The National Credit Union Administration Board held a special briefing Wednesday to give industry stakeholders an opportunity to sound off on the agency’s proposed budget for 2018, which calls for yet another slight increase for the 10th year in a row.

Those who testified during the briefing were quick to thank the regulator for giving them the opportunity to speak out on the issue – something that was denied them for seven years until then-Chairman Rick Metsger brought back public budget briefings last year. Current Chairman J. Mark McWatters, who had been calling for since joining the board more than two years ago, has continued the practice.

But participants were just as quick to call attention to some concerns with the proposed $321 million budget, up 0.9 percent from 2017.

The new budget includes a reduction in 42 full-time positions. Yet pay and benefits will increase $6.3 million or 2.9 percent to $220.8 million. NCUA will continue to have 1,118 full-time employees on its payroll.

The budget also includes a significant decline in charges to the National Credit Union Share Insurance Fund. Direct charges to the insurance fund are expected to total $7.4 million in 2018, down from $10.1 million in the current year.

“The decline is primarily due to a reduction in contractor support for credit union stress testing,” according to a document on the budget released by NCUA prior to the briefing. “Direct charges within the budget include administration of the NCUA Guaranteed Notes program, state examiner and laptop leases, as wells as financial audit support.”

The agency also is planning to close two regional offices in Atlanta and Albany, N.Y., which will reduce expenses.

A statement from the Credit Union National Association indicated that the trade agency believes NCUA’s spending levels are too high, but it is clear the regulator is “trying to increase efficiency while improving operations and interactions with credit unions,” according to CUNA Economist Mike Schenk.

“As a consequence, we think the proposed investments in capital, systems and technology will lead to further improvement in efficiency, and lead to lower staffing levels and additional relief for thousands of credit unions under NCUA’s supervision,” he told McWatters and Metsger.

However, Schenk noted that salary increases for examiners and supervisors are rising faster than for credit union employees. But he welcomed NCUA’s decision to reduce its supervisory regions from five to three, calling it “commendable” since it reduces the need for office space. He also urged the NCUA board to move ahead with a proposal to redesign examinations with remote components – something members of the credit union community have been requesting for years.

“Our hope is NCUA staff will be able to perform thorough examinations with minimum staff present in credit unions,” Schenk said.

Beverly Zook, president and chief executive of Money One Federal Credit Union, speaking on behalf of the National Association of Federally-Insured Credit Unions, noted that NCUA has proposed an increase its budget for the tenth year in row.

“The industry appreciates that NCUA has begun to slow the rate of year-over year budget growth,” she said, as the proposed 2018 increase to the agency’s operating fund is only 2.1 percent, but then went on to note that the number of institutions the regulator oversees has declined by 25 percent over the past decade. “Credit unions are looking forward to a time where we see a decrease in the budget,” Zook told the board.

However, NAFCU “strongly supports NCUA’s reform plan, which should improve NCUA’s efficiency, effectiveness and focus on its core mission responsibilities,” she testified.

Paul Gentile, president and chief executive of the Cooperative Credit Union Association, a state league which serves CUs in Delaware, Massachusetts, New Hampshire and Rhode Island, noted that the implementation of the 18-month exam schedule for highly rated credit unions has allowed the agency to make staffing cuts.

“Credit unions should get the benefit of economies of scale,” Gentile said, adding that the “number of examiners should not go up as a credit union’s assets increase.”

Lucy Ito, president and chief executive of the National Association of State Credit Union Supervisors, brought up a perennial concern among state charters: the overhead transfer rate.

Ito said that at its height, the OTR comprised 73 percent of NCUA’s operating expenses in 2016 and then was reduced to 67 percent this year with a 24 to 25 percent increase in the federal credit union operating fee.

If NCUA goes forward with its OTR proposal, the rate could be reduced to around 60 percent in 2018 and the federal credit union operating fee would go up by an estimated 24 percent.

While that represents to significant increases to the operating fee, Ito noted, this comes after eight years during which federally chartered CUs enjoyed a 30 percent decrease in the operating fee. Indeed, she said, if you look back to 2008, the increase is actually 18 percent over the 10-year period.

Ito said that if the OTR is set at 60 percent as NCUA currently is suggesting, the proposal is definitely a significant step in the right direction.

“I do want to thank you again for resurrecting the public budget briefing process, and for taking a close look at the OTR methodology and coming up with something that is more transparent and more understandable and more equitable,” Ito told the board members.