Annual Report Budget Review 2012
Board of Governors Budgets
The Board of Governors operates under a one-year budget. The budget for 2012 was approved in December 2011.
Board of Governors
For 2012, the Board approved a $511.8 million operating budget, a $17.1 million single-year capital budget, and a $22.8 million increase to the multiyear capital projects budget (table 4). The operating budget, including new initiatives and savings, represents a 7.7 percent increase over the 2011 operating plan.
|Item||2010 (budgeted)||2010 (actual)||2011 1 (budgeted)||2011 (actual)||2012 (budgeted)|
|Board of Governors||431.8||426.8||475.2||440.4||511.8|
|Office of Inspector General||19.2||10.6||18.0||11.9||20.6|
|Single-year capital expenditures 2||8.4||8.2||6.2||5.0||17.9|
|Multiyear capital projects 3||16.5||5.2||31.9||23.4||22.8|
Note: Components may not sum to totals and may not yield percentages shown because of rounding.
1. During 2011, the Board approved a $0.4 million decrease in the Board's initial operating budget of $475.6 million, a $0.7 million increase in the Board's single-year capital budget, and a $12.2 million increase in the Board's multiyear capital budget. Return to table
2. Beginning in 2010, the Board began budgeting and reporting projects that span multiple budget cycles separate from single-year capital expenses. Capital, as shown in this report, includes the Board and Office of Inspector General capital budgets. Return to table
3. Budget figures for multiyear capital projects represent annual changes to total project budgets. Return to table
The operating budget includes amounts to fund the Board's ongoing operations (the current services budget) as well as new initiatives. Increases to the current services budget include additional rental expenses, which reflect a full year of lease costs for additional office space to address staff growth, as well as increases for contractual professional services to fund several internal strategic projects, such as implementing recommendations arising from the 2010 organizational assessment of the Human Resources function. These increases are partially offset by decreases in contractual professional services for rulemaking in the Division of Consumer and Community Affairs and in outside counsel support for the Legal Division, as well as a decrease in budgeted benefit costs resulting from a change in the methodology for determining the liability for long-term disability.
New initiatives in the Board's 2012 operating budget address such areas as implementation of Dodd-Frank Act requirements, office space needs, technology projects, data requirements, staffing requests to meet increased work demands, and infrastructure support. The approved 2012 operating budget includes $24.6 million in new initiatives, partly offset by $0.3 million in savings from printing changes. Over half of the costs for initiatives are for personnel expenses for new positions. Approximately $7.3 million, or 30.0 percent, of the total initiatives is related to the increased responsibilities associated with the Dodd-Frank Act.
The increase in single-year capital provides funding for several technology initiatives. The increase in multiyear capital provides funding for space requirements and infrastructure-related projects.
Office of Inspector General
In keeping with its statutory independence, the OIG prepares its proposed budget apart from the Board's budget. For 2012, the Board approved the OIG's $20.6 million operating budget, $0.8 million single-year capital budget, and a $0.1 million increase to the multiyear capital budget. The operating budget represents a 14.2 percent increase over the 2011 operating plan. The operating increase is primarily driven by personnel services growth needed to effectively conduct legislatively mandated and discretionary audits, investigations, inspections, and other reviews of Board and Consumer Financial Protection Bureau (CFPB) programs and activities.11 Offsetting this increase is a decrease in contractual professional services of $1.8 million due to an anticipated reduction in material loss reviews.
The Board's 2012 budget includes 2,442 authorized positions, representing a 3.3 percent increase over year-end 2011 total authorized positions (table 5). The 2012 initiatives include requests to increase staffing by 112 positions. Fifty-nine of the requested positions, representing 52.7 percent of the total increase, are needed to implement requirements of the Dodd-Frank Act. Thirty of the requested positions, representing 26.8 percent of the total increase, are to address workload demands in the Division of Banking Supervision and Regulation and the Board's research divisions related (either directly or indirectly) to the financial crisis or financial stability. The remaining positions address increased workload or infrastructure support requirements across several other divisions and offices.
|2010 (budgeted)||2010 (ending)||2011 (budgeted)||2011 (ending)||2012 (budgeted)|
|Board of Governors 2||2,190||2,210||2,331||2,363||2,442|
|Office of Inspector General||61||65||85||85||113|
Note: Includes only those divisions, offices, and special accounts that have authorized position counts.
1. Interns are not included in the numbers for positions or employment. Return to table
2. The counts (budgeted and ending) for 2010 and 2011 include positions for cooperative education, worker trainee, and student aide programs that assist divisions Boardwide. Return to table
The OIG's 2012 budget includes 113 authorized positions, an increase of 28 positions from the prior year, to conduct the activities mentioned above.
Areas of Risk
Risks to the budget for the coming year remain largely consistent with those recognized during the prior year. In particular, the Board's ability to attract and retain qualified staff to meet the challenges created by passage of the Dodd-Frank Act, in addition to other ongoing work requirements, remains a concern. The Board will continue to face challenges in finding and hiring qualified staff because of increasingly competitive markets in the federal and private sectors. Furthermore, the Board will need to fill a large number of positions in a short time, and projected growth by other federal financial regulators and CFPB will require the Board to act quickly to compete for and recruit the most qualified applicants. Work-life balance will also remain an issue for staff who continue to work long hours dealing with the aftermath of the financial crisis and added requirements of the financial reform legislation.
2011 Budget Performance
Board of Governors
The Board ended 2011 with expenses that totaled less than its operating plan by $34.8 million.12 All divisions, offices, and special accounts ended the year with expenses less than their respective operating plans. The Board's capital spending for 2011 single-year capital was also less than its operating plan, and multiyear capital projects remained within their project life budgets.13
Expenses for salaries and benefits were $20.0 million, or 5.8 percent, less than the operating plan, mainly attributable to the following factors:
- Actual payout of accrued annual leave was less than expected.
- Divisions and offices took longer than expected to fill vacancies.
- The methodology for determining the liability for long-term disability changed.
Expenses for goods and services were $14.7 million, or 11.1 percent, less than the operating plan; the underrun was primarily in contractual professional services due to reduced usage of temporary help by divisions, fewer-than-expected executive searches, and the timing of compensation surveys/projects. Furthermore, spending for the Reserve Banks' financial statement audit was less than budgeted. Furniture and equipment and repairs and alterations were both under budget because of revised timelines for various build-out projects.
The Board's 2011 single-year capital purchases totaled less than the operating plan by $1.2 million. The Board encountered certain project delays, causing some projects to fall below budget expectations. As of year-end 2011, budgets for multiyear capital projects for the Board and the OIG totaled $70.6 and $0.4 million, respectively. Spending on these projects to-date totaled $35.7 and $0.4 million for the Board and the OIG, respectively. All multiyear capital projects are still in process and are expected to be completed within their budgeted amounts.
Office of Inspector General
The OIG's operating expenses for 2011 totaled $11.9 million, or $6.1 million less than the $18.0 million operating budget. Expenses for salaries and benefits were $10.1 million, or 19.2 percent less than the operating plan as a result of higher-than-anticipated attrition and slower-than-anticipated hiring as the OIG sought well-qualified candidates. Expenses for goods and services were $1.8 million, or 67.2 percent less than the operating plan; underrun was primarily in contractual professional services due to the raised threshold for when OIG must conduct material loss review of failed state member banks and the lower-than-anticipated number of bank failures. In addition, lower-than-anticipated staffing, along with the fewer number of failed banks, resulted in lower travel expenses, training expenditures, and furniture purchases.
11. Title X of the Dodd-Frank Act established the CFPB, which regulates consumer financial products and services in compliance with federal law. The new bureau, which began operating in July 2011, is an autonomous entity within the Federal Reserve System, and operates independently of the Board and other federal agencies. The Dodd-Frank Act designates the Board's OIG as the OIG for the CFPB. Return to text
12. During 2011, the Board approved a $0.4 million, or 0.1 percent, decrease in the Board's operating budget as part of the midyear adjustments. Return to text
13. During 2011, the Board approved a $0.7 million, or 12.6 percent, increase in the 2011 single-year capital budget and a $12.2 million increase in multiyear capital projects. Return to text