Even as staff shrinks, NCUA budget proposal up slightly for 2019
The National Credit Union Administration is eyeing a $334.8 million budget for 2019, a 1.1 percent increase over the 2019 funding level approved by the NCUA board in in November 2017 and 4.3 percent above the budget the board approved for 2018.
The $334.8 million represents a total for three separate budgets: the agency’s Operating Budget, Capital Budget and Share Insurance Fund Administrative Budget. Along with that proposed figure, the regulator is projecting a slightly reduced staff for 2019 and 2020 as the result of its reorganization plan, with 10 fewer positions than in 2018.
According to NCUA, since 2017, inflation has “matched or outpaced” the growth of the agency’s budget. While NCUA’s annual Operating Budget is projected to increase 2.1 percent from 2018 to 2019, inflation is forecast to be 2.3 percent, it noted.
“Therefore, in real dollar terms, the NCUA Operating Budget is 0.2 percent lower in 2019 than in 2018 (i.e., 2.1 percent budgetary growth less 2.3 percent inflation). Likewise, the projected 2.7 percent total budget growth between 2019 and 2020 represents an inflation-adjusted increase of only 0.4 percent, based on the assumption that 2020 economic inflation remains constant at 2.3 percent (i.e., 2.7 percent budgetary growth less 2.3 percent inflation),” NCUA said in a statement.
NCUA said the relative size of its budget continues to decline when compared to balance sheets at federally insured credit unions. The agency said this trend “illustrates the greater operating efficiencies NCUA has attained in the last several years” while claiming the agency has ”improved its operating efficiencies more aggressively than other financial industry regulators.”
“NCUA remains committed to a fully transparent and accountable budget process,” said NCUA Board Chairman J. Mark McWatters. “We appreciate thoughtful, specific suggestions from stakeholders on making the most efficient and effective use of the resources credit unions provide. While final decisions always remain with the board, receiving and reviewing public comments is an important part of our process.”
With a proposed 2019 Operating Budget of $304.4 million, NCUA argues that when adjusted for inflation and decreased staffing, the agency is cutting costs by approximately $624,000 (0.2 percent) compared to 2018.
In nominal dollars, the 2019 budget is an increase of $6.3 million, or 2.1 percent, over 2018 ($298.1 million, as approved by the board). The Operating Budget estimate for 2020 is $316.2 million and reflects no change to authorized positions.
While the agency’s reorganization plan eliminated 15 positions in regional offices, NCUA’s current budget proposes five new positions in various parts of the agency, resulting in a 1 percent increase ($2.1 million) in pay and benefits for 2019 – a total of $222.8 million. NCUA said this increase supports the merit and locality pay adjustments required by the agency’s current collective bargaining agreement, new positions, anticipated staff promotions, position changes, and increased costs for other mandatory employer contributions such as health insurance and retirement contributions. The 2020 pay and benefits budget is estimated at $233.6 million, which NCUA said reflects increases associated with merit and locality pay inflation, the full cost of new positions added in 2019, and an increase in required retirement fund payments to the Office of Personnel Management.
NCUA is also estimating a $326,000 (1 percent) increase to its travel budget for 2019, for a total of $26.8 million. The regulator said it has “constrained” the growth of travel costs by continuing to expand offsite examination work and use technology-driven training. Government-wide per diem rates published by the General Services Administration are expected to increase by almost 8 percent in 2019, which NCUA said accounts for a “significant share” of the travel budget’s growth.
Other highlights of the 2019-2020 budget proposals include:
- A 5 percent ($445,000) decrease in rent, communications and utilities for 2019 due to a reduction in leased office space as the result of consolidating the agency’s regional offices
- A 16 percent ($1.2 million) increase in administrative costs for a total budget of $8.7 million. Increases are attributable to recurring cost items such as shared Federal Financial Institutions Examination Council fees, relocation expenses and software licenses.
- A 9 percent ($3.1 million) increase in the budget for contracted services, bring the total budget to $38.1 million.
- A capital budget of $22 million, about $900,000 more than the 2019 funding level NCUA approved in Nov. 2017 and $6.6 million above the budget the board approved for 2018. The capital budget pays for continued investments in technology and infrastructure projects, as well as several new initiatives that will start in 2019, including replacing the AIRES examination software, which is used by both federal and state examiners in almost all credit union examinations.
- A $900,000 increase to the Share Insurance Fund Administrative Budget over the 2019 funding level the board approved in Nov. 2017 and $300,00 more than what was approved in 2018. NCUA said the increase is due to increased use of consultants and contractor support for credit union stress testing.
Both the Credit Union National Association and the National Association of Federally-Insured Credit Unions praised the agency’s transparency in the budgeting process and said they looked forward to working with the regulator and participating in the comment process.
Public comment on the budget proposal will run until Oct. 26, though the NCUA board will hold a budget hearing on Oct. 17. A vote on the final 2019-2020 budget is expected during the board’s Nov. 15 open meeting.