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Finally, although allowing the full amounts requested for Restoration and Renovation of Buildings and Zoo Construction, the House denied the $500,000 requested for South Quadrangle Development planning with the statement that the Museum Support Center should continue to be the highest priority of the Institution. | [[underlined]]500,000 [[/underlined]]

[[total]] | $2,052,000
[[/table]]

In response to the House action, the Smithsonian has appealed to the Senate for 1) restoration of the South Quadrangle planning funds to serve as an indication of Congressional support for our ongoing fund raising efforts and 2) the flexibility to apply the reduction on the Special Foreign Currency Program throughout the appropriation in order to continue reserve funding for the AIIS.

--[[underlined]] Nonappropriated Trust Funds [[/underlined]]:  FY 1981 net income from [[underlined]] Unrestricted General Trust [[/underlined]] Funds is expected to drop to $10,828,000 from projected FY 1980 income of $11,546,000.  Income items of significant variation from the current year include:

°Investment income ($2,250,000) is expected to be $250,000 lower than the current year due to anticipated lower interest rates, offset only in part by increased endowment income.

°Net Magazine ($5,298,000) will be some $700,000 lower next year because of inflationary increases in paper and other production, promotional and postage costs; this estimate may prove to be conservative if advertising revenues remain strong.

°Museum Shops and Mail Order are projected at a lower return ($688,000) than the current year ($858,000) because of rising costs of operation and conservative estimates of mail order sales.

°The division of Performing Arts is budgeted to contribute $350,000 in net income, compared to a FY 1980 break-even due to expected sales of a Country Music album.

°Photographic Services, following a deficit of ($140,000) in the current year, is expected to break-even as a result primarily of staff and other expense reductions.

Cost increases and program growth have been kept to a minimum.