Newly Approved 2013 NCUA Budget Represents 6.1-Percent Increase from 2012

The National Credit Union Administration (NCUA) board of directors convened its seventh open meeting of 2012 at the agency’s headquarters last week with four items on the agenda, all of which were significant: the NCUA operating budget, National Credit Union Share Insurance Fund (NCUSIF) Overhead Transfer Rate, Federal Credit Union Operating Fee Scale, and a board briefing on the estimated 2013 premium ranges for the NCUSIF and Corporate Stabilization Fund.

Industry hopes were high that the NCUA budget would not increase this year, as budget increases mean that federal credit unions are assessed a greater operating fee. Ultimately, the NCUA board approved a budget that represents a 6.1-percent increase from last year, but most of the proposed increase would fund NCUA employee pay and benefits.

Northwest credit unions have expressed some frustrations over the NCUA budget increases. Most of the frustration is due the hypocrisy of NCUA examiners coming in and urging tighter operational budgets and leaner staffing, while the NCUA proposes to add more than $12 million to fund employee pay and benefits a 7.5 percent increase over last year. The pay raise is dependent on Congress approving President Obama’s proposed federal increase to the general schedule. In past years Congress has exercised restraint and not rubberstamped the President’s budget. Should Congress vote to hold federal salaries flat, the NCUA will review the request related to the pay raise at the mid-session budget review during the July board meeting.

“If Congress does not increase the general schedule pay scale, the NCUA budget would increase by less than 1 percent,” said John Trull, the director of regulatory advocacy for the Northwest Credit Union Association (NWCUA). “It was very encouraging to see that the NCUA was able to cut $200,000 from rent, communications and utilities. This is a trend we would like to see continued.”

If the budget does not change, federal credit unions can expect an operating fee rate increase of 0.24 percent.

The board briefing on the NCUSIF premiums and Stabilization Fund, meanwhile, were generally positive.

“The data we see reflect the improving health and stability of the credit union industry,” NCUA Board Chairman Debbie Matz said. “While the demands on the Share Insurance Fund in 2013 will be determined by many economic factors and by possible unforeseeable losses, the most likely scenario we project would result in an equity ratio for the Share Insurance Fund at just under 1.30 percent of insured shares by the end of next year. That would mean there would be no need for a premium.”

For the Stabilization Fund, the NCUA has now retired all $5.5 billion in medium-term notes representing obligations of failed corporate credit unions. The primary remaining obligation of the Stabilization Fund is the outstanding $5.1 billion in U.S. Treasury borrowings. The projected 2013 Stabilization Fund assessment will be used to repay between $705 million to $969 million of this outstanding balance.

The NCUA also projects a Stabilization Fund assessment of between 8 and 11 basis points in 2013.

Addditional highlights of the meeting included:

  • A budget of $251.4 million to fund NCUA’s activities in 2013 with no increase in the size of the workforce. The rate of the budget increase is slower than the credit union industry’s asset growth.
  • A 2013 Overhead Transfer Rate of 59.1 percent—virtually unchanged from 2012—to fund operations related to the NCUSIF for 2013; and
  • A 2013 federal credit union Operating Fee scale increase of less than a quarter percent that also exempts all federal credit unions with assets below $1 million.

 

Questions? Contact Director of Regulatory Advocacy John Trull: 503.350.2209, jtrull@nwcua.org.

Posted in Around the NW, Community Impact, Federal, NCUA.