news.cuna.org/articles/NCUA_budget_up_by_42_percent_for_2015,_McWatters_votes_against_it

NCUA budget up by 4.2% for 2015, McWatters votes against it

November 20, 2014

ALEXANDRIA, Va. (11/21/14)--Two distinct opinions on the National Credit Union Administration's budget emerged at the agency's Thursday's open board meeting.

NCUA Chair Debbie Matz and Vice Chair Rick Metsger said they believe the budget approved by the agency is sufficient to provide the agency with the resources it needs to carry out its mission, while board member J. Mark McWatters said the agency should remain more mindful of spending credit unions' money, examine the necessity of all expenditures and make the process more transparent.

The agency's budget amount is $279.5 million, up $11.187 million (4.2%) from the previous year. While NCUA Chief Financial Officer Mary Ann Woodson said this was the lowest increase in eight years, the Credit Union National Association remains concerned that this is the eighth consecutive year the budget has increased.

Click to view larger imageNCUA board member J. Mark McWatters reads a statement with concerns about the agency's 2015 budget, as NCUA Chair Debbie Matz listens. (CUNA Photo)

"The Credit Union National Association remains very concerned that the National Credit Union Administration board has increased its budget yet again. Rather than reducing expenditures, the agency has continued to bolster its budget for eight straight years," said CUNA President/CEO Jim Nussle.

"Based on my own experience in building budgets, I know that monitoring and modernizing resources to maximize funds--which credit unions have been doing--are among the most effective methods for containing costs. NCUA is not following a similar path and that's a concern for me and credit unions. CUNA will continue pressing the agency to be more efficient with credit unions' funds," he said.

Employee pay and benefits rose by 3.7% million for 2015, which made up the bulk of the increase from 2014. Travel expenses also increased by 2.7%, contracting services increased by 8.5%, administrative expenses increased by 6.1%, and rent, communications and utilities increased by 2.8%.

Matz said it was the lowest budget increase in seven years, and that the 2015 budget allows the NCUA to perform its primary functions, adding that cutting the budget is "not an option" due to the nondiscretionary costs facing the agency.

"The only way to materially cut the budget would be to substantially cut staff," she said, adding, "Let me remind you, this agency made the mistake of cutting staff in the years leading up to the Great Recession. To keep costs down, the agency had a smaller exam force, cut back to 18 months between exams, and had fewer office staff analyzing call reports."

Metsger said the lengthy process the budget goes through ensures that the budget contains needed expenditures.

"Staff, and then the board members, review each and every position, each and every line item, each and every request, and have even reviewed each and every significant outside contract," he said. "Nothing is taken for granted. Each position, and each expenditure, must be justified. As the budget goes through its many drafts it generally goes in only one direction: down."

In casting a dissenting vote, McWatters said he was "dismayed" to see the increase in the 2015 budget, as well as with certain aspects of the budgetary process.

"I cannot in good conscience vote to approve the budget," he said. "I also will find it challenging to vote in favor of another NCUA budget unless the transparency of the budget and the budgetary process is materially enhanced and the credit union community and general public are afforded sufficient opportunity to comment on the proposed budget and the overhead transfer rate prior to action by the board."

See related story: McWatters outlines 11 enhancements for NCUA budget transparency.

NCUA November Board Action Bulletin