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Figure 1 illustrates the principal components of the losses in purchasing power the Smithsonian has sustained over the last five years.  More than half the loss represents inflation; the Institution has experienced inflation over the last several years without any additional increments to its operating budget to cover that inflation.  (Mrs. Suttenfield noted that inflation is calculated using the implicit price deflator for the gross national product that is applied to government expenditures and takes into account special rates of inflation for research, library, and other specific activities; she suggested that it would probably be worth developing an Institution-specific inflation factor.)  Another major portion represents additional costs of the new Federal Employees Retirement System that was enacted several years ago; the Institution received appropriations to cover a portion of that cost, but unfortunately the appropriation has not matched the actual cost experience.  Some of the loss is also attributable to a Gramm Rudman reduction a couple of years ago -- a permanent across-the-board reduction to the Smithsonian's operating budget.  And the remainder results from selected other reductions that have been applied to the Institution's appropriation over the last several years.

In putting together the fiscal year 1993 budget request there was strong internal consensus that the Smithsonian should give top priority to restoring its lost purchasing power as well as applying funds to sustain current programs.  The illustration below, figure 2, shows the incremental funding that is being requested of the Office of Management and Budget (OMB).  It will be seen that the Smithsonian requested the major portions of its budget to sustain current programs: close to $22-million in lost purchasing power, another $20 million approximately for that category of costs known as "uncontrollables" (that is, mandatory pay raises, rent increases, utility