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 2018 budget performance of the Board and Reserve Banks and on their 2019 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' 2018 budgeted, 2018 actual, and 2019 budgeted operating expenses and employment.2

Table 1. Total operating expenses of the Federal Reserve System, net of receipts and claims for reimbursement, 2018–19

Millions of dollars, except as noted

Item 2018 budget 2018 actual Variance
2018 actual to 2018 budget
2019 budget Variance
2019 budget to 2018 actual
Amount Percent Amount Percent
Board 766.7 739.0 -27.7 -3.6 793.6 54.6 7.4
Office of Inspector General 35.9 33.3 -2.7 -7.4 35.4 2.1 6.3
Reserve Banks 1 4,451.3 4,394.1 -57.2 -1.3 4,573.8 179.6 4.1
Currency 861.7 848.8 -13.0 -1.5 955.8 107.0 12.6
Total System operating expenses 2 6,115.7 6,015.1 -100.5 -1.6 6,358.5 343.4 5.7
               
Revenue from priced services 441.7 442.5 0.8 0.2 440.3 -2.2 -0.5
Claims for reimbursement 3 668.2 706.1 37.9 5.7 709.2 3.1 0.4
Other income4 2.5 3.0 0.5 21.7 2.9 -0.1 -3.8
Revenue and claims for reimbursement 5 1,112.4 1,151.6 39.2 3.5 1,152.4 0.8 0.1
               
Total System operating expenses, net of revenue and claims for reimbursement 5,003.3 4,863.5 -139.8 -2.8 5,206.1 342.6 7.0

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 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 2018 actual, the fiscal agency allocated portion of the pension is also included but is not included for the budget. The fiscal agency budgeted pension expense is $40.7 million in 2018 and $57.4 million in 2019. 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, 2018–19

Item 2018 budget 2018 actual Variance
2018 actual to 2018 budget
2019 budget Variance
2019 budget to 2018 actual
Amount Percent Amount Percent
Board 1 2,847 2,847 0 0.0 2,861 14 0.5
Office of Inspector General 1 132 132 0 0.0 132 0 0.0
Reserve Banks2 19,878 19,577 -300 -1.5 19,856 279 1.4
Total System employment 22,857 22,556 -300 -1.3 22,849 293 1.3

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

2018 Budget Performance

In carrying out its responsibilities in 2018, the Federal Reserve System incurred $4,863.5 million in net expenses. Total System operating expenses of $6,015.1 million were offset by $1,151.6 million in revenue from priced services, claims for reimbursement, and other income. Total 2018 System operating expenses were $139.8 million, or 2.8 percent, less than the amount budgeted for 2018.

2019 Operating Expense Budget

Budgeted 2019 System operating expenses of $5,206.1 million, net of revenue and reimbursements, are $342.6 million, or 7.0 percent, higher than 2018 actual expenses. The Reserve Bank budgets comprise almost three-quarters of the System budget (figure 1). Budgeted 2019 revenue from priced services is 0.5 percent lower than 2018 actual revenue, driven largely by decreased check volumes, offset by higher FedACH volumes, and incremental revenue for the new Exception Resolution Service.3

Figure 1. Distribution of budgeted expenses of the Federal Reserve System, 2019
Figure 1. Distribution
of budgeted expenses of the Federal Reserve System, 2019
Accessible Version | Return to text

OIG Office of Inspector General.

Trends in Expenses and Employment

From the actual 2009 level to the budgeted 2019 amount, the total operating expenses of the Federal Reserve System have increased an average of 4.6 percent per year (figure 2). Over the same period, nondefense discretionary spending by the federal government has increased an average of 0.8 percent per year (figure 3). Staffing has 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, 2009–19
Figure 2. Total expenses
of the Federal Reserve System, 2009–19, Billions of dollars
Accessible Version | Return to text

Note: For 2019, budgeted. Includes expenses of the OIG.

1 Calculated with the GDP price deflator.

Figure 3. Cumulative change in Federal Reserve System expenses and federal government expenses, 2009–19
Figure 3. Cumulative
change in Federal Reserve System expenses and federal government expenses,
2009–19
Accessible Version | Return to text

1 Discretionary spending less expenditures on defense. Source: Budget of the United States Government, Fiscal Year 2019: Historical Tables, Table 8.1. Outlays by Budget Enforcement Act Category, 1962–2023.

2 Includes expenses of the OIG.

Figure 4. Employment in the Federal Reserve System, 2009–19
Figure 4. Employment in
the Federal Reserve System, 2009–19
Accessible Version | Return to text

Note: For 2019, budgeted. Employment numbers presented include position counts for the Board and the OIG 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 implement expanded responsibilities mandated by the Dodd-Frank Act, to build out the cybersecurity supervision program, and to support other strategic national initiatives. However, supervision growth is moderating as supervisory conditions improve, efficiencies are found, and resources are shifted toward higher-risk activities and emerging risks. Expense growth in the monetary policy area during the financial crisis has been followed more recently by increased investment in financial stability monitoring and the dedication of additional resources to regional economic research.

Federal Reserve Bank expenses in the cash area have increased as a result of a multiyear investment program 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.4

2019 Capital Budgets

The capital budgets for the Board and Reserve Banks total $185.6 million and $483.4 million, respectively.5 As in previous years, the 2019 capital budgets 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 and provides funding to advance the Plan's goals, objectives, and initiatives.6 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 2019, the recommended growth target included known changes in the run-rate of the Board's ongoing operations, projected increases to centrally managed retirement and post-retirement benefits, known strategic priorities for 2019, and the 2019 triennial Survey of Consumer Finances. After the CBA endorses the growth target, staff from the Division of Financial Management briefs the Board members and the Executive Committee, which comprises the directors of each division, on the target.
  • To achieve the CBA's growth target, divisions allocate resources to their highest priorities and seek tradeoffs and efficiencies. For 2019, this included reducing several accounts in goods and services to reflect historic utilization and adjusting general lapse rates (vacancy) to more closely align with historic hiring and attrition rates.
  • Division of Financial Management staff review initial budget requests submitted by divisions and collaborate with all divisions to achieve the growth target.
  • The chief operating officer and chief financial officer subsequently meet with the Executive Committee and the CBA to further review and refine the budget submissions. Once the budget is 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.

Tables 3 and 4 summarize the Board's 2018 budgeted and actual expenses and its 2019 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 2018 and 2019. 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, 2018–19

Millions of dollars, except as noted

Division, office, or special account 2018 budget 2018 actual Variance
2018 actual to 2018 budget
2019 budget Variance
2019 budget to 2018 actual
Amount Percent Amount Percent
Research and Statistics 85.0 81.5 -3.5 -4.2 85.6 4.1 5.1
International Finance 34.7 31.8 -2.9 -8.4 35.0 3.2 10.1
Monetary Affairs 43.4 42.1 -1.3 -3.0 44.7 2.6 6.2
Financial Stability 13.1 12.9 -0.3 -2.0 13.5 0.6 5.0
Supervision and Regulation 144.8 142.1 -2.7 -1.9 151.4 9.4 6.6
Consumer and Community Affairs 37.6 35.3 -2.3 -6.0 38.1 2.7 7.7
Reserve Bank Operations and Payment Systems 46.3 44.5 -1.8 -3.9 45.7 1.2 2.6
Board Members 28.5 27.1 -1.4 -5.0 28.9 1.8 6.8
Secretary 12.0 11.9 -0.1 -0.7 12.3 0.5 4.0
Legal 32.0 30.0 -1.9 -6.1 32.2 2.2 7.3
Chief Operating Officer 19.2 17.2 -1.9 -10.1 19.2 2.0 11.3
Financial Management 13.1 13.2 0.1 0.5 14.0 0.8 6.4
Information Technology 118.2 114.4 -3.8 -3.2 117.2 2.9 2.5
IT income -52.8 -52.8 0.0 0.0 -55.8 -3.0 5.7
Management 137.7 133.8 -3.9 -2.9 139.3 5.5 4.1
Special projects1 14.5 15.2 0.7 4.9 12.9 -2.3 -15.4
Centrally managed benefits2 17.4 19.4 2.0 11.4 21.1 1.7 8.9
Extraordinary items3 20.9 17.6 -3.3 -15.9 29.7 12.1 68.9
Savings and reallocations 4 0.0 0.0 0.0 n/a -7.4 -7.4 n/a
Survey of Consumer Finances5 1.2 2.0 0.8 66.7 16.0 14.0 700.0
Total, Board operations 766.7 739.0 -27.7 -3.6 793.6 54.6 7.4
               
Office of Inspector General 35.9 33.3 -2.7 -7.4 35.4 2.1 6.3

n/a Not applicable.

 1. Includes centralized Boardwide benefit programs. Return to table

 2. Retirement and post-retirement benefits fluctuate due to changes in actuarial assumptions and demographics. Return to table

 3. Includes several strategic projects, including the Martin Building renovation, and a centralized position pool that was approved with the 2019 budget. Return to table

 4. For 2019, includes centralized budget execution adjustments. Return to table

 5. The survey collects information about family incomes, net worth, balance sheet components, credit use, and other financial outcomes, and is conducted every three years. Return to table

Table 4. Operating expenses of the Board of Governors, by account classification, 2018–19

Millions of dollars, except as noted

Account classification 2018 budget 2018 actual Variance
2018 actual to 2018 budget
2019 budget Variance
2019 budget to 2018 actual
Amount Percent Amount Percent
Personnel services
Salaries 449.8 435.9 -13.9 -3.1 461.3 25.4 5.8
Retirement/Thrift plans 61.7 56.1 -5.6 -9.0 58.4 2.3 4.1
Employee insurance and other benefits 42.8 39.2 -3.6 -8.3 41.1 1.8 4.6
Net periodic benefits costs 1 0.0 9.2 9.2 n/a 9.0 -0.2 -2.1
Subtotal, personnel services 554.3 540.5 -13.8 -2.5 569.7 29.3 5.4
               
Goods and services
Postage and shipping 0.3 0.3 0.1 23.4 0.2 -0.1 -34.6
Travel 17.1 14.9 -2.1 -12.5 15.0 0.1 0.6
Telecommunications 7.2 6.0 -1.2 -16.6 6.1 0.1 2.3
Printing and binding 1.8 0.5 -1.3 -69.7 0.5 -0.1 -14.1
Publications 0.6 0.4 -0.2 -34.9 0.6 0.2 53.7
Stationery and supplies 1.4 1.2 -0.2 -13.6 1.4 0.1 11.1
Software 17.0 17.7 0.8 4.6 19.4 1.7 9.5
Furniture and equipment (F&E) 6.3 5.6 -0.7 -11.6 6.5 0.9 16.3
Rentals 32.5 33.5 1.0 3.0 33.9 0.4 1.1
Data, news, and research 14.8 16.6 1.8 12.3 32.0 15.4 92.6
Utilities 2.3 1.6 -0.7 -31.0 2.0 0.4 27.3
Repairs and alterations—building 2.5 2.7 0.1 4.2 3.4 0.7 27.9
Repairs and maintenance—F&E 4.7 4.5 -0.2 -5.0 4.5 0.0 -0.5
Contractual professional services 54.2 46.8 -7.4 -13.7 52.8 6.0 12.9
Interest 0.0 0.0 0.0 171.7 0.0 0.0 -34.0
Training and dues 4.7 4.3 -0.4 -9.1 4.9 0.6 14.8
Subsidies and contributions 2.1 2.0 -0.1 -4.6 3.1 1.1 54.6
All other 4.0 2.7 -1.3 -32.3 3.3 0.6 22.0
Depreciation/amortization 43.2 41.2 -2.0 -4.6 39.8 -1.5 -3.6
IT user charge 52.2 52.2 0.0 -0.1 55.2 3.0 5.7
IT income -52.8 -52.8 0.0 -0.1 -55.8 -3.0 5.8
Income -3.8 -3.5 0.2 -6.3 -4.9 -1.4 39.4
Subtotal, goods and services 212.4 198.5 -13.9 -6.5 223.9 25.3 12.8
Total, Board operations 766.7 739.0 -27.7 -3.6 793.6 54.6 7.4
               
Office of Inspector General              
Personnel services 27.7 25.8 -1.8 -6.7 27.4 1.6 6.2
Goods and services 8.3 7.4 -0.8 -9.9 7.9 0.5 6.9
Total, OIG operations 35.9 33.3 -2.7 -7.4 35.4 2.1 6.3

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, 2018–19
Division, office, or special account 2018 budget1 2018 actual Variance
2018 actual to 2018 budget
2019 budget Variance
2019 budget to 2018 actual
Amount Percent Amount Percent
Research and Statistics 356 356 0 0.0 356 0 0.0
International Finance 155 156 1 0.6 156 0 0.0
Monetary Affairs 172 171 -1 -0.6 171 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 67 62 -5 -7.5 62 0 0.0
Financial Management 69 69 0 0.0 69 0 0.0
Information Technology 413 413 0 0.0 413 0 0.0
Management 454 459 5 1.1 459 0 0.0
Extraordinary items2 0 0 0 n/a 14 14 n/a
Total, Board operations 2,847 2,847 0 0.0 2,861 14 0.5
               
Office of Inspector General 132 132 0 0.0 132 0 0.0

n/a Not applicable.

 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 a centralized position pool, which will be used for strategic areas of growth. Return to table

2018 Budget Performance

Total expenses for Board operations were $739.0 million, which was $27.7 million, or 3.6 percent, less than the approved 2018 budget of $766.7 million.

Personnel services expenses were $13.8 million less than budgeted primarily because of lower employment levels, which caused higher-than-budgeted vacancy rates. The underrun in personnel services was partially offset by an overrun in centrally managed retirement and post-retirement benefits, which was driven by changes in actuarial assumptions.

Goods and services expenses were $13.9 million less than budgeted. Lower utilization of contractual professional services and reduced travel expenses driven by lower employment levels contributed heavily to the underrun. Additional underruns occurred because of reduced telecommunications expenses and lower depreciation expenses driven by purchase delays and lower capital expenditures.

The Board's 2018 single-year capital spending was less than budgeted by $3.7 million, or 21.6 percent. Multiyear capital projects remained within their overall project budgets; however, actual spending in 2018 was less than budgeted by $87.9 million, or 46.9 percent, because of schedule delays for building improvement projects. Table 6 summarizes the Board's budgeted and actual capital expenditures for 2018 and 2019.

2019 Operating Expense Budget

The 2019 budget for Board operations is $793.6 million, which is $54.6 million higher than 2018 actual expenses. Excluding the Survey of Consumer Finances, the 2019 budget has grown by 5.5 percent over 2018 actual expenses, and 7.4 percent including the survey. 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 2019 budget includes employment growth expected to occur in 2019, funding for the Board's compensation and benefit programs, projected increases to centrally managed retirement and post-retirement benefits, and expenses related to the 2019 triennial 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.

For 2019, the Board added 14 positions in support of a centralized position pool, which leadership may allocate to strategic areas of growth. As a result, the Board's total authorized position count for 2019 increased from 2,847 to 2,861.

Risks in the 2019 Budget

The budget process required all divisions to make tradeoffs and prioritize resources to fund mission-critical activities. Specifically, divisions were asked to align their goods and services budgets for continuing operations with historical spending trends. In addition, Division of Financial Management staff incorporated centralized adjustments into the budget to reflect historical under-execution.

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

2019 Capital Budgets

The Board's 2019 single-year capital budget totals $19.5 million, which is $6.0 million higher than 2018 actual capital expenditures. The increase is primarily driven by the continuation of software development projects in supervision and regulation, which was previously classified in the multiyear capital budget.

The Board's multiyear capital budget totals $634.5 million, which includes 2019 expected capital expenditures of $165.8 million. The budget reflects funding for the acquisition of the 1951 Constitution Avenue, NW building, renovation of the Martin Building, and planned renovations of the 1951, Eccles, and New York Avenue buildings. The Board has developed its capital spending plans to provide a secure, modern environment that meets the needs of the workforce, promotes efficiency, supports resiliency and continuity efforts, and maximizes productivity. Table 6 summarizes the Board's budgeted and actual capital expenditures for 2018 and 2019.

Table 6. Capital expenditures of the Board of Governors, by capital type, 2018–19

Millions of dollars, except as noted

Item 2018 budget 2018 actual Variance
2018 actual to 2018 budget
2019 budget Variance
2019 budget to 2018 actual
Amount Percent Amount Percent
Board
Single-year capital expenditures 17.3 13.6 -3.7 -21.6 19.5 6.0 44.1
Multiyear capital expenditures 1 187.6 99.6 -87.9 -46.9 165.8 66.2 66.5
Total capital expenditures 204.8 113.2 -91.7 -44.8 185.3 72.2 63.8
               
Office of Inspector General
Single-year capital expenditures 0.1 0.1 0.0 1.0 0.2 0.1 68.4
Multiyear capital expenditures 0.0 0.0 0.0 n/a 0.0 0.0 n/a
Total capital expenditures 0.1 0.1 0.0 1.0 0.2 0.1 68.4
               
Board and OIG total capital expenditures 205.0 113.3 -91.7 -44.7 185.6 72.3 63.8

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

n/a Not applicable.

 1. In May 2018, the Board of Governors approved a budget amendment, which included a revision to the 2018 multiyear capital budget. The initial multiyear capital budget was $140.6 million. Return to table

Office of Inspector General

The budget for the OIG is grounded in the goals established in its strategic plan, which are delivering results that promote agency excellence; promoting a diverse, skilled, and engaged workforce and fostering an inclusive and collaborative environment; optimizing external stakeholder engagement; and advancing organizational effectiveness and modeling a culture of continuous improvement.7

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.

2018 Budget Performance

Total expenses for OIG operations were $33.3 million, which was $2.7 million, or 7.4 percent, less than the approved 2018 budget of $35.9 million. Personnel services expenses were $1.8 million less than budgeted because of slower-than-expected net employment activities. Goods and services expenses were $0.8 million less than budgeted. The OIG slightly exceeded its single-cycle capital budget in 2018 by less than $0.1 million, or 1.0 percent, because of higher-than-expected costs for vehicle life-cycle replacements. The overexpenditure was approved through its 2019 budget memorandum. Table 6 summarizes the OIG's budgeted and actual capital expenditures for 2018 and 2019.

2019 Operating Expense Budget

The 2019 budget for OIG operations is $35.4 million, which is $2.1 million, or 6.3 percent, higher than 2018 actual expenses. The OIG's total authorized position count for 2019 remains unchanged at 132.

2019 Capital Budget

The OIG's 2019 single-year capital budget totals $0.2 million, which is $0.1 million higher than 2018 actual capital expenditures.

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 structure their budgets around specific functional areas reflecting the core responsibilities of the Federal Reserve:

  • 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:

  • The Conference of Presidents, operating through its Committee on Spend Stewardship, defines, in close consultation with the Board's Committee on Federal Reserve Bank Affairs (BAC), key strategic objectives for the System. Considering longer-term environmental trends and historical growth rates of expense, these governance bodies articulate an aggregate System-level growth expectation for a multiyear period.
  • The Reserve Banks develop budgets that reflects this direction through appropriate trade-offs, 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 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 with 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' 2018 budgeted and actual expenses and 2019 budgeted expenses by Reserve Bank, functional area, and account classification.8 Table 10 shows the Reserve Banks' budgeted and actual employment for 2018 and budgeted employment for 2019. In addition, table 11 shows the Reserve Banks' budgeted and actual capital expenditures for 2018 and budgeted capital for 2019.

Table 7. Operating expenses of the Federal Reserve Banks, by District, 2018–19

Millions of dollars, except as noted

District 2018 budget 2018 actual Variance
2018 actual to 2018 budget
2019 budget Variance
2019 budget to 2018 actual
Amount Percent Amount Percent
Boston 233.0 221.4 -11.5 -4.9 231.6 10.1 4.6
New York 1,006.7 1,002.4 -4.2 -0.4 1,043.5 41.0 4.1
Philadelphia 191.8 191.4 -0.4 -0.2 194.8 3.5 1.8
Cleveland 203.3 199.3 -4.0 -2.0 209.4 10.1 5.1
Richmond 479.8 469.0 -10.8 -2.2 503.6 34.5 7.4
Atlanta 420.3 410.5 -9.8 -2.3 415.5 5.0 1.2
Chicago 397.8 388.1 -9.6 -2.4 396.1 8.0 2.1
St. Louis 412.0 410.1 -2.0 -0.5 431.2 21.1 5.1
Minneapolis 174.0 171.5 -2.5 -1.4 180.0 8.5 4.9
Kansas City 307.3 310.8 3.4 1.1 332.7 21.9 7.1
Dallas 238.6 234.5 -4.0 -1.7 239.1 4.6 1.9
San Francisco 386.8 385.1 -1.7 -0.4 396.5 11.4 3.0
               
Total Reserve Bank operating expenses 4,451.3 4,394.1 -57.2 -1.3 4,573.8 179.6 4.1

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, 2018–19

Millions of dollars, except as noted

Operating area 2018 budget 2018 actual Variance
2018 actual to 2018 budget
2019 budget Variance
2019 budget to 2018 actual
Amount Percent Amount Percent
Monetary and economic policy 721.5 720.4 -1.1 -0.2 756.7 36.3 5.0
Services to the U.S. Treasury and other government agencies 616.1 608.3 -7.7 -1.3 657.0 48.6 8.0
Services to financial institutions and the public 1,211.6 1,199.6 -11.9 -1.0 1,245.2 45.6 3.8
Supervision and regulation 1,449.3 1,424.2 -25.1 -1.7 1,473.6 49.4 3.5
Fee-based services to financial institutions 452.9 441.5 -11.3 -2.5 441.2 -0.3 -0.1
               
Total Reserve Bank operating expenses1 4,451.3 4,394.1 -57.2 -1.3 4,573.8 179.6 4.1

 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, 2018–19

Millions of dollars, except as noted

Account classification 2018 budget 2018 actual Variance
2018 actual to 2018 budget
2019 budget Variance
2019 budget to 2018 actual
Amount Percent Amount Percent
Salaries and other benefits 1 3,330.2 3,253.9 -76.3 -2.3 3,394.5 140.5 4.3
Building 335.2 340.4 5.1 1.5 343.8 3.5 1.0
Software costs 264.6 278.5 14.0 5.3 275.3 -3.2 -1.1
Equipment 192.4 193.7 1.3 0.7 197.9 4.3 2.2
Recoveries2 -394.4 -374.7 19.6 -5.0 -384.1 -9.3 2.5
Expenses capitalized -76.5 -66.9 9.5 -12.5 -87.2 -20.3 30.3
All other 3 799.8 769.3 -30.5 -3.8 833.4 64.1 8.3
               
Total Reserve Bank operating expenses 4,451.3 4,394.1 -57.2 -1.3 4,573.8 179.6 4.1

 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, 2018–19

District 2018 budget 2018 actual Variance
2018 actual to 2018 budget
2019 budget Variance
2019 budget to 2018 actual
Amount Percent Amount Percent
Boston 1,086 1,053 -32 -3.0 1,037 -16 -1.5
New York 3,277 3,182 -96 -2.9 3,232 51 1.6
Philadelphia 876 885 9 1.0 859 -26 -2.9
Cleveland 999 982 -16 -1.6 988 5 0.5
Richmond 1,498 1,458 -40 -2.7 1,481 24 1.6
Atlanta 1,774 1,761 -13 -0.7 1,737 -24 -1.4
Chicago 1,605 1,558 -47 -2.9 1,599 40 2.6
St. Louis 1,442 1,396 -46 -3.2 1,435 39 2.8
Minneapolis 1,030 1,018 -12 -1.2 1,060 42 4.1
Kansas City 1,910 1,951 41 2.1 2,006 55 2.8
Dallas 1,320 1,284 -36 -2.7 1,278 -6 -0.5
San Francisco 1,732 1,712 -20 -1.2 1,765 52 3.1
Total, all Districts 18,550 18,241 -309 -1.7 18,477 235 1.3
               
Federal Reserve Information Technology 1,270 1,281 12 0.9 1,321 39 3.1
Office of Employee Benefits 58 55 -3 -5.4 59 4 7.7
               
Total 19,878 19,577 -300 -1.5 19,856 279 1.4

Table 11. Capital expenditures of the Federal Reserve Banks, by District, and of FRIT and OEB, 2018–19

Millions of dollars, except as noted

District * 2018 budget 2018 actual Variance
2018 actual to 2018 budget
2019 budget Variance
2019 budget to 2018 actual
Amount Percent Amount Percent
Boston 20.5 11.1 -9.4 -45.8 15.1 4.0 36.2
New York 92.0 108.7 16.8 18.2 125.6 16.9 15.6
Philadelphia 34.6 20.7 -13.9 -40.1 36.2 15.4 74.4
Cleveland 13.7 12.6 -1.1 -8.1 23.1 10.5 83.6
Richmond 20.4 15.8 -4.6 -22.7 15.2 -0.6 -3.9
Atlanta 21.1 19.3 -1.7 -8.2 23.2 3.8 19.8
Chicago 22.3 11.5 -10.8 -48.6 26.7 15.2 132.4
St. Louis 6.6 5.4 -1.2 -18.3 6.7 1.3 23.5
Minneapolis 19.3 11.4 -7.9 -40.8 26.0 14.5 127.4
Kansas City 23.4 20.4 -3.1 -13.0 32.9 12.5 61.5
Dallas 20.1 15.0 -5.1 -25.3 24.2 9.1 60.7
San Francisco 30.9 23.4 -7.4 -24.1 53.1 29.7 126.9
Total, all Districts 324.9 275.4 -49.5 -15.2 407.9 132.5 48.1
               
Federal Reserve Information Technology 81.6 64.6 -17.0 -20.8 75.3 10.6 16.4
Office of Employee Benefits 0.1 * * -35.0 0.2 0.2 607.7
               
Total 406.6 340.1 -66.5 -16.4 483.4 143.3 42.1

* Less than $50,000.

2018 Budget Performance

Total 2018 operating expenses for the Reserve Banks were $4,394.1 million, which is $57.2 million, or 1.3 percent, less than the approved 2018 budget of $4,451.3 million. The actual average number of personnel (ANP) was 19,577 ANP, an underrun of 300 ANP, or 1.5 percent, from 2018 budgeted staffing levels, largely because of slower-than-forecasted hiring in the supervision, support and overhead, and IT functions. The Reserve Banks' 2018 capital expenditures were less than budgeted by $66.5 million, or 16.4 percent, because of changes in timing and scope for numerous initiatives.

Revised project plans, benefits assumptions, and less-than-planned personnel expenses driven by delays in hiring contributed to the 2018 operating expense budget underrun. The underrun is partially offset by increased expenses for several Treasury-related initiatives, including the TWAI, the Treasury auction program, and a software write-off for the Post Payment System initiative, which will be strategically reset and redeveloped as the Post Payment Modernization Initiative in 2019.9

2019 Operating Expense Budget

The 2019 operating budgets of the Reserve Banks total $4,573.8 million, which is $179.6 million, or 4.1 percent, higher than 2018 actual expenses.10 Supervision expenses are increasing primarily for the ongoing support of the supervision portfolio, national and horizontal review initiatives, and the continued development and implementation of the cybersecurity supervision program. Treasury expenses are increasing primarily to support new and ongoing technology development for the Treasury auction program, TWAI, Stored Value Card (SVC), and the Treasury Retail Investment Manager initiative.11 Additionally, increases in cash expenses are driven by the first phase of the next-generation currency-processing program (NextGen).12 Growth in monetary policy reflects increased resources dedicated to regional economic research, including new studies on inflation and low- and moderate-income communities.

Total 2019 budgeted employment for the Reserve Banks, FRIT, and OEB is 19,856 ANP, an increase of 279 ANP, or 1.4 percent, from 2018 actual employment levels. In IT, resource additions will support information security initiatives, application development projects for Treasury and Supervision, and application development projects to enhance data analytics and integration services. In Treasury services, the increase is attributable to updated requirements for new and ongoing programs, including the Treasury auction program, SVC, Do Not Pay, and Fiscal Accounting.13

Support and overhead functions plan to add resources to strengthen strategic planning, enterprise risk management, and law enforcement capabilities. Further contributing to the growth are resources to support regional economic research and outreach initiatives, the NextGen program, and a multiyear effort to enhance the resiliency, security, and customer experience of the FedLine access solutions.14

Increases are offset by reductions in the check function in recognition of operational efficiencies; in ACH following the planned completion of the multiyear ACH Modernization initiative; and in supervision related to efficiency efforts, changes in supervisory responsibilities, and the enactment of Economic Growth, Regulatory Relief, and Consumer Protection Act.15

Reserve Bank officer and staff personnel expenses for 2019 total $2,644.9 million, an increase of $123.1 million, or 4.9 percent, from 2018 actual expenses. The increase reflects expenses associated with additional staff and budgeted salary administration adjustments.16

The 2019 Reserve Bank budgets include a salary administration program for eligible officers, senior professionals, and staff totaling $100.8 million and a variable pay program totaling $213.8 million.

2019 Capital Budgets

The 2019 capital budgets for the Reserve Banks, FRIT, and OEB total $483.4 million. The increase in the 2019 capital budget is $143.3 million, or 42.1 percent, more than the 2018 actual levels of $340.1 million, largely reflecting ongoing multiyear building and information technology projects. Initiatives in the 2019 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 $138.4 million in 2019 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.17 The expenditures designated for conditional approval by the chair of the BAC include large-scale building projects to renovate office space, increase parking, and upgrade mechanical and electrical infrastructure. Technology projects include Fedwire and FedLine initiatives and updates to supervision applications.18

Other Capital Expenditures

Significant capital expenditures (typically expenditures exceeding $1 million) that are not designated for conditional approval include total multiyear budgeted expenditures of $566.6 million for 2019 and future years, of which the single-year 2019 budgeted expenditures are $247.8 million. This category includes building expenditures for office space renovations, infrastructure upgrades, building automation, and security enhancements. IT projects include ongoing IT infrastructure investments; initiatives that enable better access to data and enhance cybersecurity and cyberresiliency; and applications to support fee-based services, supervision, cash, and open market operations.

Capital initiatives that are individually less than $1 million are budgeted at an aggregate amount of $97.2 million for 2019 and include building maintenance expenditures, scheduled software and equipment upgrades, and equipment and furniture replacements.

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 the integrity of and maintaining confidence in U.S. currency. The Board works with the Reserve Banks, the Treasury Department, the Treasury's Bureau of Engraving and Printing (BEP), and the U.S. 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.19

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 fourth quarter, Board staff estimates expenses for the calendar-year currency budget, including BEP printing expenses (based on estimated production costs provided by the BEP); BEP facility reimbursements; BEP support costs; and expenses for currency transportation, research and development, annual contributions and management support, quality assurance, counterfeit deterrence, currency education, capital expenses, and depreciation.
  • Each December, the BAC reviews the proposed currency budget.
  • The BAC chair submits the proposed currency budget to Board members for review and final action.

2018 Budget Performance

The Board's 2018 actual operating expenses for new currency were $848.8 million, a decrease of $13.0 million, or 1.5 percent, from the 2018 budget. This budget underrun is primarily attributable to lower-than-budgeted expenses for currency quality assurance (CQA), currency transportation, and research and development. Board staff focused CQA design work on security feature development and delayed planned design work until more progress was made on security of the next family of notes. In addition, budget underruns resulted from Board staff using a secure, but lower-cost mode of transportation to ship $20 notes to Reserve Banks from the BEP and shipped fewer notes than planned overall from the BEP to the Reserve Banks.20 The research and development program eliminated certain options for security feature development to focus on the most promising features and to ensure that the program's requirements could be met.

2019 Budget

The 2019 operating budget for currency is $955.8 million, and the multicycle capital budget is $3.2 million. The proposed 2019 operating budget represents an increase of $107.0 million, or 12.6 percent, from 2018 actual expenses, and includes $210.0 million in reimbursements to the BEP to fund facilities improvement costs. The two improvement projects are an expansion of the Fort Worth, Texas, facility and new design and engineering studies in support of a new facility to replace the BEP's existing Washington, D.C., facility.21

The proposed multicycle capital budget is an increase of $3.2 million (there were no multicycle capital expenses in 2018) and covers information technology equipment for exploratory research and development for prototypes that would enable an automated counterfeit inspection system. BEP costs are 95 percent of the operating budget. Board expenses for currency transportation, research and development, annual contributions and management support, quality assurance, currency education, and depreciation make up the remaining 5 percent of the operating budget (table 12).

Table 12. Federal Reserve currency budget, 2018 and 2019

Thousands of dollars, except as noted

Item 2018 budget 2018 actual Variance
2018 actual to 2018 budget
2019 budget Variance
2019 budget to 2018 actual
Amount Percent Amount Percent
Printing Federal Reserve notes
BEP fixed printing costs 468,876.0 468,876.0 0.0 0.0 401,938.0 -66,938.0 -14.3
BEP variable printing costs 332,118.9 331,009.5 -1,109.4 -0.3 288,822.1 -42,187.4 -12.7
BEP facility reimbursements
Fort Worth facility expansion 0.0 0.0 0.0 n/a 150,000.0 150,000.0 n/a
D.C. facility design work 0.0 3.5 3.5 n/a 60,000.0 59,996.5 *
BEP support costs
Other 1 3,697.2 3,501.4 -195.9 -5.3 3,672.7 171.3 4.9
Currency reader 1,285.6 1,452.9 167.3 13.0 956.8 -496.1 -34.1
Board expenses
Currency transportation 24,260.5 20,252.2 -4,008.3 -16.5 22,496.7 2,244.5 11.1
Research and development 7,740.0 5,383.7 -2,356.3 -30.4 11,767.7 6,384.0 118.6
Annual contributions and management support2 7,145.1 6,577.8 -567.3 -7.9 7,100.4 522.6 7.9
Currency quality assurance 14,000.0 9,755.7 -4,244.3 -30.3 6,500.0 -3,255.7 -33.4
Currency education 2,531.0 1,905.3 -625.7 -24.7 2,430.2 524.9 27.5
Depreciation 80.2 62.9 -17.3 -21.6 74.5 11.7 18.5
Operating budget 861,734.5 848,780.9 -12,953.5 -1.5 955,759.1 106,978.2 12.6
Capital expenses
Multiyear cycle capital 0.0 0.0 0.0 n/a 3,207.3 3,207.3 n/a

* The percentage change is greater than 100 percent and based on comparison to a de minimisvalue in the prior year.

n/a Not applicable.

 1. 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. Return to table

 2. The annual contributions and management support budget category was previously titled counterfeit deterrence. Return to table

Figure 5. Federal Reserve costs for currency, 2009–19
Figure 5. Federal Reserve
costs for currency, 2009–2019
Accessible Version | Return to text

Note: For 2019, budgeted. Data for 2009–18 have been revised.

Printing of Federal Reserve Notes

The currency budget includes $690.8 million in printing costs for 2019, which represents a decrease of $109.1 million, or 13.6 percent, from 2018 actual expenses. The decrease is attributable to a reduction of 11.7 percent in the number of notes the BEP expects to print in calendar year 2019. This decrease in new notes printed does not represent a decline in currency demand, but rather a difference in the timing of BEP deliveries to the Board.22 The printing budget includes $401.9 million (58 percent) in fixed printing costs and $288.8 million (42 percent) in variable printing costs.

BEP Facility Reimbursements

The proposed budget for BEP Fort Worth facility expansion and preliminary studies and contractor expenses in support of a replacement of the Washington, D.C., facility costs is $210.0 million.23 Of the total, the BEP expects to spend $150.0 million for the Fort Worth facility expansion and $60.0 million for architectural and engineering work in support of the D.C. replacement facility.

BEP Support Costs

The 2019 budget for BEP support costs is $4.6 million, which is a decrease of $0.3 million, or 6.6 percent, from 2018 actual expenses. The 2019 budget for other reimbursements to the BEP is $3.7 million, which is an increase of $0.2 million from 2018 actual expenses. This funding reimburses 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. The Office of Compliance 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 those standards. As a public service, the Mutilated Currency Division also processes claims for the redemption of damaged or mutilated currency.

The 2019 currency reader budget is $1.0 million, which is $0.5 million lower than 2018 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.

Transportation

The 2019 currency transportation budget is $22.5 million, an increase of $2.2 million, or 11.1 percent, from 2018 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 increase in armored carrier rates between 2018 and 2019, as specified in the existing multiyear armored carrier contracts. In addition, the budget includes funds to ship a larger volume of notes from the BEP to the Reserve Banks in 2019 because the Board did not ship all of the notes the BEP produced in the previous year.

Research and Development

The 2019 budget for research and development is $11.8 million, which is $6.4 million higher than 2018 actual expenses. The Board will develop, test, and evaluate new and existing security features in support of the new family of notes. In addition, the Board will continue development work on optical-inspection technology and will integrate data from a prototype counterfeit-inspection system. The Board also will continue work on cognitive and perception studies to help inform the U.S. currency program about security feature and banknote design decisions.

Annual Contributions and Management Support

The 2019 budget for annual contributions and management support is $7.1 million, which is $0.5 million, or 7.9 percent, higher than 2018 actual expenses. The budget funds membership in the Central Bank Counterfeit Deterrence Group, which is an association of central banks charged with combating digital counterfeiting, and funds the Reproduction Research Center to perform adversarial analysis on design concepts and potential security features in a shared member-central bank facility.

Currency Quality Assurance

The 2019 budget for quality assurance initiatives is $6.5 million, which is $3.3 million less than 2018 actual expenses. The decrease is attributable to a reduction in consultant work needed in this final contract year in support of the CQA program. This reduction also is attributed to a reallocation of design activities from the CQA budget category to the research and development budget. The CQA consultants will help facilitate executive program review meetings between the Board and BEP and recommend operational, cost, and performance metrics that are intended to measure the overall health of the U.S. currency program and result in more operational and cost transparency and better decisionmaking capabilities among executives responsible for the U.S. currency program.

Currency Education Program

The 2019 budget for the currency education program (CEP) is $2.4 million, which is $0.5 million higher than 2018 actual expenses. The CEP works 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 2019, the CEP will continue to conduct outreach to domestic and international businesses and retailers, maintain the uscurrency.gov educational website, and further develop digital resources to reach a broader community of users.

Capital Budget

The 2019 capital budget includes $3.2 million of multiyear capital to develop requirements for and support the integration of prototype optical technology intended to automate the counterfeit analysis function into the Board's broader information technology infrastructure. This capital item includes funds to reimburse the Board's Division of Information Technology for capitalized internal software development, capital equipment lease, and capital equipment needed for the effort.

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 https://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 2018 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. Exception Resolution Service provides an automated means for participants to manage ACH exceptions for entries settled through FedACH. Return to text

 4. TWAI is a dedicated, distributed computing environment that houses multiple Treasury applications.
In 2018, the Reserve Banks successfully concluded a multiyear fiscal agency consolidation effort, which reduced the number of Reserve Banks that provide services to the Treasury to increase operational efficiency and effectiveness and provide long-term cost savings. Return to text

 5. The capital budget reported for the Board includes single-year capital expenditures and 2019 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

 6.  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. More information may be found at https://www.federalreserve.gov/publications/gpra/files/2016-2019-gpra-strategic-plan.pdfReturn to text

 7. Additional information is available at https://oig.federalreserve.gov/strategic-plan.htmReturn 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 Post Payment System initiative was a multiyear effort to modernize several of the Treasury's legacy post-payment processing systems into a single application to enhance operations, reduce expenses, improve data analytics capabilities, and provide a centralized and standardized set of payment data. The Post Payment Modernization Initiative will modernize and consolidate five of Treasury's legacy post-payment processing systems into a single application. Return to text

 10. On December 11, 2018, the Board of Governors approved the 2019 Reserve Bank operating and capital budgets, including conditionally approved expenditures associated with services to the Treasury. The U.S. Department of the Treasury's Bureau of the Fiscal Service provided final authorization of its requested services on December 19, which resulted in aggregate reductions of $10.7 million and $1.8 million for the operating expense and capital budgets, respectively. The 2019 Reserve Bank operating and capital budgets discussed here reflect the updated expectations from Fiscal Service. Additional information is available at https://www.federalreserve.gov/foia/files/2019ReserveBankBudgets.pdf.
In addition, the chair of the BAC designated a portion of the 2019 operating expense budgets ($15.5 million) associated with the adoption, integration, and implementation of the procurement, financial management, and human capital technology initiatives for conditional approval, requiring additional review and approval by the director of the Division of Reserve Bank Operations and Payment Systems. The multiyear initiative will replace legacy procurement, financial management, and human capital systems to allow for greater capability and flexibility in managing, reporting, and analyzing System financial and human capital information. Return to text

 11. The SVC program comprises three military cash-management programs: EagleCash, EZpay, and Navy Cash. 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. The Treasury Retail Investment Manager will be the primary vehicle used by individual and entity investors to interact directly with Treasury to purchase and manage savings bonds and marketable securities. Return to text

 12. The NextGen program is a multiyear initiative to replace high-speed currency-processing equipment and sensors in cash offices across the Federal Reserve System. Return to text

 13. Do Not Pay helps agencies mitigate and eliminate improper payment. Fiscal Accounting maintains the federal government's set of accounts and serves as a repository for information pertaining to the government's financial position. Return to text

 14. FedLine provides financial institutions with direct access to Federal Reserve System services. Return to text

 15. The ACH Modernization program is a multiyear technology initiative designed to replace the Federal Reserve's current core ACH processing system with a new, modern technology solution. The Economic Growth, Regulatory Relief, and Consumer Protection Act, enacted in May of 2018, aims to right-size the regulatory system for smaller financial institutions, allowing community banks and credit unions to succeed and invest further in their local areas. Return to text

 16. The salary administration program includes a budgeted pool for merit increases, equity adjustments, and promotions. Return to text

 17. 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

 18. The Reserve Banks operate two key payment and settlement systems—the Fedwire Funds Service and the Fedwire Securities Service (collectively, "Fedwire Services"), among other services. Return to text

 19. 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

 20. After consultation with Reserve Banks and armored carriers, the Board determined $20 notes could be shipped using a lower-cost mode of transportation that improved operational efficiency, appropriately mitigated risk, and reduced overall costs. Return to text

 21. Excluding reimbursements for these BEP facilities improvements, the proposed 2019 operating budget is $745.8 million, which is $103.0 million, or 12.1 percent, less than 2018 actual expenses. Return to text

 22. The BEP fulfilled the fiscal year 2018 print order; however, the BEP operates on a fiscal year that begins on October 1 and ends September 30. This difference in timing requires that the Board estimate its calendar-year budget for new currency by eliminating the estimated volume of notes that the BEP will produce in the first quarter of its fiscal year and estimating the volume of notes projected to be produced by the BEP in the fourth quarter of the calendar year. Return to text

 23. In 2018, there were de minimisfacility reimbursement expenses of $4,000 for requirements definition work done for the BEP by the General Services Administration. These are included in table 12 for comparison with the proposed 2019 budget. Return to text

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Last Update: July 09, 2019