ALEXANDRIA, Va. — The National Credit Union Administration's board of directors approved a move to cut $1.3 million from its 2015 operating budget Thursday.

The decrease was a result of a reduction of the NCUA's operating fund budget by $2.9 million to a revised budget of $276.5 million. But the regulator's capital budget was increased by $1.6 million to $10.5 million.

A net decrease of more than $1.4 million in employee pay and benefits produced the largest savings, according to the Board Action Bulletin, followed by a reduction in contracted services of $588,000.

"Total reductions will reduce costs by more than $2.9 million, more than offsetting a necessary $1.6 million increase in the capital budget and other time-sensitive expenditures. More than 86 percent of the newly approved expenditures are necessary to keep up with rapidly evolving cybersecurity and technology standards," the Bulletin stated.

NCUA chairman Debbie Matz and Vice-Chair Rick Metsger voted to approve the budget.

"For the sixth straight year, NCUA's mid-year budget review has yielded more than $1 million in savings," Matz said. "The agency began this year with the lowest budget increase in eight years, and approving this reprogrammed budget will drive that still lower. These savings reflect a concentrated effort by every NCUA office to increase efficiencies and reduce costs wherever possible.

As expected, Board member J. Mark McWatters voted against the revised budget.

In a statement released following the meeting, McWatters said he was "dismayed by the increase in the budget, the historic climb in the Overhead Transfer Rate (OTR) over the past several years, and certain aspects of the budgetary process employed by NCUA, including the failure of the agency to submit the OTR methodology for public comment."

"As a Board, we should remain mindful that we are spending other peoples' money," McWatters said. "[T]hat is, the scarce resources of federal and state chartered credit unions and their members. Any allocation of these funds should occur only after thoughtful reflection as to the necessity of the expenditures and whether the costs have been undertaken in the most efficient, effective, transparent, and fully accountable manner."

CUNA President/CEO Jim Nussle said in a statement that his trade group "supports any and all efforts for budget transparency by the agency. Much is needed to make the process work better for credit unions and their members."

And NAFCU President and CEO Dan Berger said his group "continues to urge NCUA to ensure it is making the very best of the dollars credit unions pay — dollars credit unions otherwise would be using to strengthen operations and meet the needs of their members."

"Credit unions are obligated by law to provide these monies, but that does not preclude NCUA from its responsibility to operate in an efficient manner — or to be open about the manner in which the funds provided by credit unions are utilized."

In other matters, the Board voted unanimously to eliminate the 5 percent cap on fixed-asset investments for federal credit unions and unanimously approved a final rule amending the regulation governing capital planning and stress testing for CU with assets of $10 billion or greater.

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