ALEXANDRIA, Va. — The NCUA board approved a $236.8 million budget for the agency next year, a 5.1% increase from 2011.
The spending plan, which the board supported unanimously at its Nov. 17 meeting, includes funds for 33 new employees, 26 of which will be for examination-related positions. The new staff will include people with specialties in lending, capital markets, information systems, supervision and troubled institutions. The budget funds 1,259.5 full-time equivalent positions.
The budget increases spending in all major categories except for administrative costs. The largest costs are employee pay and benefits, which represents 72% of the budget, and travel, which represents 11%.
The agency expects to spend $170.8 million on wages and benefits next year, a $7.6 million increase over this year. The added expenses include $6.1 million in additional health and retirement benefits for employees covered by the agency’s labor agreement with the National Treasury Employees Union. In exchange for the added benefits, employees agreed to a wage freeze.
NCUA Chief Financial Officer Mary Ann Woodson said the travel costs, which will increase by 11%, are mostly related to the costs involved in increased examination activity and the training of examiners.
Woodson noted that the agency is projecting that next year’s assessment for the rescue of corporate credit unions will be between 8 and 11 basis points. This year’s assessment was 25 basis points. The assessment for the NCUSIF will be between 0 and 7 basis points, but the agency hopes that there won’t have to be any assessment.
NCUA Chairman Debbie Matz described the budget as “an investment that credit unions are making to make the system safe and sound.” She added that the increase “gets us where we need to be” to better regulate a complex and growing industry. Matz said she can’t guarantee that there won’t have to be another increase next year.
NAFCU Vice President and General Counsel Carrie Hunt said that while she was pleased that this year’s increase was smaller than last year’s 12% hike, it “is still a significant increase that is paid for by credit unions, and we will look at the specifics closely.”
The board also approved increasing the overhead transfer rate–what the agency transfers from the NCUSIF to the agency to pay for the agency's insurance-related operations–to 59.3% from this year’s level of 58.9%.
The board also approved a 4.75% increase in the asset-level dividing points for natural person federal credit unions to be used when determining the agency's operating fee scale. But the board decreased the natural person federal credit union operating fee rates by 0.9%.
Woodson told the board that the NCUSIF’s equity ratio was 1.32% at the end of October. It had been 1.31% for the three previous months.
She said that because there are fewer troubled credit unions, the agency is reducing the NCUSIF’s reserve balance from $1.2 billion to $871 million, which will result in an increased 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 last year, during a much more difficult economic climate, the fund was projected to lose $465 million during the first nine months of 2011.
There have been 13 credit union failures this year, compared with 28 for all of 2010.
At the end of October, 3.89% of insured shares were in CAMEL 4 and 5 credit unions, compared with 3.88% at the end of September and 5.13% at the end of last year.
As of October 31, 15.87% of insured shares were in CAMEL 3 credit 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 by Indianapolis-based Finance Center FCU to expand its community charter. It currently serves Marion County, Ind., and as a result of the change will be able to serve the entire Indianapolis-Carmel metropolitan statistical area.