NCUA Vice Chairman Rick Metsger advocated for a return to a two-year budget in his article in the NCUA Report, released Wednesday.
Of the NCUA's operating budget, Metsger acknowledged criticism that the budget doesn't fully provide visibility into the actual costs of staffing or major projects because they often involve multi-year development and costs.
“(The) NCUA may be able to provide greater transparency and accountability, while giving credit unions greater certainty, by returning to the previous policy of implementing a biennial budget with rolling biannual reviews and adjustments,” Metsger wrote. “This would provide greater transparency on the costs of multi-year initiatives, as well as provide a broader perspective on how the budget aligns with the agency's long-term strategic plan.”
He also wrote that it would be reasonable for the NCUA to invite comments on the overhead transfer rate's application and methodology.
“NASCUS has made it clear that it believes federal credit unions aren't paying their fair share of (the) NCUA's operating budget, even though federal charters currently pay 66.4% of the cost, compared to 33.6% for state charters. Perhaps commenters could persuade us that federal charters need to pay more, or maybe state-chartered credit unions haven't been paying enough and need to up their contribution,” he wrote.
NCUA Board Member J. Mark McWatters said, however, that instead of a two-year budget, the agency should adopt a one-year formal budget, together with an additional four years of fully vetted, detailed budget projections.
“This balanced approach provides five years (instead of merely two years) of budgetary transparency without binding the agency to a set budget for more than one year,” McWatters told CU Times. “It's clear that the agency does not need to adopt a two-year budget for transparency purposes. The Board may retain flexibility regarding future budgets and enhance transparency by releasing four years of budget projections contemporaneously with the adoption of each formal budget.”
The NCUA was not immediately available for comment regarding a possible timeline for returning to a two-year operating budget.
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