"Additional staff proposed includes nine new positions as outlined below. This increase is offset by the reduction of five general examiner positions to be eliminated from the regional offices for a net increase of 4.2 FTEs," the board action memorandum said.

The only way to cut the NCUA operating budget would be to cut staff, Chairman Debbie Matz said.

"(The) NCUA cut 71 FTEs between 2001 and 2008, to keep costs down," Matz said. The agency's smaller exam force and longer exam cycle prevented it from identifying problems at insured credit unions before they had to post losses.

Staff compensation and benefits expenses increased 3.7% in the 2015 budget by $7.3 million for a total cost of $201.9 million. Pay and benefits represent 72% of the total budget. Travel increased 2.7% compared to the prior year.

According to the board action memorandum, the agency identified significant budgetary changes including the reallocation of 18 existing regional staff from generalist positions to the NCUA's "priority areas" of capital markets, lending, and information systems.

"Employing specialists rather than generalists adds expertise commensurate with the increasing sophistication of credit union operations, so that NCUA will be better equipped to address these risk areas going forward," the board action memorandum said.

Matz expanded on the topic, addressing criticism that the NCUA should cut staff as the number of credit unions decline.

"Those assets don't disappear, and the remaining credit unions grow larger and more complex," she said. "And, they require more examiners with specific specialties."

The budget proposed adding a total of nine support staff positions in the Office of National Examinations and Supervision, the Office of Chief Economist, Office of Continuity and Security Management and the Office of Consumer Protection.

The budget also accounts for a cybersecurity manager in the Office of Examination and Insurance so the agency can be "better prepared for and promote the awareness of critical risks and related threats."

Board Member Mark McWatters gave a long statement in support of reinstating the budget hearing process next year. He also requested specific suggestions from credit unions regarding the budget process and methodology. McWatters spoke to CU Times after the board meeting.

CU Times will post more information on the budget and board meeting throughout the day and in our Nov. 26 print issue.