ALEXANDRIA, Va.-In what was billed as an historic event, NCUA held its first ever open budget forum November 1, permitting credit union and trade association input into the budget process for the first time. The credit union community was also invited to submit written testimony through November 7. The agency anticipates making its final budget decision at the November 15 NCUA Board meeting. "Today we have heard the most extensive public briefing on the NCUA budget in the history of our agency," NCUA Chairman Dennis Dollar said. "Details and specifics never before presented in a public forum have been presented. We have not shied away from the difficult issues, nor should we have." Specifics are what the NCUA Board got. One of the loudest voices speaking out against the overhead transfer rate has been Boeing Employees Credit Union, which commissioned its own study of the overhead transfer rate. The overhead transfer rate-the amount of money transferred to the NCUA budget from the share insurance fund to cover insurance related costs-strongly impacts how much of the budget will be born by federal vs. state chartered credit unions. "I'm not really sure what we got," BECU CEO Gary Oakland said of the NCUA-commissioned overhead transfer study from Deloitte and Touche. Basically, he said, the accounting firm double-checked the agency's math. While Oakland clarified that he did not advocate the complete elimination of the overhead transfer rate, he said the NCUA needs greater accountability and this budget hearing was "a great first step, but only a first step." NASCUS, whose state chartered credit union supervisory members do not pay into the agency's operating fee, commented not only on the overhead transfer rate, but also on the NCUA's internal efficiency. At the start of her testimony, NASCUS Chair-elect Jerrie Lattimore gave the NCUA Board members two numbers to remember: 38 and 35. "We do not question that you have authority to exercise a transfer but we do believe that it does have limitations," she commented. Aside from questioning the level of the overhead transfer rate, Lattimore noted that NCUA had 45 full-time employees in the Office of Examination and Insurance that oversee the federally insured state credit unions, calling it redundant since NCUA-trained state examiners already examine the state chartered credit unions. And the numbers 38 and 35? NCUA has 38 employees in its Office of Corporate Credit Unions when there are only 35 corporate credit unions in existence to regulate. CUNA, who has long railed against the lack of light shed on the agency budget process, commended the current board for their willingness to let the "sunshine" in. CUNA Federal Credit Union Subcommittee Chairman Ed Collins noted CUNA's own study of the NCUA's budget, which found its methods to be sound. Collins told the board during his presentation, "We encourage the agency to stay on its current course of trying to hold costs down, which we believe is the single most important action the agency can take to ensure a reasonable operating fee for federal credit unions and an equitable overhead transfer rate." CUNA, which represents both state and federal credit unions, has straddled the line on the setting of the overhead transfer rate. NAFCU, on the other hand, was not interested in discussing the overhead transfer rate in great detail during what was supposed to be a budget meeting. "I hope it's a budget meeting," NAFCU President and CEO Fred Becker said prior to the hearing. "I think a lot of people are trying to turn this into a meeting about the overhead transfer rate." Federal credit unions, while they may miss out on some of the dividend at the end of the year because of a higher overhead transfer rate from the NCUSIF, would benefit by having a lower operating fee assessed. Every group represented commended the agency's willingness to open up and most thanked the board for its money saving measures, under the leadership of Chairman Dollar, including the risk-based examination cycle and Reg-Flex. Becker did point out that NCUA could use technology more to its money-saving advantage. He added, "There seems to be a willingness of the agency to reallocate on its own under Chairman Dollar's leadership." Prior to comments from the credit union community, NCUA Executive Director Len Skiles presented a Power Point exhibit, detailing the agency decisionmaking process in regard to the budget. NCUA's 2002 budget, as it stood before the hearing, totaled $147 million for a 4.6% increase over this year's budget. The more interesting data was that Skiles said the agency anticipates a decrease to $145 million for fiscal year 2003. The majority of the budget increase, approximately 98%, is allotted for pay and benefits adjustments. Skiles also announced that the agency projects a reduction of 33.5 full-time equivalents through attrition, which has been a sticking point between the regulatory agency and its constituents. That accounts for a 3.2% staff reduction, nearly all of Dollar's goal of 4% by 2003. Other significant points include the following: *NCUA's annual budget per insured institution ($13,626) is well below other FIRREA agencies; *Using the current 66.72% transfer rate, actual 2000 operating expenses transferred to the NCUSIF totaled $240 per million dollars in insured deposits, compared to $336 for the FDIC; *In 2001, federal credit unions are estimated to have contributed 70.6% of NCUA's budget while state chartered credit unions contributed 29.4%; and *In 2002, 13 of 27 NCUA departments and regions will have fewer full-time employees than in 2001, with the rest remaining unchanged. [email protected]