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[[underlined]] Fiscal Year 1989 - Budget (Schedule C) and Projected (Schedule D) [[/underlined]]

[[underlined]]Federal Appropriations [[/underlined]]: Schedule C contains the Federal budget as updated for the January 1989 Regents' meeting to reflect the actual appropriation contained in Public law 100-446 with all required allocations and minor adjustments made to the functional areas. Schedule D has been adjusted to reflect minor reprogrammings.

[[underlined]] Nonappropriated Trust Funds [[/underlined]]: The budget for fiscal year 1989 continues to reflect the Institution's trust fund budget as approved by the Regents at their September 1988 meeting. Changes in the projected figures reflect action taken by the Regents at the January meeting as well as the results of the first quarter review. The second quarter review is currently under way but results are not yet available.

As a result of the first quarter review, the addition to fund balance was projected to drop $760,000 bringing the addition to fund balance for the year into a negative position. This was primarily the result of reduced net income projections for Auxiliary Activities. Decreases totalling $1.2 million were projected for the [[underlined]] Smithsonian [[/underlined]] magazine and Business Management; both Museum Shops and Mail Order had disappointing sales experience in the first quarter. Partially offsetting these decreases were an increase of $350,000 in investment income as a result of higher interest rates and an increase in net income of $130,000 for Smithsonian Press reflecting the excellent customer response to the [[underlined]] Guides to Historic America. [[/underlined]]

Proceeds from the sale of the National Museum of African Art properties have been received. Consequently, there is no longer any need to maintain the $2,000,000 contingency reserve previously established. As discussed with the Regents at the January meeting, these funds have been returned to General Unrestricted Trust Funds. Schedule D incorporates the addition of these funds and provides for their use as follows:

$ 760,000 -  Offset projected drop in fund balance
763,000 - Partially restore the budgeted addition to fund balance
[[underlined]]477,000[[/underlined]] - Increase the Secretary's Program Contingency
$2,000,000 - Total

As a result of this action, the addition to fund balance for the year will not drop but increase from the $367,000 reported in January to $1,100,000, which is $400,000 below the original budgeted amount. The Secretary's Program Contingency would increase from its current level of $167,000 to $644,000; however, subsequent allocations from the contingency for priority projects have totaled $348,000 bringing the balance in the contingency back down to $296,000. Funded projects are listed below:

$223,000 - Accelerated funding of the Office of Membership & Development Operating Plan
25,000 - National Zoological Park Centennial Events
50,000 - Legal fees related to National Museum of the American Indian deliberations
[[underlined]]50,000[[/underlined]] - Afro-American issues study
$348,000 - Total