ALEXANDRIA, Va. — The NCUA board approved a $236.8 millionbudget for the agency next year, a 5.1% increase from 2011. Thespending plan, which the board supported unanimously at its Nov. 17meeting, includes funds for 33 new employees, 26 of which will befor examination-related positions.

The new staff will include people with specialties in lending,capital markets, information systems, supervision and troubledinstitutions. The budget funds 1,259.5 full-time equivalentpositions.

The budget increases spending in all major categories except foradministrative costs. The largest costs are employee pay andbenefits, which represents 72% of the budget, and travel, whichrepresents 11%. The agency expends to spend $170.8 million on wagesand benefits next year, a $7.6 million increase over this year. Theadded expenses include $6.1 million in additional health andretirement benefits for employees covered by the agency's laboragreement with the National Treasury Employees Union. In exchangefor the added benefits, employees agreed to a wage freeze.

NCUA Chief Financial Officer Mary Ann Woodson said the travelcosts, which will increase by 11%, are mostly related to the costsinvolved in increased examination activity and the training ofexaminers.

Woodson noted that the agency is projecting that next year'sassessment for the rescue of corporate credit unions will bebetween 8 and 11 basis points. This year's assessment was 25 basispoints.

The assessment for the NCUSIF will be between 0 and 7 basispoints, but the agency hopes that there won't have to be anyassessment. NCUA Chairman Debbie Matz described the budget as “an investment that credit unionsare making to make the system safe and sound.” She added that theincrease “gets us where we need to be” to better regulate a complexand growing industry. Matz said she can't guarantee that therewon't have to be another increase next year.

NAFCU Vice President and General Counsel Carrie Hunt said thatwhile she was pleased that this year's increase was smaller thanlast year's 11% hike, it “is still a significant increase that ispaid for by credit unions, and we will look at the specificsclosely.”

The board also approved increasing the overhead transferrate–what the agency transfers fromthe NCUSIF to the agency to pay for the agency'sinsurance-related operations–to 59.3% from this year's level of58.9%. The board also approved a 4.75% increase in the asset-leveldividing points for natural person federal credit unions to be usedwhen determining the agency's operating fee scale. But the boarddecreased the natural person federal credit union operating feerates by 0.9%.

Woodson also told the board that the NCUSIF's equity ratio was1.32% at the end of October. It had been 1.31% for the threeprevious months. She said that because there are fewer troubledcredit unions, the agency is reducing the NCUSIF's reserve balancefrom $1.2 billion to $871 million, which will result in anincreased equity ratio.

The fund's income was $136.9 million in September and has been$367.6 million this year. When the agency prepared the budget lastyear, during a much more difficult economic climate, the fund wasprojected to lose $465 million during the first nine months of2011.

There have been 13 credit union failures this year, comparedwith 28 for all of 2010.

At the end of October, 3.89% of insured shares were in CAMEL 4and 5 credit unions, compared with 3.88% at the end of Septemberand 5.13% at the end of last year.

As of October 31, 15.87% of insured shares were in CAMEL 3credit unions, compared with 16.59% at the end of August and 18.26%at the end of last year. The board also approved the application byIndianapolis-based Finance Center FCU to expand its communitycharter. It currently serves Marion County, Ind., and as aresult of the change will be able to serve the entireIndianapolis-Carmel metropolitan statistical area. The credit unionhas assets of $390 million.

The board also approved a final rule that clarifies thatremittance transfers are permissible financial services for federalcredit unions. The rule complies with a requirement in last year'sfinancial overhaul bill that provides additional protection forpeople who send money to foreign countries via remittance transferprograms.