NCUA Officials Defend Budget Increase
While the proposed NCUA budget for 2018 continues the trend of increased spending, credit union trade groups said Wednesday that the agency is taking steps they hope will slow that growth.
“The increase seems to be reasonable,” CUNA Economist Mike Schenk said Wednesday during a hearing on the agency’s budget. He praised the agency for plans to close field offices in Atlanta and Albany, N.Y., but expressed concerns about increased personnel costs.
The proposed 2018 increase of $6.1 million represents a 2.1% increase from 2017.The agency also projects a 2019 budget of $302.8 million, a $4.6 million increase from the proposed 2018 level.
A NAFCU representative said the association remains concerned about the spending growth.
“If approved, the proposed 2018 budget would represent the tenth year in a row that the NCUA has approved a spending increase,” said Beverly Zook, president and CEO of Money One Federal Credit Union in Largo, Maryland
Agency officials defended the increase.
“The 2018–2019 budget proposal is another step in the NCUA’s broader effort to realign its resources to meet the needs of an evolving credit union system in a cost-effective manner, while continuing to protect the safety and soundness of the credit union system and the Share Insurance Fund,” said NCUA Board Chairman J. Mark McWatters.
NCUA CFO Rendell Jones said that the budget reflects a changing environment in the credit union industry.
“NCUA remains committed to ensuring the safety and soundness of the credit union system but realizes that the dynamics of the system are changing to relatively fewer and larger credit union,” he said.
Jones said the budget also continues the agency’s efforts to modernize NCUA’s technology resources.
And it anticipates the closing of the two regional offices.
Jones said that employee compensation and travel continues to represent 83% of the large expense for the agency.
The budget calls for a net reduction of 42 positions.
Zook said that while she is not suggesting that the NCUA arbitrarily cut its budget, “Credit unions are looking forward to a time where credit unions could see a decrease in the budget.”
She said budget savings could be found if the agency extended the 18-month exam cycle to all well-run, low-risk credit unions.
Paul Gentile, President/CEO of the Cooperative Credit Union Association, agreed that extending the 18-month exam cycle would save money. And he suggested that the agency also increase their reliance on state credit union regulators.
He added, “I think there are a lot of things in this budget that credit unions can be happy about.”
NASCUS President/CEO Lucy Ito said that the agency plan demonstrates a sensitivity to the dual roles of the agency.
“The proposed revisions to the [Overhead Transfer Rate] methodology evidence a commitment within NCUA to develop an equitable and understandable basis for allocating the combined expenses of the agency’s dual mission,” she said.