The remaining operating  revenues came from the Smithsonian’s private trust funds. Smithsonian Implemented Most Governance Committee Reforms and One of Four GAO Governance Recommendations, but Work Remains on Others

		The Smithsonian Has Implemented 39 of 42 Governance Committee Reforms, while Work Remains on 3 Reforms

The Smithsonian has implemented 9 reforms recommended by the Board  of Regents’ Governance Committee since May 2008—in addition to the 30  reforms it had implemented as of May 2008—bringing the total number of  reforms implemented to 39 of 42 reforms. The Smithsonian has not  completed implementation of 3 reforms—2 related to improving policies  on broader Smithsonian operations (to develop a contracting policy and  conduct a comprehensive review of financial reporting and internal  controls) and one related to communication and stakeholder relationships  (to enhance the role of the Smithsonian advisory boards). Figure 1  summarizes the status of the Smithsonian’s implementation of the  Governance Committee’s recommended reforms as of May 2008 and  December 1, 2009. As shown in Figure 1, the Smithsonian has implemented 9 Governance  Committee reforms since May 2008, including the following: The  Smithsonian (1) developed a database to identify potential conflicts of  interest; (2) implemented a policy requiring the former Smithsonian  Business Ventures (SBV)—now reorganized and renamed Smithsonian  Enterprises—to follow Smithsonian policies except in the case of a few  documented exceptions; (3) developed an event expense policy covering  regent and other Smithsonian events; (4) completed a review of the  Smithsonian’s internal controls for travel and expense reimbursement and  implemented a number of additional accountability measures for travel  and expense reimbursement; (5) held two regent annual public forums;  (6) developed a Board orientation process; (7) completed a review and  revision of the Board of Regents committees’ charters; (8) completed a  review of appointment procedures to Board of Regents committees, which  included clarifying the process for appointing nonregents to committees  and making this process publicly available on the Smithsonian’s Web site;  and (9) implemented a reform calling for a regular assessment of the  Board, its committees, and its members. We discuss the  Smithsonian’s efforts regarding this reform later in this testimony, when  we discuss the Smithsonian’s actions toward implementing our related  May 2008 recommendation. 2.) Assessment—actions in the event of persistent neglect of duties:  The Smithsonian implemented GAO’s recommendation to evaluate what  actions it can take in the event of persistent neglect of duties by a regent. Structure and composition: The Board of Regents has not fully  implemented GAO’s recommendation to develop and make public its  process for the selection, use, and evaluation of nonregents. The Board of  Regents implemented part of the recommendation by posting on its Web  site the process for selecting nonregent committee members. However,  the Board of Regents did not make a final decision regarding the use of  nonregents on committees when in July 2009, its Governance and  Nominating Committee tabled a proposed bylaw to give nonregent  members of committees the same roles and responsibilities as regents. Communication and stakeholder relationships: The Board of Regents  took steps to improve its relationship with stakeholders, including  advisory boards. However, due to  limitations of the efforts thus far—such as their informal nature and focus  on dissemination of information from the regents rather than two-way  communication—several advisory board chairs with whom we spoke  expressed concern that the Board of Regents still lacked a sufficient  understanding of Smithsonian museums and other entities to govern as  effectively as possible. Assessment—evaluation: The Board of Regents has not yet conducted a  comprehensive evaluation of its reforms but plans to do so in fiscal year  2010. Both the  Smithsonian and the Board of Regents concurred with the findings of that  report. Smithsonian Implemented Most GAO Facilities Recommendations, but Has Not Submitted a Recommended Report to Congress

The Smithsonian has fully implemented four of the five recommendations  we made in our September 2007 report on the Smithsonian’s facilities,  security, and funding challenges. It has not implemented the fifth  recommendation regarding submitting a report to Congress and the Office  of Management and Budget (OMB) on its funding strategy, but plans to do  so. 3.) Furthermore, although the Smithsonian has implemented  our recommendation to more comprehensively analyze funding strategies  to meet the needs of its facilities projects and is planning to launch a  national fundraising campaign, it is unclear what amount of funds will be  raised through such a campaign and, more specifically, what amount will  be dedicated to facilities. In November 2007,  the Board of Regents concurred with a more comprehensively analyzed  and prioritized list of nonfederal funding strategies, which included  establishing a national campaign to raise private sector funds for  Smithsonian programs and facilities, among other strategies.
Why GAO Did This Study

The Smithsonian Institution (Smithsonian) is the world's largest museum complex. Its funding comes from its own private trust fund assets and federal appropriations. The Smithsonian Board of Regents, the Smithsonian's governing body, is responsible for the long-term stewardship of the Smithsonian. In recent years, GAO and others have documented (1) significant governance and accountability breakdowns at the Smithsonian, which could ultimately put funding and the organization's credibility at risk, and (2) the deterioration of the Smithsonian's facilities and the threat this deterioration poses to the Smithsonian's collections. This testimony discusses (1) the Smithsonian's status in implementing governance reforms recommended by its Governance Committee and by GAO in a 2008 report (GAO-08-632)--as discussed in a GAO report being released today (GAO-10-190R)--and (2) the Smithsonian's progress in implementing facilities and funding recommendations GAO made in a 2007 report (GAO-07-1127). The work for this testimony is based on GAO-10-190R and an analysis of documentary and testimonial evidence from Smithsonian officials. GAO is not making recommendations in this testimony and did not make new recommendations in GAO-10-190R . The Smithsonian and the Board of Regents concurred with the findings of GAO-10-190R .

What GAO Found

Since May 2008 the Smithsonian has implemented 9 reforms recommended by the Board of Regents Governance Committee--in addition to the 30 it had implemented prior to May 2008--and 1 of 4 GAO recommendations, but work remains on 3 reforms and 3 recommendations. The 9 Governance Committee reforms implemented since May 2008 include efforts such as revising policies related to travel and expense reimbursement and event expenses, creating a regents' annual public forum, completing a review and revision of Board of Regents committees' charters, and developing an assessment process for the Board of Regents. The Smithsonian has not completed implementation of 3 Governance Committee reforms related to the Smithsonian's contracting policy, a comprehensive review of financial reporting and internal controls, and enhancing the role of advisory boards. Regarding GAO's May 2008 recommendations, the Smithsonian implemented GAO's recommendation to evaluate what actions it can take in the event of persistent neglect of duties by a regent, but has not completed implementation of the following three recommendations: (1) The Board of Regents has not fully implemented GAO's recommendation to develop and make public its process for the selection, use, and evaluation of nonregents. The Board of Regents posted on its Web site the process for selecting nonregent committee members but did not make a final decision regarding a proposed bylaw to give nonregent members of committees the same roles and responsibilities as regents. (2) The Board of Regents took steps to improve its relationship with stakeholders, including advisory boards. However, because of limitations of the efforts thus far--such as the informal nature of the Board of Regents' efforts and their focus on the dissemination of information from the regents rather than two-way communication--several advisory board chairs with whom GAO spoke expressed concern that the Board of Regents still lacked a sufficient understanding of Smithsonian museums and other entities to govern as effectively as possible. (3) The Board of Regents has not yet conducted a comprehensive evaluation of its reforms but plans to do so in fiscal year 2010. The Smithsonian has implemented four of GAO's five 2007 recommendations related to facilities and funding. These include recommendations related to improving the Smithsonian's security communications and the comprehensiveness of its capital plan. Furthermore, the Smithsonian has implemented GAO's recommendation to more comprehensively analyze nonfederal funding options to meet the needs of its facilities projects. The Smithsonian is planning to launch a national fund-raising campaign to raise private sector funds for its programs and facilities. It is unclear how much in funds will be raised or dedicated to facilities through such a campaign. The Smithsonian has not implemented GAO's recommendation to submit a report to Congress and the Office of Management and Budget on its funding strategy, but it plans to do so as part of its national fund-raising campaign.