ALEXANDRIA, Va.–At the NCUA board meeting Thursday, the agency announced a decrease in the overhead transfer rate (OTR).
For 2017, the OTR will be 67.7%, down from the current 73.1%.
The National Association of State Credit Union Supervisors (NASCUS) issued a statement saying it believes that number can be lowered further.
The OTR represents funds “transferred” from the National Credit Union Share Insurance Fund to cover what NCUA says are its costs related to supervising state-chartered credit unions. The OTR and operating fees provide for NCUA’s budget.
During the NCUA board meeting, agency staff said the 540-basis-point reduction in the OTR is the result of the reduction in exam time at state-chartered CUs and the reassignment of 20,000 man-hours to compliance activities. In addition, there has been a stronger alliance with various state agencies that has resulted in fewer hours by NCUA personnel on-site at state charters, the agency said.
Applying the 67.7% OTR to the 2017 NCUA operating budget of $298.2 million means that results in $201.8 million of that amount will be funded by the insurance fund. Two thirds of the total NCUA operating budget is covered by federal credit unions, NCUA said.
According to agency staff, as of June 30, 51.3% of insured shares were held by FCUs.
Staff also said they currently plan to deliver a report to the NCUA board on the OTR by the end of January 2017. Greater transparency around the OTR has been among the efforts led by NCUA Board Member Mark McWatters.
Following the announcement at the NCUA board meeting, NASCUS CEO Lucy Ito said, “We’re pleased, of course, that the overhead transfer rate has been reduced – but, of course, we believe that it must be further lowered. This has never been about a number: it’s about equity and fairness, and most importantly the legal question as to how Congress intended the agency to allocate funding. It’s a very hopeful sign to the state system that the NCUA board is taking a close look at the comments submitted earlier this year on the methodology, and that the agency is looking for fairness and transparency going forward, as both Chairman Metsger and Board Member McWatters said. Our sincere thanks to both of them. NASCUS has been working on this issue for many years, and we await eagerly the staff report in January. We hope to work with the board members following that. Once again, however, we urge the agency to rescind its delegation to staff of setting the OTR; this is something that must rest with the board.”