
been clarified. Previously, the roles and responsibilities of Regents 
and regent committees were not clearly and explicitly stated. The 
Governance Committee found that without a formal job description, the 
role of a regent was subject to individual interpretation, and it 
determined that adopting a clear statement of regent duties and 
responsibilities would reaffirm that the board is the Smithsonian's 
ultimate governing authority. Accordingly, the board has taken several 
actions to clarify these responsibilities, including 1) adopting 
specific written responsibilities and expectations for all Regents, 
including that all Regents should participate in committees; 2) 
clarifying the duties of the Chancellor[Footnote 13] (who by tradition 
is the Chief Justice) and creating a new board Chair position to play a 
leadership role in guiding the board in the exercise of its oversight 
functions; and 3) appointing new leadership for all committees. These 
changes are now being put into practice and it is therefore too soon to 
evaluate whether they will be effective in improving governance at the 
Smithsonian. 

* Access of key management to the board and information available have 
been improved. Several of the recent governance problems reported at 
the Smithsonian have been attributed to the isolation of certain 
members of senior management from the board and the office of the 
former Secretary's tight control of information available to the board. 
The board has taken a number of steps to address these issues, 
including 1) amending its bylaws to require the attendance of the 
General Counsel and Chief Financial Officer, or their designees, at all 
meetings of the board and relevant board committees, 2) strengthening 
the relationship between the Inspector General's office and the board, 
and 3) establishing an independent Office of the Regents that is 
responsible for, among other things, setting the agenda for the board 
in concert with the Secretary and through consultation with Smithsonian 
museum directors and others. While we have not independently validated 
these changes to assess whether they will be effective in improving 
oversight, both senior management and the Board of Regents' staff told 
us that communication between the Regents and senior management has 
improved. For example, the General Counsel and Chief Financial Officer 
both told us that they are now directly reporting to the Regents and 
are available at board meetings to discuss details and answer questions 
about information they bring to the Regents. 

* Management policies have been strengthened. The Governance Committee 
found that previous policies regarding expense reimbursement (including 
travel) and conflict-of-interest policies were not well-defined, which 
contributed to the lack of oversight of certain practices of the former 
Secretary as well as the failure to actively manage apparent conflicts 
of interest at the Smithsonian. The board has clarified management 
policies on travel and expense reimbursement, and created new ones, 
such as prohibiting senior executives from serving on the boards of for-
profit companies. We have not independently validated these changes to 
assess whether they will be effective in improving oversight, and it is 
not yet clear how these policies will improve the governance of the 
institution in practice. 

* A compensation range to guide the search for a new secretary has been 
established. In response to concerns about the compensation of the 
former Secretary (which included, among other things, a housing 
allowance that some Regents were unaware of), the board contracted for 
a study to identify a compensation range to guide the search for a new 
secretary, with the goals of making the secretary's compensation 
transparent and balancing the Smithsonian's public trust status with 
the need to attract the best leader. According to a Board of Regents' 
staff member, the study included benchmarking with about 30 comparable 
organizations. In October, the Board of Regents approved the range 
recommended by the study to be used in the recruitment process. We have 
not independently validated this recommended range. 

Some Recommendations Have Yet to Be Implemented, and Other Governance 
Issues Are Still Being Studied: 

Several recommendations have not yet been fully implemented but are 
actively being considered and debated. For example, at the direction of 
the Regents, the Smithsonian is examining the extent to which 
Smithsonian Business Ventures (SBV), a centralized business entity 
responsible for the Smithsonian's various business activities, should 
follow Smithsonian-wide policies for areas such as contracting and 
travel. Previously, SBV adopted its own policies and was not subject to 
all Smithsonian policies. The efforts underway are preliminary and 
final actions have not yet been taken, but the Regents report them as 
being on track toward implementation. In addition, in August 2007, the 
Acting Secretary established a task force to review the entirety of SBV 
and make recommendations on its governance, structure, and the role of 
revenue-generating activities within the Smithsonian. Those 
recommendations will be presented to the Acting Secretary by the end of 
the year and to the Regents at their January 2008 meeting. 

The Board of Regents is continuing to study other important issues 
related to improving governance at the Smithsonian. In particular, some 
observers have suggested that the size and composition of the board 
contributed to the lack of oversight of management practices, and in 
response, the Board of Regents, with the assistance of outside 
consultants, is evaluating potential structural changes to the board. 
The report is due in January 2008. Any changes to the size and 
composition of the board would require legislative action. Currently, 
the Board of Regents consists of 17 members--9 citizen Regents, 6 
Congressional Regents, and 2 ex-officio Regents (the Vice President and 
the Chief Justice)--which is the average size for boards of nonprofit 
organizations. However, much of the work of the Board of Regents is 
conducted at the committee level, and in the past, not all Regents have 
served on committees, suggesting that in practice, the "working" size 
of the board has been somewhat smaller than 17. Nonetheless, based on 
our review of common non-profit governance practices, and according to 
governance experts and others we consulted, there is no "right" number 
of board members. A board that is small will have fewer members to 
serve on committees, whereas having too many board members can lead to 
increased difficulty in making decisions and can stifle the 
effectiveness of the board. Determining the appropriate size for a 
board entails balancing the need for a board that is of a manageable 
size with such things as ensuring the board has the expertise necessary 
to achieve its mission and achieving an appropriate diversity of values 
and perspectives among board members. 

Beyond the size and structure of the board, several governance experts 
we interviewed stressed that having board members who actively 
participate and are engaged is central to good governance, and some 
nonprofit organizations we met with stated that they focused on 
changing the governance culture at their organization. For example, 
representatives from one nonprofit organization we spoke with--which 
recently had similar issues related to executive compensation and 
expenses--stated that they have focused on creating a culture of 
accountability and transparency in the board's activities. They told us 
that they did not change the size or structure of the board, but rather 
clarified roles and responsibilities, improved communication throughout 
the various divisions of the organization, and took other actions aimed 
at improving the accountability and transparency of the board. 

In order to address other governance recommendations, the Board of 
Regents has planned another longer term study, due in May 2008, aimed 
at establishing a stronger link between the board and the Smithsonian's 
30 advisory boards. These boards include the Smithsonian National Board 
as well as advisory boards that focus on individual museums or research 
centers. According to the Governance Committee, the advisory boards 
provide a key link between the Regents and the public and a direct 
connection to the museums. Based on preliminary findings of our ongoing 
work, the Regents generally have had limited interaction with the 
advisory boards, although the advisory boards serve important functions 
in the operations of the individual museums and other facilities across 
the Smithsonian. Preliminary results from our ongoing work indicate 
that several museum directors are concerned about the Regents' level of 
interaction with advisory boards and most museum directors see 
additional value from having a more direct relationship between the 
Board of Regents and the various museums, research facilities, and 
other institutions within the Smithsonian. 

Governance experts and others we spoke with said that, in general, the 
board appears to have taken some positive steps toward governance 
reform. However, according to the literature we reviewed and governance 
experts we interviewed, success will depend in part on how Regents 
embrace their new responsibilities and on their level of engagement, as 
good governance results from a board that consists of active and deeply 
engaged members. 

In our ongoing work, we will continue to assess the Board of Regents' 
governance changes and how the board is addressing long-term governance 
challenges facing the Smithsonian. We expect to report on these issues 
in 2008. 

Madam Chairman, this concludes my prepared statement. I would be happy 
to respond to any questions you or other Members of the Committee may 
have at this time. 

GAO Contact and Acknowledgements: 

For further information on this testimony, please contact Mark L. 
Goldstein at (202) 512-2834 or goldsteinm@gao.gov. Individuals making 
key contributions to this testimony include Brandon Haller, Carol Henn, 
Jennifer Kim, Margaret McDavid, Susan Michal-Smith, Amanda Miller, Sara 
Ann Moessbauer, Dave Sausville, Stanley Stenerson, Andrew Von Ah, and 
Alwynne Wilbur. 

[End of section] 

Appendix I: Scope and Methodology: 

We conducted our work for this testimony from October to December 2007 
in accordance with generally accepted government auditing standards. 
Our testimony regarding the Smithsonian's real property management is 
based on our past report on the Smithsonian's facilities, including 
their condition, security, management, and funding, and information 
provided by Smithsonian officials on steps taken to develop a funding 
plan for facilities projects. Our testimony regarding preliminary 
results of our ongoing work on the Smithsonian's governance changes is 
based on our review of Smithsonian and other documents, and interviews 
with Smithsonian Regents and officials and others. Specifically, we 
reviewed laws relating to the Smithsonian, the Independent Review 
Committee report, and the Smithsonian's Governance Committee Report, 
and spoke to Smithsonian Regents and officials on their progress 
towards implementing governance recommendations. We also interviewed 
all Smithsonian museum directors. We conducted a literature search to 
help identify governance experts and organizations that had recently 
undergone governance reforms. We identified and interviewed ten 
specialists on nonprofit or museum governance, including academics and 
representatives of associations dedicated to nonprofit governance. This 
included four governance or museum experts who had advised or consulted 
with the Smithsonian during its governance review, as well as six that 
we identified through a literature search or were referred to us by 
other experts in the field. 

We also reviewed literature on nonprofit governance to identify common 
nonprofit governance practices, including literature from organizations 
such as the American Association of Museums, BoardSource, Council on 
Foundations, and Independent Sector. In addition, we met with several 
organizations that had characteristics similar to those of the 
Smithsonian and that had recently undergone governance reforms. We 
focused on organizations that had had similar governance problems, 
conducted a governance review, and changed their practice or structure; 
organizations that had a structure that consisted of a central or 
national governing body with multiple programming units; and 
organizations with similar missions and stewardship challenges. As of 
December 5, 2007, we had met with officials from American University, 
American National Red Cross, Getty Trust, National Trust for Historic 
Preservation, and United Way of America. 

In ongoing work, we are continuing to evaluate the Smithsonian Board of 
Regents' governance reforms. Our objectives for this ongoing work 
include assessing (1) how governance changes being made by the Board of 
Regents address recent governance problems and how changes will be 
implemented and evaluated, and (2) how the Board of Regents is 
addressing other long-term governance challenges facing the 
Smithsonian, such as funding, strategic planning, facilities, 
collections and museum management, and what, if any, additional 
oversight activities would be beneficial to the board in achieving its 
mission. We are also continuing to interview recognized experts in 
nonprofit governance selected through the process described above to 
obtain their independent views on the Smithsonian's governance problems 
and whether recent governance changes will address those problems; and 
we are conducting interviews and reviewing documents from organizations 
selected through the process described above that have recently changed 
their governance structure and practice. We expect to report on these 
issues in 2008. 

[End of section] 

Appendix II: Implementation Status of Governance Committee 
Recommendations: 

According to Smithsonian Institution (Smithsonian) officials, the 
Smithsonian Board of Regents has largely implemented 12 of the 25 
recommendations made by the Board of Regents' Governance Committee 
based on its internal study, and has taken steps towards implementing 
the other recommendations. The implementation of some of these 
recommendations is under further study by the board. Figure 5 provides 
a summary of the board's efforts towards implementing these 
recommendations, as described by Smithsonian officials. 

Figure 5: Status of Smithsonian Institution's Implementation of 
Governance Committee Recommendations at-a-Glance: 

This figure is a chart showing status of Smithsonian institution's 
implementation of governance committee recommendations at-a-glance: 

1; 
Governance Committee recommendation: Examine Board structure; 
Implementation Status: Steps have been taken to implement the 
recommendation, but more work is needed; Implementation of 
recommendation is under further study. 

2; 
Governance Committee recommendation: Clarify regent duties and 
responsibilities; 
Implementation Status: Recommendation has been implemented. 

3; 
Governance Committee recommendation: Change duties of chancellor or 
chair; 
Implementation Status: Recommendation has been implemented. 

4; 
Governance Committee recommendation: Enhance transparency of meetings; 
Implementation Status: Recommendation has been implemented. 

5; 
Governance Committee recommendation: Create board orientation, 
assessments, and regent staff; 
Implementation Status: Steps have been taken to implement, but more 
work is needed. 

6
Governance Committee recommendation: Review committee charters and 
change committee leadership; 
Implementation Status:  Steps have been taken to implement, but more 
work is needed. 

7; 
Governance Committee recommendation: Improve executive and secretary 
compensation range; 
Implementation Status: Recommendation has been implemented. 

8; 
Governance Committee recommendation: Create standing facilities 
committee; 
Implementation Status: Recommendation has been implemented. 

9; 
Governance Committee recommendation: Strengthen regent nominating and 
governance processes; 
Implementation Status: Recommendation has been implemented. 

10; 
Governance Committee recommendation: Improve general counsel access and 
review resources; 
Implementation Status: Recommendation has been implemented. 

11; 
Governance Committee recommendation: Improve chief financial officer 
access and review resources; 
Implementation Status: Recommendation has been implemented. 

12; 
Governance Committee recommendation: Improve inspector general access 
and review resources; 
Implementation Status: Recommendation has been implemented. 

13; 
Governance Committee recommendation: Enhance role of advisory board; 
Implementation Status: Implementation of recommendation is under 
further study. 

14; 
Governance Committee recommendation: Develop Smithsonian Code of 
Ethics; 
Implementation Status: Steps have been taken to implement, but more 
work is needed. 

15; 
Governance Committee recommendation: Improve board's transparency to 
public and stakeholders; 
Implementation Status: Steps have been taken to implement, but more 
work is needed. 

16; 
Governance Committee recommendation: Increase public and stakeholder 
access to Smithsonian information; 
Implementation Status: Steps have been taken to implement, but more 
work is needed. 

17; 
Governance Committee recommendation: Develop Freedom of Information Act 
policy; 
Implementation Status: Recommendation has been implemented. 

18; 
Governance Committee recommendation: Develop policy prohibiting senior 
staff service on for-profit boards; 
Implementation Status: Recommendation has been implemented. 

19; 
Governance Committee recommendation: Create leave accrual system and 
identify potential conflicts of interest for senior trust employees; 
Implementation Status: Steps have been taken to implement, but more 
work is needed. 

20; 
Governance Committee recommendation: Require Smithsonian Business 
Ventures to follow Smithsonian policies; 
Implementation Status: Steps have been taken to implement, but more 
work is needed. 

21; 
Governance Committee recommendation: Create or revise policies and 
review internal controls for regent travel and events; 
Implementation Status: Steps have been taken to implement, but more 
work is needed. 

22; 
Governance Committee recommendation: Develop budget monitoring process; 
Implementation Status: Steps have been taken to implement, but more 
work is needed. 

23; 
Governance Committee recommendation: Review financial reporting and 
internal controls; 
Implementation Status: Steps have been taken to implement, but more 
work is needed. 

24; 
Governance Committee recommendation: Develop unified compensation 
policy; 
Implementation Status: Recommendation has been implemented. 

25; 
Governance Committee recommendation: Develop contacting policy; 
Implementation Status: Steps have been taken to implement, but more 
work is needed. 

[See PDF for image] 

Source: GAO presentation of Smithsonian Institute data. 

[End of figure] 

[End of section] 

Appendix III: Implementation Status of Independent Review Committee 
Recommendations: 

The Smithsonian Institution (Smithsonian) Board of Regents has stated 
that the Governance Committee's 25 recommendations generally encompass 
the recommendations made by the Independent Review Committee (IRC) as 
part of its study to address governance problems at the 
Smithsonian.[Footnote 14] As such, the Smithsonian is not tracking its 
implementation of these recommendations individually, except that it 
notes which IRC recommendations are relevant to each Governance 
Committee recommendation. Based on information provided to us by 
Smithsonian officials, the board has implemented 3 of the IRC's 12 
recommendations, and has taken steps towards implementing the others, 
with the exception of one recommendation (IRC recommendation number 12) 
that was not issued directly to the board. Several of these 
recommendations are being considered as part of ongoing studies 
undertaken by the board to address the Governance Committee 
recommendations. Figure 6 provides a summary of the board's efforts 
towards implementing the IRC recommendations, as described by 
Smithsonian officials. 

Figure 6: Status of Smithsonian Institution's Implementation of 
Independent Review Committee Recommendations at-a-Glance: 

This figure is a chart showing the status of Smithsonian Institution's 
implementation of independent review committee recommendations at-a-
glance. 

1; 
Independent Review Committee recommendation: Act quickly to address the 
governance crisis; 
Implementation status: Recommendation has been implemented. 

2; 
Independent Review Committee recommendation: Audit the former 
secretary's expenses and audit senior management expenses annually; 
Implementation status: Steps have been taken to implement, but more 
work is needed. 

3; 
Independent Review Committee recommendation: Set the secretary's 
compensation to be competitive and transparent; 
Implementation status: Recommendation has been implemented. 

4; 
Independent Review Committee recommendation: Make policies and salary 
schedule consistent with federal regulations and government and salary 
schedule, respectively; 
Implementation status: Steps have been taken to implement, but more 
work is needed. 

5; 
Independent Review Committee recommendation: Create an active governing 
board with a chairman wo can provide the time and proper oversight; 
Implementation status: Steps have been taken to implement, but more 
work is needed; Implementation of recommendation is under further 
study. 

6; 
Independent Review Committee recommendation: Clarify the role of chief 
justice and vice president; 
Implementation status: Steps have been taken to implement, but more 
work is needed; Implementation of recommendation is under further 
study. 

7; 
Independent Review Committee recommendation: Establish that 
Congressional regents should accept fiduciary responsibilities; 
Implementation status: Implementation of recommendation is under 
further study. 

8; 
Independent Review Committee recommendation: Expand or reorganize board 
to allow for addition of regents with needed expertise; 
Implementation status: Steps have been taken to implement, but more 
work is needed; Implementation of recommendation is under further 
study. 

9; 
Independent Review Committee recommendation: Strengthen internal 
financial controls, audit functions, and role of general counsel and 
inspector general; 
Implementation status: Steps have been taken to implement, but more 
work is needed. 

10; 
Independent Review Committee recommendation: Permit executives to 
participate only in nonprofit board activities subject prior approval; 
Implementation status: Recommendation has been implemented. 

11; 
Independent Review Committee recommendation: Ensure that selection of 
the new secretary reflects governance challenges facing the Smithsonian 
Institution; 
Implementation status: Steps have been taken to implement, but more 
work is needed. 

12; 
Independent Review Committee recommendation: Achieving effective 
oversight and governance at nonprofit organizations may ultimately 
require legislative action; 
Implementation status: No basis to judge. 

[See PDF for image] 

Source: GAO presentation of Smithsonian Institution data. 

[End of figure] 

[End of section]  

Footnotes: 

[1] GAO, Smithsonian Institution: Facilities Management Reorganization 
Is Progressing, but Funding Remains a Challenge, GAO-05-369 
(Washington, D.C.: Apr. 25, 2005). 

[2] GAO, Smithsonian Institution: Funding for Real Property Needs 
Remains a Challenge, GAO-07-725T (Washington, D.C.: Apr. 11, 2007). 

[3] According to the Board of Regents' staff, two IRC recommendations 
were not encompassed by the governance committee recommendations: a 
recommendation to audit the former Secretary's and senior management's 
expenses (although the Smithsonian did separately decide to address 
this recommendation) and a recommendation not clearly directed to the 
Board of Regents, which stated that achieving effective oversight and 
governance at nonprofit organizations may ultimately require 
legislative action. 

[4] GAO, Smithsonian Institution: Funding Challenges Affect Facilities' 
Conditions and Security, Endangering Collections, GAO-07-1127 
(Washington, D.C.: Sept. 28, 2007). 

[5] A trust is a fiduciary relationship involving a right of property 
held by the trustee for the benefit of another. 

[6] The three senators are appointed by the President of the Senate, 
the three representatives are appointed by the Speaker of the House, 
and nine citizens are appointed by joint resolution of Congress--two 
from the District of Columbia and seven from the states. 

[7] The National Air and Space Museum Steven F. Udvar-Hazy Center near 
Washington Dulles International Airport is the companion facility to 
the National Air and Space Museum on the Mall and is being built in two 
phases. Phase 1 opened in December 2003 and provides enough space for 
the Smithsonian to display thousands of aviation and space artifacts. 
Phase 2 will include a restoration hangar, archives, collections 
processing unit, conservation laboratory, and collections storage 
facility. 

[8] Several bills have been introduced in the 110th Congress to study 
the potential creation of a National Museum of the American Latino and 
whether the museum should be located within the Smithsonian. See S. 
500, 110th Cong. (2007); and H.R. 512, 110th Cong. (2007). 

[9] In addition to significant collections from the United States, the 
National Museum of the American Indian also contains items from 
throughout the Western Hemisphere. 

[10] A master plan is a proposal of a comprehensive renovation or 
expansion of a complex that aligns the physical plant with the 
organization's strategic goals. It includes proposals to make the 
complex conform to current codes and meet technology and security 
requirements, and can also involve upgrading and replacing major 
building systems, among other things. 

[11] GAO, Homeland Security: Further Actions Needed to Coordinate 
Federal Agencies' Facility Protection Efforts and Promote Key 
Practices, GAO-05-49 (Washington, D.C.: Nov. 30, 2004). 

[12] According to a Smithsonian official, the other funding options the 
Board of Regents established as priorities at the November 19, 2007, 
meeting include a "gift maintenance fee" specifically devoted to 
facilities, admission fees for selected special exhibitions, additional 
energy savings performance contracts, public/private partnerships to 
rehabilitate buildings, and to expand and improve the existing program 
of voluntary donation boxes in museums. 

[13] The Smithsonian charter provides for a presiding officer called 
the chancellor, who is elected by the Regents. By tradition, the 
Regents have selected the Chief Justice of the United States as 
chancellor. The Board of Regents' Bylaws provided that the Chancellor 
is also the Chair of the Board. Recently, the Board of Regents amended 
the bylaws to separate the position of chancellor and chair of the 
board. The Governance Committee's report stated that the roles of the 
chancellor and chair may be further refined as a result of the review 
of the board structure and functions. 

[14] According to the Board of Regents' staff, two IRC recommendations 
were not encompassed by the Governance Committee recommendations: IRC 
recommendation number 2, to audit the former Secretary's and senior 
management's expenses, and IRC recommendation number 12, which stated 
that achieving effective oversight and governance at nonprofit 
organizations may ultimately require legislative action. The board 
considered these topics outside its charge; however, the board did 
adopt IRC recommendation 2 in addition to the Governance Committee 
recommendations. 

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(202) 512-4400: 
U.S. Government Accountability Office: 
441 G Street NW, Room 7125: 
Washington, DC 20548: 

Public Affairs: 

Chuck Young, Managing Director, youngc1@gao.gov: 
(202) 512-4800: 
U.S. Government Accountability Office: 
441 G Street NW, Room 7149: 
Washington, DC 20548: