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 2022 budget performance of the Board and Reserve Banks and on their 2023 budgets, 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' 2022 budgeted, 2022 actual, and 2023 budgeted operating expenses and employment.2
Table D.1. Total operating expenses of the Federal Reserve System, net of receipts and claims for reimbursement, 2022–23
Millions of dollars, except as noted
| Item | 2022 budget |
2022 actual |
Variance 2022 actual to 2022 budget |
2023 budget |
Variance 2023 budget to 2022 actual |
||
|---|---|---|---|---|---|---|---|
| Amount | Percent | Amount | Percent | ||||
| Board | 965.9 | 912.9 | –53.0 | –5.5 | 960.8 | 47.8 | 5.2 |
| Office of Inspector General 1 | 36.0 | 37.6 | 1.7 | 4.6 | 37.9 | 0.3 | 0.7 |
| Reserve Banks 2 | 5,434.6 | 5,353.0 | –81.6 | –1.5 | 5,646.2 | 293.2 | 5.5 |
| Currency 3 | 1,060.0 | 979.9 | –80.1 | –7.6 | 931.4 | –48.5 | –5.0 |
| Total System operating expenses 4 | 7,496.5 | 7,283.5 | –213.0 | –2.8 | 7,576.3 | 292.8 | 4.0 |
| Revenue from priced services | 477.2 | 466.8 | –10.4 | –2.2 | 495.7 | 28.9 | 6.2 |
| Claims for reimbursement 5 | 829.7 | 845.9 | 16.2 | 2.0 | 787.9 | –58.0 | –6.9 |
| Other income 6 | 1.0 | 0.4 | –0.6 | –61.3 | 0.0 | –0.4 | –100.0 |
| Revenue and claims for reimbursement7 |
1,307.9 | 1,313.1 | 5.2 | 0.4 | 1,283.6 | –29.1 | –2.2 |
| Total System operating expenses, net of revenue and claims for reimbursement |
6,188.6 | 5,970.4 | –218.3 | –3.5 | 6,292.7 | 322.3 | 5.4 |
Note: Here and in subsequent tables, components may not sum to totals and may not yield percentages shown because of rounding.
1. Reflects the total operating budget net of expected earned income from the Consumer Financial Protection Bureau (CFPB). For 2022, the Office of Inspector General (OIG) conducted less work related to the CFPB than planned, which drove the variance. Return to table
2. Excludes Reserve Bank assessments by the Board of Governors for costs related to currency and the operations of the Board of Governors, OIG, and CFPB. Return to table
3. In the previous report, single-cycle and multicycle project budgets were combined. However, the 2022 and 2023 currency budgets only include the single-cycle operating costs. The Bureau of Engraving and Printing's multicycle project budgets are tracked separately. Return to table
4. Includes total operating expenses of the Federal Reserve Information Technology support function and the System's Office of Employee Benefits, the majority of which are in the Reserve Banks. Return to table
5. Reimbursable claims include the expenses of fiscal agency. In 2022 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 $81.0 million in 2022 and $79.8 million in 2023. Return to table
6. In 2022 and prior years, other income included fees that depository institutions pay for the settlement component of the Fedwire Securities Service transactions for U.S. Department of the Treasury securities transfers. In 2023, these fees will no longer be collected as a result of the Treasury's decision to offer the transfer and settlement of marketable Treasury bills, notes, and bonds through the Fedwire Securities Service, and will be reported as revenue going forward. Return to table
7. 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 D.2. Employment in the Federal Reserve System, 2022–23
| Item | 2022 budget |
2022 actual |
Variance 2022 actual to 2022 budget |
2023 budget |
Variance 2023 budget to 2022 actual |
||
|---|---|---|---|---|---|---|---|
| Amount | Percent | Amount | Percent | ||||
| Board | 3,083 | 2,988 | –95 | –3.1 | 3,054 | 66 | 2.2 |
| Office of Inspector General | 133 | 133 | 1 | 0.6 | 136 | 2 | 1.8 |
| Reserve Banks1 | 21,212 | 20,831 | –381 | –1.8 | 20,763 | –68 | –0.3 |
| Currency 2 | 20 | 18 | –2 | –10.4 | 22 | 4 | 21.3 |
| Total System employment | 24,448 | 23,970 | –478 | –2.0 | 23,974 | 4 | 0.0 |
Note: For 2022, employment numbers presented include average number of personnel (ANP) for the Board and headcount for the Reserve Banks. ANP is the average number of employees expressed in terms of full-time positions for the period and includes outside agency help. Headcount is the number of active employees in an organization. Headcount is the actual number of people employed (actual) or expected to be employed (projected) at a given date and includes full-time and part-time staff. For 2023, employment numbers are represented in full-time equivalents (FTE) for the Reserve Banks. FTE represent an employee's scheduled hours divided by the employer's hours for a full-time workweek. Part-time workers' hours can be fractional, which means the variance may be off slightly.
1. Includes employment of the Federal Reserve Information Technology (FRIT) support function and the Office of Employee Benefits (OEB). Return to table
2. Values are subject to change based on revisions to underlying data. Return to table
2022 Budget Performance
In carrying out its responsibilities in 2022, the Federal Reserve System incurred $5,970.4 million in net expenses. Total System operating expenses of $7,283.5 million were offset by $1,313.1 million in revenue from priced services, claims for reimbursement, and other income. Total 2022 System operating expenses were $218.3 million, or 3.5 percent, less than the amount budgeted for 2022.
2023 Operating Expense Budget
Budgeted 2023 System operating expenses of $6,292.7 million, net of revenue and reimbursements, are $322.3 million, or 5.4 percent, higher than 2022 actual expenses. The Reserve Bank budgets comprise almost three-quarters of the System budget (figure D.1). Budgeted 2023 revenue from priced services is 6.2 percent higher than 2022 actual revenue, largely due to a shift from reimbursements to revenue as a result of the Treasury's decision to offer the transfer and settlement of marketable Treasury bills, notes, and bonds through the Fedwire Securities Service. This change will enable Reserve Banks to collect fees from customers and eliminate the need for remittance to and reimbursement from the Treasury. This change is effective January 2023 and is reflected in lower reimbursable claims and higher revenue in the 2023 budget.
Figure D.1. Distribution of budgeted expenses of the Federal Reserve System, 2023
Accessible Version | Return to text
OIG: Office of Inspector General.
Trends in Expenses and Employment
From the actual 2013 amount to the budgeted 2023 amount, the total operating expenses of the Federal Reserve System have increased an average of 4.6 percent annually (figure D.2), which is slightly lower than the 10-year growth rate between 2012 and 2022. The total rate of growth in Federal Reserve System expenses reflects investments in technology initiatives related to new and ongoing application development, payment infrastructure modernization efforts, the next-generation currency-processing program, and resources to support the supervision portfolio and other national strategic initiatives (figure D.3).
Figure D.2. Total expenses of the Federal Reserve System, 2013–23
Accessible Version | Return to text
1 Calculated with the GDP price deflator.
Note: For 2023, budgeted. Includes expenses of the OIG.
Figure D.3. Employment in the Federal Reserve System, 2013–23
Accessible Version | Return to text
Note: For 2023, budgeted. From 2013 to 2018, employment numbers presented include position counts for the Board and the OIG and average number of personnel (ANP) for the Reserve Banks. From 2019 to 2020, employment numbers for all entities are represented in ANP. For 2021 to 2022, employment numbers presented include ANP for the Board and OIG and headcount for the Reserve Banks. For 2023, employment numbers presented include ANP for the Board and OIG and full-time equivalents for the Reserve Banks.
Expense growth in the monetary policy area represents continued investment in regional economic research, and resources to support effective market operations and environmental monitoring activities.
Treasury services expenses have increased to meet expanding scope and evolving needs, including business and technology modernization of payment services, financing and securities services, and accounting and reporting services, as well as significant investment in infrastructure and technology services.
Expenses for services to financial institutions continue to increase as a result of the next-generation currency-processing program (NextGen).3 More recently, increased demand for cash and social distancing protocols related to the COVID-19 pandemic have resulted in higher personnel costs for cash operations and other related expenses for essential on-site staff, such as hazard pay, rapid COVID-19 testing, and frequent and in-depth cleaning services. 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 growth has moderated 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. Expenses for 2022 reflect higher-than-budgeted turnover and extended lag in hiring vacant positions.
Growth in fee-based services is primarily for investments in the 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
2023 Capital Budgets
The capital budgets for the Board and Reserve Banks total $173.7 million and $888.2 million, respectively.5 As in previous years, the 2023 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.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 recommend a specific growth target for the Board's operating budget. For 2023, the recommended growth target included known changes in the run-rate of the Board's ongoing operations. Existing and new initiatives were evaluated, refined, and prioritized to fund the most important strategic priorities. After endorsement by the CBA, Division of Financial Management (DFM) staff communicate the target to the Executive Committee, which comprises the directors of each division.
- To achieve the CBA's growth target, divisions allocate resources to their highest priorities and seek tradeoffs and efficiencies.
- DFM staff review initial budget requests submitted by divisions and collaborate with all divisions and functional areas to achieve the growth target.7
- 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 analyze variances and report the variances to senior management.
Tables D.3, D.4, and D.5 summarize the Board's 2022 budgeted and actual expenses and its 2023 budgeted expenses by operating area; division, office, or special account; and account classification, respectively. Table D.6 summarizes the Board's 2022 budgeted and actual authorized positions and its budgeted positions for 2023. 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, 2022–23
Millions of dollars, except as noted
| Item | 2022 budget |
2022 actual |
Variance 2022 actual to 2022 budget |
2023 budget |
Variance 2023 budget to 2022 actual |
||
|---|---|---|---|---|---|---|---|
| Amount | Percent | Amount | Percent | ||||
| Monetary policy and financial stability 1 | 415.5 | 395.9 | –19.6 | –4.7 | 409.1 | 13.2 | 3.3 |
| Supervision | 420.9 | 393.1 | –27.9 | –6.6 | 412.6 | 19.5 | 5.0 |
| Payment system and Reserve Bank oversight | 75.9 | 72.0 | –3.9 | –5.1 | 82.2 | 10.3 | 14.3 |
| Public engagement and community development | 53.7 | 52.0 | –1.7 | –3.1 | 56.9 | 4.9 | 9.4 |
| Total, Board operations | 965.9 | 912.9 | –53.0 | –5.5 | 960.8 | 47.8 | 5.2 |
| Office of Inspector General | 36.0 | 37.6 | 1.7 | 4.6 | 37.9 | 0.3 | 0.7 |
Note: This table presents financial performance for the Board's operating areas, which align with the Reserve Banks. Monetary policy and financial stability aligns with monetary and economic policy within the Reserve Banks; growth in 2023 is driven by strategic priorities and employment growth. Supervision aligns with supervision and regulation within the Reserve Banks; growth in 2023 is driven by strategic priorities and employment growth. Payment system and Reserve Bank oversight is an operating area unique to the Board. Public engagement and community development aligns with services to financial institutions and the public within the Reserve Banks. Office of Inspector General growth in 2023 is driven by employment growth and higher Board support and overhead allocations.
1. Includes the Survey of Consumer Finances. Return to table
Table D.4. Operating expenses of the Board of Governors, by division, office, or special account, 2022–23
Millions of dollars, except as noted
| Division, office, or special account | 2022 budget |
2022 actual |
Variance 2022 actual to 2022 budget |
2023 budget |
Variance 2023 budget to 2022 actual |
||
|---|---|---|---|---|---|---|---|
| Amount | Percent | Amount | Percent | ||||
| Research and Statistics | 100.3 | 99.4 | –0.9 | –0.9 | 108.3 | 8.8 | 8.9 |
| International Finance | 40.2 | 39.7 | –0.5 | –1.3 | 42.2 | 2.5 | 6.2 |
| Monetary Affairs | 45.8 | 45.4 | –0.4 | –0.9 | 49.3 | 3.8 | 8.5 |
| Financial Stability | 20.3 | 18.4 | –1.9 | –9.4 | 21.0 | 2.6 | 14.0 |
| Supervision and Regulation | 128.7 | 120.4 | –8.3 | –6.4 | 129.7 | 9.2 | 7.7 |
| Consumer and Community Affairs | 38.8 | 38.2 | –0.6 | –1.7 | 41.0 | 2.9 | 7.5 |
| Reserve Bank Operations and Payment Systems |
49.0 | 46.8 | –2.1 | –4.3 | 51.4 | 4.5 | 9.6 |
| Board Members | 27.4 | 28.1 | 0.7 | 2.5 | 30.0 | 1.9 | 6.8 |
| Secretary | 10.4 | 11.2 | 0.8 | 7.9 | 11.9 | 0.7 | 6.1 |
| Legal | 36.3 | 33.5 | –2.8 | –7.6 | 36.8 | 3.3 | 9.8 |
| Chief Operating Officer | 15.7 | 13.2 | –2.5 | –16.1 | 15.1 | 1.9 | 14.3 |
| Financial Management | 15.2 | 14.6 | –0.6 | –4.3 | 16.1 | 1.5 | 10.6 |
| Information Technology | 148.5 | 148.3 | –0.2 | –0.1 | 158.2 | 9.9 | 6.7 |
| Management | 185.8 | 180.7 | –5.1 | –2.8 | 192.7 | 12.0 | 6.6 |
| Centrally managed benefits 1 | 55.0 | 46.9 | –8.1 | –14.7 | 33.2 | –13.7 | –29.3 |
| Extraordinary items 2 | 54.1 | 33.3 | –20.8 | –38.5 | 48.3 | 15.0 | 45.2 |
| Savings and reallocations3 | –20.3 | –19.1 | 1.3 | –6.3 | –24.7 | –5.6 | 29.5 |
| Survey of Consumer Finances4 | 14.7 | 13.9 | –0.8 | –5.6 | 0.5 | –13.3 | –96.1 |
| Total, Board operations | 965.9 | 912.9 | –53.0 | –5.5 | 960.8 | 47.8 | 5.2 |
| Office of Inspector General | 36.0 | 37.6 | 1.7 | 4.6 | 37.9 | 0.3 | 0.7 |
1. For 2022, Special Projects and Retirement and Benefits were merged. Centrally managed benefits includes centralized Boardwide benefit programs, such as accrued annual leave, academic assistance, and relocation, and retirement and post-retirement benefits, which fluctuate because of changes in actuarial assumptions and demographics. Return to table
2. Includes several strategic projects, including the Martin building renovation, replacement of the Board's human capital, financial management and procurement systems, and a centralized position pool. Return to table
3. Includes negative adjustments to reflect measured budget risks for large, complex projects and historical under execution. In addition, includes Board support and overhead allocations to the Office of Inspector General and Currency. Return to table
4. 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 D.5. Operating expenses of the Board of Governors, by account classification, 2022–23
Millions of dollars, except as noted
| Account classification | 2022 budget |
2022 actual |
Variance 2022 actual to 2022 budget |
2023 budget |
Variance 2023 budget to 2022 actual |
||
|---|---|---|---|---|---|---|---|
| Amount | Percent | Amount | Percent | ||||
| Personnel services | |||||||
| Salaries | 535.7 | 518.3 | –17.4 | –3.2 | 558.5 | 40.1 | 7.7 |
| Outside agency help1 | 38.3 | 37.0 | –1.3 | –3.4 | 44.5 | 7.5 | 20.3 |
| Retirement/Thrift plans | 78.0 | 75.2 | –2.8 | –3.6 | 71.2 | –4.1 | –5.4 |
| Employee insurance and other benefits | 45.6 | 41.5 | –4.1 | –9.0 | 47.5 | 6.0 | 14.5 |
| Net periodic benefits costs2 | 18.5 | 15.4 | –3.1 | –16.8 | 7.7 | –7.7 | –50.0 |
| Subtotal, personnel services | 716.2 | 687.5 | –28.7 | –4.0 | 729.4 | 41.9 | 6.1 |
| Goods and services | |||||||
| Postage and shipping | 0.3 | 0.3 | 0.1 | 20.5 | 0.3 | 0.0 | –13.1 |
| Travel | 9.2 | 8.1 | –1.1 | –12.2 | 8.9 | 0.8 | 10.4 |
| Telecommunications | 7.1 | 6.0 | –1.0 | –14.5 | 6.9 | 0.8 | 13.8 |
| Printing and binding | 0.7 | 0.5 | –0.2 | –28.7 | 0.5 | 0.0 | 6.2 |
| Publications | 0.3 | 0.3 | 0.0 | –5.1 | 0.3 | 0.0 | 5.4 |
| Stationery and supplies | 1.1 | 1.3 | 0.2 | 15.5 | 1.1 | –0.2 | –12.5 |
| Software | 35.6 | 31.2 | –4.4 | –12.5 | 35.9 | 4.7 | 15.2 |
| Furniture and equipment (F&E) | 10.0 | 10.0 | 0.1 | 0.8 | 6.9 | –3.1 | –31.0 |
| Rentals | 37.5 | 37.6 | 0.1 | 0.3 | 39.6 | 2.0 | 5.2 |
| Data, news, and research | 35.7 | 30.9 | –4.8 | –13.4 | 22.9 | –8.0 | –25.9 |
| Utilities | 1.9 | 2.4 | 0.5 | 25.3 | 2.4 | –0.1 | –2.2 |
| Repairs and alterations—building | 4.9 | 4.9 | 0.0 | –0.3 | 5.8 | 0.9 | 19.2 |
| Repairs and maintenance—F&E | 5.5 | 5.7 | 0.2 | 4.2 | 5.9 | 0.2 | 3.7 |
| Contractual professional services | 49.2 | 38.4 | –10.8 | –22.0 | 47.3 | 8.9 | 23.2 |
| Interest | 0.0 | 0.0 | 0.0 | 199.1 | 0.0 | 0.0 | –33.4 |
| Training and dues | 6.0 | 3.2 | –2.9 | –47.4 | 5.3 | 2.1 | 67.1 |
| Subsidies and contributions | 3.2 | 2.5 | –0.7 | –21.1 | 3.4 | 0.9 | 34.2 |
| All other | 5.1 | 6.2 | 1.1 | 22.0 | 7.3 | 1.1 | 18.3 |
| Depreciation/amortization | 59.9 | 58.7 | –1.2 | –2.1 | 57.2 | –1.4 | –2.5 |
| Support and overhead allocations 3 | –19.1 | –19.1 | 0.0 | 0.2 | –21.9 | –2.8 | 14.8 |
| Income | –4.4 | –3.8 | 0.7 | –14.7 | –4.7 | –0.9 | 24.9 |
| Subtotal, goods and services | 249.7 | 225.4 | –24.3 | –9.7 | 231.4 | 6.0 | 2.7 |
| Total, Board operations | 965.9 | 912.9 | –53.0 | –5.5 | 960.8 | 47.8 | 5.2 |
| Office of Inspector General (OIG) | |||||||
| Personnel services | 31.2 | 30.9 | –0.3 | –0.9 | 33.1 | 2.1 | 6.9 |
| Goods and services 4 | 20.1 | 19.5 | –0.6 | –3.1 | 21.0 | 1.5 | 7.7 |
| Subtotal, excluding operating income | 51.4 | 50.5 | –0.9 | –1.8 | 54.1 | 3.7 | 7.2 |
| Operating income5 | –15.4 | –12.8 | 2.6 | –16.7 | –16.2 | –3.4 | 26.5 |
| Total, OIG operations | 36.0 | 37.6 | 1.7 | 4.6 | 37.9 | 0.3 | 0.7 |
1. For 2022, contractor expenses that met the ANP definition were moved from goods and services (contractual professional services) to personnel services (outside agency help) to provide a more complete view of personnel expenses. This change is in alignment with the Reserve Banks. For comparability, changes are also reflected for 2021 budget and actual. Return to table
2. Net periodic benefits costs other than services costs related to pension and post-retirement benefits. Return to table
3. Includes a net zero transfer of costs from the Board operating budget to the OIG and Currency operating budgets for Board support and overhead expenses attributable to the OIG and Currency. Return to table
4. Includes Board support and overhead allocations to the OIG. Return to table
5. The OIG operating budget incorporates earned income from the Consumer Financial Protection Bureau. Return to table
Table D.6. Positions authorized by the Board of Governors, by division, office, or special account, 2022–23
| Division, office, or special account | 2022 budget |
2022 actual |
Variance 2022 actual to 2022 budget |
2023 budget |
Variance 2023 budget to 2022 actual |
||
|---|---|---|---|---|---|---|---|
| Amount | Percent | Amount | Percent | ||||
| Research and Statistics | 364 | 364 | 0.0 | 0.0 | 364 | 0 | 0.0 |
| International Finance | 168 | 168 | 0.0 | 0.0 | 168 | 0 | 0.0 |
| Monetary Affairs | 186 | 186 | 0.0 | 0.0 | 186 | 0 | 0.0 |
| Financial Stability | 80 | 81 | 1.0 | 1.3 | 81 | 0 | 0.0 |
| Supervision and Regulation | 497 | 497 | 0.0 | 0.0 | 497 | 0 | 0.0 |
| Consumer and Community Affairs | 138 | 138 | 0.0 | 0.0 | 138 | 0 | 0.0 |
| Reserve Bank Operations and Payment Systems |
187 | 190 | 3.0 | 1.6 | 190 | 0 | 0.0 |
| Board Members | 123 | 124 | 1.0 | 0.8 | 124 | 0 | 0.0 |
| Secretary | 55 | 56 | 1.0 | 1.8 | 56 | 0 | 0.0 |
| Legal | 132 | 136 | 4.0 | 3.0 | 136 | 0 | 0.0 |
| Chief Operating Officer | 65 | 64 | –1.0 | –1.5 | 64 | 0 | 0.0 |
| Financial Management | 72 | 72 | 0.0 | 0.0 | 72 | 0 | 0.0 |
| Information Technology | 418 | 419 | 1.0 | 0.2 | 419 | 0 | 0.0 |
| Management | 485 | 485 | 0.0 | 0.0 | 485 | 0 | 0.0 |
| Extraordinary items1 | 9 | 0 | –9.0 | –100.0 | 10 | 10 | n/a |
| Total, Board operations | 2,979 | 2,980 | 1.0 | 0.0 | 2,990 | 10 | 0.3 |
| Office of Inspector General | 142 | 142 | 0.0 | 0.0 | 142 | 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. Centralized position pool used for strategic areas of growth. Return to table
2022 Budget Performance
Total expenses for Board operations were $912.9 million, which were $53.0 million, or 5.5 percent, lower than the approved 2022 budget of $965.9 million.
Personnel services expenses were $28.7 million, or 4.0 percent, lower than the approved budget, driven by higher-than-budgeted vacancy rates and lower pension expenses that fluctuate with changes in actuarial assumptions and demographics. Goods and services expenses were $24.3 million, or 9.7 percent, lower than the approved budget driven by lower contractual professional services, lower data, software, and hardware purchases, and reduced travel and training spend. A slower start in ramping up new technology initiatives contributed to the under-execution.
The Board's 2022 single-year capital spending was less than budgeted by $7.7 million, or 38.7 percent, driven by lower spending on equipment purchases and life-cycle replacements as well as routine building improvements. Multiyear capital projects spending in 2022 was higher than budgeted by $4.6 million, or 3.9 percent. Although 2022 expenditures for multiyear capital projects were higher than budgeted, multiyear projects are still projected to be within their project budgets. Table D.7 summarizes the Board's budgeted and actual capital expenditures for 2022 and 2023.
Table D.7. Capital expenditures of the Board of Governors, by capital type, 2022–23
| Item | 2022 budget |
2022 actual |
Variance 2022 actual to 2022 budget |
2023 budget |
Variance 2023 budget to 2022 actual |
||
|---|---|---|---|---|---|---|---|
| Amount | Percent | Amount | Percent | ||||
| Board | |||||||
| Single-year capital expenditures | 20.0 | 12.3 | –7.7 | –38.7 | 21.7 | 9.4 | 76.9 |
| Multiyear capital expenditures | 118.9 | 123.6 | 4.6 | 3.9 | 151.8 | 28.2 | 22.9 |
| Total capital expenditures | 139.0 | 135.8 | –3.1 | –2.2 | 173.5 | 37.7 | 27.7 |
| Office of Inspector General (OIG) | |||||||
| Single-year capital expenditures | 0.0 | 0.0 | 0.0 | n/a | 0.2 | 0.2 | n/a |
| Multiyear capital expenditures | 0.0 | 0.0 | 0.0 | n/a | 0.0 | 0.0 | n/a |
| Total capital expenditures | 0.0 | 0.0 | 0.0 | n/a | 0.2 | 0.2 | n/a |
| Board and OIG total capital expenditures | 139.0 | 135.8 | –3.1 | –2.2 | 173.7 | 37.9 | 27.9 |
Note: The amount reported for the multiyear capital budget represents the expected expenditure for the budget year.
n/a Not applicable.
2023 Operating Expense Budget
The 2023 budget for Board operations is $960.8 million, which is $47.8 million, or 5.2 percent, higher than 2022 actual expenses. Staff formulated the operating budget to advance the Board's strategic priorities, and it includes initiatives that support policy deliberations; promote safety, soundness, and stability of financial institutions; foster a safe, efficient, and accessible payment and settlement system; promote broader, ongoing engagement with the public; and optimize operations.
In addition, the 2023 budget includes growth driven by employment growth expected to occur in 2023, funding for the Board's compensation and benefit programs, and approved initiatives.
Authorized positions for 2023 are 2,990, an increase of 10 positions from the 2022 authorized number.
2023 Capital Budgets
The Board's 2023 single-year capital budget totals $21.7 million, which is $9.4 million, or 76.9 percent, higher than 2022 actual capital expenditures. The proposed budget includes building infrastructure needs and continued investments in automation projects and routine life-cycle replacements of equipment.
The Board's multiyear capital budget is driven by facilities projects. Expected capital expenditures in 2023 total $151.8 million and reflect the Board's commitment to provide a secure, modern environment that meets the needs of the workforce and leverages opportunities to increase collaboration, efficiency, productivity, and sustainability. Table D.7 summarizes the Board's budgeted and actual capital expenditures for 2022 and 2023.
Office of Inspector General
The budget for the Board's OIG is grounded in the goals established in its strategic plan.8 The goals are to deliver results that promote agency excellence; promote a diverse, skilled, and engaged workforce and foster an inclusive, 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.
2022 Budget Performance
Expenses for OIG operations, excluding operating income, were $50.5 million, which was $0.9 million, or 1.8 percent, lower than the approved 2022 budget of $51.4 million.
Personnel services expenses were lower than the approved budget by $0.3 million, or 0.9 percent. Goods and services expenses were $0.6 million, or 3.1 percent, lower than the approved budget, driven by lower contractual professional services and reduced training and telecommunications spend. Operating income was $2.6 million, or 16.7 percent, lower than the approved budget amount; the office conducted less work related to the Consumer Financial Protection Bureau than planned because of the ongoing, increased oversight and investigative responsibilities related to the Board's programs created in response to the COVID-19 pandemic. Including operating income, total expenses for OIG operations were $37.6 million in 2022. The OIG did not have any single-year capital spending during 2022.
2023 Operating Expense Budget
The 2023 budget for OIG operations, excluding operating income, is $54.1 million, which is $3.7 million, or 7.2 percent, higher than 2022 actual expenses. This increase is driven by employment growth within existing authorized staffing levels, funding for the compensation and benefit programs, and travel, training, and equipment purchases. Including operating income, the 2023 budget for OIG operations is $37.9 million. The OIG's single-year capital budget is $0.2 million, which will be used to replace existing vehicles and purchase equipment.
The OIG has 142 authorized positions for 2023, with no increase to the authorized number from 2022.
Federal Reserve Banks Budgets
Each Reserve Bank establishes 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, 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
- leading efforts to enhance the security, resiliency, functionality, and efficiency of services provided to financial institutions and the public
The Reserve Bank budget process is as follows:
- The Conference of Presidents, operating through its Committee on Spending 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, through framing and making appropriate trade-offs, and senior leadership in the Reserve Banks reviews the budgets for alignment with Reserve Bank and System priorities.
- The Reserve Banks submit 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 and areas such as payments and IT, where there is a high degree of cooperation among the Banks to support Systemwide operations and initiatives.
- 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 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 D.8, D.9, and D.10 summarize the Reserve Banks' 2022 budgeted and actual expenses and 2023 budgeted expenses by Reserve Bank, functional area, and account classification.9 Table D.11 shows the Reserve Banks' budgeted and actual employment for 2022 and budgeted employment for 2023.10 In addition, table D.12 shows the Reserve Banks' budgeted and actual capital expenditures for 2022 and budgeted capital for 2023.
Table D.8. Operating expenses of the Federal Reserve Banks, by District, 2022–23
Millions of dollars, except as noted
| District | 2022 budget |
2022 actual |
Variance 2022 actual to 2022 budget |
2023 budget |
Variance 2023 budget to 2022 actual |
||
|---|---|---|---|---|---|---|---|
| Amount | Percent | Amount | Percent | ||||
| Boston | 389.2 | 377.4 | –11.8 | –3.0 | 407.7 | 30.3 | 8.0 |
| New York | 1245.2 | 1214.5 | –30.6 | –2.5 | 1291.3 | 76.8 | 6.3 |
| Philadelphia | 231.9 | 231.6 | –0.3 | –0.1 | 232.8 | 1.2 | 0.5 |
| Cleveland | 317.8 | 306.6 | –11.1 | –3.5 | 304.2 | –2.4 | –0.8 |
| Richmond | 369.2 | 355.9 | –13.3 | –3.6 | 394.2 | 38.3 | 10.8 |
| Atlanta | 466.9 | 457.4 | –9.6 | –2.0 | 476.6 | 19.2 | 4.2 |
| Chicago | 489.2 | 496.2 | 7.0 | 1.4 | 540.1 | 43.9 | 8.8 |
| St. Louis | 487.4 | 472.0 | –15.4 | –3.2 | 427.9 | –44.0 | –9.3 |
| Minneapolis | 223.4 | 221.6 | –1.7 | –0.8 | 257.1 | 35.5 | 16.0 |
| Kansas City | 422.8 | 422.3 | –0.4 | –0.1 | 487.9 | 65.6 | 15.5 |
| Dallas | 290.8 | 291.3 | 0.5 | 0.2 | 302.2 | 10.8 | 3.7 |
| San Francisco | 500.8 | 505.6 | 4.9 | 1.0 | 524.1 | 18.4 | 3.6 |
| Total Reserve Bank operating expenses | 5,434.6 | 5,353.0 | –81.6 | –1.5 | 5,646.2 | 293.2 | 5.5 |
Note: Includes expenses of the FRIT support function and the OEB and reflects allocations for all indirect services. 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 Consumer Financial Protection Bureau.
Table D.9. Operating expenses of the Federal Reserve Banks, by operating area, 2022–23
Millions of dollars, except as noted
| Operating area | 2022 budget |
2022 actual |
Variance 2022 actual to 2022 budget |
2023 budget |
Variance 2023 budget to 2022 actual |
||
|---|---|---|---|---|---|---|---|
| Amount | Percent | Amount | Percent | ||||
| Monetary and economic policy | 902.7 | 896.2 | −6.4 | −0.7 | 943.2 | 47.0 | 5.2 |
| Services to the U.S. Treasury and other government agencies | 728.4 | 680.4 | −48.0 | −6.6 | 721.3 | 40.9 | 6.0 |
| Services to financial institutions and the public 1 | 1457.3 | 1459.5 | 2.2 | 0.1 | 1519.8 | 60.3 | 4.1 |
| Supervision and regulation | 1670.7 | 1655.3 | −15.4 | −0.9 | 1722.1 | 66.7 | 4.0 |
| Fee-based services to financial institutions 2 | 675.6 | 661.2 | −14.4 | −2.1 | 739.9 | 78.7 | 11.9 |
| Total Reserve Bank operating expenses 3 | 5,434.6 | 5,353.0 | −81.6 | −1.5 | 5,646.2 | 293.2 | 5.5 |
1. Services to financial institutions and the public includes cash services. Return to table
2. Includes operating expenses related to development of the FedNow Service. Return to table
3. Operating expenses exclude pension costs, reimbursements, and operating expense of the Board of Governors (see table D.4). Return to table
Table D.10. Operating expenses of the Federal Reserve Banks, by account classification, 2022–23
Millions of dollars, except as noted
| Account classification |
2022 budget |
2022 actual |
Variance 2022 actual to 2022 budget |
2023 budget |
Variance 2023 budget to 2022 actual |
||
|---|---|---|---|---|---|---|---|
| Amount | Percent | Amount | Percent | ||||
| Salaries and other benefits1 | 4,020.6 | 3,986.4 | −34.2 | −0.8 | 4,195.4 | 209.0 | 5.2 |
| Building | 283.4 | 282.3 | −1.1 | −0.4 | 301.8 | 19.4 | 6.9 |
| Software costs | 416.7 | 416.2 | −0.4 | −0.1 | 498.7 | 82.5 | 19.8 |
| Equipment | 251.5 | 249.6 | −1.9 | −0.7 | 231.2 | −18.5 | −7.4 |
| Recoveries | −124.7 | −254.6 | −129.9 | 104.1 | −236.2 | 18.4 | −7.2 |
| Expenses capitalized | −137.8 | −139.0 | −1.1 | 0.8 | −164.8 | −25.8 | 18.6 |
| All other 2 | 725.0 | 812.0 | 87.0 | 12.0 | 820.2 | 8.2 | 1.0 |
| Total Reserve Bank operating expenses | 5,434.6 | 5,353.0 | −81.6 | −1.5 | 5,646.2 | 293.2 | 5.5 |
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 G.9. Income and expenses of the Federal Reserve Banks, by Bank" in Appendix G, "Statistical Tables." Return to table
2. Includes fees, materials and supplies, travel, communications, and shipping. Return to table
Table D.11. Employment at the Federal Reserve Banks, by District, and at FRIT and OEB, 2022–23
| District | 2022 budget |
2022 actual |
Variance 2022 actual to 2022 budget |
2023 budget |
Variance 2023 budget to 2022 actual |
||
|---|---|---|---|---|---|---|---|
| Amount | Percent | Amount | Percent | ||||
| Boston | 1,323 | 1,263 | −58 | −4.4 | 1,285 | 22 | 1.7 |
| New York | 3,146 | 2,957 | −189 | −6.0 | 2,981 | 24 | 0.8 |
| Philadelphia | 916 | 873 | −43 | −4.7 | 861 | −12 | −1.4 |
| Cleveland | 1,254 | 1,110 | −107 | −8.5 | 1,104 | −6 | −0.5 |
| Richmond | 1,545 | 1,585 | 62 | 4.0 | 1,548 | −37 | −2.4 |
| Atlanta | 1,726 | 1,699 | −30 | −1.7 | 1,729 | 30 | 1.8 |
| Chicago | 1,709 | 1,679 | −30 | −1.8 | 1,679 | 0 | 0.0 |
| St. Louis | 1,394 | 1,450 | 56 | 4.0 | 1,447 | −3 | −0.2 |
| Minneapolis | 1,145 | 1,069 | −76 | −6.6 | 1,071 | 2 | 0.2 |
| Kansas City | 2,146 | 2,182 | 32 | 1.5 | 2,132 | −50 | −2.3 |
| Dallas | 1,363 | 1,292 | −70 | −5.1 | 1,281 | −11 | −0.9 |
| San Francisco | 1,880 | 1,909 | 30 | 1.6 | 1,864 | −45 | −2.4 |
| Total, all Districts | 19,547 | 19,068 | −423 | −2.2 | 18,981 | −87 | −0.5 |
| Federal Reserve Information Technology | 1,600 | 1,703 | 80 | 5.0 | 1,723 | 20 | 1.2 |
| Office of Employee Benefits | 65 | 60 | −5 | −7.7 | 58 | −2 | −3.1 |
| Total, System | 21,212 | 20,831 | −381 | −1.8 | 20,763 | −68 | −0.3 |
Note: For 2022 budgeted and actual, employment numbers presented are represented in headcount. For 2023, employment numbers presented are full-time equivalents (FTE) for the Reserve Banks. Headcount is the actual number of people employed (actual) or expected to be employed (projected) at a given date and includes full-time and part-time staff. FTE represent an employee's scheduled hours divided by the employer's hours for a full-time workweek. Part-time workers' hours can be fractional, which means the variance may be off slightly.
Table D.12. Capital expenditures of the Federal Reserve Banks, by District, and of FRIT and OEB, 2022–23
Millions of dollars, except as noted
| District | 2022 budget |
2022 actual |
Variance 2022 actual to 2022 budget |
2023 budget |
Variance 2023 budget to 2022 actual |
||
|---|---|---|---|---|---|---|---|
| Amount | Percent | Amount | Percent | ||||
| Boston | 56.2 | 66.2 | 10.0 | 17.8 | 53.5 | –12.6 | –19.1 |
| New York | 70.1 | 58.9 | –11.1 | –15.9 | 145.8 | 86.8 | 147.3 |
| Philadelphia | 24.2 | 17.4 | –6.8 | –28.3 | 15.7 | –1.7 | –9.6 |
| Cleveland | 41.4 | 32.6 | –8.9 | –21.4 | 29.7 | –2.9 | –8.8 |
| Richmond | 18.6 | 13.5 | –5.1 | –27.3 | 17.0 | 3.5 | 26.2 |
| Atlanta | 57.2 | 20.4 | –36.8 | –64.4 | 80.9 | 60.5 | 297.3 |
| Chicago | 54.2 | 47.4 | –6.8 | –12.6 | 43.8 | –3.6 | –7.6 |
| St. Louis | 22.3 | 16.0 | –6.3 | –28.4 | 39.0 | 23.1 | 144.4 |
| Minneapolis | 20.3 | 14.6 | –5.8 | –28.3 | 34.2 | 19.6 | 134.5 |
| Kansas City | 51.0 | 39.3 | –11.8 | –23.0 | 69.0 | 29.7 | 75.7 |
| Dallas | 31.6 | 36.4 | 4.8 | 15.3 | 45.3 | 8.9 | 24.3 |
| San Francisco | 91.8 | 87.1 | –4.7 | –5.1 | 134.5 | 47.3 | 54.3 |
| Total, all Districts | 539.0 | 449.7 | –89.3 | –16.6 | 708.4 | 258.7 | 57.5 |
| Federal Reserve Information Technology | 82.4 | 80.1 | –2.3 | –2.8 | 179.8 | 99.7 | 124.5 |
| Office of Employee Benefits | 0.2 | 0.1 | –0.1 | –66.0 | 0.1 | 0.0 | 17.7 |
| Total | 621.5 | 529.8 | –91.7 | –14.8 | 888.2 | 358.4 | 67.6 |
2022 Budget Performance
Total 2022 operating expenses for the Reserve Banks were $5,353.0 million, which is $81.6 million, or 1.5 percent, less than the approved 2022 budget of $5,434.6 million. More than half of the expense underrun is due to updated assumptions for staffing across several programs in the Treasury portfolio including forecasting and financing modernizations, and Pay.gov. Also contributing to the underrun in Treasury are updated decisions in the 2022 forecast following the final authorization from Fiscal Service and the decision to discontinue the Transforming Tax Collection program (T2C).11 Additionally, the expense underrun is driven, to a lesser degree, by higher-than-budgeted turnover and extended lags in filling open positions in supervision and across several business areas. Actual headcount was 20,831, an underrun of 381 headcount, or 1.8 percent, from 2022 budgeted staffing levels.
The Reserve Banks' 2022 capital expenditures were less than budgeted by $91.7 million, or 14.8 percent, primarily driven by planned delays to projects as a result of environmental factors, such as supply chain issues affecting the availability of materials and equipment. This underrun is largely offset by costs associated with the new data center, which was not originally included in the 2022 budget.
2023 Operating Expense Budget
The 2023 operating budgets of the Reserve Banks total $5,646.2 million, which is $293.2 million, or 5.5 percent, higher than 2022 actual expenses.12 Growth in monetary policy expense reflects increased resources dedicated to researching inflation and enhancing existing and developing new inflation indicators. The increase in Treasury is primarily attributable to infrastructure and support costs for the migration of applications to the cloud and data center as well as other technology initiatives. Additionally, cash investments are to retain resources across Reserve Banks because of recent labor shortages and additional resources needed to support the production and development phase of NextGen.13 Supervision continues to focus on areas of risk and allocating resources to the highest priorities. Investments in fee-based services align with the Federal Reserve System's commitment to modernize the nation's payment system and establish a safe and efficient foundation for the future (FedNow SM Service), and 2023 spend is specifically related to IT infrastructure and cloud services.
Total 2023 budgeted employment for the Reserve Banks, Federal Reserve Information Technology (FRIT), and the Office of Employee Benefits (OEB) is relatively flat, 20,763 full-time equivalents (FTE), a decrease of 68, or 0.3 percent, from 2022 actual employment levels.14
Reserve Bank officer and staff personnel expenses for 2023 total $4,195.4 million, an increase of $209.0 million, or 5.2 percent, from 2022 actual expenses. The increase reflects expenses associated with additional staff, salary administration, variable pay, and retirement and other benefit costs.15
The 2023 Reserve Bank budgets include a salary administration program for eligible officers, senior professionals, and staff totaling $174.5 million and a variable pay program totaling $265.3 million.
2023 Capital Budgets
The 2023 capital budgets for the Reserve Banks, FRIT, and OEB total $888.2 million. The increase in the 2023 capital budget is $358.4 million, or 67.6 percent, greater than the 2022 actual levels of $529.8 million, largely reflecting strategic IT initiatives, investments in cash services, and multiyear building projects. Initiatives in the 2023 capital budget support the development and deployment phase of NextGen, target major workspace renovations, address aging building infrastructure in several Reserve Banks, continue data center modernization, and improve IT infrastructure.
Capital Expenditures Designated for Conditional Approval
The BAC chair designated projects with an aggregate cost of $218.3 million in 2023 for conditional approval, requiring additional review and approval by the director of the Board's Division of Reserve Bank Operations and Payment Systems before the funds are committed.16 The expenditures designated for conditional approval include a new facility, a cash vault, and renovations to the main lobby of a Reserve Bank. Technology projects include investments for the FedNow Service, data center modernization, and an initiative to modernize the Markets Group operations platform.
Other Capital Expenditures
Significant capital expenditures (typically expenditures exceeding $1 million) that are not designated for conditional approval include total multiyear budgeted expenditures of $1,781.7 million for 2023 and future years, of which the single-year 2023 budgeted expenditures are $570.7 million. This category includes building investments to support security and resiliency, and infrastructure upgrades. IT projects include ongoing IT infrastructure investments, and support for cash, priced services, monetary policy, and supervision initiatives.
Capital initiatives that are individually less than $1 million are budgeted at an aggregate amount of $99.3 million for 2023 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 banknote security features and new design concepts, and conducts adversarial analysis to ensure the banknote security features and designs are robust against counterfeiting. The budget includes activities that support its issuing authority role, reimbursements to the BEP for banknote printing, 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 by coordinating counterfeit detection training to Reserve Bank and foreign central bank staff, providing information about banknote security features, and conducting outreach to key stakeholders on U.S. Currency Program (USCP) initiatives.
The annual currency budget process is as follows:
- 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
- The BEP forecasts expenses for the single-cycle calendar-year and multicycle project budgets. The single-cycle budget included fixed and variable costs for printing Federal Reserve notes and support costs. The multicycle budget includes costs related to significant capital investments. Board staff develop budgets for Board expenses in relation to strategic guidance set by cash leadership.
- The various sections of the budget are independently reviewed by Board staff, 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 action.
2022 Budget Performance
BEP Single-Cycle Operating Costs
BEP single-cycle operating costs were $923.8 million, which was $65.4 million, or 6.6 percent, below the budgeted amount for 2022. The budget underrun is primarily attributable to lower note deliveries in response to changing payment trends. Following updated payment trends, Reserve Bank inventories, and the need to prioritize testing for the next family of notes, BEP and Board staff agreed to reduce note deliveries to 6.0 billion notes for the calendar year 2022.
Board Single-Cycle Operating Costs
Board costs were $56.1 million, which was $14.7 million, or 20.7 percent, under the budgeted amount for 2022. The primary driver was lower currency issuance transportation costs given the reduced number of note deliveries from the BEP. Also contributing to the underrun was the banknote development costs, which were less than budgeted because of lower membership fees, contract terminations for banknote studies, and procurement delays.
2023 Budget
Table D.13 summarizes the 2023 single-cycle currency operating budget of $931.4 million.19 The 2023 single-cycle operating budget represents a decrease of $48.5 million, or 5.0 percent, from 2022 actual expenses. BEP costs associated with the printing of Federal Reserve notes are 92.2 percent of the operating budget. Board expenses for currency issuance, banknote development, and currency education comprise the remaining 7.8 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, 2022–23
Millions of dollars, except as noted
| Item | 2022 budget |
2022 actual |
Variance 2022 actual to 2022 budget |
2023 budget |
Variance 2023 budget to 2022 actual |
||
|---|---|---|---|---|---|---|---|
| Amount | Percent | Amount | Percent | ||||
| BEP costs | 989.2 | 923.8 | −65.4 | −6.6 | 858.7 | −65.2 | −7.1 |
| Printing Federal Reserve notes | 983.8 | 918.7 | −65.1 | −6.6 | 852.5 | −66.3 | −7.2 |
| BEP fixed printing costs | 612.5 | 612.3 | −0.2 | 0 | 587.0 | −25.3 | −4.1 |
| BEP variable printing costs | 371.3 | 306.4 | −64.8 | −17.5 | 265.5 | −40.9 | −13.4 |
| BEP support costs | 5.4 | 5.1 | −0.3 | –5.9 | 6.2 | 1.1 | 21.8 |
| Currency reader | 1.0 | 0.8 | −0.2 | –17.7 | 1.0 | 0.2 | 23.9 |
| Destruction and compliance | 4.4 | 4.3 | −0.1 | −3.3 | 5.2 | 0.9 | 21.4 |
| Board expenses | 70.8 | 56.1 | −14.7 | −20.7 | 72.8 | 16.6 | 29.6 |
| Currency issuance1 | 37.6 | 26.5 | −11.1 | −29.5 | 33.6 | 7.1 | 26.9 |
| Banknote development2 | 27.1 | 24.2 | −2.9 | −10.8 | 32.2 | 8.1 | 33.4 |
| Currency education 2 | 6.1 | 5.5 | −0.7 | −11.2 | 6.9 | 1.4 | 25.8 |
| Operating budget | 1060.0 | 979.9 | −80.1 | −7.6 | 931.4 | −48.5 | −5.0 |
1. This line item was previously identified as Currency transportation. Starting in 2022, the Currency issuance category includes transportation, personnel, and other support costs. Return to table
2. Personnel, travel, and training costs were previously displayed as line items in the budget. These costs are now included in the Banknote development and Currency education budget categories that they support. Return to table
Table D.14. Multicycle projects in the currency budget, 2022–23
Millions of dollars, except as noted
| Item | 2021 and prior actual |
2022 budget | 2022 actual | 2023 budget | Project lifetime budget |
|---|---|---|---|---|---|
| BEP project funding | |||||
| Fort Worth facility expansion 1 | 200.2 | 52.8 | 53.7 | 28.9 | 282.8 |
| Washington, D.C., replacement facility 2 | 45.4 | 5.5 | 20.0 | 62.3 | 134.1 |
| Note production equipment 3 | 111.9 | n/a | n/a | 43.8 | 787.0 |
| Total | 357.5 | 58.3 | 73.7 | 135.0 | 1,204.0 |
1. The Board approved a project lifetime budget of $282.8 million and a 2023 forecast of $33.6 million. The Board funded the BEP
$4.7 million more than originally forecast in 2022, reducing the 2023 estimate to $28.9 million. Return to table
2. The Washington, D.C., replacement facility will seek phased approvals. The BEP's current project total estimate is $1,784.1 million. Return to table
3. The Board conditionally approved the budget for Note production equipment. The director of RBOPS will provide final approval when funding is required. Return to table
BEP Single-Cycle Operating Costs
The proposed 2023 budget to fund the BEP printing and support costs is $858.7 million, which is $65.2 million, or 7.1 percent, lower than 2022 actual expenses.
Figure D.4. Federal Reserve costs for currency, 2013–2023
Note: For 2023, budgeted.
The budget for fixed printing costs is $587.0 million, which is $25.3 million, or 4.1 percent, lower than 2022 actual expenses. The fixed costs budget decreased due to a change in budget treatment of capital investments.20 The decrease in fixed costs was slightly offset by increased research and development costs to support testing for the next family of notes.
The budget for variable printing costs is $265.5 million, which is $40.9 million, or 13.4 percent lower than 2022 actual expenses. The decrease is attributable to a decrease in variable printing costs because of the lower expected note deliveries in 2023 than in 2022. The FY 2023 print order is lower to allow the BEP to focus on strategic priorities including deferred equipment maintenance and security testing for the next family of notes.
BEP Multicycle Project Operating Costs
The total $1,204.0 million in multicycle project funding includes $416.9 million of approved funding for the BEP's two construction projects, the Fort Worth facility (WCF) expansion and the Washington, D.C., replacement facility (DCRF). The multicycle project budget also includes $787.0 million of conditionally approved funding for the BEP's note production equipment.
In August 2021, the Board approved a total WCF program budget of $282.8 million to expand production capabilities, and 2023 funding of $28.9 million will be used to complete and close out the project. The Board approved a total of $134.1 million in the 2023 multicycle budget for the current phase of the DCRF project. The current estimated total cost is $1,784.1 million. The multicycle project budget includes $62.3 million in 2023 funds for design and specific construction costs. After additional design documents and construction estimates become available, Board staff will submit a budget request for the next project phase.
Starting in 2023, the multicycle project budget will include funds for note production equipment for both BEP facilities. The multicycle project budget includes $43.8 million in 2023 funds. Final approval is contingent upon receiving additional information and when funding is required.
Board Single-Cycle Operating Costs
The Board costs budget is $72.8 million, which is $16.6 million, or 29.6 percent, higher than 2022 actual costs. The increase is primarily driven by increases for currency issuance and banknote development costs.
The currency issuance budget increases are primarily attributable to higher intra-System shipment costs to rebalance banknote inventories across the System given the lower print order. In addition, transportation contract prices are increasing due to various factors, such as labor and fuel costs. The budget includes two additional positions and contract support to assist with upcoming changes to the USCP and the Board's strategic priorities.
The banknote development increases are primarily attributable to an increase in membership fees to fund a vendor management contract to mitigate program risks. Additionally, higher contract costs will further support security feature testing and the banknote development process.
The currency education program will focus on expanding its domestic and international stakeholder education outreach and maintaining the currency website. The increase is attributable to higher personnel costs and procuring a tool to support stakeholder outreach efforts.
The currency issuance, banknote development, and currency education budget categories also include personnel, travel, training, and support and overhead costs.21
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. The report is 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 2022 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 System is implementing 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
4. 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. The initiative to modernize the ACH processing platform was completed in early 2021. Return to text
5. The capital budget reported for the Board includes single-year capital expenditures and 2023 expected capital expenditures from multiyear projects of the Board and the Office of Inspector General. The capital budget reported for the Reserve Banks includes the amounts budgeted for the Federal Reserve Information Technology support function and the Office of Employee Benefits. Return to text
6. The Board approved the plan published in December 2019 and located at https://www.federalreserve.gov/publications/files/2020-2023-gpra-strategic-plan.pdf. Return to text
7. Monetary Policy and Financial Stability, Supervision, Payment System and Reserve Bank Oversight, Public Engagement and Community Development, and Mission Enablement (Support and Overhead). Return to text
8. The plan is located at https://oig.federalreserve.gov/strategic-plan.htm. Return to text
9. Additional information about the operating expenses of each of the Reserve Banks can be found in Appendix G, "Statistical Tables" (see "Table G.9. Income and expenses of the Federal Reserve Banks, by Bank"). Return to text
10. As part of the transition to the new Enterprise Resource Planning tool, and in line with industry standards, Reserve Banks will use the updated staffing metric, full-time equivalents (FTE). Starting in 2023, employment will be represented as FTE. Return to text
11. On September 9, 2022, Fiscal Service notified the Federal Reserve Bank of Cleveland of their decision to discontinue the T2C program. Return to text
12. On December 15, 2022, the Board approved the 2023 Reserve Bank operating budgets totaling $5,646.2 million. Additional information is available at https://www.federalreserve.gov/foia/budgets.htm. Return to text
13. FedCash (formerly Cash Product Office) is transitioning the existing fleet of high-speed currency processing machines and the sensor suite from the Banknote Processing System platform to the future next-generation (NextGen) processing infrastructure. Return to text
14. As noted in Table D.11, 2022 actuals are represented in headcount while 2023 budgeted employment is represented as full-time equivalents. The variance between 2022 actuals and 2023 budget may be slightly off due to part-time workers. Return to text
15. The salary administration program includes a budgeted pool for merit increases, equity adjustments, and promotions. Return to text
16. 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
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. Operations and capital investments of the BEP have been generally 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 is available on the Board's website at https://www.federalreserve.gov/paymentsystems/coin_currency_orders.htm. Return to text
19. For 2022, the Board approved a $25,000 multicycle capital budget for adversarial analysis laboratory equipment. Return to text
20. A portion of the capital investments in the fixed printing costs was moved to the multicycle project budget for note production equipment. Return to text
21. The currency budget includes support and overhead costs for enterprise IT, facilities, law enforcement, human resources, and other services. Return to text