Board of Governors Budgets
For 2010, the Board moved from a two-year budget to a single-year budget because of the changes in demands placed on the Board during the financial crisis and the potential impact of regulatory restructuring proposals then being debated in Congress. Given the continuing demands on the Board to implement the requirements contained in the Dodd-Frank Act and lessons learned through the financial crisis, the Board also developed a one-year budget for 2011.
Budget
Board of Governors
For 2011, the Board approved a $475.6 million operating budget, a $5.5 million single-year capital budget, and a $19.7 million increase to the multiyear capital projects budget (table 4). The budget reflects growth in personnel services expenses as well as increased costs for goods and services. Growth in personnel services includes the full-year impact of positions added in 2010, including the creation of the new OFSPR.7 Other personnel services growth in the 2011 budget includes funding for increases in benefit liabilities as determined by the Federal Reserve System's actuaries and increases in the accrued leave liability. Growth in the cost of goods and services is driven by the loss of $1.4 million in lease income from the tenant of a Board building, as well as increases in anticipated expenditures for travel and furniture and equipment. These increases are partially offset by $10.5 million in savings from the Survey of Consumer Finance Data, which is conducted only every three years.
On December 22, 2010, President Obama signed legislation prohibiting statutory pay adjustments for most federal employees and freezing base pay for senior executives. Consistent with the legislation and implementing guidance issued by the Office of Personnel Management (OPM), Board and OIG officers did not receive a merit increase for 2011. The Board and OIG also froze the salary structure for all employees at 2010 levels. The OPM guidance allows for merit increases for staff that are based solely on individual performance, and because the Board's and OIG's merit pay system is entirely performance based, eligible staff received merit increases that recognized their individual performance during 2010. Promotions are not affected by the new law.
| Operational area or Office of Inspector General | 2008-091(budgeted) | 2008-09 (actual) | 20102(budgeted) | 2010 (actual) | 2011 (budgeted) |
|---|---|---|---|---|---|
| Monetary and economic policy | 169.8 | 166.1 | 96.5 | 91.9 | 107.0 |
| Supervisory, regulatory, and legal services | 250.2 | 247.9 | 144.2 | 141.1 | 156.5 |
| Federal Reserve System policy direction | 65.4 | 63.8 | 36.5 | 35.0 | 38.8 |
| Support and security services | 243.7 | 252.4 | 143.7 | 147.8 | 172.9 |
| Extraordinary items | 7.3 | 5.5 | 11.0 | 11.1 | 0.5 |
| Total, Board operations | 736.4 | 735.6 | 431.8 | 426.8 | 475.6 |
| Office of Inspector General | 14.0 | 12.4 | 19.2 | 10.6 | 18.0 |
| Single-year capital expenditures3 | 47.9 | 33.3 | 8.4 | 8.2 | 5.5 |
| Multiyear capital projects4 | ... | ... | 16.5 | 5.2 | 19.7 |
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 OIG's respective operating budgets during 2009. Return to table
2. During 2010, the Board approved a $6.9 million increase in the Board's initial operating budget of $444.2 million, a $0.8 million increase for the Board's single-year capital budget, a $0.1 million increase in the Board's multiyear capital budget, and a $0.4 million increase in the OIG's multiyear budget. Return to table
3. Beginning in 2010, the Board began budgeting and reporting projects that span multiple budget cycles separate from single-year capital expenses. Capital, as shown in this report, includes the Board and OIG capital budgets. Return to table
4. Budget figures for multiyear capital projects represent annual changes to total project budgets. As of year-end 2010, budgets for multiyear capital projects totaled $39.2 million. Project spending to-date totaled $12.8 million, of which $5.2 million was spent in 2010. Return to table
... Not applicable.
Office of Inspector General
In keeping with its statutory independence, the OIG prepares its proposed budget apart from the Board's budget. For 2011, the Board approved an operating budget of $18.0 million and a $35,000 single-year capital budget as well as an increase of $50,000 in the multiyear capital budget for the OIG. This represents a net decrease of $1.2 million (a 6.3 percent reduction) from the 2010 initial operating budget. The reduction is realized by reducing the contractual professional services budget by $4.5 million, partially offset by an increase of $2.4 million in salaries. The growth in salaries is mostly to fund the OIG's increase in staffing to provide appropriate oversight and to conduct legislatively mandated and discretionary audits, investigations, inspections, and other reviews of Board and Consumer Financial Protection Bureau (CFPB) programs and activities.8
Authorized Positions
The Board's 2011 budget includes 2,331 authorized positions (table 5). This represents a 5.5 percent increase over current total authorized positions and a 6.4 percent increase over the authorized positions at the beginning of 2010.9 The proposed increase includes an addition of 146 new positions for 10 divisions and offices, partially offset by a decrease of 25 positions expected to be transferred to the CFPB in 2011. Forty-six of the total requested positions, representing 38 percent of the net increase, are needed to implement requirements of the Dodd-Frank Act; other needs include implementing lessons learned from the financial crisis and meeting infrastructure-related requirements. The OIG's 2011 budget includes 85 authorized positions. This figure reflects an increase of 20 positions to conduct the activities mentioned above.
| Operational area or Office of Inspector General | Position count1 | ||||
|---|---|---|---|---|---|
| 2008-09 (budgeted) | 2008-09 (ending) | 2010 (budgeted) | 2010 (ending) | 2011 (budgeted) | |
| Monetary and economic policy | 481 | 493 | 506 | 526 | 572 |
| Supervisory, regulatory, and legal services | 576 | 615 | 627 | 627 | 668 |
| Federal Reserve System policy direction | 179 | 185 | 187 | 187 | 189 |
| Support and security services2 | 805 | 873 | 870 | 870 | 902 |
| Total, Board operations | 2,041 | 2,166 | 2,190 | 2,210 | 2,331 |
| Office of Inspector General | 37 | 45 | 61 | 65 | 85 |
Note: Includes only those divisions, offices, and special accounts that have authorized position counts.
1. Interns are not included in the numbers for positions or employment. Return to table
2. The count (ending) includes positions that provide reimbursable support to other agencies, such as the Federal Financial Institutions Examination Council; positions for cooperative education, worker trainee, and student aide programs that assist divisions Boardwide; and law enforcement personnel. Return to table
Areas of Risk
Risks to the budget for the coming year stem from the Board's ability to attract and retain qualified staff to meet the challenges created by passage of the Dodd-Frank Act and continue to meet demands of ongoing work requirements. The Board will be challenged to hire staff in increasingly competitive markets in the federal and private sectors, as well as academia, and the Board will need to act quickly to recruit the most qualified applicants. Divisions and offices will also be challenged to effectively absorb a large number of positions in a short time period. For staff who have worked long hours dealing with the financial crisis and must now take on the added requirements of the Dodd-Frank Act, work-life balance may become an issue. In addition, despite the strategic planning group's best efforts, it is uncertain whether the proposed initiatives will provide sufficient growth in personnel, technology, space, and other infrastructure support to supply the resources necessary for the Board's increased responsibilities. There is also uncertainty about the impact that external audits and reviews may have on the Board and the System.
2010 Budget Performance
Board of Governors
The Board ended 2010 with expenses that totaled less than its operating plan by $5.0 million.10 The Board's capital spending for 2010 single-year capital was also less than its operating plan, and multiyear capital projects remained within their project life budgets.
The Board's expenses for salaries and benefits exceeded the operating plan for the year by $2.3 million, or 0.7 percent. Retirement and insurance costs were underspent by $1.5 million and $1.3 million, respectively.
Expenses for goods and services were less than the operating plan by $7.4 million, or 6.3 percent, for the year, mainly attributable to the following line items: contractual professional services spending was below anticipated needs because of delayed or deferred projects and lower-than-budgeted audit costs for the Reserve Banks' external audits; software costs were underspent due to delays in software purchases; subsidies and contributions were underspent because payments did not occur as planned; repairs and alterations were underspent due to the timing of new building project costs; tuition costs were underspent mainly because the demand for academic assistance was lower than expected; and the "All other" account was underspent due to lower-than-anticipated reimbursements to participants in the Board's Transportation Subsidy Program.
The Board's 2010 single-year capital purchases totaled less than the operating plan by $0.2 million. The Board's underspending is due primarily to project delays and several projects coming in under budgeted expectations. As of year-end 2010, budgets for multiyear capital projects for the Board and the OIG totaled $39.2 million. Project spending to-date totaled $12.8 million, of which $5.2 million was spent in 2010. All multiyear capital projects are still in process and are expected to be completed within their budgeted amounts.
Office of Inspector General
The OIG's operating expenses for 2010 totaled $10.6 million, or $8.6 million less than the $19.2 million operating budget. The variance was mainly due to lower-than-expected contractual professional service expenses for conducting mandated material loss reviews. The number of state member banks that failed in 2010 was significantly less than projected, and in July 2010, the Dodd-Frank Act raised the threshold requirement for when the OIG must conduct material loss reviews of state member banks, further reducing the number of reviews the OIG was required to conduct. In addition, personnel expenses were less than the operating plan due to a longer-than-anticipated time frame to recruit and hire well-qualified staff in a highly competitive environment.
7. The Board established the OFSPR in 2010 to develop and coordinate the staff's work program in the area of financial stability. The office reports to the directors of the three research divisions and other directors as the Board may deem appropriate. Return to text
8. Title X of the Dodd-Frank Act established the CFPB, which will regulate consumer financial products and services in compliance with federal law. The new bureau will be an autonomous entity within the Federal Reserve System, and will operate independently of the Board and other federal agencies. The Dodd-Frank Act designates the Board's OIG as the OIG for the CFPB. Return to text
9. During 2010, the Board added 20 positions to meet workload requirements, including the creation of the OFSPR. Return to text
10. The operating plan reflects budgetary changes made during the year. During 2010, the Board approved a $6.9 million, or 1.6 percent, increase in the Board's initial operating budget of $444.2 million; a $0.8 million increase for the Board's 2010 single-year capital budget; and a $0.1 million increase for the Board's multiyear capital budget. Personnel services comprised $5.2 million of the increase, due primarily to lower-than-expected vacancy rates. Budget increases for goods and services were mainly for additional international travel and repairs and maintenance; these increases were partially offset by lower-than-expected spending for furniture and equipment and other accounts. Return to text
