ALEXANDRIA, Va.–The NCUA board has approved a plan on a 3-0 vote to use the significant travel savings it has seen this year due to the pandemic to make a minor “reprogramming” of its budget.
The board had earlier approved a 2020 budget that included $27.4 million in funds for travel-related costs, but the Office of the CFO estimates there will be at least $18 million in unspent travel expenses in 2020 due to examiners working from home to conduct exams. The agency is also seeing another $300,000 in lower spending on facilities due to lower occupancy.
Board approval was sought to reallocate $4.32 million in COVID-related costs and “opportunities,” including covering certain increases in costs related to information technology to support offsite exams and remote work postures, and to pull forward from the 2021 budget previously planned central office renovations while the NCUA workforce remains largely offsite.
Those central office improvements include reconfiguring the building’s entrances and lobby to meet security and accessibility requirements and the reconfiguration of office space to meet agency needs.
“By accelerating this project, we can forego a year of lease costs in Alexandria, Va., in 2021, reducing the 2021 rental budget by $600,000,” said NCUA CFO Eugene Schied, citing office space the agency leases adjacent to its headquarters. “The $3 million planned for the 2021 capital budget can be eliminated.”
Hood Points to Budget Briefing
Prior to discussing the 2020 budget reprogramming, NCUA Chairman Rodney Hood pointed to NCUA’s recently released draft budget or 2021, which is smaller than the 2020 budget, due in large part to the same travel cost savings.
“This reflects NCUA’s commitment to be a sound prudent steward of the funds we collect from credit unions,” said Hood, noting a public budget briefing is scheduled for Dec. 2. He said additional details can be found at www.ncua.gov.
Harper Looks to 2021
Todd Harper urged the board to think about what lies ahead in 2021, including carrying forward a sizeable budget surplus, and said numerous credit unions will have higher risk profiles next year as a result of the ongoing economic crisis.
“We must engage in a comprehensive discussion at the board level about the priorities for 2021,” said Harper, adding he believes more examiners are going to be needed.
McWatters Points to Earlier Steps
NCUA Board Member J. Mark McWatters said he believes that since the budget reprogramming motion before the board included the allocation of $700,000 for the agency’s virtual examination, it would be worthwhile to offer a brief recap of the agency’s progress with virtual examinations over the past four years.
Among the points made by McWatters:
- In November 2017, three years ago, the NCUA board approved the virtual examinations project and associated resources necessary to research, develop and implement methods to conduct offsite as many aspects of the examination and supervision program as possible.
- In July 2018, the secure file transfer portal (to transfer electronic documents securely) was rolled out to the NCUA staff and the credit union community.
- In January 2019, the NCUA established the Virtual Exam Working Group.
- In March 2020, based upon the success of the virtual examinations initiative, the NCUA was able to mandate a strict offsite policy for all examiners and employees in response to the COVID-19 pandemic.
Foresight Pays Off
“By working together over the past four years with the goal of developing an efficient and effective protocol for conducting virtual examinations, the agency has been able to examine and supervise credit unions remotely during the Covid-19 pandemic while protecting our examiners and other employees and endeavoring to maintain the safety and soundness of the NCUSIF,” said McWatters. “It’s problematic that we would have achieved these results but for the efforts of those who foresaw - several years ago - the benefits of virtual examinations and worked diligently to develop and implement the programs and procedures that are in effect today.”