ALEXANDRIA, Va. - The NCUA Board last week approved a 12% rise in agency spending for next year, mostly to hire and train 55 new examiners to deal with troubled credit unions or emerging problems.
"We can't afford to roll the dice and not be able to deal with contingent economic stress," said Len Skiles, executive director of the agency, in presenting the $177.9 million spending package.
The increased spending will raise the average annual operating fees paid by federally chartered credit unions by almost 7%.
The new examiners will facilitate NCUA's plans to have an on-site vist to every one of the 7,800 federally insured credit union every year. While the agency introduced a 12-month exam cycle six years ago, from a practical standpoint, most credit unions are only examined every 14 to 18 months.
Expenses related to the new examiners will cost the agency about $3.4 million next year. "Of paramount importance is the goal of NCUA to address important emerging problems," said Skiles, who referred to growing numbers of troubled credit unions. "This will require NCUA to be proactive, rather than reactive."
The new exam program will aim to examine every federal credit union on a 12-month cycle and every troubled state chartered federally insured CU on a 10-month to 14-month cycle, in coordination with state regulators.
"All economic indicators seem to tell us that 2009 may be more difficult than 2008, and I believe NCUA should be able to find these problems more rapidly than we can now," said NCUA Chairman Michael Fryzel, before voting to approve the exam program.
The spending plan also includes average pay raises of 6.3% for all NCUA personnel, following 5% raises this year. Next year's raises are comprised of 5% merit raises for everyone, as set out in a contract with the agency's examiners' union (all NCUA employees, including supervisors, will get the same raises), and 3% raises for so-called locality pay, which takes into consideration cost-of-living increases in the most expensive markets of the country. While some employees could receive as much as 8% raises, the average will be 6.3%.
The spending plan was reduced by about $3 million and 50 new examiner positions from the one NCUA proposed in an open forum last month, after complaints from CUNA and NAFCU. Fryzel acknowledged the role the public forum had in shaping the final budget.
The spending plan also includes an increase of $3.5 million for employee travel, due to the rise in airfares over the past year; $1.4 million of a three-year $4.2 million plan to buy 1,700 new laptops for examiners; and $2.5 million for the second year of a $5 million upgrade in the agency's financial management system.
