NCUA requires all credit unions to post monthly financial statements for members.
Similarly NCUA posts monthly financial statements for the three funds it manages. This is an important transparency commitment as all the agency’s revenue is from money provided by credit unions.
Timely publication permits credit unions and the public to follow how the funds are used and overall spending trends.
These monthly updates are a promise the agency made when the 1% NCUSIF underwriting was agreed to by credit unions in 1984. The dominant concern of credit unions with the 1% requirement was, if we keep sending money, how do we know the government won’t just keep spending it? (see pgs 18-19 in NCUA’s 1984 Annual Report)
Timely publication is critical for credit unions which provide the funding, to be able to monitor what was being done with their member’s money.
NCUA’s June 2023 Operating Expense Trends
The following is an overview of one aspect of each fund’s financial report, the trend in operating expenses.
Operating Expenses ($ millions)
Fund YTD June ’22 YTD June ’23 % change
CLF $ 521 $ 1,051 98 %
Op Fund $ 61,145 $ 69,770 14.1%
NCUSIF $101,164 $115,010 13.7%
TOTAL $162,840 $185,131 14.1%
These numbers actually understate several expense or cash outlays. For example the NCUSIF operating expense does not include a YTD $20 million increase in the provision for insurance losses (a non cash outlay).
In the Operating Fund, NCUA has spent $3.4 million in cash outlays for fixed and intangible assets, but only records depreciation expense of $1.8 million.
Depending on which measure of inflation one uses, the 14.1% increase is three to four times (300%-400%) the most recent reported annual price increase.
The Board Action with a Budget Surplus
The staff’s mid year budget update in the July board meeting, projected a $5.1 million surplus by year end.
Here is the recommendation from staff of how to use these funds:
Based on projections for the remainder of the year, staff estimates that spending will be approximately $5.1 million lower than the Board-approved 2023 Operating Budget. Reprogramming a portion of this projected surplus would provide funding for new requirements related to cybersecurity in the Office of the Chief Information Officer (OCIO), support to credit unions provided through the Consumer Access Division in the Office of Credit Union Resources and Expansion (CURE), reasonable accommodations, and the hiring initiative. The estimated cost of these proposals is $737,000 for 2023, which is factored into the estimated budget surplus stated above. Six new full-time positions related to the NCUA’s cybersecurity efforts and CURE are part of the proposed action for Board consideration.
Credit union concerns about the spending of their funds sent to NCUA are as relevant today as in 1984. Staff routinely recommends and the board approves the carryover of funds unspent from prior years, not their return to credit unions. Or, as in this situation, adding new positions and increased expenditure in other areas as described in the memo.
NCUA provides credit unions with the facts. It is up to credit unions to respond. After all, it is the members’ money.