[Congressional Record (Bound Edition), Volume 157 (2011), Part 5]
[Extensions of Remarks]
[Pages 6795-6796]
[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, May 5, 2011

  Ms. NORTON. Mr. Speaker, today, I 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 Smithsonian 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 and changing the composition of 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. This change will strengthen both the Smithsonian's 
governance and fundraising capacity, and it is the first significant 
change in this old and revered institution since it was established in 
1846. The second bill, the Smithsonian Free Admission Act of 2010, 
seeks to preserve the long-standing free admission policy for permanent 
exhibits at an institution that is largely funded by the federal 
government, as envisioned by James Smithson, its founder. Finally, the 
Open and Transparent Smithsonian Act of 2011 will apply the Freedom of 
Information Act and the Privacy Act to the Smithsonian in the same 
manner they apply to 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 
the forthcoming 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

[[Page 6796]]

financial contributions, but most of its funding continues to come from 
federal appropriations. Despite receiving 70 percent of its funding 
from the federal government, the Smithsonian has long had serious 
infrastructure and other needs.
  Congress must help the Smithsonian strengthen its ability to build 
resources beyond what taxpayers are able to provide. The most important 
step Congress could take today is to rescue the Smithsonian from its 
19th century governance structure, which keeps it from accessing needed 
and available private resources and limits close and critical 
oversight. The Smithsonian Modernization Act bill provides a governance 
structure befitting the Smithsonian's unique complexity. 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 Board had 
violated principles of good management during the tenure of the former 
Secretary of the Smithsonian, Lawrence Small, allowing him to create an 
``insular culture.'' The Committee's 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 over six years. Further, the Smithsonian's then-Business 
Ventures chief, Gary Beer, was dismissed for financial indiscretions. 
This unprecedented crisis, caused by unprecedented controversies and 
irresponsible risks, put into sharp 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 media 
coverage, damaged its reputation and perhaps the confidence of 
potential contributors. The poor judgment and overreaching of 
Smithsonian personnel during that period requires 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 report and the Board's 
response, and related Smithsonian practices.
  The IRC was forthright in its investigation and recommendations. The 
IRC stated explicitly that the root cause of the problems at the 
Smithsonian was an antiquated governance structure, which 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 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 a 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 the Members of the House and Senate who serve on the Board. 
The IRC recommended that the Board increase the level of expertise and 
the number of 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, concluding that the Board did not receive or demand the 
reports necessary for competent decision-making, that the staff whom 
the Board depended upon for oversight inquiries did not have direct 
access to information, and that the inability of staff to communicate 
red flags ``crippled'' internal compliance and oversight.
  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 the 
bill expands the Board from 17 to 21 members, 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 importantly, private citizens will have sufficient 
expertise to serve on the Board, 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 Board 
members, while eliminating the self-perpetuating role of the Board 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's own 
governance committee and of the IRC, the changes prescribed by the 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 making 
the Smithsonian's governance consistent with that of similar 
institutions today. Only congressional attention can reassure the 
public that the controversies that recently 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 the bill.

                          ____________________