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requested increase of $17.3 million represents simply the cost of doing business based upon current programs and obligations.

Primary emphasis is also given to core responsibilities and functions in this budget request by seeking additional funds both to take care of the Institution's physical assets (both facilities and collections) and to provide the tools and utilities, such as scientific equipment, computers, information systems, and so forth, that are necessary for current program operations.

And, lastly, within the operating budget, the Institution is seeking to provide for several initiatives in areas that represent national imperatives and in which the Smithsonian can make important and distinctive contributions. These initiatives are in the categories of cultural pluralism, global change research, and education.

While management fully recognizes the worsening Federal budget climate, it has a responsibility to place these funding requirements for the Institution's highest priorities in the record with OMB.

At the conclusion of her presentation, Mrs. Suttenfield informed the Regents that the Audit and Review Committee has accepted management's recommendation to hold a new round of competitive bids for the annual audit which is performed by an independent auditing firm. This proposal stemmed from changing expectations on the part of both management and the Audit and Review Committee and is also based upon broader requirements of Federal appropriations. Management will be issuing a request for proposals by late October or early November and, working with the Audit and Review Committee, expects to bring a recommendation to the Board of Regents at its May 1993 meeting.

Mr. Adams added that the need is clear for Institutional down-sizing which has as a fundamental element a reduction in the size of the staff. He