BIRMINGHAM, Ala.—Credit union feedback following Wednesday’s NCUA budget briefing should lean more toward the positive than in the past, even as the agency has proposed a record budget figure, predicts one former NCUA chairman.
Dennis Dollar, who in the early 2000s instituted budget briefings at the agency, believes NCUA’s enhanced budget discipline and greater transparency are very positive steps.
“After an almost 75% increase in the agency’s budget since 2009 that has raised a lot of eyebrows in credit union land, it is only fair that we now commend NCUA Chairman Mark McWatters and Board Member Rick Metsger for the most recent proposed NCUA budget for 2018 and 2019,” said the Dollar Associates’ principal. “In addition, it is great to see Chairman McWatters continue with public budget briefings that were reinstituted last October by former Chairman Metsger during his brief chairmanship.”
With the enhanced discipline being shown in both the budget and the agency staffing model, most comments will likely be much more positive during, and following, the October 18 budget briefing than they have been in recent years, predicts Dollar.
'Reasonable' Increase
The previous budget for 2018, as outlined last year in the NCUA two-year budget projection cycle, had a $14-million increase projected. But this version calls for only a $6.1-million increase. The total 2018 budget is proposed to be $298.2 million—a 2.1% increase over the 2017 budget.
Dennis Dollar
“That is a reasonable increase,” Dollar said.
Because of the impact of personnel costs on any budget, what is significant is that the 2018 NCUA budget calls for a reduction of the FTE staffing level to 1,188, pointed out Dollar.
“This is a net decrease of 42 FTEs, the largest decrease since the Dollar administration years of 2001-2004,” said the former NCUA chairman. “With the diminishing number of credit unions, the need for staffing discipline is quite overdue.”
By contrast, the FDIC has lowered its total personnel by 25% since 2009 because of the diminishing number of banks—even as NCUA had increased personnel by over 30% since 2009 despite the number of credit unions falling at a rate of one per business day since that time, noted Dollar.
“The current number of credit unions stands at approximately 5,700, a far cry from the 12,500 when I went to NCUA in 1997. Yet the agency budget has increased from crossing the $100-million threshold during my second year on the NCUA board to now nearing the $300-million mark,” Dollar said.
Tough Critics
Dollar acknowledged that he knows “first-hand” that credit unions commend regulators “only begrudgingly.”
“But I feel kudos are deserved for Chairman McWatters and Board Member Metsger in displaying this improved budget discipline,” he said. “Their actions in facing the realistic fact that fewer personnel are required in regulating and supervising a diminishing number of credit unions is good stewardship of the agency’s funds which come, as we all know, from the stakeholder institutions.”
The projected 2019 budget, also to be discussed at the budget briefing, will increase the overall agency budget to $302.8 million.
“Even though it will be the agency’s first $300-million budget in its history, that will—if it holds when next year’s budget process rolls around at NCUA—represent only a $4.6-million (1.5%) increase over 2018,” said Dollar. “The budget numbers seem to be headed in the right direction, based upon the reduction in the number of regulated institutions. The 2019 projection also includes an additional reduction of 15 FTEs on top of the 42 FTE reduction in 2018—primarily from the closing of the Atlanta regional office and the moving from five to four NCUA regional operations centers—Albany, Alexandria, Austin and Tempe.”