ALEXANDRIA, Va. — NCUA said last week it expects to hold the annual increase in spending to around 3%, which will mean an increase in operating fees assessed federally chartered credit unions.
The proposed $156.9-million budget, still being finalized but presented during NCUA's annual budget preview, would include average 3.5% raises for employees in 2008, around the same as in 2007. But NCUA won't know the final figures until it completes a collective bargaining contract with its examiners union, which represents more than 75% of the agency's employees.
The proposed budget, will require an increase in the operating fees assessed federally chartered credit unions, according to Skiles. He predicted a fee increase of 8% to 12%. But the budget would lower the overhead transfer rate from 53% to 52%, in which NCUA transfers money from the National CU Share Insurance Fund, to pay operating expenses.
The proposed budget also includes seven new positions to address expanding risks, including vast growth in member business lending and mortgage lending and time spent to resolve four major credit unions, according to Len Skiles, executive director of NCUA. The credit unions being resolved are believed to include the three that failed from exposure to Florida land speculation.
The spending plan also includes about $230,000 equip the agency's 750 examiners with NCUA-owned cellphones for the first time.
Skiles said the proposed budget, expected to be voted next month by the NCUA Board, will leave NCUA with its customary 5% cushion of reserves. "It's been my objective to narrow the gap between what we budget and what we spend," he said.
The biggest part of the NCUA budget every year is pay and benefits for the agency's 960 employees. This amounts to 74% of the budget. The 3.5% merit raises for employees, the same being given to all federal employees, will cost an additional $1.9 million next year.
The next biggest increase is for employee travel. Skiles projects NCUA to spend an additional $1.8 million next year, because of increases in travel costs and moving all examiner training back to the agency's Alexandria, Va., headquarters.
Skiles said the number of federally insured credit unions continues at a rate of more than one every business day. He said 255 credit unions have disappeared through merger or liquidation so far this year, and as many as 320 credit unions may disappear by year-end.
Despite this consolidation, Skiles said the NCUA workload continues to grow because of the increasing size of credit unions and the growing number of regulatory requirements. "The regulatory issues really have not subsided," he said. "If anything, they're probably increasing. You have issues (Bank Secrecy Act) issues; fair lending, and (Home Mortgage Disclosure Act)." He also cited fast growth in real estate and member business lending for the heavy examiner workload.
NCUA has kept its spending increases to a minimum for the past five years, an average of just 1.7% a year, since 2001. This followed several years of double-digit increases as the agency moved to pay its management staff comparable salaries to the banking regulators at the Fed, FDIC and Comptroller of the Currency.
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