ALEXANDRIA, Va.-NCUA's second annual public budget briefing drew comments ranging from nothing to mild to fairly critical in follow-up letters. While NASCUS decided not to send a follow-up response to the meeting, NAFCU took the opportunity to criticize the speed of the agency's staffing reductions. CUNA also reemphasized the need for a clear definition of what are insurance-related expenses in determining the overhead transfer rate. In response to NCUA's request for follow-up comments last week relating to the budget briefing, NAFCU told the agency that it is not doing enough to cut costs to the credit unions that fund it. The letter from NAFCU President and CEO Fred Becker pointed out that at the budget briefing NCUA said the regions should be able to "easily" assimilate the work after closing the Region IV office, which he interpreted to mean the agency could be doing more. He wrote, ".it is apparent that in assessing back-office operations, the NCUA Board should be able to undertake further cost-saving measures to eliminate continued and unnecessary redundancy." NAFCU, the self-proclaimed NCUA `budget hawk,' also expressed displeasure in the agency's handling of the full-time equivalent reductions. "Given the agency's budget presentation, however, normal attrition may not be sufficient to reduce the agency's staff to appropriate levels," Becker wrote. "In this vein, NAFCU recommends that NCUA carefully examine and consider the personnel actions taken by the other federal financial institutions regulatory agencies in recent years. Simply stated, if the workload of Region IV can so easily be absorbed and there are further reductions that can be undertaken without impacting safety and soundness-either now or in the foreseeable future-we urge the NCUA Board to do so." "There is no question in my mind that we need to reduce.the regional offices by one," NCUA Executive Director Len Skiles said in an interview following the budget briefing. "I think more [staffing cuts] would have been stretching it for us at the moment." NAFCU also wrote that true openness in the budget process would occur when budget comparisons between the current year and the previous year take into account the cost of the biannual examiners conference, which typically increases the budget, while off year training takes place locally. Skiles said during his budget presentation that the examiners conference typically costs about $2 million, but Becker pointed out that the budget reduction over the previous year was approximately $800,000. While Becker admits that there are still some training costs during years without examiner conferences, he wrote that the $800,000 budget reduction be examined further to determine if there is an actual reduction in spending. "We will admit to you that the years of the examiners conference are more expensive years. In my view, therefore, in saying they're saving $800,000 in actual spending, there is some smoke and mirrors, there continues to be some smoke and mirrors," Becker commented in a later press call. Despite the fact that the groups testifying during NCUA's budget briefing represent different interests, CUNA wrote in its follow up letter, one thing everyone agreed on was that NCUA should define what it considers to be "insurance-related costs" when setting the overhead transfer rate. CUNA noted that South Carolina Credit Union League President John Franklin, who testified on behalf of CUNA as its Examination and Supervision Subcommittee chair, raised the issue. "Its significance was further underscored by the fact that regardless of views on other budget matters, there was a consensus expressed among the presenters that there should be a clearer definition of `insurance-related costs' and greater input from credit union when NCUA sets its overhead transfer rate for 2004 and beyond." Additionally, according to NASCUS Public Relations Specialist Erik Huey, NASCUS decided to let its original testimony stand on its own and not submit a follow up response to NCUA. Boeing Employees Credit Union CEO Gary Oakland and Community Credit Union (Wash.) CEO Don Larsen, on behalf of the Washington Credit Union League, also testified at the briefing, but could not be reached for follow up. [email protected]

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