ALEXANDRIA, Va.—NCUA Board Chairman Debbie Matz announced Monday that the agency will invite credit unions and the public to comment on the methodologies for calculating both the overhead transfer rate (OTR) and the federal credit union operating fee.
Matz said she intends to call for an NCUA board vote in January 2016 to publish both methodologies as public notices in the Federal Register.
“While these methodologies do not require notice and comment procedures, the Federal Register notices would provide additional measures of transparency by making the process behind the agency’s two primary funding mechanisms more formally available for public comment,” Matz said in a statement. “As always, NCUA will review all comments thoroughly and consider them carefully.”
Publishing the notices in January 2016 would provide “ample time for interested parties to share their views before the NCUA board considers a 2017 budget at an open meeting in November 2016,” continued Matz. “We also plan to publish a Federal Register notice in January 2016 with a multi-year draft NCUA strategic plan, which will drive the agency’s budget process over several years.”
NCUA said it will also invite credit unions and the public to comment on the draft strategic plan.
The OTR, the percentage of funds that the NCUA annually transfers to its operating budget from the National Credit Union Share Insurance Fund to cover expenses of the agency, has come under fire in recent months from the National Association of State Credit Union Supervisors (NASCUS), which has long challenged the OTR. In June, NASCUS released legal analysis that suggested NCUA is violating the law on the OTR.
The legal analysis was prepared by a Washington, D.C. law firm. In a previous statement, Lucy Ito, president and CEO of NASCUS, said the analysis confirms that the OTR substantially affects the dual chartering system of state and federal credit unions.
“As the analysis points out, by shifting a portion of federal credit unions’ share of NCUA expenses to the NCUSIF, the OTR reduces out-of-pocket expenses incurred by federal credit unions,” Ito said. “Our fundamental point is that the resulting reduction in federal credit union operating fees provides a singular advantage to those credit unions, and adversely affects the competitive position of state charters relative to federal charters.”
NCUA in July released a full set of documents around the OTR, which are available on the budget resource center of NCUA’s website.