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Smithsonian Investigating Its Sales Division's Salaries

In a few cases, the Smithsonian requires some of the 40 percent to be used to pay off debts the individual museums have accumulated. For example, the Natural History museum owes money for its West Court project, which includes the Imax theater, the African Voices exhibition and the Gem Hall renovation.

After these deductions, the museums can spend the money on their priority projects.

This year, according to documents provided to The Washington Post, officials at the National Museum of the American Indian and the National Museum of Natural History questioned their share of the profits. They thought they were shortchanged, according to the documents.

"Most of the museums are well past frustrated regarding communication of financial information," said one official in an e-mail.

Two employees, who spoke on the condition they not be identified, said that the SBV executives had added new expenses this year. That increased overhead cut into the money going back to the museums. In fiscal 2005, a new accounting system showed museum directors that they were being charged for administrative costs, including a share of the rent for the accounting office in Herndon and a percentage of the salaries of the SBV staff. That was not itemized before. A Smithsonian spokesperson said the overhead costs were always taken out but never shown.

Some employees have raised questions about whether money has been taken from the profits to pay severance packages for dismissed employees. All of the salaries and other compensation for SBV employees comes from the Smithsonian's private funds.

Earlier this year, Cristian Samper, the director of Natural History, received the proposed numbers for his museum's allocations and was unhappy. Beer said one of the problems was a "glitch" in the new automated accounting system. In an e-mail response, Semper told Beer: "Needless to say, we are shocked, disappointed and discouraged."

In an interview, Semper said, "What we are trying to understand is what the revenue shares are for the year, why some of the preliminary numbers showed a decline. I still don't have an answer, but we have received additional figures." Semper said SBV generally did a good job with the operations but, because of the success of the museum's stores, "the numbers for the first quarter made absolutely no sense."

At the American Indian museum, the disappointing results attributed to the Chesapeake Store, the high-end gift shop, alarmed some of the officials. The store grossed $1.6 million in its first full year and received $151, 064 in revenue sharing, according to the document.

Overall, two stores at the Indian museum grossed $8.6 million in the year after the museum opened in September 2004. The museum received $1.3 million in revenue sharing, but had expected $170,000 more, according to the correspondence.

The documents suggest that the new way of calculating expenses hurt the bottom line for the shops at American History. At the end of fiscal 2004, the stores brought in $7.4 million with a net income back to the Smithsonian of $2.9 million. The actual income in 2005 was more -- $7.9 million -- but the net income was less -- $1.5 million, according to a SBV document.

"It is bad accounting with a bloated overhead and it affects what goes to the museum," said an employee.

Linda St. Thomas, director of media relations for the Smithsonian, said SBV added an automated system that now follows the details of every operation of each of the 28 stores.

In addition to the staff reduction, the Smithsonian hopes that revenues from its publishing partnership with HarperCollins and a Showtime television production deal will help offset the losses when American History shuts down for renovations.

SBV is in charge of Smithsonian magazine, other publications, gift shops, restaurants, catalogue and online sales, theaters and Smithsonian Journeys, a travel group that at one point had almost 8,000 participants a year.

Before SBV was organized, the retail side of the Smithsonian produced $20 million for the general fund, according to a study on business operations. The study predicted that in five years SBV would return $55 million a year, a level it has not achieved.

After the downturn in business after the 89/11 terrorist attacks, the office laid off 100 employees, reduced hours at some shops, froze wages and hired outsiders to do some jobs. Incentives for executives were canceled in 2002 and 2003, according to officials.

The regents and an SBV board provide oversight for the unit.


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