[Congressional Record (Bound Edition), Volume 161 (2015), Part 9]
[Extensions of Remarks]
[Pages 12228-12229]
[From the U.S. Government Publishing Office, www.gpo.gov]




       INTRODUCTION OF THE SMITHSONIAN MODERNIZATION ACT OF 2015

                                 ______
                                 

                       HON. ELEANOR HOLMES NORTON

                      of the district of columbia

                    in the house of representatives

                        Wednesday, July 22, 2015

  Ms. NORTON. Mr. Speaker, today, I introduce a bill 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 of 2015, makes changes to the 
Smithsonian's governance structure by expanding and changing the 
current 17-member composition of its Board of Regents, which includes 
public officials--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 would be the first significant change in this old and revered 
institution since it was established in 1846.
  This 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 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 these 
recommendations.
  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, donations from cultural foundations, and 
contemporary artists, 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 
funding, infrastructure, and other needs. Today, the Smithsonian is 
embarking on a seven-year, $1.5 billion fundraising effort, but its 
current board members who hold public office are severely limited in 
participating, as is usually expected of board members. Under the 
Smithsonian's fundraising plan, the 19 museums and research 
institutions are working together as part of a unified campaign to 
raise the necessary funds. With this goal of $1.5 billion, it is more 
important now than ever that the Smithsonian's ability to raise money 
be modernized.
  Congress must help the Smithsonian strengthen its ability to build 
resources beyond what taxpayers are able to provide. The most

[[Page 12229]]

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 
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 federal government, and the public.
  The present governance structure places immense responsibility to 
raise money 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 by allowing him to create 
an ``insular culture.'' The committee's report indicated that the Board 
had failed to provide the 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 personally 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 demonstrate the need for new and 
concentrated oversight.
  The current 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, 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 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 
in particular, 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. My bill follows this guidance.
  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 Smithsonian Board is still a board 
dominated by highly placed public officials.
  The number of Regents, however, is not the root problem. My bill 
expands the Board from 17 to 21 members, but most importantly, it 
brings the Board into alignment with modern public and private boards 
by requiring all the 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 this bill will improve oversight and the 
capacity for fundraising from private sources. Unlike the eight federal 
officials on the current Board, the nine private citizens on the 
current 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.
  Considering the seriousness of the findings of the Board's own 
governance committee, as well as of the IRC, the changes prescribed by 
this bill are nothing short of mandatory. 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 and 
a $1.5 billion fundraising goal, Congress would be remiss if it left 
the Smithsonian to its own oversight and devices alone.
  I urge my colleagues to support this bill.

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