NCUA Budget Increase Below Inflation; Operating Fees, OTR Down
ALEXANDRIA, Va. -- NCUA approved a 0.81% budget increase last week for 2007, but planned ahead for a larger increase in 2008, while knocking down federal credit unions' operating fees and the overhead transfer rate from the NCUSIF.
The approved $152,016,840 budget for 2007 represents a $1.2 million increase over the 2006 budget, or just 0.81%. The agency plans to maintain staffing, measured in full-time equivalents at 958. NCUA's budget contains an average 3.1% merit increase, impacting the budget by $2.6 million. Employee pay and benefits account for approximately 75% of the agency's budget.
Looking ahead to 2008, the agency is anticipating a budget of $157,678,517.
The NCUA Board also unanimously approved a 53.3% overhead transfer rate--the portion of the budget covered by the NCUSIF for insurance related oversight purposes. This is down from the 2006 rate of 57%. NCUA Loss/Risk Analysis Officer Cherie Freed explained that this was due to the fact that while the cost of insurance-related work at the agency increased, compliance-related efforts went up more. The OTR is based on a formula that takes into account examiner time surveys of the portion of their time spent on insurance versus non-insurance related work, as well as the work done by state regulators.
Based on the budget and subtracting out the OTR and a few smaller items, NCUA determined that a reduction in federal credit unions' operating fees of 1.54% was called for in addition to increasing the dividing points for the various asset tiers for insurance assessments by 3.25%, the estimated asset growth for federally insured credit unions.
Allowances will be considered for 85 federal credit unions in the Gulf Coast region still impacted by FEMA assistance funds and private insurance company payments following hurricanes Katrina and Rita last year.
Operating fees are due to the agency no later than April 16, 2007.
The NCUA Board unanimously approved the 2007 Annual Performance Budget, which provides "near-term, agency-wide direction" through strategic goals and objectives. Goal No. 1 is maintaining a safe, sound and healthy credit union system.
The NCUA Board also approved the new official insurance signage in line with the Federal Deposit Insurance Reform Act, signed into law earlier this year.
NCUA said it kept the overall appearance of the sign basically the same for continuity and member confidence. However, the language was updated to acknowledge the possibility of insurance coverage beyond $100,000 under the new law; the FDIRA allows for $250,000 coverage for certain retirement accounts, essentially IRAs and Keoghs, to be indexed by NCUA and the FDIC to inflation, and the basic $100,000 to be indexed to inflation beginning in 2011.
"Your savings federally insured to at least $100,000 and backed by the full faith and credit of the United States Government," the amended portion reads.
Federally insured credit unions will have up to six months to replace the signage at stations or windows where the credit union normally receives insured funds or deposits and all of its branches and Web sites. FICUs have up to one year to replace marketing materials to exhaust existing supplies purchased in bulk. A statutory requirement calls for a $100 per day penalty for non-compliance.
The agency also clarified that the color scheme of the signage does not matter, unlike FDIC's rule that requires a gold background with black lettering. NCUA was footing the bill for an initial supply of new signs in the standard blue that were due to be sent out upon finalization of the regulation. --email@example.com