But board Chairman J. Mark McWatters bristled at the notion that the agency's budget should be cut simply because the number of credit unions is decreasing each year.

"The remaining credit unions are larger" and more complex, he said, adding that credit unions are offering more complicated services to members than they have in the past.

He added that the agency must keep pace with changes in the credit union industry. "And that costs money," he said.

"The industry needs a strong NCUA, so I am not suggesting the budget be arbitrarily slashed," Kucey said. "What I am suggesting though is that there be an ongoing, agency-wide commitment to eliminating duplicity and creating an efficient budget that can be maintained long-term without relying on annual increases."

She said extending the exam cycles for credit unions could lead to additional budget savings. And she questioned the cost of an agency proposal to extend its authority to third-party vendors.

During recent testimony on Capitol Hill, McWatters asked Congress to grant the agency that authority.

CUNA Vice President of Research and Policy Analysis Mike Schenk told the board that the trade group believes that the agency budget is headed in the right direction.

"While we still have critical concerns, our analysis of the Budget Justification and related documents makes it clear that NCUA is headed in the right direction with consolidating operations and greater efficiencies which require fewer staffing resources," Schenk said. "We have long advocated for and supported NCUA in taking these actions."

He asked the board to try to cut the agency's Normal Operating Level from 1.39% to 1.3% as soon as possible.

The discussion came as the board held a public hearing on its 2019-2020 budget. McWatters said that the agency under his chairmanship and the chairmanship of board member Rick Metsger had reinstituted open hearings on the budget.

He said that the regulatory overhaul bill enacted during this Congress included a requirement that the agency continue to hold hearings on the budget.

Under the proposal, the, the agency's budget would increase 4.3%, to $334.8 million budget for 2019.

The budget proposal calls for a $6.3 million increase for the agency's operating budget, which amounted to $298.1 million this year. The operating budget estimate for 2020 is $316.2 million.

Based on the Overhead Transfer Rate methodology, the overall increase for the operating fee is 2.2% in 2019, compared with 2018. The Operating Fee will be assessed to federal credit unions based on estimated year-end assets.

The agency's personnel level will drop by 10 positions, the result of the agency's reorganization plan. The reorganization plan resulted in the elimination of 15 positions, but the agency is proposing five new positions.

The Share Insurance Fund's administrative budget would increase $300,000 above the 2018 level. The agency said that the increase is primarily for the increased use of consultants and contractor support for credit union stress testing.

In his testimony, NASCUS Vice President of Communications Shelton Roulhac commended the board for its "principled" review of the agency's Overhead Transfer Rate, adding that if the budget is adopted, it will mark the third year in a row that the OTR is decreased.