[Congressional Record (Bound Edition), Volume 156 (2010), Part 2]
[Extensions of Remarks]
[Pages 2740-2741]
[From the U.S. Government Publishing Office, www.gpo.gov]




           INTRODUCTION OF THE SMITHSONIAN MODERNIZATION ACT

                                 ______
                                 

                       HON. ELEANOR HOLMES NORTON

                      of the district of columbia

                    in the house of representatives

                        Thursday, March 4, 2010

  Ms. NORTON. Madam Speaker, today I will introduce three bills to 
modernize the Smithsonian Institution and to enhance its governance and 
fundraising ability, in keeping with the recommendations of a number of 
experts, including the Independent Review Committee, chaired by former 
U.S. Comptroller General Charles Bowsher. This bill, the Smithsonian 
Modernization Act, makes changes to the Smithsonian's governance 
structure by expanding its Board of Regents from 17 members, which 
includes six Members of Congress, the Vice President of the United 
States, and the Chief Justice of the U.S. Supreme Court, to 21 members, 
comprised solely of private citizens. These changes will strengthen 
both the Smithsonian's governance and fundraising capacity, and it is 
the first significant change in an old and revered institution since it 
was established in 1846. The second bill, the Smithsonian Free 
Admission Act of 2010, seeks to preserve the longstanding free 
admission policy for permanent exhibits at an institution that is 
largely funded by the federal government, as envisioned by James 
Smithson, its founder who contributed the

[[Page 2741]]

original gift. Finally, the Open and Transparent Smithsonian Act of 
2010 will apply the Freedom of Information Act and the Privacy Act to 
the Smithsonian in the same manner they are applied to other federal 
agencies.
  The Smithsonian Institution is a unique and irreplaceable cultural, 
historical, educational and artistic complex without any public or 
private counterpart in the world. Since its founding, the Smithsonian 
has developed an extraordinary array of world-class museums, galleries, 
educational showplaces and unique research centers, including 19 
museums and galleries, nine research facilities, the National Zoo, and 
a pending National Museum of African American History and Culture, 
which has been approved by Congress and is now seeking funding from the 
private sector for construction. The Smithsonian has grown with 
donations from American culture and life, and financial contributions, 
but most of its funding continues to come from federal appropriations. 
Despite receiving 70 percent of its support from the federal 
government, the Smithsonian has long had serious and unmet 
infrastructure and other financial needs.
  Congress must help the Smithsonian Institution strengthen its ability 
to build resources beyond what taxpayers are able to provide. The most 
important step that Congress could take today is to rescue the 
Smithsonian from the 19th Century governance structure that keeps it 
from accessing needed and available private resources and limits close 
and critical internal oversight. This bill provides a governance 
structure befitting an agency of the unique complexity of the 
Smithsonian.
  In no small part, the difficulty the Smithsonian has faced results 
from limitations inherent in its antiquated governance structure. The 
existing structure may have fit the Smithsonian over 170 years ago, but 
today the structure has proven to be a relic that does a disservice to 
the Smithsonian. The present governance structure places immense 
responsibility on dedicated but overextended Members of the House and 
Senate, the Vice President of the United States and the Chief Justice 
of the United States Supreme Court. These federal officials comprise 
almost half of the Smithsonian Board of Regents, and must perform their 
fiduciary duties as board members while giving first priority to their 
sworn responsibilities as important federal officials.
  In 2007, an independent review committee found that the Smithsonian 
Board had violated principles of good management during the tenure of 
Lawrence Small, the former Secretary of the Smithsonian, and had 
allowed him to create an ``insular culture.'' The report indicated that 
the Board had failed to provide desperately needed oversight and had 
overcompensated Mr. Small. The report also found that Sheila P. Burke, 
the Smithsonian's then-deputy secretary and chief operating officer, 
had frequent absences from her duties because of outside activities, 
including service on corporate boards for which she earned more than 
$1.2 million in six years. Further, the Smithsonian's Business Ventures 
Chief, Gary Beer, was dismissed for financial indiscretions. This 
unprecedented crisis caused by unprecedented controversies and 
irresponsible risks put into sharp dual-focus the need for new revenue 
streams and for a modern governance structure. The first full-blown 
scandal in the Smithsonian's history, replete with embarrassing 
coverage, has damaged its reputation and perhaps the confidence of 
potential contributors. The poor judgment and overreaching of 
Smithsonian personnel require new and concentrated oversight by 
citizens for whom the Smithsonian would command priority attention.
  The Board of Regents, of course, has taken some important action on 
its own. After irregularities were uncovered by the media, the Board 
responded to the controversies by creating a Governance Committee, 
chaired by Patty Stonesifer, a Regent and former chief executive 
officer of the Bill & Melinda Gates Foundation, with a mandate to 
comprehensively review the policies and practices of the Smithsonian 
and how the Board conducts its oversight of the institution. The Board 
also established an Independent Review Committee (IRC), chaired by 
former U.S. Comptroller General Charles A. Bowsher, to review the 
issues arising from an Inspector General's reports, the Board of 
Regents' response, and related Smithsonian practices.
  The IRC was forthright in its investigation and recommendations. The 
IRC stated explicitly that the root cause of the current problems at 
the Smithsonian was an antiquated governance structure that led to 
failures in governance and management. According to the IRC, the Board 
must assume a fiduciary duty that carries a ``major commitment of time 
and effort, a reputational risk, and potentially, financial 
liability.'' The IRC further argued that the Smithsonian, with a budget 
of over $1 billion a year, must have a Board of Regents who ``act as 
true fiduciaries and who have both the time and the experience to 
assume the responsibilities of setting strategy and providing 
oversight.'' The IRC cited lack of clarity of the roles of the U.S. 
Vice President and Chief Justice of the U.S. Supreme Court on the 
Board, and said that ``it is not feasible to expect the Chief Justice 
to devote the hours necessary to serve as a fiduciary agent.'' The same 
observation could be made of Members of the House and Senate who serve 
on the Board. The IRC recommended increasing the level of expertise and 
the number of board members to ensure that the Regents have sufficient 
time and attention to dedicate to the Smithsonian.
  The Smithsonian's own Governance Committee identified several board 
weaknesses and concluded that the Regents did not receive or demand the 
reports necessary for competent decision making, that the staff whom 
the Regents depended upon for oversight inquiries did not have direct 
access to information, and that the inability of staff to communicate 
red flag issues ``crippled'' internal compliance and oversight 
mechanisms.
  Only Congress, with the concurrence of the president, can amend the 
Smithsonian Charter. The last change to the Board's structure occurred 
over 30 years ago, but only to increase the number of private citizens 
on the Board from six to nine.
  The number of Regents, however, is not the root problem. Although 
this bill expands the Board of Regents from 17 to 21, it most 
importantly brings the board into alignment with modern public and 
private boards by requiring all Regents to be private citizens. The 
search for private funds by Smithsonian management was a major cause of 
the recent controversy. Faced with crippling budget problems, the 
Regents must be free to give new and unprecedented attention and energy 
to finding and helping to raise substantially more funds from private 
sources. The new structure envisioned by the bill will improve 
oversight and the capacity for fundraising from private sources. Unlike 
federal officials, private citizens are entirely free to assist in 
private fundraising. Most important, private citizens will have 
sufficient time and expertise to serve on the Board of Regents, and 
will be able to devote the personal time and attention necessary to 
fulfill the fiduciary responsibility that comes with serving such a 
venerable and complex institution.
  The bill preserves and strengthens the traditional role of the 
Speaker of the House and the President of the Senate in selecting 
members of the Regents, while eliminating the self-perpetuating role of 
the Board of Regents in selecting private citizens for the Board. The 
Speaker of the House and the President of the Senate will each send 12 
recommendations to the President of the United States, who will select 
the 21 members of the Board of Regents.
  Considering the seriousness of the findings of the Board of Regents' 
own Governance Committee and of the IRC, the changes prescribed by this 
bill are nothing short of necessary. The reform of the fiduciary and 
governance issues that have brought public criticism to this iconic 
American institution must begin with the indispensable step of a making 
its governance consistent with that of similar institutions today. Only 
congressional attention can reassure the public that the controversies 
that recently have besieged the Smithsonian will not recur. In the face 
of an unprecedented public controversy, Congress would be remiss if it 
left the Smithsonian to its own oversight and devices alone for 
improvement.
  I urge my colleagues to support this bill.

                          ____________________