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[[underlined]] Trust Funds [[/underlined]]

Final results for FY 1977, together with the amended FY 1978 budget and tentative estimates for FY 1979, are contained on Exhibits A, B, and C.
[[underlined]] FY 1977 [[/underlined]]:  At the end of the fiscal year, a recalculation was made of the potential tax liability on [[underlined]] Smithsonian [[/underlined]] advertising income; the result of the analysis showed that the $1.0 million reserve set aside during the year was substantially higher than needed, even if the Institution does not receive a favorable ruling on our request, currently before the Internal Revenue Service, for an interpretation of its related regulations (discussed more fully in agenda item - Smithsonian Tax Matter).  The additional reserve for FY 1977 was therefore reduced from $1.0 million to $270,000 (leaving a cumulative total of $900,000); this permitted the transfer in FY 1977 of an additional $500,000 to endowment (a total of $5.5 million for the year). Final costs relating to the West Court and the Naturalists Center in the Natural History Building required transfer of an additional $100,000 to Plant Funds, and the underrecovery of administrative costs (resulting from not fully allocating these rising expenses against all activities of the Institution) was some $200,000 greater than anticipated.  Aside from these changes, the results for Unrestricted Funds were largely in line with September projections.

Earned revenue to the Special Purpose Funds, relating principally to Bureau activities (Exhibit C) was higher than expected and well above FY 1976, due in large measure to continued capacity attendance at the NASM theatres and to strong sales of NASM related merchandise.  Gifts and Foundation grants for restricted projects, on the other hand, were sharply lower than projections and less than half of amounts in the 2 previous bicentennial related years.