Federal Reserve System Budgets

The Federal Reserve Board of Governors and the Federal Reserve Banks prepare annual budgets as part of their efforts to ensure appropriate stewardship and accountability.1 This section presents information on the 2017 budget performance of the Board and Reserve Banks and on their 2018 budgets, budgeting processes, and trends in expenses and employment. This section also presents information on the costs of new currency.

System Budgets Overview

Tables 1 and 2 summarize the Federal Reserve Board of Governors' and Federal Reserve Banks' 2017 budgeted and actual and 2018 budgeted operating expenses and employment.2

Table 1. Total operating expenses of the Federal Reserve System, net of receipts and claims for reimbursement, 2017-18

Millions of dollars, except as noted

Item 2017 budget 2017 actual Variance
2017 actual to 2017 budget
2018 budget Variance
2018 budget to 2017 actual
Amount Percent Amount Percent
Board 744.6 707.8 -36.7 -4.9 766.7 58.9 8.3
Office of Inspector General 34.3 33.8 -0.4 -1.2 35.9 2.1 6.2
Reserve Banks 1 4,312.4 4,209.0 -103.5 -2.4 4,451.3 242.4 5.8
Currency 726.0 723.3 -2.7 -0.4 861.7 138.5 19.1
Total System operating expenses 2 5,817.3 5,673.9 -143.4 -2.5 6,115.7 441.8 7.8
               
Revenue from priced services 439.4 441.6 2.2 0.5 441.7 0.1 0.0
Claims for reimbursement 3 677.3 698.2 20.9 3.1 668.2 -30.0 -4.3
Other income4 2.5 2.6 0.1 3.7 2.5 -0.1 -3.5
Revenue and claims for reimbursement 5 1,119.2 1,142.4 23.2 2.1 1,112.4 -30.0 -2.6
               
Total System operating expenses, net of revenue and claims for reimbursement 4,698.1 4,531.5 -166.6 -3.5 5,003.3 471.7 10.4

Note: Here and in subsequent tables, components may not sum to totals and may not yield percentages shown because of rounding.

 1. Excludes Reserve Bank capital expenditures as well as assessments by the Board of Governors for costs related to currency and the operations of the Board of Governors, Office of Inspector General, and the Consumer Financial Protection Bureau (CFPB). Return to table

 2. Includes total operating expenses of the Federal Reserve Information Technology (FRIT) support function and the System's Office of Employee Benefits (OEB), the majority of which are in the Reserve Banks. Return to table

 3. Reimbursable claims include the expenses of fiscal agency. In 2017 actual, the fiscal agency allocated portion of the pension is also included but is not included for the budget. Return to table

 4. Fees that depository institutions pay for the settlement component of the Fedwire Securities Service transactions for Treasury securities transfers. Return to table

 5. Excludes annual assessments for the supervision of large financial companies pursuant to Regulation TT, which are not recognized as revenue or used to fund Board expenses. (See section 4, "Supervision and Regulation," for more information.)   Return to table

Table 2. Employment in the Federal Reserve System, 2017-18
Item 2017 budget 2017 actual Variance
2017 actual to 2017 budget
2018 budget Variance
2018 budget to 2017 actual
Amount Percent Amount Percent
Board 1 2,847 2,847 0 0.0 2,847 0 0.0
Office of Inspector General 1 132 132 0 0.0 132 0 0.0
Reserve Banks 2 19,822 19,393 -429 -2.2 19,878 485 2.5
Total System employment 22,801 22,372 -429 -1.9 22,857 485 2.2

Note: Employment numbers presented include authorized position counts for the Board and average number of personnel (ANP) for the Reserve Banks. ANP is the average number of employees expressed in terms of full-time positions for the period and includes outside agency help.

 1. Budget represents authorized position count at the beginning of the year and actual represents authorized position count at year-end. Return to table

 2. Includes employment of the FRIT support function and the OEB. Return to table

2017 Budget Performance

In carrying out its responsibilities in 2017, the Federal Reserve System incurred $4,531.5 million in net expenses. Total System operating expenses of $5,673.9 million were offset by $1,142.4 million in revenue from priced services, claims for reimbursement, and other income. Total 2017 System operating expenses were $143.4 million, or 2.5 percent, less than the amount budgeted for 2017.

2018 Operating Expense Budget

Budgeted 2018 System operating expenses of $5,003.3 million, net of revenue and reimbursements, are $471.7 million, or 10.4 percent, higher than 2017 actual expenses. The Reserve Bank budgets comprise almost three-quarters of the System budget (figure 1). Budgeted 2018 revenue from priced services and claims for reimbursements are expected to slightly decrease in 2018.

Figure 1. Distribution of budgeted expenses of the Federal Reserve System, 2018
Figure 1. Distribution of budgeted expenses of the Federal Reserve
System, 2018
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OIG Office of Inspector General.

Trends in Expenses and Employment

From the actual 2008 level to the budgeted 2018 amount, the total operating expenses of the Federal Reserve System have increased an average of 4.7 percent per year (figure 2). Over the same period, nondefense discretionary spending by the federal government has increased an average of 1.4 percent per year (figure 3). Federal Reserve System employment declined from 2007 through 2010 because of continued efforts to reduce the size of the System's check service and because of efficiency improvements in cash. Staffing has subsequently increased in information technology (IT) to support large application-development projects, information security efforts, end-user services, and the central computing environment. Supervision resource levels were augmented to meet requirements of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act) and to support portfolio growth (figure 4).

Figure 2. Total expenses of the Federal Reserve System, 2008-18
Figure 2. Total expenses of the Federal Reserve System, 2008-18,
Billions of dollars
Accessible Version | Return to text

Note: For 2018, budgeted.

1. Calculated with the GDP price deflator.

Figure 3. Cumulative change in Federal Reserve System expenses and federal government expenses, 2008-18
Figure 3. Cumulative change in Federal Reserve System expenses and
federal government expenses, 2008-18
Accessible Version | Return to text

Note: For 2018, budgeted. Federal government expenses are reported on a fiscal-year basis beginning October 1; the Federal Reserve System expenses are reported on a calendar-year basis.

1. Discretionary spending less expenditures on defense. Source: Budget of the United States Government, Fiscal Year 2018: Historical Tables, Table 8.1. Outlays by Budget Enforcement Act Category, 1962-2021.

2. Includes expenses of the OIG.

Figure 4. Employment in the Federal Reserve System, 2008-18
Figure 4. Employment in the Federal Reserve System, 2008-18
Accessible Version | Return to text

Note: For 2018, budgeted. Employment numbers presented include position counts for the Board and average number of personnel (ANP) for the Reserve Banks.

Growth in supervision expenses over the past 10 years has been driven by additional supervisory resources needed to respond to the financial crisis and a growth in the state member bank portfolio, to continue to implement expanded responsibilities mandated by the Dodd-Frank Act, to build out the cybersecurity supervision program, and to support other strategic national initiatives. Expense growth in the monetary policy area during the financial crisis has been followed by a focus on enhancing financial stability monitoring and dedicating additional resources to regional economic research.

Federal Reserve Bank expenses in the cash area have increased as a result of a multiyear effort to modernize the cash-processing and inventory-tracking infrastructure. These increases have been partially offset by lower expenses because of efficiency improvements in cash operations. Treasury services expenses have increased to meet evolving needs, including the automation of the Treasury's collection and payment services, the addition of Treasury applications to the Treasury Web Application Infrastructure (TWAI), and other requested projects.3

2018 Capital Budgets

The capital budgets for the Board and Reserve Banks total $158.0 million and $406.6 million, respectively.4 As in previous years, the capital budgets in 2018 include funding for projects that support the strategic direction outlined by the Board and each Reserve Bank. These strategic goals emphasize investments that continue to improve operational efficiencies, enhance services to Bank customers, and ensure a safe and productive work environment.

Board of Governors Budgets

Board of Governors

The Board's budget is grounded in the principles established by the Strategic Plan 2016-19 (www.federalreserve.gov/publications/gpra/files/2016-2019-gpra-strategic-plan.pdf)5 and provides funding to advance the Plan's goals, objectives, and initiatives. The budget is structured by division, office, or special account.

The Board's budget process is as follows:

  • At the start of the budget process, the chief operating officer and chief financial officer meet with the Committee on Board Affairs (CBA) to recommend a specific growth target for the Board's operating budget. For 2018, the recommended growth target included known changes in the run-rate of the Board's ongoing operations, such as funding for the Board's compensation and benefit programs; no net growth in authorized position count; projected increases to centrally managed benefits, such as retirement and post-retirement benefits; and targeted increases in select goods and services accounts. After endorsement by the CBA, the target is briefed to the Board members, and to the Executive Committee, which comprises the directors of each division.
  • To achieve the CBA's growth target, divisions review their resource requirements, reallocate funding to support mission-critical activities and strategic priorities, and submit initial budget requests, including proposed initiatives and potential savings. Since the growth target for 2018 did not include any new authorized positions, divisions prioritized vacancies to their most critical needs.
  • Division of Financial Management staff review initial budget requests submitted by divisions and work collaboratively with all divisions to achieve the growth target.
  • The chief operating officer and chief financial officer subsequently meet with the Executive Commit-tee and the CBA to further review and refine the budget submissions. Once the budget has been finalized, the administrative governor submits the budget to the full Board for review and final approval.
  • Expenses are monitored throughout the year. Quarterly financial forecasts provide insights into budgetary pressures. Variances are analyzed and reported to senior management.6

Tables 3 and 4 summarize the Board's 2017 budgeted and actual expenses and its 2018 budgeted expenses by division, office, or special account and by account classification, respectively. Table 5 summarizes the Board's budgeted and actual authorized position count for 2017 and 2018. Table 6 summarizes the Board's budgeted and actual capital expenditures for 2017 and 2018. Each table includes a line item for the Office of Inspector General (OIG), which is discussed later in this section.

Table 3. Operating expenses of the Board of Governors, by division, office, or special account, 2017-18

Millions of dollars, except as noted

Division, office, or special account 2017 budget 2017 actual Variance
2017 actual to 2017 budget
2018 budget Variance
2018 budget to 2017 actual
Amount Percent Amount Percent
Research and Statistics 80.1 77.3 -2.8 -3.5 85.0 7.7 9.9
International Finance 33.4 31.6 -1.8 -5.5 34.7 3.1 9.9
Monetary Affairs 41.1 39.2 -1.9 -4.6 43.4 4.2 10.8
Financial Stability 12.7 11.8 -0.9 -7.1 13.1 1.3 11.2
Supervision and Regulation 143.4 133.8 -9.6 -6.7 144.8 11.0 8.2
Consumer and Community Affairs 35.3 34.1 -1.1 -3.2 37.6 3.5 10.2
Reserve Bank Operations and Payment Systems 44.7 41.7 -3.0 -6.8 46.3 4.6 11.1
Board Members 28.4 26.3 -2.1 -7.2 28.5 2.2 8.3
Secretary 11.3 11.2 -0.1 -0.7 12.0 0.7 6.3
Legal 32.1 29.5 -2.6 -8.0 32.0 2.5 8.3
Chief Operating Officer 17.7 16.6 -1.1 -6.1 19.2 2.6 15.4
Financial Management 12.8 12.4 -0.4 -3.5 13.1 0.7 5.8
Information Technology 116.0 111.1 -4.9 -4.2 118.2 7.1 6.4
IT income -48.3 -48.4 -0.1 0.1 -52.8 -4.4 9.1
Management 137.0 133.7 -3.3 -2.4 137.7 4.0 3.0
Special projects1 16.4 12.4 -4.0 -24.4 14.5 2.1 17.1
Extraordinary items: strategic projects2 16.1 15.2 -0.8 -5.3 20.9 5.6 37.0
Survey of Consumer Finances3 0.6 0.7 0.1 10.3 1.2 0.5 74.1
Centrally managed benefits 4 13.9 17.5 3.7 26.4 17.4 -0.2 -0.9
Total, Board operations 744.6 707.8 -36.7 -4.9 766.7 58.9 8.3
               
Office of Inspector General 34.3 33.8 -0.4 -1.2 35.9 2.1 6.2

 1. Includes centralized Boardwide benefit programs. Return to table

 2. Includes several strategic projects, including the Martin Building renovation. Return to table

 3. Previously, the Survey of Consumer Finances was reported with extraordinary items. Return to table

 4. Includes retirement and post-retirement benefits, which fluctuate due to changes in actuarial assumptions and demographics. Return to table

Table 4. Operating expenses of the Board of Governors, by account classification, 2017-18

Millions of dollars, except as noted

Account classification 2017 budget 2017 actual Variance
2017 actual to 2017 budget
2018 budget Variance
2018 budget to 2017 actual
Amount Percent Amount Percent
Personnel services
Salaries 433.9 416.6 -17.4 -4.0 449.8 33.2 8.0
Retirement/Thrift plans 56.5 52.3 -4.1 -7.3 61.7 9.4 17.9
Employee insurance and other benefits 42.3 40.0 -2.2 -5.3 42.8 2.8 6.9
Net periodic benefits costs 1 0.0 7.3 7.3 n/a n/a n/a n/a
Subtotal, personnel services 532.7 516.3 -16.4 -3.1 554.3 38.0 7.4
               
Goods and services
Postage and shipping 0.4 0.2 -0.1 -37.6 0.3 0.0 9.4
Travel 17.5 13.3 -4.2 -24.0 17.1 3.8 28.7
Telecommunications 8.3 6.0 -2.3 -28.3 7.2 1.2 20.7
Printing and binding 2.2 1.8 -0.4 -18.4 1.8 0.0 1.7
Publications 0.6 0.5 -0.1 -15.4 0.6 0.0 7.4
Stationery and supplies 1.7 1.1 -0.5 -31.3 1.4 0.3 25.0
Software 17.1 15.8 -1.3 -7.9 17.0 1.2 7.6
Furniture and equipment (F&E) 11.1 10.9 -0.1 -1.2 6.3 -4.6 -42.0
Rentals 30.6 29.2 -1.3 -4.3 32.5 3.3 11.3
Data, news, and research 14.7 13.3 -1.4 -9.7 14.8 1.5 11.1
Utilities 2.8 2.3 -0.6 -20.1 2.3 0.0 0.9
Repairs and alterations--building 2.7 3.7 1.0 38.4 2.5 -1.2 -31.4
Repairs and maintenance--F&E 5.4 4.5 -0.9 -16.0 4.7 0.2 4.2
Contractual professional services 53.9 48.1 -5.8 -10.7 54.2 6.1 12.7
Interest 0.0 0.0 0.0 -3.9 0.0 0.0 -40.8
Training and dues 4.8 3.6 -1.2 -25.6 4.7 1.1 31.3
Subsidies and contributions 0.9 0.9 0.0 0.8 2.1 1.2 126.5
All other 3.6 3.1 -0.6 -16.1 4.0 0.9 30.6
Depreciation/amortization 40.3 38.7 -1.6 -3.9 43.2 4.5 11.6
IT user charge 47.5 47.6 0.1 0.2 52.2 4.7 9.8
IT income -48.3 -48.4 -0.1 0.2 -52.8 -4.4 9.0
Income -5.9 -4.7 1.2 -20.2 -3.8 0.9 -19.1
Subtotal, goods and services 211.9 191.5 -20.3 -9.6 212.4 20.9 10.9
Total, Board operations 744.6 707.8 -36.7 -4.9 766.7 58.9 8.3
               
Office of Inspector General              
Personnel services 25.8 25.7 -0.1 -0.4% 27.7 2.0 7.8
Goods and services 8.5 8.2 -0.3 -3.8% 8.3 0.1 1.0
Total, OIG operations 34.3 33.8 -0.4 -1.2% 35.9 2.1 6.2

n/a Not applicable.

 1. Account was established after the approval of the 2018 budget to track net periodic benefits costs other than services costs related to pension and post-retirement benefits. Return to table

Table 5. Positions authorized by the Board of Governors, by division, office, or special account, 2017-18
Division, office, or special account 2017 budget1 2017 actual Variance
2017 actual to 2017 budget
2018 budget Variance
2018 budget to 2017 actual
Amount Percent Amount Percent
Research and Statistics 356 356 0 0.0 356 0 0.0
International Finance 154 155 1 0.6 155 0 0.0
Monetary Affairs 172 172 0 0.0 172 0 0.0
Financial Stability 55 55 0 0.0 55 0 0.0
Supervision and Regulation 493 493 0 0.0 493 0 0.0
Consumer and Community Affairs 131 131 0 0.0 131 0 0.0
Reserve Bank Operations and Payment Systems 183 183 0 0.0 183 0 0.0
Board Members 121 121 0 0.0 121 0 0.0
Secretary 53 53 0 0.0 53 0 0.0
Legal 125 125 0 0.0 125 0 0.0
Chief Operating Officer 68 67 -1 -1.5 67 0 0.0
Financial Management 68 69 1 1.5 69 0 0.0
Information Technology 413 412 -1 -0.2 413 1 0.2
Management 455 455 0 0.0 454 -1 -0.2
Total, Board operations 2,847 2,847 0 0.0 2,847 0 0.0
               
Office of Inspector General 132 132 0 0.0 132 0 0.0

 1. Budget represents authorized position count at the beginning of the year, and actual represents authorized position count at year-end. Return to table

2017 Budget Performance

Total expenses for Board operations were $707.8 million, which was $36.7 million, or 4.9 percent, less than the approved 2017 budget of $744.6 million. The Board's 2017 single-year capital spending was less than budgeted by $2.7 million, or 19.6 percent, and multiyear capital projects remained within their project budgets with actual spending in 2017 less than budgeted by $14.5 million, or 24.9 percent.

Table 6. Capital expenditures of the Board of Governors, by capital type, 2017-18

Millions of dollars, except as noted

Item 2017 budget 2017 actual Variance
2017 actual to 2017 budget
2018 budget Variance
2018 budget to 2017 actual
Amount Percent Amount Percent
Board
Single-year capital expenditures 14.0 11.2 -2.7 -19.6 17.3 6.1 53.9
Multiyear capital expenditures 58.3 43.8 -14.5 -24.9 140.6 96.8 221.0
Total capital expenditures 72.3 55.0 -17.2 -23.8 157.8 102.8 186.9
               
Office of Inspector General
Single-year capital expenditures 0.0 0.0 0.0 n/a 0.1 0.1 n/a
Multiyear capital expenditures 0.2 0.3 0.1 29.0 0.0 -0.3 -100.0
Total capital expenditures 0.2 0.3 0.1 29.0 0.1 -0.1 -54.8
               
Board and OIG total capital expenditures 72.5 55.3 -17.2 -23.7 158.0 102.7 185.7

Note: The amount reported for the multiyear capital budget represents the expected expenditures for the budget year.

n/a Not applicable.

Personnel services expenses were $16.4 million less than budgeted because of the hiring freeze, which caused higher-than-budgeted vacancy rates.7 The underrun in personnel services was partially offset by an overrun in centrally managed benefits (e.g., retirement and post-retirement benefits), which was driven by changes in actuarial assumptions, including lower-than-planned discount rates and changes in other key actuarial assumptions.

Goods and services expenses were $20.3 million less than the budget. Lower-than-expected employment levels in 2017 contributed to underruns in several areas, particularly travel and relocation. In addition, underruns in goods and services were driven by lower utilization of contractual professional services, reduced telecommunications expenses and less professional service support for supervision projects, lower rentals and depreciation expenses because of delays in several major projects, and fewer data and software purchases.

2018 Operating Expense Budget

The 2018 budget for Board operations is $766.7 million, which is $58.9 million, or 8.3 percent, higher than 2017 actual expenses and 3.0 percent higher than the 2017 budget. The operating budget includes funding for the Board's ongoing operations and support for the six overarching pillars identified in the Board's Strategic Plan 2016-19.

The 2018 budget includes employment growth as hiring activities are expected to continue to normalize in 2018, funding for the Board's compensation and benefit programs, projected increases to centrally managed benefits (e.g., retirement and post-retirement benefits), and expenses related to preparing for the 2019 Survey of Consumer Finances. The budget allows for continued investments in strategic, high-priority projects in support of the Plan's pillars: project development and resource allocation, workforce, physical infrastructure, technology, data, and public engagement and accountability.

The Board's total authorized position count for 2018 remains unchanged at 2,847.

Risks in the 2018 Budget

The 2018 operating budget is built on the steps taken in recent years to better align budget requests with historic hiring trends and spending patterns, while ensuring the funding of the Board's highest priorities. Meeting the approved growth targets required all divisions to make tradeoffs and prioritize resources to fund mission-critical activities for 2018.

Staff from the Division of Financial Management will work closely with all divisions throughout the year to mitigate potential budget overruns by closely monitoring spending. Building improvements projects will continue to be an area of focus, from both a budget and project management perspective, given their size, complexity, and strategic importance.

2018 Capital Budgets

The Board's 2018 single-year capital budget totals $17.3 million, which is $6.1 million higher than 2017 actual capital expenditures and $3.3 million higher than the 2017 budget. The increase is primarily driven by planned equipment replacements in the data center and the continuation of pre-design efforts for the Eccles Building.

The Board's multiyear capital budget totals $452.8 million, which includes 2018 expected capital expenditures of $140.6 million. The budget includes increases to building improvement projects, such as furniture purchases and renovation funding for design phases services in the Eccles Building. The potential renovation of the Eccles Building will improve compliance with modern building codes and allow for efficient space utilization with today's technology capabilities. Other funding increases are driven by: continued enhancements of supervision and regulation data capabilities; automation initiatives, including Federal Open Market Committee (FOMC) system enhancements; and security enhancements. Expected capital expenditures in 2018 are primarily driven by the Martin Building renovation project. Table 6 summarizes the Board's budgeted and actual capital expenditures for 2017 and 2018.

Office of Inspector General

The budget for the Board's OIG is grounded in the values established by its strategic plan (https://oig.federalreserve.gov/strategic-plan.htm), which include delivering high-quality products and services that promote agency excellence and a diverse, skilled, and engaged workforce; cultivating leadership; fostering an inclusive and collaborative environment; optimizing external stakeholder engagement; and enhancing the capacity and improving the operational effectiveness of the OIG.

In keeping with its statutory independence, the OIG prepares its proposed budget apart from the Board's budget. The OIG presents its budget directly to the Board for approval.

2017 Budget Performance

Total expenses for OIG operations were $33.8 million, which was $0.4 million, or 1.2 percent, less than the approved 2017 operating budget. Personnel services expenses were $0.1 million less than budgeted. Goods and services expenses were $0.3 million less than budgeted because of lower-than-planned rental expenses and contractual professional services usage, and fewer furniture and equipment purchases. The OIG did not have single-year capital spending in 2017. Multiyear capital projects remained within their project budgets with actual spending in 2017 higher than planned because of the buildout of additional office space at the San Francisco regional office. Table 6 summarizes the OIG's budgeted and actual capital expenditures for 2017 and 2018.

2018 Operating Expense Budget

The 2018 budget for OIG operations is $35.9 million, which is $2.1 million, or 6.2 percent, higher than 2017 actual expenses and 4.8 percent higher than the 2017 budget. The OIG's total authorized position count for 2018 remains unchanged at 132. The additional funding assists the OIG in implementing the goals, objectives, and activities identified in its strategic plan.

2018 Capital Budget

The OIG's 2018 single-year capital budget totals $0.1 million for vehicle lifecycle replacements. For 2018, the OIG closed its $3.2 million multiyear capital budget, which funded the construction of temporary and permanent regional offices.

Federal Reserve Banks Budgets

Each Reserve Bank establishes major operating goals for the coming year, devises strategies for attaining those goals, estimates required resources, and monitors results. The Reserve Banks' budgets are structured by functional area, with attributable support and overhead charged to each area. The budgets are formulated to ensure alignment with each Reserve Bank's and the System's strategic priorities, including

  • contributing to the formulation of monetary policy and enhancing monetary policy implementation to become more effective, flexible, and resilient
  • promoting financial stability through effective monitoring, analysis, and policy development
  • promoting safety and soundness of financial institutions through effective supervision
  • leading efforts to enhance the security, resiliency, functionality, and efficiency of services provided to financial institutions and the public

The Reserve Bank budget process is as follows:

  • Reserve Bank and Board governance bodies provide an aggregate System-level growth expectation for the upcoming budget year.
  • The Reserve Banks develop budgets that incorporate this guidance, and senior leadership in the Reserve Banks reviews the budgets for alignment with Reserve Bank and System priorities.
  • The Reserve Banks submit preliminary budget information to the Board for review, including documentation to support the budget request.
  • Board staff analyzes the Banks' budgets, both individually and in the context of System initiatives.
  • The Board's Committee on Federal Reserve Bank Affairs (BAC) reviews the Bank budgets.
  • The Reserve Banks make any needed changes, and the BAC chair submits the revised budgets to Board members for review and final action.
  • Throughout the year, Reserve Bank and Board staffs monitor actual performance and compare it to approved budgets and forecasts.

In addition to the budget approval process, the Reserve Banks must submit proposals for certain capital expenditures to the Board for further review and approval.

Tables 7, 8, and 9 summarize the Reserve Banks' 2017 budgeted and actual expenses and 2018 budgeted expenses by Reserve Bank, functional area, and account classification.8 Table 10 shows the Reserve Banks' budgeted and actual employment for 2017 and budgeted employment for 2018. In addition, table 11 shows the Reserve Banks' budgeted and actual capital expenditures for 2017 and budgeted capital for 2018.

Table 7. Operating expenses of the Federal Reserve Banks, by District, 2017-18

Millions of dollars, except as noted

District 2017 budget 2017 actual Variance
2017 actual to 2017 budget
2018 budget Variance
2018 budget to 2017 actual
Amount Percent Amount Percent
Boston 230.5 217.4 -13.1 -5.7 233.0 15.6 7.2
New York 992.1 968.7 -23.4 -2.4 1,006.7 37.9 3.9
Philadelphia 191.4 181.3 -10.1 -5.3 191.8 10.5 5.8
Cleveland 196.8 189.3 -7.6 -3.8 203.3 14.0 7.4
Richmond 450.6 435.3 -15.3 -3.4 479.8 44.5 10.2
Atlanta 407.4 391.8 -15.5 -3.8 420.3 28.5 7.3
Chicago 383.3 381.1 -2.1 -0.6 397.8 16.6 4.4
St. Louis 399.1 395.3 -3.8 -1.0 412.0 16.7 4.2
Minneapolis 165.1 162.2 -2.9 -1.8 174.0 11.8 7.3
Kansas City 285.0 282.3 -2.7 -1.0 307.3 25.0 8.9
Dallas 229.1 219.6 -9.5 -4.2 238.6 19.0 8.6
San Francisco 381.9 384.6 2.6 0.7 386.8 2.3 0.6
               
Total Reserve Bank operating expenses 4,312.4 4,209.0 -103.5 -2.4 4,451.3 242.4 5.8

Note: Includes expenses of the FRIT support function and the OEB and reflects all redistributions for support and allocation for overhead. Excludes Reserve Bank capital expenditures as well as assessments by the Board of Governors for costs related to currency and the operations of the Board of Governors and the CFPB.

Table 8. Operating expenses of the Federal Reserve Banks, by operating area, 2017-18

Millions of dollars, except as noted

Operating area 2017 budget 2017 actual Variance
2017 actual to 2017 budget
2018 budget Variance
2018 budget to 2017 actual
Amount Percent Amount Percent
Monetary and economic policy 697.7 693.4 -4.4 -0.6 721.5 28.2 4.1
Services to the U.S. Treasury and other government agencies 625.7 597.6 -28.0 -4.5 616.1 18.4 3.1
Services to financial institutions and the public 1,151.2 1,127.0 -24.2 -2.1 1,211.6 84.6 7.5
Supervision and regulation 1,389.6 1,366.0 -23.6 -1.7 1,449.3 83.3 6.1
Fee-based services to financial institutions 448.2 425.0 -23.2 -5.2 452.9 27.9 6.6
               
Total Reserve Bank operating expenses1 4,312.4 4,209.0 -103.5 -2.4 4,451.3 242.4 5.8

 1. Operating expenses exclude pension costs, reimbursements, and operating expense of the Board of Governors (see table 4). Return to table

Table 9. Operating expenses of the Federal Reserve Banks, by account classification, 2017-18

Millions of dollars, except as noted

Account classification 2017 budget 2017 actual Variance
2017 actual to 2017 budget
2018 budget Variance
2018 budget to 2017 actual
Amount Percent Amount Percent
Salaries and other benefits1 3,238.4 3,135.0 -103.4 -3.2 3,330.2 195.2 6.2
Building 330.6 326.2 -4.4 -1.3 335.2 9.0 2.7
Software costs 250.8 254.3 3.5 1.4 264.6 10.3 4.0
Equipment 189.1 185.0 -4.2 -2.2 192.4 7.4 4.0
Recoveries 2 -183.5 -190.7 -7.2 3.9 -394.4 -203.7 106.8
Expenses capitalized -93.0 -68.9 24.1 -25.9 -76.5 -7.5 10.9
All other3 580.1 568.1 -12.0 -2.1 799.8 231.7 40.8
               
Total Reserve Bank operating expenses 4,312.4 4,209.0 -103.5 -2.4 4,451.3 242.4 5.8

 1. Includes salaries, other personnel expense, and retirement and other employment benefit expenses. It does not include pension expenses related to all the participants in the Retirement Plan for Employees of the Federal Reserve System and the Reserve Bank participants in the Benefit Equalization Plan and the Supplemental Retirement Plan for Select Officers of the Federal Reserve Banks. These expenses are recorded as a separate line item in the financial statements; see "Table 10. Income and expenses of the Federal Reserve Banks, by Bank" in section 11, "Statistical Tables."   Return to table

 2. Includes tenant rent recoveries. Return to table

 3. Includes fees, materials and supplies, travel, communications, and shipping. Return to table

Table 10. Employment at the Federal Reserve Banks, by District, and at FRIT and OEB, 2017-18
District 2017 budget 2017 actual Variance
2017 actual to 2017 budget
2018 budget Variance
2018 budget to 2017 actual
Amount Percent Amount Percent
Boston 1,131 1,090 -41 -3.6 1,086 -4 -0.4
New York 3,319 3,200 -119 -3.6 3,277 78 2.4
Philadelphia 914 894 -20 -2.2 876 -18 -2.0
Cleveland 995 963 -31 -3.2 999 35 3.6
Richmond 1,499 1,471 -29 -1.9 1,498 27 1.9
Atlanta 1,762 1,745 -18 -1.0 1,774 29 1.7
Chicago 1,600 1,546 -54 -3.4 1,605 59 3.8
St. Louis 1,416 1,368 -47 -3.4 1,442 74 5.4
Minneapolis 1,008 997 -11 -1.1 1,030 33 3.3
Kansas City 1,850 1,848 -2 -0.1 1,910 62 3.3
Dallas 1,294 1,257 -37 -2.9 1,320 64 5.1
San Francisco 1,697 1,701 4 0.2 1,732 31 1.8
Total, all Districts 18,487 18,080 -407 -2.2 18,550 470 2.6
               
Federal Reserve Information Technology 1,277 1,260 -18 -1.4 1,270 10 0.8
Office of Employee Benefits 58 53 -4 -7.7 58 5 9.3
               
Total 19,822 19,393 -429 -2.2 19,878 485 2.5
Table 11. Capital expenditures of the Federal Reserve Banks, by District, and of FRIT and OEB, 2017-18

Millions of dollars, except as noted

District* 2017 budget 2017 actual Variance
2017 actual to 2017 budget
2018 budget Variance
2018 budget to 2017 actual
Amount Percent Amount Percent
Boston 26.6 16.7 -9.9 -37.1 20.5 3.7 22.1
New York 100.8 92.9 -7.9 -7.8 92.0 -0.9 -1.0
Philadelphia 20.9 13.6 -7.3 -34.9 34.6 21.0 153.9
Cleveland 32.8 31.4 -1.4 -4.3 13.7 -17.7 -56.5
Richmond 21.3 11.1 -10.1 -47.6 20.4 9.3 83.5
Atlanta 25.8 24.2 -1.6 -6.2 21.1 -3.1 -12.9
Chicago 29.2 26.0 -3.2 -11.0 22.3 -3.7 -14.1
St. Louis 6.8 6.5 -0.3 -4.0 6.6 0.1 1.4
Minneapolis 4.4 3.7 -0.7 -15.5 19.3 15.6 417.2
Kansas City 25.3 26.7 1.4 5.7 23.4 -3.3 -12.3
Dallas 19.3 15.2 -4.0 -20.9 20.1 4.9 32.2
San Francisco 36.2 15.5 -20.7 -57.2 30.9 15.4 99.1
Total, all Districts 349.4 283.8 -65.7 -18.8 324.9 41.1 14.5
               
Federal Reserve Information Technology 67.2 64.4 -2.8 -4.2 81.6 17.3 26.9
Office of Employee Benefits * * * 6.0 0.1 * 34.8
               
Total 416.6 348.2 -68.4 -16.4 406.6 58.4 16.8

* Less than $50,000.

2017 Budget Performance

Total 2017 operating expenses for the Reserve Banks were $4,209.0 million, which is $103.5 million, or 2.4 percent, less than the approved 2017 budget of $4,312.4 million. The actual average number of personnel (ANP) was less than the 2017 budget, largely because of delays in hiring as a result of the hiring freeze. The Reserve Banks' 2017 capital expenditures were less than budgeted by $68.4 million, or 16.4 percent, because of changes in timing and scope for numerous initiatives.

Revised project plans, benefits assumptions, and increased cash recoveries from depository institutions contributed to the 2017 operating expense budget underrun. Project plan changes include updated business-line transition plans for ongoing Treasury services, delays in development efforts for Fedwire and automated clearinghouse (ACH) enhancements and check-related projects, and the completion of software development and testing following the implementation of the CashForward initiative.9 The underrun is partially offset by increased expenses for the TWAI.

Total 2017 actual employment for the Reserve Banks, the Federal Reserve Information Technology (FRIT), and the Office of Employee Benefits (OEB) was 19,393 ANP, an underrun of 429 ANP, or 2.2 percent, from 2017 budgeted staffing levels. The impact of the hiring freeze affected all functional areas with the largest underruns in support services and the monetary policy business lines. Additionally, program delays in several Treasury business lines and changes in the cash environment contributed to the underrun.

2018 Operating Expense Budget

The 2018 operating budgets of the Reserve Banks total $4,451.3 million, which is $242.4 million, or 5.8 percent, higher than 2017 actual expenses. The increase in the supervision function is primarily for the ongoing support of the supervision portfolio and national and horizontal review initiatives and for the continued development and implementation of the cybersecurity supervision program. The increase is partially offset by operational efficiencies and the extension of the exam cycle for qualifying depository institutions because of the implementation of the Fixing America's Surface Transportation (FAST) Act.

Increases in services to financial institutions and the public include expenses for cash related to the first phase of the next-generation currency-processing program (NextGen) as well as staffing to address the increase in the volume of currency received from circulation. Expenses related to fee-based services are increasing to fund continuing technology investments for ACH and Fedwire enhancements. Budgeted expenses for services to the Treasury, which are fully reimbursable, are increasing primarily for the Stored Value Card (SVC) program, expanded Do Not Pay (DNP) analytics, and Pay.gov initiatives.10

Total 2018 budgeted employment for the Reserve Banks, FRIT, and OEB is 19,878 ANP, an increase of 485 ANP, or 2.5 percent, from 2017 actual employment levels. The increase is largely due to 2017 hiring delays as a result of the hiring freeze. Support and overhead functions plan to add resources to strengthen facilities maintenance, strategic planning, enterprise risk management, internal audit, and human resources capabilities. In information technology, ANP increases are for information security initiatives and application development projects, primarily for Treasury programs. In the Treasury services function, ANP increases are due to updated requirements for ongoing programs, including SVC and DNP. Staff is also increasing in cash to address local cash-processing volume increases and to support phase I of the NextGen program. Supervision ANP are increasing to support the cybersecurity program and the growth in the number of state member banks.

Reserve Bank officer and staff personnel expenses for 2018 total $2,565.6 million, an increase of $141.1 million, or 5.8 percent, from 2017 actual expenses. The increase reflects expenses associated with additional staff and budgeted salary adjustments, including merit increases, equity adjustments, promotions, and funding for variable pay.

The 2018 Reserve Bank budgets include a 3.0 percent merit program for eligible officers, senior professionals, and staff totaling $64.8 million and a variable pay program totaling $206.4 million. Budgeted equity adjustments and promotions total $7.3 million for officers and senior professionals and $26.4 million for staff.

2018 Capital Budgets

The 2018 capital budgets for the Reserve Banks, FRIT, and OEB total $406.6 million. The increase in the 2018 capital budget is $58.4 million, or 16.8 percent, more than the 2017 actual levels of $348.2 million, largely reflecting ongoing multiyear building and information technology projects. Initiatives in the 2018 capital budget include supporting workspace renovations, addressing aging building infrastructure, and providing application upgrades and releases.

Capital Expenditures Designated for Conditional Approval

The BAC chair designated projects with an aggregate cost of $83.6 million in 2018 for conditional approval, requiring additional review and approval by the Board's director of the Division of Reserve Bank Operations and Payment Systems before the commitment of funds.11 The expenditures designated for conditional approval by the chair of the BAC include large-scale building projects to renovate office and cafeteria spaces, increase parking, and upgrade mechanical and electrical infrastructure. Technology projects include current and future Fedwire initiatives, Treasury applications, and the migration of major applications off the mainframe.12

Other Capital Expenditures

Significant capital expenditures (typically expenditures exceeding $1 million) that are not designated for conditional approval include total multiyear budgeted expenditures of $496.7 million for 2018 and future years, of which the single-year 2018 budgeted expenditures are $232.2 million. This category includes building expenditures for office space renovations, infrastructure upgrades, and security enhancements. IT projects include ongoing IT infrastructure investments and Treasury, monetary policy, and supervision initiatives.

Capital initiatives that are individually less than $1 million are budgeted at an aggregate amount of $90.8 million for 2018 and include building maintenance expenditures, equipment and furniture replacements, and scheduled software and equipment upgrades.

Currency Budget

The Board is the issuing authority for Federal Reserve notes. As the issuing authority, the Board has a wide range of responsibilities, from ensuring an adequate supply of notes in circulation, to protecting and maintaining confidence. To protect the integrity of the notes it issues, the Board works with the Reserve Banks, the Treasury Department, the Treasury's Bureau of Engraving and Printing (BEP), and the United States Secret Service to ensure that the notes meet quality standards from production through destruction, monitors counterfeiting threats for each denomination, and conducts adversarial analysis on existing and new security features to ensure they are robust to counterfeiting. The currency budget funds the Board's and BEP's activities related to note production and issuance.13

The annual currency budget process is as follows:

  • Each August, based on Board staff's assessment of currency demand and other factors, the Board's director of the Division of Reserve Bank Operations and Payment Systems submits a fiscal year print order for notes to the director of the BEP.
  • Each December, Board staff estimates expenses for the calendar-year currency budget, including printing expenses (based on estimated production costs provided by the BEP); certain other BEP initiatives; and expenses for currency transportation, quality assurance, research and development, counterfeit deterrence, currency education, and depreciation.14
  • The BAC reviews the proposed currency budget.
  • The BAC chair submits the proposed currency budget to Board members for review and final action.

2017 Budget Performance

The Board's 2017 actual operating expenses for new currency were $723.3 million, a decrease of $2.7 million, or 0.4 percent, from the 2017 budget. This budget underrun is primarily attributable to lower-than-budgeted expenses for currency education and counterfeit deterrence. The currency education program delivered educational content more cost-effectively by encouraging the public to download electronic versions of resources rather than ordering hard copy versions, and by using in-house web development resources instead of more-expensive contracted resources. The counterfeit-deterrence program was unable to conduct all planned research and development efforts in 2017.

2018 Budget

The 2018 operating budget for currency is $861.7 million, which is $138.5 million, or 19.1 percent, higher than 2017 actual expenses (figure 5). Printing costs for notes are 93 percent of the operating budget. Expenses for currency transportation, quality assurance, research and development, counterfeit deterrence, other BEP initiatives, currency education, and depreciation make up the remaining 7 percent (table 12).

Table 12. Federal Reserve currency budget, 2017 and 2018

Thousands of dollars, except as noted

Item 2017 budget 2017 actual Variance
2017 actual to 2017 budget
2018 budget Variance
2018 budget to 2017 actual
Amount Percent Amount Percent
BEP-related expenses
Printing Federal Reserve notes 673,799 673,936 137 0.0 800,995 127,059 18.9
Currency reader 1,715 1,426 -289 -16.9 1,286 -140 -9.8
Other 4,000 3,569 -431 -10.8 3,697 128 3.6
New BEP facility 0 683 n/a n/a 0 -683 -100.0
Board expenses
Currency transportation 21,200 21,711 511 2.4 24,260 2,549 11.7
Currency quality assurance 12,500 13,117 617 4.9 14,000 883 6.7
Research and development 1 n/a n/a n/a n/a 7,740 n/a n/a
Currency counterfeit deterrence and analysis 8,100 6,103 -1,997 -24.7 7,145 1,042 17.1
Currency education, outreach, and research 4,645 2,714 -1,931 -41.6 2,531 -183 -6.7
Depreciation 71 25 -46 -64.8 80 55 220.0
Total expenses 726,030 723,284 -2,746 -0.4 861,734 138,450 19.1
Capital expenses
Single cycle capital 600 364 -236 -39.3 0 -364 n/a

BEP Bureau of Engraving and Printing.

n/a Not applicable.

 1. The Board established the research and development budget category in 2018 to distinguish between research and development efforts and ongoing project work. Previously, these expenses were included in quality assurance, counterfeit deterrence, and currency education. Return to table

Figure 5. Federal Reserve costs for currency, 2008-18
Figure 5. Federal Reserve costs for currency, 2008-18
Accessible Version | Return to text

Note: For 2018, budgeted. Data for 2008-16 have been revised.

Printing and Transportation of Federal Reserve Notes

The currency budget includes $801.0 million in printing costs for 2018, an increase of $127.1 million, or 18.9 percent from 2017 actual expenses. The increase is attributable to continued strong demand for banknotes, which resulted in the Board's request for 20.6 percent more notes in 2018 from the prior year, with a 61.8 percent increase in the share of more-expensive $100 notes.

The 2018 currency transportation budget is $24.3 million, an increase of $2.5 million, or 11.7 percent, from 2017 actual expenses. The budget includes the cost of shipping new notes from the BEP to Reserve Banks, of intra-System shipments of fit and unprocessed notes, and of returning pallets from the Reserve Banks to the BEP. The majority of the increase is attributable to the BEP shipping a larger volume of new notes to the Reserve Banks in 2018 than it did in 2017.

Currency Reader Program

The 2018 currency reader budget is $1.3 million, which is $0.1 million, or 9.8 percent, lower than 2017 actual expenses. The budget allows the BEP to distribute currency readers to qualified blind or visually-impaired individuals at no cost to the user; to reimburse the Library of Congress for administering the currency reader program through the existing infrastructure of its book reader program, which is managed by the National Library Service; and other administrative and outreach expenses.

Other Reimbursements to the Bureau of Engraving and Printing

The 2018 budget for other reimbursements to the BEP is $3.7 million, which is an increase of $0.1 million, or 3.6 percent, from 2017 actual expenses. This funding reimburses the BEP for expenses incurred by its Destruction Standards and Compliance Division of the Office of Compliance (OC) and Mutilated Currency Division (MCD) of the Office of Financial Management. The OC develops standards for cancellation and destruction of unfit currency and for note accountability at the Reserve Banks and reviews Reserve Banks' cash operations for compliance with its standards. As a public service, the MCD also processes claims for the redemption of damaged or mutilated currency.

Quality Assurance

The 2018 budget for quality assurance initiatives is $14.0 million, which is $0.9 million, or 6.7 percent, higher than 2017 actual expenses. The currency quality assurance consultants, in consultation with staff from the Board and BEP, will develop operational performance metrics to monitor and assess the BEP's efficiency and effectiveness. In addition, the consultants will establish process roadmaps that will facilitate the transition of responsibility for quality-related processes to the BEP. The budget also includes funding for the Board to continue working with a design consultant to assist with the accelerated development of a new family of notes.

Research and Development

The 2018 budget includes $7.7 million to fund ongoing initiatives related to research and development of security features and optical-inspection technology.15 Previously, these expenses were included in quality assurance, counterfeit deterrence, and currency education. The Board will develop, test, and evaluate new and existing security features in support of the new family of notes, continue development work on optical-inspection technology, and develop an automated system for identification and analysis of counterfeit notes. In addition, the Board will continue to work on cognitive and perception studies to help inform security feature and banknote design decisions.

Counterfeit Deterrence

The 2018 budget for counterfeit deterrence and analysis is $7.1 million, which is $1.0 million, or 17.1 percent, higher than 2017 actual expenses. The budget funds membership in the Central Bank Counterfeit Deterrence Group to combat digital counterfeiting and funds the Reproduction Research Center to perform adversarial analysis on design concepts and potential security features.

Currency Education Program

The 2018 budget for the currency education program (CEP) is $2.5 million, which is $0.2 million, or 6.7 percent, lower than 2017 actual expenses. The CEP is designed to protect and maintain confidence in U.S. currency worldwide by providing information on all circulating designs of notes to the global public and key stakeholder groups. In 2018, the CEP will continue to conduct outreach to domestic and international businesses and retailers, maintain the uscurrency.gov educational website, and launch new initiatives such as an educational app and a suite of youth-focused digital learning tools.

Footnotes

 1. Before 2013, information about the budgeted expenses of the Board and Reserve Banks was presented in a separate report titled Annual Report: Budget Review. Copies of that report are available at www.federalreserve.gov/publications/budget-review/default.htm.
Each budget covers one calendar year. Return to text

 2. Substantially all employees of the Board and Reserve Banks participate in the Retirement Plan for Employees of the Federal Reserve System (System Plan). Reserve Bank employees at certain compensation levels participate in the Benefit Equalization Plan, and certain Reserve Bank officers participate in the Supplemental Retirement Plan for Select Officers of the Reserve Banks. The operating expenses of the Reserve Banks presented in this section do not include expenses related to the retirement plans; however, the 2017 claims for reimbursement include the allocated portion of the pension. Additional information about these expenses can be found in section 11, "Statistical Tables" (see "Table 10. Income and expenses of the Federal Reserve Banks, by Bank").
Board employees also participate in the Benefit Equalization Plan, and Board officers participate in the Pension Enhancement Plan for Officers of the Board of Governors of the Federal Reserve System (PEP). The operating expenses of the Board presented in this section include expenses related to Board participants in the Benefit Equalization Plan and PEP but do not include expenses related to the System Plan. Return to text

 3. TWAI is a dedicated, distributed computing environment that houses multiple Treasury applications.
In April 2014, the Treasury announced the consolidation of the fiscal agent services provided by the Federal Reserve Banks as part of its effort to increase operational efficiency and effectiveness. The Treasury anticipates long-term savings, once services are transitioned from 10 sites to 4 consolidated sites. As of year-end 2017, 12 of the 15 business line transitions had been completed. Return to text

 4. The capital budget reported for the Board includes single-year capital expenditures and 2018 expected capital expenditures from multiyear projects of the Board and the Office of Inspector General. The capital budget reported for the Reserve Banks includes the amounts budgeted for the Federal Reserve Information Technology support function and the Office of Employee Benefits. Return to text

 5. The Strategic Plan 2016-19, which was approved by the Board in July 2015, continues the work of the Strategic Framework 2012-15. In addition to investing in ongoing operations, the Board is prioritizing investments and dedicating resources to six pillars over the 2016-19 period, which will allow the Board to advance its mission and respond to continuing and evolving challenges. The six pillars are: project development and resource allocation, workforce, physical infrastructure, technology, data, and public engagement and accountability. Return to text

 6. The Division of Financial Management has implemented an automated, multiyear budget development and forecasting system, which helps inform budget development, provides forecast information, and allows for greater comparability with Federal Reserve Bank information. Return to text

 7. On January 23, 2017, President Trump issued a memorandum ordering a freeze on the hiring of federal civilian employees "across the board in the executive branch," with only limited exceptions for national security and public safety. In keeping with past practice, the System complied with the spirit of the memorandum's provisions while allowing for the continued advancement of critical strategic priorities and the ability to meet the System's public service mission. Return to text

 8. Additional information about the operating expenses of each of the Reserve Banks can be found in section 11, "Statistical Tables" (see "Table 10. Income and expenses of the Federal Reserve Banks, by Bank"). Return to text

 9. The ACH Modernization initiative involves the transition of the ACH application from the legacy mainframe environment to a distributed platform. The CashForward initiative replaced legacy software applications, automated business processes, and employed technologies to meet current and future needs for the cash function. The project was completed in November 2017. Return to text

 10. The SVC program comprises three military cash-management programs: EagleCash, EZpay, and NavyCash. These programs provide electronic payment methods for goods and services on military bases and Navy ships, both domestic and overseas, to reduce costs and increase convenience for the military and service members. DNP helps agencies mitigate and eliminate improper payments. Pay.gov is an application that allows the public to use the internet to authorize and initiate payments to federal agencies. Return to text

 11. Generally, capital expenditures that are designated for conditional approval include certain building projects, District expenditures that substantially affect or influence future System direction or the manner in which significant services are performed, expenditures that may be inconsistent with System direction or vary from previously negotiated purchasing agreements, and local expenditures that duplicate national efforts. Return to text

 12. The Reserve Bank migration strategy involves moving a majority of applications from the mainframe to alternative processing environments. Budgeted projects for 2018 include the migration of the statistics and reserves application and the ACH processing platform. Return to text

 13. The Board reimburses the BEP for all costs related to the production of currency because the BEP does not receive federal appropriations. All operations of the BEP are financed by a revolving fund that is reimbursed through product sales, virtually all of which are sales of Federal Reserve notes to the Board to fulfill its annual print order. Section 16 of the Federal Reserve Act requires that all costs incurred for the issuing of notes shall be paid for by the Board and included in its assessments to the Reserve Banks. Customer billings are the BEP's only means of recovering costs of operations and generating funds necessary for capital investment. Return to text

 14. Other BEP expenses include costs to reimburse the BEP for expenses incurred by its Destruction Standards and Compliance Division of the Office of Compliance and Mutilated Currency Division of the Office of Financial Management and for work performed in 2017 toward a new facility to replace the existing facility in Washington, D.C. Return to text

 15. The Board established the research and development budget category in 2018 to distinguish between research and development efforts and ongoing project work. Return to text

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Last Update: July 19, 2018