[Congressional Record (Bound Edition), Volume 159 (2013), Part 8]
[Extensions of Remarks]
[Pages 10980-10981]
[From the U.S. Government Publishing Office, www.gpo.gov]




     THE INTRODUCTION OF THE SMITHSONIAN MODERNIZATION ACT OF 2013

                                  _____
                                 

                       HON. ELEANOR HOLMES NORTON

                      of the district of columbia

                    in the house of representatives

                          Monday, July 8, 2013

  Ms. NORTON. Mr. Speaker, today, I introduce three bills to modernize 
the Smithsonian Institution and to enhance its governance and 
fundraising capabilities, 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 2013, 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 2013 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 an irreplaceable cultural, scientific, 
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 is now under construction. The Smithsonian has grown 
with private funding and donations from American culture and life, 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 provides a governance 
structure befitting the Smithsonian's unique complexity. The 
difficulties the Smithsonian has faced result in part from the 
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 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 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 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

[[Page 10981]]

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 Board members 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 in the roles of the Vice President of the 
United States 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 Board 
has 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 it only increased 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, most importantly, it 
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 
on the Board, private citizens on the Board are entirely free to assist 
in private fundraising. Most importantly, private citizens have 
sufficient expertise to serve on the Board, and are 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 from those recommendations.
  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 other 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.

                          ____________________