Board of Governors of the Federal Reserve System

Federal Reserve System Budgets

The Federal Reserve Board of Governors and the Federal Reserve Banks prepare annual budgets as part of their efforts to demonstrate strong stewardship and provide appropriate transparency.¹ This section presents information on the 2024 budget performance of the Board and Reserve Banks and on their 2025 budgets (box 1), budgeting processes, and trends in expenses and employment. This section also presents information on the costs of new currency.

System Budgets Overview

Tables D.1 and D.2 summarize the Federal Reserve Board of Governors' and Federal Reserve Banks' 2024 budgeted, 2024 actual, and 2025 budgeted operating expenses and employment.²

Table D.1. Total operating expenses of the Federal Reserve System, net of receipts and claims for reimbursement, 2024–25

Table D.2. Employment in the Federal Reserve System, 2024–25

2024 Budget Performance

In carrying out its responsibilities in 2024, the Federal Reserve System incurred $6,837.5 million in net expenses. Total System operating expenses of $8,197.7 million were offset by $1,360.2 million in revenue from priced services and claims for reimbursement. Total 2024 System operating expenses, net of revenue and reimbursements, were $312.9 million, or 4.4 percent, less than the amount budgeted for 2024.

2025 Operating Expense Budget

Budgeted 2025 System operating expenses of $7,409.3 million, net of revenue and reimbursements, are $571.7 million, or 8.4 percent, higher than 2024 actual expenses. The Reserve Bank budgets comprise almost three-quarters of the System budget (figure D.1).

Trends in Expenses and Employment

From the actual 2015 amount to the budgeted 2025 amount, the total operating expenses of the Federal Reserve System have increased an average of 5.4 percent annually (figure D.2), which is slightly higher than the 10-year growth rate between 2014 and 2024. The total rate of growth in Federal Reserve System expenses reflects investments in technology initiatives, payment infrastructure modernization efforts, the next-generation currency-processing program NextGen, and resources to support the supervision portfolio and other national strategic initiatives (figure D.3).³

Expense growth in the monetary policy area represents continued investment in regional economic research and resources to support effective market operations and monitoring activities.

Treasury services expenses have increased in response to Treasury's request that Reserve Banks, as fiscal agents, modernize legacy applications and align with the federal government's cloud computing strategy.

Expenses for services to financial institutions have increased as a result of the System's initiative to replace the existing, decades-old high-speed currency processing equipment with new equipment and technology. Growth in services to financial institutions and the public is also attributable to the addition of resources in support of the credit and liquidity facilities created in response to the COVID-19 pandemic.

Supervision has experienced moderate growth over the past 10 years. Growth driven by changes in the state member bank portfolio, the buildout of the cybersecurity supervision program, and support for other national strategic initiatives was partially offset by adjustments to supervisory mandates from the Economic Growth, Regulatory Reform, and Consumer Protection Act, the identification and realization of operational efficiencies, and the prioritization of resources toward higher-risk activities and emerging risks. In particular, resources were temporarily shifted from supervision in 2020 and 2021 to support the credit and liquidity facilities responding to the COVID-19 pandemic. Most recently, resources have been added to align with supervisory portfolio growth, increased complexity of institutions, and other strategic initiatives impacting the banking industry.

Growth in fee-based services is primarily for investments in payment infrastructure modernization efforts, including the FedNow ^SM Service initiative, and investments associated with multiyear technology initiatives to modernize processing platforms for Fedwire and automated clearinghouse (ACH).⁴

2025 Capital Budgets

The capital budgets for the Board and Reserve Banks total $531.8 million and $942.7 million, respectively.⁵ As in previous years, the 2025 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 2024–27 and provides funding to advance the plan's goals and objectives.⁶ This functional alignment helps ensure organizational resources are used to advance the Board's mission and provides 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 discuss budget recommendations for the Board's operating budget. After engagement with the CBA, Division of Financial Management (DFM) staff communicate the budget recommendations to the Executive Committee, which comprises the directors of each division.
• Divisions develop budget proposals and allocate resources to highest priority areas and seek tradeoffs and efficiencies. In some instances, new initiatives are proposed, reviewed, and prioritized against existing operations and budgets.
• DFM staff review initial budget requests submitted by divisions and collaborate with all divisions across all functional areas to develop budget recommendations.⁷
• The chief operating officer and chief financial officer subsequently brief the CBA on the budget submissions and recommendations. Once a final budget proposal is finalized, the Administrative Governor submits the budget to the full Board for review and final approval.
• Throughout the year, DFM staff monitor expenses through financial forecasts that provide insight into budgetary trends. Staff analyze budgetary variances and trends and communicate the results to senior management.

Tables D.3, D.4, and D.5 summarize the Board's 2024 budgeted and actual expenses and its 2025 budgeted expenses by operating area; division, office, or special account; and account classification, respectively. Table D.6 summarizes the Board's 2024 budgeted and actual authorized positions and its budgeted positions for 2025. Each table includes a line item for the Office of Inspector General (OIG), which is discussed later in this section.

Table D.3. Operating expenses of the Board of Governors, by operating area, 2024–25

Table D.4. Operating expenses of the Board of Governors, by division, office, or special account, 2024–25

Table D.5. Operating expenses of the Board of Governors, by account classification, 2024–25

Table D.6. Positions authorized by the Board of Governors, by division, office, or special account, 2024–25

2024 Budget Performance

During 2024, uncontrollable factors within centrally managed benefits drove upward pressure to the 2024 budget. While staff use the latest and best estimates available when the budget is finalized, actuarial and demographic assumptions, economic conditions, and other factors contribute to variations in these benefits. In December 2024, the Board approved a 2024 budget authority of $1,070.2 million. Total expenses for Board operations were $1,049.9 million, which were $20.3 million, or 1.9 percent, lower than the budget authority.

The Board's 2024 single-year capital spending was $16.8 million, $8.2 million or nearly 32.9 percent less than budgeted. This variance was driven primarily by lower spending on equipment purchases, life-cycle replacements, and deferred automation projects. Multiyear capital projects spending in 2024 was higher than budgeted by $27.4 million, or 7.5 percent, driven by long-lead items received earlier than expected within building improvement projects. Although 2024 expenditures for multiyear capital projects were higher than budgeted, multiyear projects are still projected to be within their total project budgets. Table D.7 summarizes the Board's budgeted and actual capital expenditures for 2024 and 2025.

Table D.7. Capital expenditures of the Board of Governors, by capital type, 2024–25

2025 Operating Expense Budget

The 2025 budget for Board operations is $1,168.6 million, which is $118.6 million, or 11.3 percent, higher than 2024 actual expenses. The operating budget reflects investments to advance the Board's priorities across five goal areas to maintain the stability, integrity, and efficiency of the nation's monetary, financial, and payment systems.

The 2025 budget includes strategic investments in the Board's data and technology environment and the processes used for forecasting and modeling, short-term (non-permanent) support for upcoming G–20 and G–7 meetings, and funding to support the Board's triennial Survey of Consumer Finances.

Authorized positions for 2025 are 3,057, an increase of 47 positions from the 2024 authorized number.

2025 Capital Budgets

The Board's 2025 single-year capital budget is $20.9 million, which is $4.0 million, or 24 percent, higher than 2024 actual capital expenditures. The growth is driven by routine building life-cycle replacements and an accounting threshold change for bulk purchases.

The Board's multiyear capital budget is driven by building improvements and funding for information technology investments. Expected capital expenditures in 2025 total $510.7 million and reflect the Board's commitment to provide a secure, modern environment that meets the needs of the Board's workforce and leverages opportunities to increase collaboration, efficiency, and productivity. Table D.7 summarizes the Board's budgeted and actual capital expenditures for 2024 and 2025.

Office of Inspector General

The budget for the Board's OIG is grounded in the goals established in its strategic plan. In keeping with its statutory independence, the OIG prepares its proposed budget separate and apart from the Board's budget. The OIG presents its budget directly to the Board for approval.

2024 Budget Performance

In December 2024, the Board approved a budget authority of $59.8 million. Total expenses for OIG operations, excluding operating income, were $58.7 million, which was $1.1 million, or 1.9 percent, lower than the budget authority.

The OIG provides independent oversight of the Board and the Consumer Financial Protection Bureau (CFPB). Both agencies contribute to the OIG's budget based on the allocation of work attributed to each. Operating income from the CFPB was $18.6 million, which was $1.6 million, or 8.1 percent, lower than the forecasted amount of $20.2 million. The OIG conducted more work related to the Board than planned, resulting in less operating income from the CFPB. Including operating income from the CFPB, total expenses for OIG operations were $40.1 million in 2024.

The OIG's single-year capital spending was $0.2 million, which was $0.3 million, or 63.4 percent, less than the budgeted amount. Table D.5 summarizes the OIG's 2024 budgeted and actual expenses and table D.7 summarizes the OIG's 2024 budgeted and actual capital expenditures.

2025 Operating Expense Budget

The 2025 budget for OIG operations, excluding operating income, is $62.5 million, which is $3.8 ;million, or 6.6 percent, higher than 2024 actual expenses. Including operating income from the CFPB, the 2025 budget for OIG operations is $41.3 million.

The OIG has 152 authorized positions for 2025, which is no change from the 2024 authorized number.

2025 Capital Budget

The OIG's single-year capital budget is $0.2 million, which is consistent with 2024 actual capital expenditures. The budget includes funding for equipment purchases and life-cycle replacements. Table D.5 summarizes the OIG's 2025 budgeted expenses, and table D.7 summarizes the OIG's budgeted capital expenditures for 2025.

Federal Reserve Banks Budgets

Each Reserve Bank establishes operating goals for the coming year that reflect the System's key strategic objectives as endorsed by the Board of Governors, to devise strategies for attaining those goals, to estimate required resources, and to monitor 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, to the U.S. Treasury as its fiscal agent, and to the public

The Reserve Bank budget process is as follows:

• The Conference of Presidents, working closely with the Conference of First Vice Presidents (CFVP), structured itself such that five umbrella committees would be responsible for major operational and functional areas.⁸ The umbrella committees are chaired by Reserve Bank Presidents and comprise Presidents and First Vice Presidents. These committees matured their roles in the budgeting process by setting budget priorities that aligned with the System's long-term strategies.
• The chair of each umbrella committee sits on the Committee on Spend Stewardship (CSS). The CSS defines, in close consultation with the Board's Committee on Federal Reserve Bank Affairs (BAC), key strategic objectives for the System. Considering long-term environmental trends and historical growth rates of expense, these governance bodies articulate an aggregate System-level growth expectation for the budget year.
• With guidance from the CSS, the 12 Reserve Banks develop budgets that reflect the System's strategic priorities, relying heavily on framing and making appropriate tradeoffs. These budgets are reviewed by each Reserve Bank's senior leadership and respective board of directors.
• The Reserve Banks submit for Board review preliminary budget information, including documentation to support the budget request.

• Board staff analyzes these budgets, both individually and in the aggregate, with a focus on the overall System strategy and its articulation through resource decisions before providing its recommendations to the BAC.

• Expenses associated with services provided to the Treasury require authorization from the Bureau of the Fiscal Service.

• The BAC reviews the Banks' budgets.

• The Reserve Banks make any needed changes and the BAC chair submits the revised budgets to Board members for review and final approval.

• 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 D.8, D.9, and D.10 summarize the Reserve Banks' 2024 budgeted and actual expenses and 2025 budgeted expenses by Reserve Bank, functional area, and account classification.⁹ Table D.11 shows the Reserve Banks' budgeted and actual employment for 2024 and budgeted employment for 2025. In addition, table D.12 shows the Reserve Banks' budgeted and actual capital expenditures for 2024 and budgeted capital for 2025.

Table D.8. Operating expenses of the Federal Reserve Banks, by District, 2024–25

Table D.9. Operating expenses of the Federal Reserve Banks, by operating area, 2024–25

Table D.10. Operating expenses of the Federal Reserve Banks, by account classification, 2024–25

Table D.11. Employment at the Federal Reserve Banks, by District, and of FRIT, 2024–25

Table D.12. Capital expenditures of the Federal Reserve Banks, by District, and of NIT, 2024–25

2024 Budget Performance

Total 2024 operating expenses for the Reserve Banks were $5,865.4 million, which is $187.7 million, or 3.1 percent, less than the approved 2024 budget of $6,053.2 million. Budget performance reflects slower-than-expected onboarding of planned incremental resources, increased turnover, and program delays related to the Accelerate: Cloud and Colo Program (ACC), Common Data Platform (CDP), and Federal Reserve Financial Services (FRFS) cloud migration. Actual full-time equivalents (FTE) was 20,840, an underrun of 398 FTE, or 1.9 percent, from 2024 budgeted staffing levels. The Reserve Banks' 2024 capital expenditures were less than budgeted by $136.6 million, or 15.0 percent, primarily driven by delays in critical System investments.

2025 Operating Expense Budget

The 2025 operating budgets of the Reserve Banks total $6,382.5 million, which is $517.1 million, or 8.8 percent, higher than 2024 actual expenses.¹⁰ Growth in monetary policy expense reflects staffing to support regional economic research. Treasury growth is primarily attributable to the Treasury's request that Reserve Banks, as fiscal agents, modernize legacy applications and migrate applications to a cloud platform in alignment with the federal government's cloud computing strategy. Cash investments reflect increases across several Districts to support local implementations for the NextGen program.¹¹ Supervision resource additions align with portfolio growth. Investments in fee-based services are for resource needs to meet cloud migration deadlines and software costs for FedLine and the project to implement ISO 20022 for the Fedwire Funds service.

Total 2025 budgeted employment for the Reserve Banks and Federal Reserve Information Technology (FRIT) is 21,411 FTE, an increase of 571, or 2.7 percent, from 2024 actual employment levels.¹²

Reserve Bank officer and staff personnel expenses for 2025 total $4,670.8 million, an increase of $349.6 million, or 8.1 percent, from 2024 actual expenses. The increase reflects expenses associated with additional staff, salary administration, variable pay, and retirement and other benefit costs.¹³

The 2025 Reserve Bank budgets include a salary administration program for eligible officers, senior professionals, and staff totaling $135.4 million and a variable pay program totaling $294.2 million.

2025 Capital Budgets

The 2025 capital budgets for the Reserve Banks and National IT total $942.7 million. The increase in the 2025 capital budget is $165.4 million, or 21.3 percent, greater than the 2024 actual levels of $777.2 million, and includes ongoing, multiyear, strategic IT initiatives, investments in cash services, and building projects. Initiatives in the 2025 capital budget support ongoing multiyear building investments related to the maintenance of aging buildings, construction of a new cash services center, deployment of currency processors as part of the NextGen program, and the expansion of a cash vault. Increases are also for IT infrastructure investments, including the ACC Program.

Capital Expenditures Designated for Conditional Approval

The BAC chair designated projects with an aggregate cost of $312.4 million in 2025 for conditional approval, requiring additional review and approval by the director of the Board's Division of Reserve Bank Operations and Payment Systems (RBOPS) before the funds are committed.¹⁴ The expenditures designated for conditional approval comprise investments in technology related to the System's ACC Program as well as large-scale projects related to the development and deployment of currency processors as part of the NextGen program, markets-related initiatives, the Treasury Retail Investment Manager (TRIM), and building upgrades related to the future of work and certain building renovation programs.

Other Capital Expenditures

Significant capital expenditures (typically expenditures exceeding $1 million) that are not designated for conditional approval include total multiyear budgeted expenditures of $1,645.4 million for 2025 and future years, of which the single-year 2025 budgeted expenditures are $557.6 million. This category includes necessary infrastructure investments for building and IT projects, and applications support for cash, fee-based services, monetary policy, and supervision initiatives.

Capital initiatives that are individually less than $1 million are budgeted at an aggregate amount of $72.7 million for 2025 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 necessarily incurred 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.¹⁵ As the issuing authority, the Board is responsible for ensuring that there is an adequate supply of banknotes in circulation, that the banknotes meet defined quality standards to function in commerce, and that any security features or new designs are robust against counterfeiting.

To support the Board's role, the budget includes BEP note production costs, consistent with the annual calendar year print order submitted by the director of RBOPS on behalf of the Board. The budget also funds Board costs to ship new currency from the BEP to Reserve Banks, ship currency between the Reserve Banks, and cover program management expenses to support long-term issuance strategies and resiliency.¹⁶

Program management expenses include work by Board staff, done in collaboration with the Reserve Banks, the Treasury Department, the BEP, and the U.S. Secret Service, to ensure that notes meet quality standards to be able to function in commerce and have suitable security and design features to discourage or prevent counterfeiting.

In addition, the Board plays a central role in protecting the integrity of, and maintaining public confidence in, U.S. currency. The U.S. Currency Program (USCP) stakeholders perform development and testing of security features and designs in support of the next banknote family.¹⁷ Board staff monitors counterfeiting threats for each denomination and conducts adversarial analysis to ensure resistance to counterfeiting.

The currency budget also funds the currency education program, which aims to protect and maintain confidence in U.S. currency worldwide by facilitating counterfeit-detection trainings for Reserve Bank and foreign central bank staff and educating the public about banknote security features. The currency education program also conducts outreach on USCP initiatives to key stakeholders, including commercial banks, retailers, cash-intensive industries, and law enforcement agencies.

The annual currency budget process is as follows:

• Each year, under authority delegated by the Board, the director of RBOPS submits a calendar year print order for banknotes to the director of the BEP.
• The BEP forecasts expenses for the single-cycle calendar-year and multicycle project budgets. The single-cycle budget includes fixed and variable costs for printing Federal Reserve notes and support costs. The multicycle budget includes costs related to significant capital investments.
• Board staff develops budgets for Board expenses consistent with strategic guidance set by the RBOPS officer responsible for the cash program of work.
• The sections of the budget are independently reviewed by Board staff members, who also prepare a consolidated budget recommendation for BAC and Board approval.
• The BAC reviews the proposed currency budget.
• The BAC chair submits the proposed currency budget to Board members for review and final approval.

2024 Budget Performance

BEP Single-Cycle Operating Costs

BEP single-cycle operating costs were $976.6 million, which was $57.1 million, or 5.5 percent, below the budgeted amount for 2024. The budget underrun was primarily attributable to lower variable printing costs as BEP and Board staff agreed to reduce the print order to reflect updated demand trends for certain denominations. BEP fixed printing costs were below budget because of a mix of IT and facilities capital project expenditures that were pushed to 2025.

Board Single-Cycle Operating Costs

Board costs were $56.7 million, which was $13.5 million, or 19.3 percent, under the budgeted amount for 2024. The primary drivers were lower currency issuance costs for banknote transportation and an underrun in banknote development. Lower currency issuance costs were due to reduced demand, healthy inventory levels across the System, and lower-than-expected transportation contract price increases. Banknote development's underrun was primarily due to scope changes to contracts and decreased membership fees for the Central Bank Counterfeit Deterrence Group.

2025 Budget

Table D.13 summarizes the 2025 single-cycle currency operating budget of $1,040.0 million.¹⁸ The 2025 single-cycle operating budget reflects an increase of $6.7 million, or 0.7 percent, from 2024 actual expenses. BEP costs associated with the printing of Federal Reserve notes are 93.9 percent of the operating budget. Board expenses for currency issuance, banknote development, currency education, and counterfeit threat analysis comprise the remaining 6.1 percent of the operating budget. Table D.14 provides an overview of the multicycle project budget that funds the BEP's capital investments.

Table D.13. Federal Reserve single-cycle currency budget, 2024–25

Table D.14. Multicycle projects in the currency budget, 2024–25

BEP Single-Cycle Operating Costs

The proposed 2025 budget to fund the BEP printing and support costs is $976.9 million, which is $0.3 million, or 0.03 percent, higher than 2024 actual expenses.

The budget for fixed printing costs is $688.6 million, which is $29.0 million, or 4.4 percent, higher than 2024 actual expenses. Fixed costs are growing to support cybersecurity efforts and information technology upgrades, and to fund increased staffing levels for manufacturing support.

The budget for variable printing costs is $283.4 million, which is $29.6 million, or 9.4 percent, lower than 2024 actual expenses. The decrease is primarily a result of fewer expected note deliveries in 2025.

BEP Multicycle Project Operating Costs

The 2025 budget includes two multicycle projects: the BEP's Washington, D.C., replacement facility (DCRF) and modernization of BEP note production equipment. The combined lifetime project budget for DCRF and note production equipment is $3,049.1 million. The Fort Worth, Texas, western currency facility expansion project was successfully completed in 2024 and is therefore no longer reflected in the 2025 budget. The Board has reimbursed the BEP $272.6 million for the project.

As of May 2024, there is a total of $3,049.1 million in approved multicycle project funding, which includes $1,784.1 million for the new DCRF facility and $1,265.0 million for a generational upgrade of note production equipment for both BEP facilities. Within the lifetime project budget for note production equipment, there is $40.2 million remaining in contingency funding that has not been released and requires additional review and approval by the director of RBOPS when funding is required. The lifetime project budget of $1,265.0 for note production equipment funds the replacement of nearly all the production equipment at the BEP through 2033.¹⁹

The multicycle project budget includes 2025 components for each of the two budgeted projects: $117.9 million to complete the DCRF design and prepare for the awarding of the construction contract, and $105.6 million for note production equipment to support the BEP and Board's joint commitment to replacing aging equipment.

Board Single-Cycle Operating Costs

The Board costs budget is $63.1 million, which is $6.4 million, or 11.3 percent, higher than 2024 actual costs. The year-over-year change is primarily driven by increases to support the U.S. currency program's strategic initiatives.

The currency issuance budget increases are primarily attributable to increased transportation costs due to updated contract pricing, increased shipments to rebalance Reserve Bank inventories given the reduced print order, increased shipments to support Reserve Bank cash offices during renovations to support deployment of new currency processing machines, and development of a new currency ordering application.

The banknote development decrease is primarily attributable to the successful completion of a counterfeit-detection project and reduced contractual support for overseeing and identifying risks in executing major cross-program initiatives. The decrease is slightly offset by increased Central Bank Counterfeit Deterrence Group membership fees to fund work that was deferred from 2024.

The currency education program will focus on efforts to protect and maintain confidence in U.S. currency worldwide through public outreach, expansion of domestic and international stakeholder education, and brand strategy to prepare for the release of the next family of notes.

The 2025 currency budget includes funding for three new positions and additional contract resources to support counterfeit threat analysis efforts. The three additional positions will support analyzing and curating intelligence analysis in support of the Board's currency issuance role, which includes banknote issues such as security features and circulation patterns. The additional contract resources will assist with assessing options for counterfeit processing performed by the Reserve Banks and U.S. Secret Service and identifying ways to better respond to counterfeiting threats.

The currency issuance, banknote development, currency education, and counterfeit threat analysis budget categories also include personnel, travel, training, and support and overhead costs.²⁰

Footnotes