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Budgets: Chapter 2. Board of Governors

For the past 12 years, the Board prepared two-year budgets. However, to better respond to the significant changes in demands placed on the Board during the financial crisis and the potential impact of regulatory restructuring proposals, the Board approved a one-year budget for 2010.

2010 Budget

Board of Governors

The Board approved a $425.0 million operating budget and a $23.6 million capital budget for 2010. The budget reflects growth in personnel service expenses as well as increased costs for goods and services. For personnel services, the primary driver underlying the increase is the full-year effect of positions added during the 2008−09 budget period in response to increased workload demands, driven in large part by the financial crisis and Board compliance with mandates such as the Federal Information Security Management Act, requirements under Section 508 of the Rehabilitation Act for the Board's websites, and the Sarbanes-Oxley Act. Increases in the category of goods and services include higher costs for the Survey of Consumer Finances (in response to the financial crisis and the need to increase the survey's sample size), additional rental expenses related to leased office space, and increased costs of the Reserve Banks' external audit.

Office of Inspector General

In keeping with its statutory independence, the Office of Inspector General (OIG) prepares its proposed budget apart from the Board's budget. The Board approved an operating budget of $19.2 million and a $50,000 capital budget for 2010 for the OIG. The growth in the budget is mostly to fund personnel services and contractual professional services to conduct legislatively mandated material loss reviews of failed banks.

Table 2.1. Operating Expenses and Capital Expenditures of the Board of Governors, 2006-2010
Millions of dollars, except as noted
Operational area or Office of Inspector General 2006-07 (budgeted) 2006-07 (actual) 2008-091(budgeted) 2008-09 (actual) 2010 (budgeted)
Monetary and economic policy 143.1 137.9 169.8 166.1 95.8
Supervisory, regulatory, and legal services 206.4 200.5 250.2 247.9 138.8
Federal Reserve System policy direction 55.6 55.9 65.4 63.8 36.8
Support and security services 195.4 198.8 243.7 252.4 143.5
Extraordinary items 9.0 8.3 7.3 5.5 10.2
Total, Board operations 609.5 601.4 736.4 735.6 425.0
Total, capital2 31.4 24.7 47.9 33.3 23.6
Office of Inspector General 10.2 9.5 14.0 12.4 19.2

NOTE: Components may not sum to totals and may not yield percentages shown because of rounding.

1. 2008-09 budgeted figures include $30.1 million and $1.3 million added to the Board's and the Office of Inspector General's respective operating budgets during 2009.   Return to table

2. Includes the Office of Inspector General.  Return to table

Table 2.2. Positions Authorized at the Board of Governors, 2006-2010
Operational area or Office of Inspector General Position Count1
2006-07 (initial) 2006-07 (ending) 2008-09 (initial) 2008-09 (ending) 2010 (budgeted)
Monetary and economic policy 466 467 481 493 506
Supervisory, regulatory, and legal services 567 577 576 615 627
Federal Reserve System policy direction 173 176 179 185 187
Support and security services2 770 805 805 873 870
Extraordinary items … … … … …
Total, Board operations 1,976 2,025 2,041 2,166 2,190
Office of Inspector General 36 36 37 45 61

NOTE: Includes only those divisions, offices, and special accounts that have authorized position counts.

1. Excludes summer interns.  Return to table

2. Includes positions that support the Federal Financial Institutions Examination Council for processing data collected under the Home Mortgage Disclosure Act and the Community Reinvestment Act, as well as cooperative education, worker trainee, and student aide programs that assist offices and divisions Boardwide.  Return to table

… Not applicable  Return to table

Authorized Positions

The Board's 2010 budget includes 2,190 authorized positions. This figure reflects an increase in the number of positions to address increased workload demands, integrate analysis for financial stability, enhance policy analysis, address new legislative and regulatory initiatives, address consumer compliance, and improve consumer protection. The OIG's 2010 budget includes an increase of 16 positions to conduct material loss reviews of failed banks, mentioned above.

Areas of Risk

Risks to the budget stem from the continued pressure on staff to meet the demands generated by the financial crisis and to complete the backlog of work because of the shift in focus to meet those demands. Passage of proposed legislation related to regulatory restructuring could result in significant changes to the Board's responsibilities for, and processes related to, bank supervision and regulation as well as consumer protection. These changes could, in turn, necessitate a revision to the strategic plan and to budgetary requirements. The Board's continued commitment to maintaining the transparency of its operations and the potential increase in both the number and the complexity of requests for information not disclosed under the transparency initiative may require additional investments in information systems to enhance the Board's communication and document management capabilities. Finally, an increase in staffing levels (including new positions in the OIG) may require additional funding to secure additional leased space.

2008-09 Budget Performance

Board of Governors

The Board's actual operating expenses for 2008−09 were $735.6 million, or $0.8 million less than the operating plan. Increased spending for travel and rentals was offset by lower-than-expected expenses for contractual professional services for the Reserve Banks' financial audit, the Survey of Consumer Finances, and depreciation for capital projects that was deferred to future periods. Capital purchases totaled less than the operating plan by $14.5 million because construction costs were less than budgeted and because projects were delayed, primarily because of staff focus on the financial crisis.

Office of Inspector General

The OIG's actual expenses totaled $12.4 million for 2008−09, or $1.6 million less than the operating plan. The decrease was mainly due to lower-than-expected personnel services expenses and contractual professional service expenses related to the material loss reviews of failed banks.

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