WASHINGTON—NAFCU has written to NCUA calling for increased transparency and scrutiny of the agency’s Operating Fund.
The NCUA Operating Funds covers costs related to the administration and service of functions related to overseeing federal credit union system. Its primary source of revenue comes is the annual operating fee charged to federal credit unions. The Operating Fund is also reimbursed by the NCUA Share Insurance Fund, specifically for insurance-related expenses, better known as the “overhead transfer rate.”
“In recent years, the cash balance of the Operating Fund has risen dramatically,” wrote NAFCU President and CEO Dan Berger. “In general, the balance follows a seasonal pattern of peaking each April with the collection of the federal credit union operating fee and gradually declining in the months that follow before being replenished with the following year’s operating fee.”
More Than Doubled
While the cash balance was consistently below three months of budgeted expenses over the past few years, it has more than doubled to roughly 5.5 months—or an increase of $70 million—of budgeted expenses, NAFCU noted.
“Even when the cash balance was at its lowest point of the current cycle in March 2021, it was still above its average level prior to 2018,” stated Berger. “It should be noted that one month of budgeted expenses is itself a growing dollar amount.”
While NAFCU said it understands the agency requires sufficient funds to operate and pay for agency expenses, it also said it believes greater transparency on the cash needs of the Operating Fund is essential to identify any surpluses that could be directed back to credit unions.
‘Deserve to Know’
“Credit unions deserve to know how their members’ funds are being spent. Furthermore, credit unions are still enduring the stress of recent economic turmoil, and so it is critical that the NCUA explore every option to reduce financial burdens associated with funding agency operations,” concluded Berger.