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 2019 budget performance of the Board and Reserve Banks and on their 2020 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' 2019 budgeted, 2019 actual, and 2020 budgeted operating expenses and employment.2

Table 1. Total operating expenses of the Federal Reserve System, net of receipts and claims for reimbursement, 2019–20

Millions of dollars, except as noted

Item 2019 budget 2019 actual Variance
2019 actual to 2019 budget
2020 budget Variance
2020 budget to 2019 actual
Amount Percent Amount Percent
Board 793.6 788.5 -5.2 -0.7 814.4 25.9 3.3
Office of Inspector General 35.4 35.1 -0.3 -0.8 28.9 -6.2 -17.7
Reserve Banks1 4,573.8 4,543.1 -30.6 -0.7 4,771.2 228.1 5.0
Currency 955.8 837.1 -118.7 -12.4 877.2 40.1 4.8
Total System operating expenses2 6,358.5 6,203.7 -154.8 -2.4 6,491.6 287.9 4.6
Revenue from priced services 440.3 444.0 3.7 0.8 443.8 -0.2 0.0
Claims for reimbursement 3 709.2 728.5 19.3 2.7 722.5 -5.9 -0.8
Other income4 2.9 3.5 0.7 22.8 2.8 -0.7 -20.6
Revenue and claims for reimbursement5 1,152.4 1,176.0 23.7 2.1 1,169.2 -6.9 -0.6
Total System operating expenses, net of revenue and claims for reimbursement 5,206.1 5,027.7 -178.4 -3.4 5,322.4 294.7 5.9

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 2019 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 $57.4 million in 2019 and $48.0 million in 2020. 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, 2019–20
Item 2019 budget 2019 actual Variance
2019 actual to 2019 budget
2020 budget Variance
2020 budget to 2019 actual
Amount Percent Amount Percent
Board 1 2,891 2,843 -48 -1.7 2,903 60 2.1
Office of Inspector General 132 128 -4 -3.2 131 4 3.1
Currency 1 0 0 0 n/a 15 14 n/a
Reserve Banks 2 19,856 19,754 -102 -0.5 19,898 144 0.7
Total System employment 22,879 22,725 -154 -0.7 22,947 222 1.0

Note: Employment numbers are average number of personnel (ANP). ANP is the average number of employees expressed in terms of full-time positions for the period and includes outside agency help. In prior Annual Reports, the Board reported authorized position counts.

n/a Not applicable.

 1. For 2020, includes the transfer of staff from the Board budget to the Currency budget that support currency education, technology and banknote development processes, new design concepts, security feature developments, adversarial analysis of proposed security features and design concepts, and new technology developments. Return to table

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

2019 Budget Performance

In carrying out its responsibilities in 2019, the Federal Reserve System incurred $5,027.7 million in net expenses. Total System operating expenses of $6,203.7 million were offset by $1,176.0 million in revenue from priced services, claims for reimbursement, and other income. Total 2019 System operating expenses were $178.4 million, or 3.4 percent, less than the amount budgeted for 2019.

2020 Operating Expense Budget

Budgeted 2020 System operating expenses of $5,322.4 million, net of revenue and reimbursements, are $294.7 million, or 5.9 percent, higher than 2019 actual expenses. The Reserve Bank budgets comprise almost three-quarters of the System budget (figure 1). Budgeted 2020 revenue from priced services is 0.05 percent lower than 2019 actual revenue, reflecting a continual decline in check volume, offset by steadily increasing automated clearinghouse (ACH) volume.

Figure 1. Distribution of budgeted expenses of the Federal Reserve System, 2020
Figure 1. Distribution of budgeted expenses of the Federal Reserve System, 2020
Accessible Version | Return to text

OIG Office of Inspector General.

Trends in Expenses and Employment

From the actual 2010 amount to the budgeted 2020 amount, the total operating expenses of the Federal Reserve System have increased an average of 4.3 percent annually (figure 2). This rate is down 0.3 percent from the previous 10-year growth rate, as some expenses began to moderate following the increases from the financial crisis, offset by technology investments. The total rate of growth in Federal Reserve System expenses reflects the staffing increases 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 3).

Figure 2. Total expenses of the Federal Reserve System, 2010–20
Figure 2. Total expenses of the Federal Reserve System, 2010–20
Accessible Version | Return to text

Note: For 2020, budgeted. Includes expenses of the OIG.

1 Calculated with the GDP price deflator.

Figure 3. Employment in the Federal Reserve System, 2010–20
Figure 3. Employment in the Federal Reserve System, 2010–20
Accessible Version | Return to text

Note: For 2020, budgeted. From 2010 to 2018, employment numbers presented include position counts for the Board and the OIG and average number of personnel (ANP) for the Reserve Banks. For 2019 and 2020, employment numbers for all entities are represented in ANP.

Growth in supervision expenses over the past 10 years has been driven by implementation of expanded responsibilities mandated by the Dodd-Frank Act, changes in the state member bank portfolio, building out the cybersecurity supervision program, and supporting other strategic national initiatives. However, supervision growth has moderated because of the Economic Growth, Regulatory Reform and Consumer Protection Act, and as supervisory conditions improved, efficiencies were found and resources were 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 function continue to increase as a result of a multiyear investment program to modernize the cash-processing and inventory-tracking infrastructure. These increases have been offset partially by lower expenses associated with efficiency improvements in cash operations. Treasury services expenses have increased to meet expanding scope and evolving needs, including the modernization of the Treasury's collection and payment services, the addition of Treasury applications to the Federal Reserve Treasury infrastructure portfolio, and other projects requested by the Treasury.

2020 Capital Budgets

The capital budgets for the Board and Reserve Banks total $180.8 million and $530.9 million, respectively.3 As in previous years, the 2020 capital budgets include funding for projects that support the strategic direction outlined by the Board, System leadership, 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 based on the principles established by the Strategic Plan 2020–23 and provides funding to advance the Plan's goals and objectives.4 This functional alignment helps ensure that organizational resources are used to advance the Board's mission and to provide a structure to fund strategic priorities over the four-year time horizon.

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 2020, the recommended growth target included known changes in the run-rate of the Board's ongoing operations, projected increases to retirement and insurance benefits, and strategic priorities for 2020. After endorsement by the CBA, Division of Financial Management (DFM) staff communicates the target to the Executive Committee, which comprises the directors of each division.
  • To manage growth across the Board, the CBA identifies specific growth rates for each functional area: Monetary Policy and Financial Stability, Supervision, Payment System and Reserve Bank Oversight, Public Engagement and Community Development, and Mission Enablement (Support and Overhead).
  • To achieve the CBA's growth target, divisions allocate resources to their highest priorities and seek tradeoffs and efficiencies.
  • DFM staff reviews initial budget requests submitted by divisions and works collaboratively with all divisions and functional areas to achieve the growth target.
  • The chief operating officer and chief financial officer subsequently brief the CBA on the budget submissions. Once the budget is finalized, the administrative governor submits the budget to the full Board for review and final approval.
  • DFM staff monitor expenses throughout the year. Quarterly financial forecasts provide insight into budgetary pressures. Staff analyzes variances and reports the variances to senior management.

Tables 3, 4, and 5 summarize the Board's 2019 budgeted and actual expenses and its 2020 budgeted expenses by operating area; division, office, or special account; and account classification, respectively. Table 6 summarizes the Board's 2019 budgeted and actual authorized positions and its budgeted positions for 2020. 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 operating area, 2019–20

Millions of dollars, except as noted

Operating area 2019 budget 2019 actual Variance
2019 actual to 2019 budget
2020 budget Variance
2020 budget to 2019 actual
Amount Percent Amount Percent
Monetary policy and financial stability 1 332.0 329.3 -2.7 -0.8 335.3 6.0 1.8
Supervision 362.3 360.3 -2.0 -0.5 368.3 8.0 2.2
Payment system and Reserve Bank oversight 55.2 54.8 -0.4 -0.7 62.5 7.7 14.0
Public engagement and community development 44.2 44.1 -0.1 -0.2 48.3 4.2 9.6
Total, Board operations 793.6 788.5 -5.2 -0.7 814.4 25.9 3.3
               
Office of Inspector General 35.4 35.1 -0.3 -0.8 28.9 -6.2 -17.7

Note: This new table presents financial performance for the Board's operating areas, which aligns with the Reserve Banks. Monetary policy and financial stability aligns with monetary and economic policy within the Reserve Banks. Supervision aligns with supervision and regulation within the Reserve Banks. Public engagement and community development aligns with services to financial institutions and the public within the Reserve Banks; growth in 2020 is driven by technology initiatives and support. Payment system and Reserve Bank oversight is an operating area unique to the Board; growth in 2020 is driven by FedNow Service oversight.

 1. Includes the Survey of Consumer Finances. Return to table

Table 4. Operating expenses of the Board of Governors, by division, office, or special account, 2019–20

Millions of dollars, except as noted

Division, office, or special account 2019 budget 2019 actual Variance
2019 actual to 2019 budget
2020 budget Variance
2020 budget to 2019 actual
Amount Percent Amount Percent
Research and Statistics 85.3 83.4 -1.9 -2.2 89.0 5.6 6.7
International Finance 34.7 33.3 -1.4 -3.9 36.4 3.1 9.2
Monetary Affairs 38.2 37.9 -0.3 -0.8 40.0 2.2 5.7
Financial Stability 13.4 13.1 -0.3 -2.2 14.3 1.3 9.8
Supervision and Regulation 123.6 120.7 -2.8 -2.3 122.6 1.9 1.6
Consumer and Community Affairs 34.0 33.1 -0.8 -2.5 34.4 1.3 3.9
Reserve Bank Operations and Payment Systems 44.2 42.9 -1.3 -2.9 45.0 2.0 4.7
Board Members 26.2 25.7 -0.5 -2.1 26.4 0.7 2.8
Secretary 9.0 8.9 -0.1 -1.4 9.4 0.5 5.2
Legal 31.6 30.2 -1.4 -4.3 33.3 3.1 10.3
Chief Operating Officer 13.7 13.7 -0.1 -0.6 14.8 1.1 8.0
Financial Management 13.7 13.5 -0.3 -1.8 14.2 0.8 5.6
Information Technology 117.2 119.2 2.0 1.7 127.6 8.4 7.1
IT income -0.6 -0.6 0.0 -5.9 0.0 0.6 -100.0
Management 137.3 137.5 0.2 0.2 163.6 26.1 19.0
               
Special projects1 12.9 14.9 2.1 16.0 13.0 -1.9 -12.6
Centrally managed benefits 2 21.1 20.0 -1.0 -5.0 24.7 4.7 23.5
Extraordinary items 3 29.7 25.0 -4.7 -15.8 25.9 0.9 3.5
Savings and reallocations4 -7.4 0.0 7.4 -100.0 -21.0 -21.0 n/a
Survey of Consumer Finances5 16.0 16.0 0.0 0.0 0.7 -15.3 -95.6
Total, Board operations 793.6 788.5 -5.2 -0.7 814.4 25.9 3.3
               
Office of Inspector General 35.4 35.1 -0.3 -0.8 28.9 -6.2 -17.7

Note: Division figures for the Board exclude the IT user charge and income accounts since this methodology was retired with the 2020 budget.

n/a Not applicable.

 1. Includes centralized Boardwide benefit programs. Return to table

 2. Includes retirement and post-retirement benefits, which 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. Return to table

 4. Includes negative centralized budget execution and forecast adjustments and Board support and overhead allocations to the OIG. 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 5. Operating expenses of the Board of Governors, by account classification, 2019–20

Millions of dollars, except as noted

Account classification 2019 budget 2019 actual Variance
2019 actual to 2019 budget
2020 budget Variance
2020 budget to 2019 actual
Amount Percent Amount Percent
Personnel services
Salaries 461.3 455.7 -5.5 -1.2 477.4 21.6 4.7
Retirement/Thrift plans 58.4 58.9 0.5 0.8 62.8 3.9 6.6
Employee insurance and other benefits 41.1 41.2 0.2 0.4 42.3 1.1 2.6
Net periodic benefits costs 1 9.0 8.8 -0.2 -1.8 11.1 2.3 25.7
Subtotal, personnel services 569.7 564.7 -5.0 -0.9 593.6 28.9 5.1
               
Goods and services
Postage and shipping 0.2 0.3 0.1 34.4 0.4 0.1 50.8
Travel 15.0 14.6 -0.4 -2.6 15.7 1.0 7.2
Telecommunications 6.1 6.3 0.2 2.9 7.3 0.9 15.0
Printing and binding 0.5 0.8 0.3 65.4 0.6 -0.2 -21.8
Publications 0.6 0.3 -0.2 -38.8 0.4 0.0 11.4
Stationery and supplies 1.4 1.2 -0.2 -12.2 1.3 0.1 4.5
Software 19.4 19.0 -0.4 -2.3 21.7 2.7 14.5
Furniture and equipment (F&E) 6.5 5.9 -0.6 -9.4 6.2 0.3 4.8
Rentals 33.9 34.0 0.1 0.3 38.0 4.0 11.7
Data, news, and research 32.0 31.1 -1.0 -3.0 15.9 -15.2 -49.0
Utilities 2.0 1.7 -0.4 -17.6 1.7 0.0 0.8
Repairs and alterations—building 3.4 4.7 1.3 37.7 4.2 -0.4 -9.1
Repairs and maintenance—F&E 4.5 4.9 0.4 9.7 5.0 0.1 2.0
Contractual professional services 52.8 50.2 -2.7 -5.1 64.7 14.5 29.0
Interest 0.0 0.0 0.0 438.6 0.0 0.0 -85.3
Training and dues 4.9 4.4 -0.5 -10.1 5.2 0.7 16.4
Subsidies and contributions 3.1 2.7 -0.4 -13.2 3.1 0.4 15.2
All other 3.3 4.3 1.0 30.1 3.5 -0.8 -17.6
Depreciation/amortization 39.8 42.5 2.7 6.9 44.2 1.7 4.0
Support and overhead allocations 2 ,3 55.2 55.1 -0.1 -0.1 -14.0 -69.1 -125.3
IT income 4 -55.8 -55.8 0.0 0.0 -0.3 55.5 -99.4
Income -4.9 -4.3 0.6 -12.7 -3.9 0.4 -10.1
Subtotal, goods and services 223.9 223.8 -0.1 -0.1 220.8 -3.0 -1.3
Total, Board operations 793.6 788.5 -5.2 -0.7 814.4 25.9 3.3
               
Office of Inspector General              
Personnel services 27.4 27.4 0.0 0.1 28.5 1.0 3.7
Goods and services 7.9 7.6 -0.3 -3.8 4.1 -3.5 -45.9
Operating income5 0.0 0.0 0.0 n/a -17.7 -17.7 n/a
Support and overhead allocations 3 0.0 0.0 0.0 n/a 14.0 14.0 n/a
Total, OIG operations 35.4 35.1 -0.3 -0.8 28.9 -6.2 -17.7

n/a Not applicable.

 1. Net periodic benefits costs other than services costs related to pension and post-retirement benefits. Return to table

 2. Previously, this account was named IT user charge. The IT user charge and income methodology was retired with the 2020 budget. Return to table

 3. Starting with the 2020 budget, this account includes a net zero transfer of costs from the Board operating budget to the OIG operating budget for Board support and overhead expenses attributable to the OIG. Return to table

 4. IT user charge and income methodology was retired with the 2020 budget. The amount shown for 2020 is earned income from the Currency budget. Return to table

 5. Starting with the 2020 budget, the OIG operating budget will incorporate earned income from the Consumer Financial Protection Bureau. Return to table

Table 6. Positions authorized by the Board of Governors, by division, office, or special account, 2019–20
Division, office, or special account 2019 budget 2019 actual Variance
2019 actual to 2019 budget
2020 budget Variance
2020 budget to 2019 actual
Amount Percent Amount Percent
Research and Statistics 356 356 0 0.0 356 0 0.0
International Finance 156 156 0 0.0 158 2 1.3
Monetary Affairs 171 172 1 0.6 171 -1 -0.6
Financial Stability 55 55 0 0.0 55 0 0.0
Supervision and Regulation 493 493 0 0.0 489 -4 -0.8
Consumer and Community Affairs 131 131 0 0.0 131 0 0.0
Reserve Bank Operations and Payment Systems 183 183 0 0.0 182 -1 -0.5
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 0.0 129 4 3.2
Chief Operating Officer 62 62 0 0.0 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 1 459 459 0 0.0 477 18 3.9
Extraordinary items2 14 13 -1 -7.1 13 0 0.0
Total, Board operations 2,861 2,861 0 0.0 2,879 18 0.6
               
Office of Inspector General 132 133 1 0.8 133 0 0.0

Note: Budget represents authorized position count at the beginning of the year and actual represents authorized position count at year-end.

 1. Reflects the resolution of positions within the law enforcement unit in which two employees occupy the same position. Return to table

 2. Centralized position pool used for strategic areas of growth. Return to table

2019 Budget Performance

Total expenses for Board operations were $788.5 million, which was $5.2 million, or 0.7 percent, less than the approved 2019 budget of $793.6 million.

Personnel services expenses were $5.0 million, or 0.9 percent, less than the budget primarily because of lower employment levels, which caused higher-than-budgeted vacancy rates. Goods and services expenses were $0.1 million, or 0.1 percent, less than the budget primarily because of lower use of contractual professional services and data. The underrun was offset partially by an overrun in depreciation expenses due to the acceleration of the depreciation schedule for facilities assets.

The Board's 2019 single-year capital spending was less than budgeted by $2.8 million, or 14.4 percent. Multiyear capital projects remained within their overall project budgets; however, actual spending in 2019 was less than budgeted by $37.8 million, or 22.8 percent, due to delays in building improvement projects. Table 7 summarizes the Board's budgeted and actual capital expenditures for 2019 and 2020.

2020 Operating Expense Budget

The 2020 budget for Board operations is $814.4 million, which is $25.9 million, or 3.3 percent, higher than 2019 actual expenses. Staff formulated the operating budget to advance the Board's strategic priorities, which include initiatives that support policy deliberations; promote safety, soundness, and stability of financial institutions; foster safe, efficient, and accessible payment and settlement systems; promote broader, ongoing engagement with the public; and optimize operations.

In addition, the 2020 budget includes employment growth expected to occur in 2020; funding for the Board's compensation and benefit programs; and projected increases to centrally managed retirement and postretirement benefits, which fluctuate with changes in actuarial assumptions and demographics.

Risks in the 2020 Budget

The budget process required all divisions to make tradeoffs and prioritize resources to fund mission-critical activities. DFM staff incorporated centralized adjustments into the budget to reflect historical under-execution.

DFM staff will monitor spending and work closely with all divisions throughout the year to mitigate potential budget overruns.

2020 Capital Budgets

The Board's 2020 single-year capital budget totals $19.2 million, which is $2.5 million higher than 2019 actual capital expenditures. The increase reflects continued investments in data center infrastructure purchases and routine life-cycle replacements of equipment and building components.

The Board's multiyear capital budget is driven by facilities projects. Expected capital expenditures in 2020 total $160.8 million and reflect the Board's commitment to provide a secure, modern environment that meets the needs of the workforce and takes advantage of opportunities to increase collaboration, efficiency, productivity, and sustainability. Table 7 summarizes the Board's budgeted and actual capital expenditures for 2019 and 2020.

Table 7. Capital expenditures of the Board of Governors, by capital type, 2019–20

Millions of dollars, except as noted

Item 2019 budget 2019 actual Variance
2019 actual to 2019 budget
2020 budget Variance
2020 budget to 2019 actual
Amount Percent Amount Percent
Board
Single-year capital expenditures 19.5 16.7 -2.8 -14.4 19.2 2.5 15.0
Multiyear capital expenditures 165.8 128.0 -37.8 -22.8 160.8 32.8 25.7
Total capital expenditures 185.3 144.7 -40.7 -21.9 180.0 35.3 24.4
Office of Inspector General
Single-year capital expenditures 0.2 0.1 -0.1 -28.0 0.8 0.6 441.0
Multiyear capital expenditures 0.0 0.0 0.0 n/a 0.0 0.0 n/a
Total capital expenditures 0.2 0.1 -0.1 -28.0 0.8 0.6 441.0
               
Board and OIG total capital expenditures 185.6 144.8 -40.7 -21.9 180.8 36.0 24.8

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

n/a Not applicable.

Office of Inspector General

The budget for the Board's OIG is grounded in the goals established in its strategic plan.5 The goals are to deliver results that promote agency excellence; promote a diverse, skilled, and engaged workforce and foster an inclusive and collaborative environment; optimize external stakeholder engagement; and advance organizational effectiveness and model a culture of continuous improvement.

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.

2019 Budget Performance

Total expenses for OIG operations were $35.1 million, which was $0.3 million, or 0.8 percent, less than the approved 2019 budget of $35.4 million. Personnel services expenses exceeded the budget by less than $0.1 million, or 0.1 percent; this over-expenditure was driven by the correction of an error related to contributions to a special retirement plan and was offset mostly by higher-than-budgeted vacancy rates. Goods and services expenses were $0.3 million, or 3.8 percent, less than the budget. The OIG's single-year capital spending was less than budgeted by $0.1 million, or 28.0 percent.

2020 Operating Expense Budget

The 2020 budget for OIG operations is $28.9 million, which is $6.2 million, or 17.7 percent, less than 2019 actual expenses because of one-time adjustments, including a net zero transfer of support and overhead costs from the Board's operating budget to the OIG's operating budget and earned income from the Consumer Financial Protection Bureau. The 2020 budget also includes employment growth expected to occur in 2020, funding for the Board's compensation and benefit programs, and escalations for goods and services.

2020 Capital Budget

The OIG's 2020 single-year capital budget totals $0.8 million, which is $0.6 million higher than 2019 actual capital expenditures. The increase is driven by vehicle and equipment replacements as well as a software enhancement project. Table 7 summarizes the OIG's budgeted and actual capital expenditures for 2019 and 2020.

Federal Reserve Banks Budgets

Each Reserve Bank establishes major operating goals for the coming year that are aligned with the System's key strategic objectives, 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, including through public communication, outreach, and economic education
  • promoting financial stability through effective monitoring, analysis, and policy development
  • promoting safety and soundness of financial institutions through effective supervision

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 reflect this direction, importantly through framing and making appropriate tradeoffs, and senior leadership in the Reserve Banks reviews the budgets for alignment with Reserve Bank and System priorities.
  • The Reserve Banks submit for Board review preliminary budget information, 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 8, 9, and 10 summarize the Reserve Banks' 2019 budgeted and actual expenses and 2020 budgeted expenses by Reserve Bank, functional area, and account classification.6 Table 11 shows the Reserve Banks' budgeted and actual employment for 2019 and budgeted employment for 2020. In addition, table 12 shows the Reserve Banks' budgeted and actual capital expenditures for 2019 and budgeted capital for 2020.

Table 8. Operating expenses of the Federal Reserve Banks, by District, 2019–20

Millions of dollars, except as noted

District 2019 budget 2019 actual Variance
2019 actual to 2019 budget
2020 budget Variance
2020 budget to 2019 actual
Amount Percent Amount Percent
Boston 231.6 226.8 -4.7 -2.1 239.6 12.8 5.6
New York 1,043.5 1,039.2 -4.2 -0.4 1,076.9 37.6 3.6
Philadelphia 194.8 193.6 -1.3 -0.6 199.4 5.8 3.0
Cleveland 209.4 210.7 1.3 0.6 230.2 19.5 9.3
Richmond 503.6 493.8 -9.8 -1.9 517.7 23.9 4.8
Atlanta 415.5 411.4 -4.1 -1.0 414.1 2.7 0.7
Chicago 396.1 396.5 0.4 0.1 423.7 27.2 6.9
St. Louis 431.2 415.5 -15.7 -3.6 437.3 21.9 5.3
Minneapolis 180.0 180.7 0.8 0.4 183.1 2.4 1.3
Kansas City 332.7 337.6 4.9 1.5 364.4 26.9 8.0
Dallas 239.1 241.1 2.1 0.9 243.3 2.2 0.9
San Francisco 396.5 396.3 -0.2 0.0 441.4 45.1 11.4
               
Total Reserve Bank operating expenses 4,573.8 4,543.1 -30.6 -0.7 4,771.2 228.1 5.0

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 9. Operating expenses of the Federal Reserve Banks, by operating area, 2019–20

Millions of dollars, except as noted

Operating area 2019 budget 2019 actual Variance
2019 actual to 2019 budget
2020 budget Variance
2020 budget to 2019 actual
Amount Percent Amount Percent
Monetary and economic policy 756.7 751.9 -4.8 -0.6 786.3 34.4 4.6
Services to the U.S. Treasury and other government agencies 657.0 617.1 -39.9 -6.1 668.2 51.1 8.3
Services to financial institutions and the public 1,245.2 1,238.1 -7.1 -0.6 1,296.4 58.3 4.7
Supervision and regulation 1,473.6 1,473.0 -0.6 0.0 1,518.0 45.0 3.1
Fee-based services to financial institutions 1 441.2 463.0 21.8 4.9 502.3 39.2 8.5
               
Total Reserve Bank operating expenses 2 4,573.8 4,543.1 -30.6 -0.7 4,771.2 228.1 5.0

 1. Includes operating expenses related to development of the FedNow Service. Return to table

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

Table 10. Operating expenses of the Federal Reserve Banks, by account classification, 2019–20

Millions of dollars, except as noted

Account classification 2019 budget 2019 actual Variance
2019 actual to 2019 budget
2020 budget Variance
2020 budget to 2019 actual
Amount Percent Amount Percent
Salaries and other benefits1 3,394.5 3,360.0 -34.5 -1.0 3,504.5 144.5 4.3
Building 343.8 348.7 4.8 1.4 354.0 5.3 1.5
Software costs 275.3 281.2 5.8 2.1 329.4 48.3 17.2
Equipment 197.9 193.7 -4.3 -2.2 194.5 0.9 0.5
Recoveries 2 -384.1 -369.0 15.0 -3.9 -383.6 -14.5 3.9
Expenses capitalized -87.2 -75.1 12.1 -13.9 -90.0 -14.9 19.8
All other 3 833.4 803.8 -29.6 -3.6 862.3 58.5 7.3
               
Total Reserve Bank operating expenses 4,573.8 4,543.1 -30.6 -0.7 4,771.2 228.1 5.0

 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 appendix G, "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 11. Employment at the Federal Reserve Banks, by District, and at FRIT and OEB, 2019–20
District 2019 budget 2019 actual Variance
2019 actual to 2019 budget
2020 budget Variance
2020 budget to 2019 actual
Amount Percent Amount Percent
Boston 1,037 1,008 -29 -2.8 1,055 47 4.7
New York 3,232 3,223 -10 -0.3 3,223 1 0.0
Philadelphia 859 884 25 2.9 864 -19 -2.2
Cleveland 988 990 2 0.2 1,030 40 4.1
Richmond 1,481 1,458 -23 -1.6 1,460 1 0.1
Atlanta 1,737 1,755 18 1.1 1,730 -25 -1.4
Chicago 1,599 1,580 -18 -1.1 1,606 26 1.6
St. Louis 1,435 1,415 -20 -1.4 1,415 0 0.0
Minneapolis 1,060 1,035 -25 -2.4 1,054 20 1.9
Kansas City 2,006 2,037 32 1.6 2,064 27 1.3
Dallas 1,278 1,294 16 1.2 1,278 -16 -1.2
San Francisco 1,765 1,733 -32 -1.8 1,762 29 1.7
Total, all Districts 18,477 18,412 -65 -0.4 18,542 131 0.7
               
Federal Reserve Information Technology 1,321 1,285 -36 -2.8 1,295 10 0.8
Office of Employee Benefits 59 58 -1 -1.6 61 4 6.1
               
Total 19,856 19,754 -102 -0.5 19,898 144 0.7
Table 12. Capital expenditures of the Federal Reserve Banks, by District, and of FRIT and OEB, 2019–20

Millions of dollars, except as noted

District * * 2019 budget 2019 actual Variance
2019 actual to 2019 budget
2020 budget Variance
2020 budget to 2019 actual
Amount Percent Amount Percent
Boston 15.1 10.1 -5.0 -32.9 21.7 11.5 113.9
New York 125.6 66.5 -59.1 -47.1 87.6 21.1 31.6
Philadelphia 36.2 24.5 -11.6 -32.2 75.3 50.8 207.1
Cleveland 23.1 18.0 -5.1 -22.2 25.9 7.9 43.9
Richmond 15.2 13.7 -1.5 -10.0 20.8 7.1 52.2
Atlanta 23.2 11.4 -11.7 -50.6 26.9 15.4 134.7
Chicago 26.7 23.1 -3.6 -13.4 21.4 -1.7 -7.4
St. Louis 6.7 4.1 -2.6 -38.6 15.2 11.1 271.8
Minneapolis 26.0 6.6 -19.4 -74.8 12.6 6.0 92.0
Kansas City 32.9 26.3 -6.6 -20.2 44.6 18.4 70.0
Dallas 24.2 19.3 -4.9 -20.1 27.0 7.7 40.0
San Francisco 53.1 37.5 -15.6 -29.4 63.8 26.2 69.9
Total, all Districts 407.9 261.1 -146.8 -36.0 442.7 181.6 69.6
               
Federal Reserve Information Technology 75.3 69.0 -6.3 -8.3 84.8 15.8 22.9
Office of Employee Benefits 0.2 * -0.2 -93.5 3.4 3.4 22,666.6
               
Total 483.4 330.1 -153.2 -31.7 530.9 200.8 60.8

* Less than $50,000.

2019 Budget Performance

Total 2019 operating expenses for the Reserve Banks were $4,543.1 million, which is $30.6 million, or 0.7 percent, less than the approved 2019 budget of $4,573.8 million. The actual average number of personnel (ANP) was 19,754, an underrun of 102 ANP, or 0.5 percent, from 2019 budgeted staffing levels, largely because of greater-than-anticipated lag in filling open positions in the Treasury and IT functions. The Reserve Banks' 2019 capital expenditures were less than budgeted by $153.2 million, or 31.7 percent, primarily due to plan changes, including timing and scope for numerous building-related initiatives.

Revised project plans, benefits assumptions, and less-than-planned personnel expenses driven by delays in hiring contributed to the 2019 operating expense budget underrun, and improving forecasting to avoid such outcomes in the future remains a focus for the System and its leadership. The underrun is offset partially by resources attributable to the extension of the ACH modernization program into 2020 and investments in support of FedNow Service.7

2020 Operating Expense Budget

The 2020 operating budgets of the Reserve Banks total $4,771.2 million, which is $228.1 million, or 5.0 percent, higher than 2019 actual expenses.8 Supervision growth has moderated with a shift from implementing significant regulatory reforms of the post-crisis era to providing more-efficient oversight by focusing on areas of risk and allocating resources to the highest priorities. Treasury expenses are increasing primarily to support new and ongoing technology development, including Transforming Tax Collections (T2C), Pay.gov, Do Not Pay (DNP) analytics, and Treasury Retail Investment Manager (TRIM) initiatives.9 Additionally, increases in cash expenses are driven by the first phase of the next-generation currency-processing program (NextGen).10 Growth in monetary policy reflects increased resources dedicated to regional economic research, including new studies on inflation and low- and moderate-income communities.

Total 2020 budgeted employment for the Reserve Banks, Federal Reserve Information Technology (FRIT), and the Office of Employee Benefits (OEB) is 19,898 ANP, an increase of 144 ANP, or 0.7 percent, from 2019 actual employment levels. In national support functions, additional resources are planned to enhance product offerings and ensure the security and resiliency of the FedLine Solutions, as well as to support System strategic initiatives in procurement, finance, and human resource management.11 In IT, resource additions will support application development projects and information security initiatives for Treasury, and will develop cloud computing foundational services and infrastructure for the System.

Further contributing to the growth are resources to support community development initiatives, regional economic research and outreach initiatives, FedNow Service, and the NextGen program. Increases are offset by reductions in the check function in recognition of operational efficiencies; in ACH following the planned implementation of the multiyear ACH Modernization initiative; and in supervision related to efficiency efforts, changes in supervisory responsibilities, and legislative changes.12

Reserve Bank officer and staff personnel expenses for 2020 total $2,742.9 million, an increase of $116.4 million, or 4.4 percent, from 2019 actual expenses. The increase reflects expenses associated with additional staff and budgeted salary administration adjustments.13

The 2020 Reserve Bank budgets include a salary administration program for eligible officers, senior professionals, and staff totaling $103.6 million and a variable pay program totaling $225.2 million.

2020 Capital Budgets

The 2020 capital budgets for the Reserve Banks, FRIT, and OEB total $530.9 million.14 The increase in the 2020 capital budget is $200.8 million, or 60.8 percent, greater than the 2019 actual levels of $330.1 million, largely because of ongoing multiyear building and information technology strategic initiatives. Initiatives in the 2020 capital budget support major workspace renovations, address aging building infrastructure in several Reserve Banks, improve IT infrastructure, and provide application upgrades and releases.

Capital Expenditures Designated for Conditional Approval

The BAC chair designated projects with an aggregate cost of $42.2 million in 2020 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 funds are committed.15 The expenditures designated for conditional approval by the chair of the BAC include large-scale building projects to renovate office space and update building infrastructure. Technology projects include support for services performed on behalf of the Treasury, upgrades to existing cash services' applications, and Fedwire and FedLine initiatives.16

Other Capital Expenditures

Significant capital expenditures (typically expenditures exceeding $1 million) that are not designated for conditional approval include total multiyear budgeted expenditures of $798.9 million for 2020 and future years, of which the single-year 2020 budgeted expenditures are $391.3 million. This category includes building expenditures for office space renovations, mechanical and electrical infrastructure upgrades, building automation, and security enhancements. IT projects include ongoing 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 $97.5 million for 2020 and include building maintenance expenditures, scheduled software and equipment upgrades, and equipment and furniture replacements.

Currency Budget

The currency budget provides funds to reimburse the Treasury's Bureau of Engraving and Printing (BEP) for expenses related to the production of banknotes, and the Board's activities related to its role as issuing authority of the nation's currency in the form of Federal Reserve notes.17 As issuing authority, the Board works closely with its strategic partners, such as the Reserve Banks, the Department of the Treasury, the BEP, and the U.S. Secret Service to help maintain the integrity of and public confidence in our nation's currency.

The Board works to ensure that the notes meet quality standards from production through destruction, monitors counterfeiting risks and threats for each denomination, contributes to the development of security features and new design concepts, and conducts adversarial analysis to ensure the security features and designs are robust against counterfeiting. The budget includes activities that support its issuing authority role, the cost of shipping new currency from the BEP to Reserve Banks and fit currency between Reserve Banks, and funds the Currency Education Program (CEP). The CEP aims to protect and maintain confidence in U.S. currency worldwide, working closely with other agencies and departments of the U.S. government, to provide information and conduct outreach through a variety of channels.

The annual currency budget process is as follows:

  1. Each year, under authority delegated by the Board, the 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.18
  2. The BEP forecasts expenses for the calendar-year currency budget, including fixed and variable costs for printing Federal Reserve notes, facility costs, and support costs. Board staff develop budgets for Board expenses in relation to strategic guidance set by Cash leadership.
  3. The BAC reviews the proposed currency budget.
  4. The BAC chair submits the proposed currency budget to Board members for review and final action.

2019 Budget Performance

The Board's 2019 actual operating expenses for new currency were $837.1 million, $118.7 million, or 12.4 percent, below the budgeted amount for 2019. The budget underrun is attributable primarily to a delay in design work for a new production facility in the Washington, D.C., area, and lower variable printing expenses because of the revised print order.19

Currency transportation expenses were lower than budgeted primarily because the print order was reduced at midyear, resulting in fewer currency shipments than originally planned. The 2019 research and development budget underrun is primarily the result of the design consulting work ramping up more slowly than planned and fewer requirements for Board IT support of (externally developed) prototype equipment that would be used for an inspection system for notes, sheets, and plates, as well as a counterfeit analysis tool.

2020 Budget

Table 13 summarizes the 2020 currency operating budget of $877.2 million.20 The proposed 2020 operating budget represents an increase of $40.1 million, or 4.8 percent, from 2019 actual expenses. BEP costs associated with the printing of Federal Reserve notes are 94.4 percent of the operating budget. Board expenses for currency transportation, research and development, annual contributions and management support, currency education, and depreciation comprise the remaining 5.6 percent of the operating budget.

Table 13. Federal Reserve currency budget, 2019–20

Thousands of dollars, except as noted

Item 2019 budget 2019 actual Variance
2019 actual to 2019 budget
2020 budget Variance
2020 budget to 2019 actual
Amount Percent Amount Percent
Printing Federal Reserve notes
BEP fixed printing costs 401,938 401,940 2 0.0 499,836 97,896 24.4
BEP variable printing costs 288,822 239,488 -49,333 -17.1 233,099 -6,389 -2.7
BEP facility reimbursements
Fort Worth facility expansion 150,000 150,000 0 0.0 60,000 -90,000 -60.0
D.C. facility design work 60,000 0 -60,000 -100.0 30,000 30,000 n/a
BEP support costs
Currency reader 956 818 -138 -14.5 955 136 16.7
Other1 3,672 3,615 -57 -1.6 3,776 161 4.5
Board expenses
Currency transportation 22,496 18,668 -3,828 -17.0 19,042 374 2.0
Research and development 11,767 7,148 -4,619 -39.3 15,893 8,744 122.3
Annual contributions and management support 7,100 6,959 -140 -2.0 8,865 1,905 27.4
Currency quality assurance 6,500 6,457 -42 -0.7 0 -6,457 -100.0
Currency education 2,430 1,898 -532 -21.9 2,425 527 27.8
Personnel 0 0 0 n/a 2,893 2,893 n/a
Travel 0 0 0 n/a 278 278 n/a
Training 0 0 0 n/a 27 27 n/a
Depreciation 74 62 -11 -15.6 63 0 0.2
Operating budget 955,759 837,056 -118,703 -12.4 877,153 40,097 4.8

n/a Not applicable. The percentage change is greater than 100 percent and based on comparison to a de minimis value in the prior year.

 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

BEP costs include $90.0 million to fund two facility improvement projects: 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

Figure 4. Federal Reserve costs for currency, 2010–20
Figure 4. Federal Reserve costs for currency, 2010–20
Accessible Version

Note: For 2020 budgeted.

BEP Costs

The proposed 2020 budget to fund the BEP expenses associated with the printing of Federal Reserve notes is $827.7 million, which is $31.8 million, or 4.0 percent, greater than 2019 actual expenses. The primary driver of this increase is higher fixed costs to fund capital investments and research and development projects.

The proposed budget for fixed printing costs is $499.8 million, which is $97.9 million, or 24.4 percent, greater than 2019 actual expenses. The increase is attributed to investments in manufacturing equipment, information technology projects, and physical security upgrades. Additional increases are for research and development efforts to support the design and security of the next family of notes.

Fixed cost increases are offset partially by a reduction in variable costs associated with the Board's lower FY2020 print order and BEP facility reimbursements. While total variable costs are expected to decrease this year, the BEP estimates an increase in cost for paper, ink, direct labor, and other variable manufacturing expenses. The decrease associated with the Ft. Worth facility expansion reflects the final year of the total $220.0 million multiyear project.

Board Costs

Board costs are estimated to be $49.5 million, or 20.1 percent, more than 2019 actual expenses. The primary drivers of the 2020 budget increase are due to research and development and annual contributions and management consultations to assist in implementing all phases of the Cash strategic plan.

In 2020, Board staff will continue to work with contract staff to develop prototype equipment that would assess quality at the BEP by performing plate, sheet, and note inspection. The Board will continue to contract services to develop security features for possible inclusion in the next family of notes.

Board staff will conduct market research on and expand outreach to banknote equipment manufacturers to identify trends in the market for equipment that accepts and dispenses banknotes. Contract resources are included to perform financial analysis supporting Board oversight of reimbursements to Treasury in support of the new D.C. currency production facility.

To support counterfeit deterrence activities, funds are included for the Counterfeit Currency Processing Facility (CCPF) initiative. The 2020 increase supports development of prototype technology to identify, analyze, and classify suspect counterfeit notes.

The 2020 currency budget includes $3.2 million for personnel services, travel, and training costs for 15 ANP, or 18 positions.22

2020 Capital Budget

In 2019, the Board approved a $3.2 million multicycle capital budget for information technology equipment in support of counterfeit inspection technology. As the program is in the developmental stage, no additional capital funds have been budgeted.

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 2019 claims for reimbursement include the allocated portion of the pension. Additional information about these expenses can be found in appendix G, "Statistical Tables."
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. The capital budget reported for the Board includes single-year capital expenditures and 2020 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

 4. The Board approved the Plan published in December 2019, available at https://www.federalreserve.gov/publications/files/2020-2023-gpra-strategic-plan.pdfReturn to text

 5. The plan is located at https://oig.federalreserve.gov/strategic-plan.htmReturn to text

 6. Additional information about the operating expenses of each of the Reserve Banks can be found in appendix G, "Statistical Tables" (see table 10, "Income and expenses of the Federal Reserve Banks, by Bank"). Return to text

 7. The Federal Reserve is developing a new round-the-clock, real-time payment and settlement service, called the FedNow Service, to support faster payments in the United States. Return to text

 8. On December 18, 2019, the Board approved the 2020 Reserve Bank operating budgets totaling $4,771.2 million, including $668.2 million in Treasury services. Because the U.S. Department of the Treasury's Bureau of the Fiscal Service (Fiscal Service) had not fully determined the level of funding for fiscal services provided by the Federal Reserve Banks in time for a sufficient review, the portion of the 2020 Banks' budgets associated with services to the Treasury was not considered final. The subsequent reductions identified by Fiscal Service constituted less than the 1 percent threshold for such adjustments explicitly specified in the Board's approval, and consequently the final budgets were approved by the director of the Division of Reserve Bank Operations and Payment Systems under limited delegated authority. Additional information is available at https://www.federalreserve.gov/foia/files/2020ReserveBankBudgets.pdf.
In addition, the chair of the BAC designated a portion of the 2020 operating expense budgets ($268.3 million) associated with selected Treasury, Priced Services, and Cash initiatives for conditional approval, requiring additional review and approval by the director of the Division of Reserve Bank Operations and Payment Systems. Return to text

 9. The T2C program will develop and implement a modern tax collection system for electronically collecting federal tax payments. Pay.gov is an application that allows the public to use the internet to authorize and initiate payments to federal agencies. DNP is an analytics tool, which helps federal agencies detect and prevent improper payments made to vendors, grantees, loan recipients, and beneficiaries. TRIM is a multiyear development program that introduces new business functionality and infrastructure to Treasury's retail securities program. Return to text

 10. The Cash Product Office is implementing on a strategy to transition the current fleet of high-speed currency processing machines and the associated sensor suite from the Banknote Processing System platform to the future next-generation (NextGen) processing technologies (machines and sensor technologies). Return to text

 11. Enhancements to the FedLine Solutions include a multiyear transformational effort focused on evolving the FedLine network, authentication, and hosting infrastructure to meet customer, industry, and Federal Reserve System needs. Return to text

 12. 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 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

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

 14. The Board delegated the approval of the resources for services provided to the Treasury to the director of the Division of Reserve Bank Operations and Payment Systems pending final authorization from the Bureau of the Fiscal Service. The 2020 capital budget, including those capital expenditures designated for conditional approval, reflect the final authorization from Fiscal Service. Return to text

 15. 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

 16. 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

 17. As mandated by the Federal Reserve Act, section 16, the Board reimburses the BEP for all costs related to the production of Federal Reserve notes. Section 16 of the Federal Reserve Act also 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. All operations and capital investments of the BEP are financed by a revolving fund that is reimbursed through product sales, nearly all of which are sales of Federal Reserve notes to the Board to fulfill its annual print order. Return to text

 18. The Board delivers the annual print order to the BEP director in August of each year, and copies are available on the Board's public website at https://www.federalreserve.gov/paymentsystems/coin_currency_orders.htmReturn to text

 19. In 2019, the Board approved $210 million to reimburse the BEP for the Ft. Worth facility expansion and for preliminary design studies and contractor expenses in support of a replacement of its Washington, D.C., facility. Return to text

 20. In 2019, the Board approved a $3.2 million multicycle capital budget for counterfeit inspection information technology equipment. In 2020, no additional capital funds are budgeted. Return to text

 21. Excluding reimbursements for improvements to the BEP facilities, the proposed 2020 operating budget is $737.7 million, which is $91.8 million, or 14.2 percent, less than 2019 actual expenses. Return to text

 22. Additional information related to currency positions can be found at https://www.federalreserve.gov/foia/files/2020currency.pdfReturn to text

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Last Update: July 28, 2020