Report of the 

 Board of Regents 



The work of the Board of Regents' Committees throughout 

 the year substantially strengthened the three plenary meetings 

 in February, May, and September 1997. The Board welcomed 

 its newest congressional member, Representative Esteban 

 E. Torres (D-Calif.), whose appointment by the Speaker of the 

 House on February 2.5, 1997, filled a long-standing vacancy on 

 the Board and brought the membership to is full statutory 

 capacity. The Board named Regent Frank A. Shrontz to its 

 investment policy committee and elected Regent Wesley 

 S. Williams, Jr., to the Executive Committee. The Regents' 

 Committee of the Whole, established last year, effectively 

 enhanced the Board's oversight of the Institution. The 

 Committee's meetings attracted the participation of many 

 Regents on the Sunday afternoons preceding regular Monday 

 board meetings. Members discussed in depth such topics as 

 the status of development and campaign; the Smithsonian's 

 Strategic Plan (known also as the Response to the Government 

 Performance Results Act); and space needs associated with the 

 planned renovation of the Patent Office building and the 

 enhancement of the operations of the National Portrait Gallery, 

 National Museum of American Art, and Archives of American 

 Art. In addition, the Committee of the Whole discussed the 

 operations and plans of the National Museum of Natural 

 History and the Freer and Sackler Galleries with their 

 respective directors and advisory board representatives. 



The Audit and Review Committee exercised its primary 

 responsibility for oversight of the Institution's financial 

 operations. This committee is the Regents' principal contact 

 with the Institution's external auditors and receives the yearly 

 report on its fiscal transactions. The committee also receives 

 the Smithsonian inspector general's findings and frequently 

 reviews particular functions and operations that have come to 



its attention. In the past year, such reviews included new 

 accounting standards, insurance and risk funding, and tax 

 issues related to the Institution's business activities. 



The Investment Policy Committee continued to monitor 

 and meet with each of the current investment managers of the 

 Institution's endowment. The committee terminated one 

 investment management firm based on its relatively weak 

 performance, redistributing its funds and some funds from 

 another balanced management firm to other specialized 

 investment managers. In other actions, the committee's rules 

 of operation, proxy voting guidelines, and standards of 

 conduct and disclosure were adopted; a $21 per-unit payout 

 rate for fiscal year 1998 was approved; and the committee 

 discussed the use of index funds and investments in 

 alternative investment classes. 



Among its many actions throughout the year, the Board of 

 Regents established the Smithsonian's charitable gift annuity 

 program, approved an agreement with Novus Services, Inc., 

 for a Smithsonian affinity credit card, and authorized 

 tax-exempt financing for the construction of the Discovery 

 Center in the National Museum of Natural History. In 

 addition, the Regents approved the sale of the Barney Studio 

 House for the benefit of the National Museum of American 

 Art, reported to Congress that the National Campaign for the 

 National Museum of the American Indian raised more than 

 $37 million in fulfillment of its statutory requirement for 

 construction of the Mall museum, worked with the Secretary 

 to ensure that the continuing tour of "America's Smithsonian" 

 would incur no additional deficit, and established the 

 Smithsonian Center for Latino Initiatives. 



Particularly notable among the Regents' discussions were 

 the Smithsonian policy on cosponsored special events, the 



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