Capital Briefs: Fed Approves Operations Budget Increase

The Federal Reserve Board on Tuesday approved a budget of $387.6 million to fund its operations in fiscal years 2000 and 2001, a 4.9% increase from the current biennium.

The increase will mostly fund salaries, which account for nearly three-fourths of the Fed's operating budget. Fed staff members will receive raises of up to 4.4% next year and 4% in 2001, compared with 3.5% in 1999 and 3.8% in 1998. The Fed's operating budget for 2000-01 covers 1,705 positions, a net decrease from 1998-99 of 16 jobs, primarily support positions.

The budget increase also will cover the cost of developing a computer system, the Banking Organization National Desktop, to improve supervision.

The Fed also approved a 19% increase to its capital budget, to $23.8 million. It said the cost of restoring its main building is responsible for most of the increase.

A third budget, the "extraordinary items" budget, will be $7.8 million over the next two fiscal years. The cost of two surveys -- one on consumer finance and one on small-business finance -- makes up 85% of that budget. The remaining $1.2 million will pay for monitoring computer systems after the year-2000 date change.

The cost of extraordinary items was more than twice that amount in the current budget. Preparations for the year-2000 date change are to blame as the Fed set aside $11.2 million to repair or replace computer software. Total extraordinary items cost $18.5 million in the 1998-99 budget. -- Compiled by Katharine Fraser