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At this time, therefore, the tentative budget for which we are now asking approval, projects a surplus of $1,715,000, just slightly under that of the current year. With the surpluses of FY 1973 and 1974 and this now projected for FY 1975, the balance of our unrestricted funds by June 30, 1975 should have risen to a point where a transfer from current funds into unrestricted endowment funds should be possible. Thus, we have tentatively indicated a $1,000,000 transfer for this purpose in FY 1975; it would be a most welcome addition to our present limited amount of such funds, now totaling $5,800,000. After such a transfer the balance of current unrestricted funds would still total over $4,800,000, compares to a low point of $1,720,000 reached at the end of FY 1971.

[[underline]] PRIVATE RESTRICTED FUNDS [[/underline]]

As also shown in Exhibit B, the Freer Gallery is expected to show a surplus of $26,000 in FY 1974. A balanced budget is also expected for FY 1975, despite a slight drop in Endowment Fund income from $875,000 to $850,000; this results from present lower stock market values and is based on the Total Return formula of 4-1/2% of average market value of the Fund for the past five years.

Total income for other restricted funds supported by endowment income, as determined by this same formula will, however, remain unchanged at $890,000 in FY 1975.

The income for all other restricted funds, coming from gifts and miscellaneous sources, is projected at $3,775,000 for FY 1974, about the same as the previous year. This includes the gift of $1,000,000 from