Summary Proceedings of the Board of Regents 

January 29, 2007

WELCOME TO NEW REGENTS AND CHAIR OF THE SMITHSONIAN 

NATIONAL BOARD 

The Chancellor opened the meeting by welcoming newly appointed Congressional Regents 

Christopher Dodd (in absentia) and Doris Matsui, as well as Smithsonian National Board 

Chair L. Hardwick “Hacker” Caldwell, who will represent the National Board at the Regents’ 

meetings for the duration of his term. 

REPORT OF THE EXECUTIVE COMMITTEE

The Regents’ Executive Committee met on November 20, 2006, to discuss the work of the 

Regents’ Nominating Committee, the status of the review of the Secretary’s and Smithsonian 

Business Ventures Chief Executive Officer’s expenses, the impact of mid-term elections on the 

Smithsonian, and highlights of the Government Accountability Office’s review of the 

Smithsonian On Demand agreement. The Committee also met on January 4, 2007, to review the 

proposed agenda for the January 29 meeting of the Board of Regents, as well as the report and 

recommendations of the Regents’ Committee on Compensation and Human Resources. 

REPORT OF THE SMITHSONIAN NATIONAL BOARD

The Board held its 2006 Fall Meeting in Washington, D.C., on October 19–21, 2006, and its 

2007 Winter Meeting at the Smithsonian Tropical Research Institution in Panama on January 

24–27, 2007. The report on the activities of the Board included a motion to appoint Peter Lunder 

as vice chair of the Board. Accordingly, the following motion was approved:

VOTED that the Board of Regents appoints Peter Lunder as vice chair of the Smithsonian 

National Board effective October 2006. 

APPOINTMENTS TO SMITHSONIAN ADVISORY BOARDS

VOTED that the Board of Regents appoints Lynne N. Horning to the Advisory Board of 

the Anacostia Community Museum for a three-year term effective January 31, 2007. 

VOTED that the Board of Regents appoints Agnes M. Brown, S. Taylor Glover, Susan 

Hutchison, Roger D. Percy, and Richard Sugden to the Board of the National Air and 

Space Museum for three-year terms effective February 2007. 

VOTED that the Board of Regents reappoints Timothy J. Bork and Henry L. Thaggert III 

to the Board of the National Museum of African Art for three-year terms effective 

immediately. 
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VOTED that the Board of Regents appoints David McCullough to the Board of Directors 

of the National Museum of American History, Kenneth E. Behring Center, for a threeyear term effective February 8, 2006.

VOTED that the Board of Regents appoints Gabriela Febres-Cordero, William H. Frist, 

Jane Lubchenco, and David Rubenstein to the Board of the National Museum of Natural 

History for three-year terms effective immediately. 

VOTED that the Board of Regents appoints W. Dean Smith and reappoints Ella M. 

Foshay, V. Thanh Nguyen, R. Ted Steinbock, and Jack H. Watson, Jr., to the Commission 

of the National Portrait Gallery for four-year terms effective January 1, 2007.

VOTED that the Board of Regents appoints James Dyer and Steven A. Elmendorf to the 

Advisory Board of the National Zoological Park for three-year terms effective January 1, 

2007.

VOTED that the Board of Regents appoints Gisele Galante Broida, Edgar M. Masinter, 

and Nion McEvoy to the Commission of the Smithsonian American Art Museum for fouryear terms; reappoints Norma Lee Funger and Clarice Smith for four-year terms; and 

reappoints Jesús Moroles for a one-year term, all effective immediately. 

VOTED that the Board of Regents appoints Cristián Samper to the Board of Directors of 

Smithsonian Business Ventures for a one-year term and reappoints Gary Beer, Sheila 

Burke, Adolfo Marzol, and Don Steiner for three-year terms and Alice Maroni for a twoyear term, all effective immediately.

VOTED that the Board of Regents appoints Marjorie Murtagh Cooke and reappoints 

Barbara L. Bedford, Frank Chaney, and Diane Ebert-May to the Advisory Board of the 

Smithsonian Environmental Research Center for three-year terms effective immediately.

VOTED that the Board of Regents appoints Pamela J. Braden to the Board of the 

Smithsonian Institution Libraries for a three-year term effective immediately. 

REPORTS OF SELECTED ADVISORY BOARDS

The Board of Regents regularly receives updates from Smithsonian advisory boards to support 

communications between the boards and the Regents. At this meeting the Regents reviewed 

supportive, as well as constructive, reports from the advisory boards of Smithsonian Business 

Ventures and Smithsonian Institution Libraries. Both reports also conveyed the boards’ grave 

concern about the debilitating impact of Federal funding cuts. 

REPORT OF THE AUDIT AND REVIEW COMMITTEE

The report of the Audit and Review Committee primarily focused on the failure of the 

Institution’s independent auditors, KPMG, to deliver the fiscal year 2006 audit on or before its 

previously scheduled December 15, 2006, deadline. The Committee, which met on January 22, 

2007, heard from Acting Inspector General (IG) Sprightley Ryan who summarized recent IG audits 

of executive compensation (including that of Smithsonian Business Ventures employees) and the 

Secretary’s expenses (see Executive Session report on page xi). In addition, Chief Financial Officer 
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(CFO) Alice Maroni gave the Committee her perspective on the KPMG audit, as well as the 

implications for the Smithsonian of operating under a Continuing Resolution. The Committee 

met alone after three separate executive sessions with the Acting IG, the CFO, and KPMG 

representatives. 

LEGISLATIVE ACTIVITIES AND ISSUES

Smithsonian-Related Legislation 

The Regents considered two requests for Congressional support to authorize the process of 

planning, designing, and constructing facilities. The first, a request to begin the process of securing 

replacement greenhouse facilities, was proposed in response to the pending closure of a 55,000-

square-foot greenhouse complex currently leased for the Institution’s horticultural operations. 

The facility supports the National Orchid Collection, as well as all of the horticultural activities that 

cannot be contracted out. Accordingly, the following motion was approved: 

VOTED that the Board of Regents requests its Congressional Regents to introduce and 

support legislation to provide for the planning, design, and construction of a 55,000-

square-foot greenhouse facility at the Institution’s Suitland, Maryland, site. 

The Regents then discussed the Institution’s need for a replacement building on the Gamboa site of 

the Smithsonian Tropical Research Institute. The new facility would replace a termite-ridden 

building that, if renovated, would surpass the cost of constructing an entirely new building. 

Accordingly, the following motion was approved: 

VOTED that the Board of Regents requests its Congressional members to introduce and 

support legislation to provide for replacement construction of the Smithsonian Tropical 

Research Center’s schoolhouse building in Gamboa, Panama, for the purpose of 

supporting the Center’s terrestrial research program and other investigative initiatives. 

REPORT OF THE GENERAL COUNSEL

The General Counsel is working with the Office of the Secretary to update ethics guidelines for 

the Institution’s 39 advisory boards. The revised guidelines are modeled on the Regents’ Ethics 

Guidelines. 

GOVERNMENT ACCOUNTABILITY OFFICE REVIEW OF

SMITHSONIAN REAL PROPERTY MANAGEMENT AND SECURITY

The Regents received a positive status report on the General Accounting Office’s review of the 

Institution’s real property management. Although the review process was projected to conclude 

by March 2007, it is now anticipated that the reporting timeframe will be extended to allow the 

GAO to properly process the quantity of information provided by the Institution. 
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PROPOSED LAND ACQUISITION FOR THE SMITHSONIAN 

ENVIRONMENTAL RESEARCH CENTER:CONTEE FARM

The Regents reviewed a proposal to use outside funding sources to acquire Contee Farm, a 

strategically located property that is integral to the overall land management of for the 

Smithsonian Environmental Research Center (SERC) in Edgewater, Maryland. The Smithsonian 

has had covenants on Contee Farm for over 30 years and has been offered the right of first 

refusal on its sale. Outside funding sources have been identified that will enable the Smithsonian 

to take title of the property without the use of any Federal monies or Smithsonian Trust funds. 

Accordingly, the following motion was approved:

VOTED that the Board of Regents approves the purchase of the 587-acre Contee Farm in 

Edgewater, Maryland, for the purpose of enhancing the research, education, and public 

outreach programs of the Smithsonian Environmental Research Center. 

PROPOSED USE OF PROCEEDS FROM THE SALE OF DEACCESSIONED 

REVENUE STAMPS

The Regents’ 2004 decision to support the auction of revenue stamps from the collection of the 

National Postal Museum was based in part on advice that the proceeds from such an auction only 

could fund the Museum’s acquisition program. Since that time, two successful auctions were 

held, a third has been scheduled, and the auditor, KPMG, has revised its opinion regarding the 

use of revenues from the second and any subsequent auctions, determining that the proceeds may 

fund the direct care and management of the National Philatelic Collection, as well as support 

acquisitions. The Regents were asked to support the revised rules that govern the use of proceeds 

from the Museum’s revenue stamp auctions. 

VOTED that the Board of Regents approves the National Postal Museum’s request to 

apply the proceeds from the second and any subsequent sale of deaccessioned revenue 

stamps to the acquisition of new objects and/or the direct care and management of the 

National Philatelic Collections. 

ENDOWMENTS, DONOR RECOGNITION,CORPORATE SUPPORT, AND 

GIFT POLICY

The Regents adopted the following resolutions for donor recognition and corporate support 

opportunities, as well as actions to create endowments and gift administration policies, which 

had been proposed in accordance with the fund-raising principles, policies, and procedures 

approved by the Board of Regents and applicable Smithsonian directives. 
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VOTED that the Board of Regents recognizes the generosity and dedication of Peter 

Buck to the National Museum of Natural History, and gratefully approves the creation of 

a $5 million endowment in 2008, the proceeds of which will be used to support Human 

Origins Initiative scholarly activities, which may include staffing support and research 

programs, as well as the efforts of a new chair in human origins. The Board also 

approves the recognition of the Peter Buck family for its overall support of the Human 

Origins Initiative with a plaque at the entrance of the Human Origins Hall. The plaque 

will be displayed for at least 25 years or until the next major renovation of the space, 

whichever occurs later. In addition, the Board approves recognizing Dr. Buck by naming 

a new chair The Peter Buck Chair in Human Origins. 

VOTED that the Board of Regents recognizes the generosity of the Lily Auchincloss 

Foundation and its principals, Alexandra A. Herzan and Paul K. Herzan, to CooperHewitt, National Design Museum and gratefully approves the creation and naming of the 

Lily Auchincloss Design Education Endowment, an endowment to support design 

education programs at the Museum. 

VOTED that the Board of Regents recognizes the generosity of Michael A. Mennello and 

his late wife, Marilyn Logsdon Mennello, to the Smithsonian American Art Museum and 

gratefully approves the creation and naming of The Michael A. and The Honorable 

Marilyn Logsdon Mennello Endowment, an endowment to benefit the Museum’s 

programmatic initiatives, as determined by the director. 

VOTED that the Board of Regents recognizes the generosity of Agnes M. Brown to the 

National Air and Space Museum and gratefully approves the creation and naming of the 

Colonel and Mrs. James J. Brown Restoration Fund, an endowment for the benefit of 

restoration work at the National Air and Space Museum. 

VOTED that the Board of Regents approves the creation of a quasi-endowment for the 

benefit of the National Science Resources Center, the payout of which will be used for 

expenditures associated with a project the Center is conducting in North Carolina to 

establish a comprehensive and challenging K–12 science program in all school districts. 

To fund the endowment, the Board authorizes the transfer of a $1 million gift to the 

Center from the Burroughs Wellcome Fund. As stated in the August 2006 gift agreement 

between the Burroughs Wellcome Fund and the Center, the payout of the quasiendowment will fund the Center’s North Carolina project for 10 years and, upon 

completion of the project, the Center may direct the quasi-endowment to support other 

efforts, at the Center’s discretion. 

VOTED that the Board of Regents, consistent with the Demetrions’ request and in 

grateful recognition of James Demetrion’s past service to the Hirshhorn Museum and 

Sculpture Garden and James and Barbara Demetrions’ ongoing generous support of the 

Museum, rename the endowment established and named in their honor on January 22, 

2002. The endowment will be named the Friends of Jim and Barbara Demetrion 

Endowment Fund. 

VOTED that the Board of Regents recognizes the generosity of EMC Corporation to the 

Smithsonian and its Office of the Chief Information Officer and accepts the terms of this 

corporate sponsorship agreement. 
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VOTED that the Board of Regents recognizes the generosity of the Marcel Dassault 

Trading Corporation to the National Air and Space Museum and to Phase Two 

construction of the Steven F. Udvar-Hazy Center and, consistent with the company’s wish 

to honor its founder, Marcel Dassault, and his son, Serge Dassault, and their 

contributions to the aerospace industry, approves placing in the Boeing Aviation 

Hangar of the Steven F. Udvar-Hazy Center a plaque reading “The National Air and 

Space Museum recognizes the generosity of Marcel and Serge Dassault in support of the 

Steven F. Udvar-Hazy Center.” 

VOTED that the Board of Regents recognizes the generosity and dedication of Elihu Rose 

to the National Museum of American History and gratefully approves naming a planned 

temporary exhibition gallery in the west wing of the Museum the Susan and Elihu Rose 

Gallery. The name will be associated with the gallery for 20 years from the date that the 

gallery opens to the public until, after that period, the gallery’s next significant 

renovation. 

VOTED that the Smithsonian Board of Regents approves the application of a 5% fee to 

realized unrestricted, undesignated bequests received by the Smithsonian and the use of 

this fee to supplement the budget supporting the Smithsonian’s Planned Giving program 

to expand marketing and programmatic components. The 5% administrative fee will be 

capped so that the maximum amount of funding for this purpose will not exceed 

$700,000, cumulatively, for the current and next two fiscal years, adjusted upward every 

year by the CPI. 

REPORT OF THE FINANCE AND INVESTMENT COMMITTEE

The Finance and Investment Committee discussed three topics during its meeting on January 23: the 

activities of the Smithsonian Investment Committee, the fiscal year 2006 budget, and the fiscal year 

2008 Federal budget request. 

The Smithsonian Investment Committee continues to focus on restructuring the Endowment’s 

investment portfolio in order to reduce the portfolio’s volatility while enhancing its return. Strategic 

changes made to the Endowment portfolio have enabled the Institution to reduce the fixed-income 

portion from 18 percent to 14 percent, as well as increase the Endowment’s value by $103.5 million 

during the calendar year, to a total of $894 million. 

The report on the fiscal year 2006 budget was based on unaudited numbers, which prompted the 

Committee’s serious discussion about the Institution’s external auditor, KPMG. The Committee 

reported that the Institution had a very good year financially. Fund raising during fiscal year 2006 

exceeded budget by $49 million, external debt was reduced by nearly $89 million (largely due to the 

sale of the Victor Building), and the unrestricted Trust budget achieved its third consecutive surplus 

by continuing its one-for-two hiring freeze. However, income from retail businesses’ net income fell 

$6 million below budget due primarily to a decline in museum visitation at the major venues where 

the Smithsonian Business Ventures (SBV) operates, as well as the poor performance of the SBV 

catalog division. 
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Federal support for the Institution continues to be a problem, particularly in the areas of facilities 

revitalization and maintenance. As the mandated pay raise for Federal employees was under-funded 

yet again, the Institution began the year with a Federal operations shortfall of $13 million. In 

addition, facilities maintenance funding of $46 million remains short of the minimum industry 

standard of $94 million, and the fiscal year 2006 facilities capital appropriation was 31 percent less 

than the prior year, which was a major setback for the facilities program. The prospects for fiscal 

year 2007 are not better, as the Continuing Resolution through which the Smithsonian receives its 

Federal funding appears likely to continue, effectively freezing the fiscal year 2007 budget at this 

lower level. Facilities revitalization remains the Institution’s most pressing financial challenge. 

The Finance and Investment Committee also reviewed the Institution’s fiscal year 2008 Federal 

budget request to be submitted to the Congress in early February. As the President’s priorities 

remain the war on terrorism, homeland security, and the economy, most non-defense budget 

requests are being reduced. The Institution’s negotiations with OMB, however, appear to have been 

constructive, as the fiscal year 2008 budget request to the Congress is 5.3 percent over the fiscal 

year 2007 budget request. Because the latter was never enacted, the fiscal year 2008 budget request 

represents about 10 percent more than the current funding level imposed by the budget freeze. 

The OMB allowance for fiscal year 2008 includes $517 million for Federal salaries and expenses, 

which will cover most of the known mandatory costs, as well as provide a funding increase of 

$10 million for the National Museum of African American History and Culture. The Smithsonian 

also received an allowance of $107 million for its facilities capital request, which includes funding 

for the new elephant area at the Zoo and important modifications of the Pod III storage facility in 

Suitland, Maryland. The OMB allowance for fiscal year 2008 will not, however, provide the 

critically needed funding to address facilities maintenance and collections care, which together 

remain the biggest challenge to the Institution’s ability to fulfill its mission. 

VOTED that the Board of Regents authorizes the Secretary to submit to Congress a 

Federal budget for fiscal year 2008 as part of the President’s budget in the amount 

negotiated with OMB and authorizes the Secretary to inform OMB and Congress fully 

about the implications of the President’s budget for the mission and priorities of the 

Institution. 

REPORT OF THE NOMINATING COMMITTEE

During its October 31, 2006, meeting, the Nominating Committee unanimously agreed to propose 

the renomination of three citizen Regents. Accordingly, the Regents approved the following motion: 

VOTED that the Board of Regents renominates Walter E. Massey, Roger W. Sant, 

and Patricia Q. Stonesifer for second terms as members of the Board. The 

Congressional members of the Board of Regents are asked to introduce and 

support legislative initiatives leading to their reappointment. 

The Committee also reviewed the Regents’ committee memberships for calendar year 2007 and 

proposed the appointments of Hacker Caldwell to the Finance and Investment Committee and 

Phillip Frost to the Audit and Review Committee. Accordingly, the Regents approved the following 

motion:
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VOTED that the Board of Regents approves the list of committee memberships for 

calendar year 2007 or until further action of the Board. 

The last agenda item discussed by the Committee was the ongoing search for nominees to fill the 

Board vacancy that will occur upon the December 2007 conclusion of Anne d’Harnoncourt’s final 

term on the Board of Regents. Statutory charter provisions dictate that citizen Regents cannot 

represent the same state. Consequently, the current search must be limited to persons who reside 

outside of the states of California, Florida, Illinois, Massachusetts, New York, and Washington, as 

well as the District of Columbia. It was agreed that the primary qualities that any Regent candidate 

must possess include a passion for and commitment to the Smithsonian, as well as a willingness to 

exercise both on behalf of the Institution. World-class experience with museums and their 

management also were identified as desirable attributes. 

DESIGNATION OF RALPH REGULA AS REGENT EMERITUS

VOTED that the Board of Regents confers the title of Regent Emeritus on Representative 

Ralph Regula with heartfelt gratitude for the outstanding service he has provided to the 

Smithsonian Institution. 

STATUS OF THE ARTS AND INDUSTRIES BUILDING

In January 2004 the Board of Regents voted to close the Arts and Industries Building because of 

safety concerns, particularly those regarding the structural integrity of its roof. The structure was 

vacated by the end of calendar year 2006. 

As Federal funds are not available to address the decrepit condition of the building, the Institution 

has actively explored options to address its future use. Outside agencies have been consulted, 

including representatives from the Office of Management and Budget and the United States 

Congress. Discussions were held regarding the possible pursuit of private partnerships that might 

allow the use of private funding to renovate the building and allow its use by other parties. The 

Institution also conducted an assessment of the building and determined that it would cost 

approximately $56 million to stabilize the building and bring it up to a code-compliant warm shell. 

This estimate includes repairing the building’s infrastructure and roof, but not addressing the 

interior of the building. 

The Regents were asked to allow the Institution to issue a Request for Proposal (RFP) to the private 

sector to determine the interest level of organizations that might want to enter into a partnership 

intended to provide the funding needed to preserve the historic structure while remaining 

appropriate for the building’s use and historic status, consistent with the Institution’s mission, and 

compatible with the building’s prominent location on the National Mall. Both the RFP process and 

any subsequent partnership would be carried out under the oversight of the Regents, who have full 

authority over the building, and with appropriate communication with the Fine Arts Commission, 

the National Capital Planning Commission, the Office of Management and Budget, and Congress. 
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Congressional Regent Xavier Becerra reminded the Board that he had introduced legislation to 

create a commission to explore the idea of building a Museum of the American Latino. Although 

the proposed legislation has yet to be approved by the Senate and the Institution presently is 

incapable of funding such an initiative, Representative Becerra noted the Arts and Industries 

Building might be considered in the future as a potential home to the museum. 

It was then proposed that the Board of Regents authorize the issuance of a Request for Proposal. 

With one Regent abstaining from the vote, the following motion was approved: 

VOTED that the Board of Regents authorize the issuance of a Request for 

Proposal regarding the possible renovation and long-term lease of the 

Smithsonian’s Arts and Industries Building. 

SMITHSONIAN ON DEMAND 

An update on the status of the Smithsonian On Demand television initiative included a short 

video featuring a cross-section of the types of programming that likely will be shown on the 

network. Poised to launch this spring with 35 to 40 hours of programming, the initiative will 

ultimately provide up to 100 hours of programs that originate from the Institution or are based on its 

collections. All of the programs will be vetted by an internal review process to assure that they 

support the mission of the Institution and are consistent with the kinds of information and 

programming expected of the Institution, as well as to confirm that their content is factually correct. 

The initiative is 100% financed by the venture and the Smithsonian’s sole investment is the 

contribution of intellectual content. 

The Regents were also provided with a paper summarizing the results of the December 15, 2006, 

GAO review of the circumstances surrounding the negotiation, execution, and implementation of 

the Smithsonian On Demand contracts. The Institution found the GAO review to be fair and 

unbiased. 

REPORT OF THE EXTERNAL REVIEW COMMITTEE FOR SMITHSONIAN ARTS

The morning meeting of the Committee of the Whole was devoted primarily to the presentation of 

the Report of the External Review Committee for Smithsonian Arts (“the Committee”). Under 

Secretary for Art Ned Rifkin and two Committee members, Dr. Glenn D. Lowry, the director of 

The Museum of Modern Art in New York, and Dr. John Walsh, director emeritus of the J. Paul 

Getty Museum, presented an overview of the Committee’s assignment, findings, and general 

recommendations. 

The Committee noted that the Smithsonian’s arts organizations have extraordinary potential, 

including the ability to achieve the Secretary’s goals for the Institution: increase public impact; 

strengthen research, scholarship, and collections; promote organizational and management 

excellence; and achieve greater financial strength. To realize these goals, the Committee said that 

the Smithsonian’s arts organizations must address four areas: excellence, collaboration, 

administration, and financial support. 
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The Committee endorsed the restructuring of the art museums under the umbrella of Smithsonian 

Arts and the direction of the Office of the Under Secretary for Art. The report noted the real and 

potential benefits offered by the reorganization, citing the benefits of intellectual and artistic 

cross-pollination, as well as collaborative efforts to identify, attract, and utilize funding and other 

resources. The critical need for more funding for Smithsonian Arts was noted as an overarching 

concern. 

The leadership role of the Under Secretary for Art was examined, including the need for 

increased support for the position. The Committee praised initiatives to promote communication 

and cooperation among Smithsonian Arts organizations, such as the new Contemporary Art 

Forum. 

The Committee stated that the Smithsonian Arts possess an implicit mandate as national role 

models. The report concluded that the opportunity to play a vital role in sustaining an educated, 

curious, creative public has never been more essential to the future of the nation, and that the 

investment of public funds in the arts has never been more important. 

During the afternoon meeting of the Board of Regents, the tremendous work and vision of the 

External Review Committee for Smithsonian Arts was recognized. The Regents, in an expression of 

appreciation, accordingly approved the following motion: 

VOTED that the Board of Regents accepts with deep gratitude the report of the External 

Review Committee for Smithsonian Arts. The Board expresses its total support for the 

Committee’s work and shares in the consensus reached, endorses the vision and direction 

embodied in the Report, and asks the Secretary to report regularly on progress in the 

exciting and needed implementation of the Committee’s findings. 

BUTTERFLIES AND PLANTS: PARTNERS IN EVOLUTION AT THE NATIONAL 

MUSEUM OF NATURAL HISTORY

An exciting new exhibition, Butterflies and Plants: Partners in Evolution, is scheduled to open at 

the National Museum of Natural History in November 2007. The exhibition will include both a 

long-term exhibition focusing on the co-evolution of plants and animals through time and a 

special Butterfly Pavilion featuring live plants and butterflies. It will be unique in its strong focus 

on science. 

The investment for the new exhibition and its Butterfly Pavilion is fully funded. The annual 

operations of the Pavilion, including the ongoing replenishment of butterflies and plants, will 

require an admission charge based on estimated annual operating costs, related expenses, and the 

projected number of visitors. All income generated from admissions will be used to support the 

operation of the Butterfly Pavilion, the Insect Zoo, and related activities. Although the 

Smithsonian previously has charged fees for certain programs, such as IMAX films and visits to 

the National Air and Space Museum’s Planetarium, this would be the first time admission would 

be charged for a special highlight in a permanent exhibition. 
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The Museum is taking four specific steps to ensure that Butterflies and Plants: Partners in 

Evolution and its educational message will be accessible to all visitors. Access to the larger, 

long-term exhibition around the Butterfly Pavilion will be free-of-charge to all visitors during 

regular Museum hours. Admission fees to the Pavilion are proposed to be waived one day each 

week, and reduced or waived fees to the Pavilion will be offered to school groups through 

special arrangements. In addition, free educational resources will be available via the web for 

both formal and informal educational use. 

The Regents were enthusiastic about the proposed exhibition. Following a review of the proposed 

measures to ensure the Pavilion’s accessibility to all visitors, the Regents also expressed their 

support for a proposed admission fee to support the annual operating costs of the Butterfly Pavilion. 

With one Regent abstaining from the vote, the following motion was approved: 

VOTED that the Board of Regents approves the proposed plan to charge admission 

to the Butterfly Pavilion in the forthcoming exhibition Butterflies and Plants: Partners 

in Evolution. 

STATUS OF SMITHSONIAN INSTITUTION FISCAL YEAR 2006 GOALS

The Regents reviewed the Institution’s fiscal year 2006 accomplishments during the morning 

meeting of the Committee of the Whole. The status report cited progress on a number of 

scheduled initiatives, including major facilities capital and exhibitions projects (such as the 

opening of the Donald W. Reynolds Center for American Art and Portraiture and the National 

Zoo’s Asia Trail I), major information technology and financial projects, and private fund-raising 

efforts, as well as those to secure increases in Federal appropriations. The Institution exceeded its 

fund-raising goals, produced a Trust surplus for the third consecutive year, met or exceeded 

diversity goals for employees and major suppliers, and achieved a green status rating on four of 

five of the areas measured in the 2006 year-end President’s Management Agenda. However, the 

Institution experienced a slight drop in physical visits (although virtual visits rose by 32%), 

Smithsonian Business Ventures’ net gain did not reach its fiscal year goal, and media and 

government relations were temporarily affected by Congressional misgivings related to the 

Smithsonian On Demand video initiative. 

EXECUTIVE SESSION

The plenary meeting of the Board of Regents concluded at 3:15 p.m., after which the Regents 

met in executive session to consider a special report from the Audit and Review Committee, as 

well as the recommendations of the Committee on Compensation and Human Resources. Acting 

Inspector General A. Sprightley Ryan joined the Regents for a discussion of the Audit and 

Review Committee’s examination of the Secretary’s expenses. 

In June 2006 the Secretary and the Audit and Review Committee asked the Chief Financial 

Officer, with help from an independent auditor, to undertake a review of the Secretary’s 

expenses during fiscal years 2000 through 2005 (he began his tenure in January 2000) and to 

determine if travel and other reimbursable expenditures incurred by the Secretary were 

reasonable in the context of a business expense related to the Smithsonian’s mission and 
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consistent with his employment agreement. By August 2006, the Institution entered into a 

contract with Cotton & Company to conduct this review, and the Smithsonian’s Inspector 

General was assigned to serve as the Institution’s technical representative with respect to that 

contract. 

According to the Cotton & Company December 22, 2006, report and the Inspector General’s 

January 16, 2007, letter to the Audit and Review Committee, the six-year review of 1,040 

transactions disclosed “no evidence of fraud or abuse associated with the expense transactions 

reviewed.” At its meeting on January 22, 2007, the Audit and Review Committee met with the 

Inspector General in executive session to discuss her observations. The Committee also 

examined the supporting documentation and found both that the documentation was adequate to 

support the expenses and that the expenses were incurred for demonstrable business purposes, no 

personal benefit for the Secretary, and in furtherance of the mission of the Institution. 

Moreover, the Inspector General expressly found “no evidence that the expenses reviewed were 

solely for personal benefit.” The Inspector General further noted that 96% of these transactions 

were fully documented. Of the 3% found to be inadequately supported, most of those 

transactions were deemed to be inadequately supported because only partial documentation, not 

the original invoices or receipts, could be found. These transactions also occurred primarily in 

2000 and 2001, and the Inspector General noted that gaps in records could be attributed to the 

lapse of time, relocation of the Office of the Comptroller, and staff turnover. The remaining 

transactions, which represented only 1% (worth $7,108.89) of all reviewed expenses, were 

deemed to be unsupported. The Office of the Secretary and the Chief Financial Officer provided 

the Audit and Review Committee with supplemental documentation establishing the legitimate 

business purposes for the 4% of transactions deemed in the report to have been unsupported or 

improperly supported. 

The Inspector General specifically questioned two transactions: (1) a $14,509.40 round-trip 

charter flight in May 2001, when the Secretary attended the opening of an affiliate museum and, 

at the request of one of the Institution’s largest donors, a function held by a major potential donor 

and then needed to return to Washington for a Board of Regents’ meeting; and (2) a $5,764 

reimbursement for the three-day Cambodia portion of the Smithsonian National Board’s 2004 

China/Cambodia trip for the Secretary’s wife, who had agreed to represent him and the 

Smithsonian for the last portion of the trip so that he could return to commitments in 

Washington. After reviewing the relevant supplemental documentation for each of these 

transactions, as well as the articulated business purpose for each expense, the Audit and Review 

Committee found that the transactions were consistent with the Smithsonian’s mission and would 

have been authorized by the Regents as proper business expenses if presented to the Regents for 

advance approval. Similarly, the Committee recognized that a $4,811.50 cash award in June 

2000 for a long-service employee, while technically unauthorized, was justified in the same 

manner and would have met with the Regents’ approval. 

The Inspector General noted that approximately 200 transactions (representing 8% of the cost of 

all transactions) for gifts and meals for donors and staff were not authorized in some years due to 

inconsistent policy guidance. According to the Inspector General, most of these transactions 

were undertaken for legitimate business purposes, none were solely for the Secretary’s personal 
xiii

benefit, and all would have been permissible if the policy had been clear. The Committee agreed 

with the conclusion of the Inspector General with respect to these expenses, and understood that 

such policies are already being clarified. 

In addition, the Inspector General noted that certain meals and gifts provided to staff appeared to 

be lavish. The Committee reviewed all such expenditures, and while it understands that the 

Institution must ensure that the expenses incurred in carrying out its mission must be reasonable, 

none of the reviewed expenses were found to be unreasonable. 

Finally, the Inspector General recommended that “the Board of Regents consider amending the 

Secretary’s employment agreement to specify what level of travel service the Secretary is 

entitled to... and to make the [Secretary’s] housing allowance a single yearly payment with no 

documentation of expenses or minimum amount required to qualify for the allowance....” In the 

Audit and Review Committee’s opinion, making these terms unambiguous through simple 

modifications will clarify the intent of the agreement and make the accounting for his 

compensation more straightforward. 

Following discussion of the Audit and Review Committee’s report, the Regents approved the 

following motion: 

VOTED that the Board of Regents acknowledges the Inspector General’s diligent 

management of the review of the Secretary’s expenses and accepts the Audit and 

Review Committee’s conclusions that the expenses were incurred for 

demonstrable business purposes in furtherance of the mission of the Institution, 

none of the expenditures were solely for the Secretary’s personal benefit, and 

there was no evidence of fraud or abuse in any transactions in this review. The 

Regents authorize the following modifications to The Secretary’s employment 

agreement of September 28, 1999: 

Modify Paragraph #7 to provide, in its entirety, “The Secretary shall 

make his personal residence available for official Smithsonian hospitality 

and will receive an annual housing allowance of $193,022 for 2007, 

payable bi-weekly, and adjusted annually by the Board of Regents.” 

Modify Paragraph #8 to provide, in its entirety, “To carry out his role as 

chief spokesman and fundraiser for the Smithsonian, the Secretary is 

authorized by the Board of Regents to travel at the first-class level for all 

transportation, including the use of car services for transportation to 

official functions (not to include daily commuting between home and 

office), and quality hotel accommodations and meals such as those 

provided by Marriott, Hilton, and other brands targeted at business 

travelers. The Secretary’s spouse is authorized to travel at the 

Smithsonian’s expense when there are business reasons for her to do so.” 

The Regents next discussed the Report of the Committee on Compensation and Human 

Resources, which had met on December 4, 2006, to conduct its annual review of the Institution’s 

compensation philosophy and procedures, as well as to consider recommendations for 

compensation adjustments for Smithsonian management. Following discussion of the 

Committee’s report, the Regents approved the following motion: 
xiv

VOTED that the Board of Regents approves the compensation adjustments for 

Smithsonian management for calendar year 2007 as presented by its Committee on 

Compensation and Human Resources. These adjustments shall be effective 

January 7, 2007. 

REGENTS’ DINNER AND MONDAY MORNING EVENTS

On Sunday, January 28, Regents and guests gathered for a buffet dinner in the Commons Room 

in the Smithsonian Castle. On Monday morning, January 29, the Committee of the Whole met in 

the Regents’ Room of the Castle. The two-part meeting was devoted to the report of the External 

Review Committee (ERC) on Smithsonian Arts and the Smithsonian’s fiscal year 2006 

accomplishments, after which an executive session followed. Members of senior staff then joined 

the Regents for lunch in the Castle Library, during which Merry Foresta, director of the 

Smithsonian Photography Initiative, presented an illustrated lecture, “Click! Photography 

Changes Everything.” Following her remarks, a dynamic video clip effectively demonstrated the 

enterprising work that had been praised in the External Review Committee’s report on 

Smithsonian Arts.