The Introduction of the Smithsonian Modernization Act of 2013

Floor Speech

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 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.

Source