Today, CUNA Chief Economist Mike Schenk presented before the NCUA Board regarding its proposed 2020-2021 agency budget. During the briefing, NCUA Chief Financial Officer Rendell Jones walked the Board through a budget presentation.

While CUNA supports aspects of the proposed budget—particularly the transparency of the process—we did raise concerns, as detailed in Mike’s testimony.

The proposed budget includes a 3.9% increase, which we feel seems reasonable in the context of approximately 2% inflation and with the 6% increase in credit union operating expenses which is the point of reference for most credit union CEOs. Further, we understand how personnel costs have a dramatic effect on overall agency expenditures and recognize that regulatory and contractual obligations drive a substantial portion of the changes in overall agency budgeted expenditures each year.

However, we did raise concerns in several areas:

• Regional consolidation – while we support the focus on cost savings and efficiency in consolidating regions, it has resulted in some inconsistency in the interpretation and application of rules and regulations.
• Examination cycle – an extended exam cycle is a helpful tool but should be expanded to more credit unions (i.e., the threshold should be increased to $3 billion).
• NCUSIF Normal Operating Level – we support the agency’s action last year to decrease the NOL to 1.38% but urge the Board to ultimately reduce it back down to 1.30%.
• Expansion of the Office of Consumer Protection – while Board Member Harper’s proposal may be well-intentioned, we believe altering the agency’s risk-focused examination process and substantially increasing examination-related expenditures is not warranted at this time.

NCUA is accepting written comments on the proposed budget until December 2.

The Board will vote on the proposed budget at its December Board meeting.