NCUA Approves 12 Percent Increase for 2011 Operating Budget, Higher OTR and Estimates 2011 Premiums

Nov. 18, 2010 — The National Credit Union Administration (NCUA) Board approved its fiscal year 2011 budget during its monthly November meeting.

The NCUA Board approved a budget of $225,403,988 equating to an increase of 12 percent over the 2010 budget.

The budget increase includes 78 new positions, 60 of which will be new examiner hires. The Overhead Transfer Rate (OTR) increased from 57.2 percent in 2010 to 58.9 percent for 2011. The federal credit union operating fee decreased 2.86 percent.

Regarding the OTR, NCUA commissioned a study of the OTR methodology earlier this year from Pricewaterhousecoopers (PwC). NCUA staff commented during the board meeting that the PwC's draft report from the study indicated that the OTR methodology was "equitable and revealed no material weaknesses." NASCUS provided comments to PwC during their study of the OTR.

The OTR survey data for the 2011 budget revealed that examiners reported spending 67.0 percent of their examination and supervision time on insurance related activities compared to 61.3 percent in 2010. The 2011 workload budget for federal examination and supervision increased by over 65,000 hours; the state workload increased over 38,000 hours.

The NCUA Board also announced that credit unions should budget for a range of 20-35 basis points for 2011 assessments and premiums. NCUA estimated that the Temporary Corporate Stabilization Fund assessment will likely land in the range of 20-25 basis points and that the insurance fund premium would likely target between zero and 10 basis points. NCUA staff indicated that the insurance fund premium is impacted by the performance of higher CAMEL code credit unions and the costs of possible credit union failures, two factors difficult to predict.

As required by the Dodd-Frank Act, the NCUA is establishing an Office of Minority and Women Affairs, and six of the new full time equivalents (FTE) will staff that office.

To read more about the NCUA 2011 budget, follow this link.