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

It was reported that the Institution received and unqualified opinion from its independent auditors for its fiscal year 1989 financial statements.  Fiscal year 1989 trust funds finished the year with a considerable surplus due to additional income and unexpended funds, allowing the Institution to build its unrestricted trust fund balance to a prudent level of $13.3 million.  Projections for 1990 are not nearly so rosy, since the original budget was drafted more than a year and a half ago; results toward the end of the last fiscal year and the beginning of the current year suggest considerably lower income projections, by as much as $3 to $4 million below budget.  Procedures were outlined which will gain a more realistic production of income as well as a better understanding of possibilities for cutting back trust fund expenditures by increments of 3% or 7%.  The staff agreed to bring to the next meeting of the Board a plan for finishing out the year with a balanced budget.

Similar measures are being implemented for the fiscal year 1990 appropriated funds, out of which the Institution has been forced to absorb the effects of Gramm-Rudman-Hollings, water and sewer payments to the District government, and the cost of pay increases.  For example, it will not be possible to support summer evening visiting hours this year, which would cost approximately $500,000; efforts are under way to find corporate support.  For fiscal year 1991 the Office of Management and Budget provided an increase of approximately $40 million, or 15%, for a total in all accounts of about $307 million.  That budget will allow for operating and construction costs for the National Museum of the American Indian, for the repatriation of skeletal materials, for global diversity, for construction of the floating laboratory at the Tropical Research Institute, and for selected administrative enhancements.  That allowance does not provide for the renovation of the old General Post Office building or general infrastructure needs.  Because of the tightness in the current and future Federal appropriations, organization units are being requested to outline plans by which they can save 3% to 7%.

The following motions were suggested and approved:

VOTED that the Board of Regents authorizes the Secretary to establish, as part of the Institution's Endowment funds, a quasi-unrestricted fund to be known as the Dorothy B. Koteen Fund and to authorize the transfer of the unrestricted monies identified for this purpose.

VOTED that the Board of Regents authorizes the Secretary to establish, as part of the Institution's Endowment funds, a true unrestricted fund to be known as the Gilbert B. and Betty J. Morgan Memorial Fund and to authorize the transfer of the unrestricted monies identified for this purpose.
VOTED that the Board of Regents authorizes the Secretary to establish, as part of the Institution's Endowment funds, a true restricted fund to be known as the Mellon Publication Endowment Fund and to authorize the transfer of the restricted monies.

Transcription Notes:
Page 6 and Page 23 are duplicates. Page 5 was transcribed and then pasted into page 23.

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