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minimum fixed income level and a 45% minimum equities level for the total portfolio to be effected as soon as possible. The Committee also confirmed the continuing policy of permitting the managers to invest in foreign currency bonds that are free from any South African connections

Noting the need to sustain a stable level of investment income for the Institution, the Committee discussed the composition and purposes of the endowment funds and their comparative growth since 1978. The Committee approved a recommendation to the Board of Regents that the fiscal year 1989 total return income payout be set at $9.81 per share (versus $9.48 per share for fiscal year 1988). This represents a 3.5% increase, roughly keeping pace with inflation.

[[underlined]] THE SECRETARY'S REPORT [[/underlined]]

Mr. Adams began his oral report on recent developments by announcing that the Smithsonian will be holding its first annual "Garden Party" in honor of Congressional Regent Eddie Boland on June 14 in the Enid A. Haupt Garden, and the Secretary expressed the hope that as many Regents as possible will be able to attend.

The Secretary informed the Regents about the appointment of Mr. Tom McCance as the Director of the Office of Membership and Development and Ms. Alice Burnett as the Coordinator of Institutional Advancement. Both individuals will also serve as Deputy Assistant Secretaries for External Affairs. In discussion the Secretary said that these appointments do not reflect any change in the recent efforts to decentralize certain development functions.

Concluding his remarks, the Secretary alluded to Smithsonian staff views of proposed legislative changes in the application of the unrelated business income tax for charitable and educational organizations.

[[underlined]] FINANCIAL REPORT [[/underlined]]

Mr. Jameson noted that the House and Senate subcommittees are expected to act promptly on the Smithsonian's request to reprogram surplus funds from the Federal Employees Retirement System allocation to cover unfunded costs associated with the January 1988 pay raise. He added that the House appropriations subcommittee has tentatively scheduled markup for May 19 on the Institution's fiscal year 1989 request. In discussion Mr. Jameson pointed out that with support from both the Office of Management and Budget and the Congress there is expected to be an increase of approximately $10 million in the appropriations for the Repair and Restoration account over fiscal years 1988 and 1989.

Proceeds from the Hirshhorn estate have been received and were proposed for the establishment of an endowment exclusively for the Museum's acquisition with the flexibility to invade principal if necessary at some time in the future. Accordingly, it was
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