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an inconsistency with the previous action.  After conferring with members of the Committee, he requested the Treasurer to order the sale of the Institution's holdings in the Trustees Commingled Fund.)

[[underlined]] The Secretary's Report [[/underlined]]

Mr. Adams presented a number of topics which were quite tentative or of rather recent origin as the business of the Institution and which therefore were not reflected in the status reports and other agenda papers distributed in advance of the meeting.  He began his presentation by introducing Mr. Tom Freudenheim who has been appointed Assistant Secretary for Museums effective February 3, 1986.

The Secretary reported that the Institution's share of the Gramm-Rudman-Hollings sequestration of fiscal year 1986 appropriated funds amounts for 4.3%, or a reduction of approximately $8.6 million (all but a million dollars of which comes out of operating funds).  This sequestration comes on the heels of a 2% base reduction and other earlier cuts in 1986 funds which placed the appropriation almost $12 million below the amount requested for 1986.  He added that cuts later in the year on the 1987 funds could well be 3 to 5 times as large.

To meet current and future cuts, the Secretary said he has asked his Management Committee, the Council of Bureau Directors, the Council of Information and Education Directors, and the Council of Administrative Officers to prepare advice on the most appropriate steps.  Initial advice has been received and preparations are underway for making the necessary reductions for fiscal year 1986.  Mr. Adams pointed out that the preparation of the Five-Year Prospectus has been delayed so that the Institution can incorporate the OMB planning figures more substantially than in the past.  He said that the requirement to effect reductions on a line-by-line basis is a severe handicap for the Smithsonian and suggested that the Institution, by its nature, would need to have the flexibility of making more discretionary cuts if it were to preserve its most vital activities.

Mr. Adams reminded the Regents of their discussion of the organization of development operations at the September 16, 1985 meeting of the Board and reported that he has taken steps to partially decentralize the Institution's fundraising activities.  Under the new procedures, bureaus and offices are encouraged to undertake greater responsibility for their own development programs; to hire their own development specialists, in collaboration with the Development Office; and to report on their activities to the Development Office, which office will continue to handle projects costing over $100,000, those of a pan-Institutional nature, and those on behalf of bureaus and offices not building their own development staff.

The Secretary alluded briefly to the plans under development for an exhibition on the Information Age at the National Museum of American History.  As reported widely in the press, the Smithsonian was recently the recipient of a $1 million challenge grant from IBM for this purpose.  In the wake of that contribution the Secretary has
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