Annual Report Budget Review 2013
Federal Reserve System Budget
Total expenses for the Federal Reserve System for 2013 are budgeted at $5,072.7 million, an increase of 8.0 percent from 2012 actual expenses. Of this total, $3,688.2 million is for the Reserve Banks, $586.9 million is for the Board and the Office of Inspector General, and $797.6 million is for the cost of new currency (table 2 and table 3). Revenue from priced services provided to depository institutions is expected to total $423.9 million, or 8.4 percent of total budgeted expenses. This revenue, combined with claims for reimbursement and other income, results in the recovery of approximately 19 percent of the System's budgeted 2013 expenses.5 When these items are deducted from budgeted expenses, 2013 net expenses for the System are 9.9 percent higher than 2012 net expenses (table 2). Pursuant to section 318 of the Dodd-Frank Act, the Board intends to collect assessments from certain large bank holding companies and savings and loan holding companies and from nonbank financial companies designated for Board supervision by the Financial Stability Oversight Council equal to the estimated cost of supervising and regulating those companies. These funds will be transferred in full by the Board directly to the U.S. Department of the Treasury.
Table 2. Total expenses of the Federal Reserve System, net of receipts and claims for reimbursement, 2011-13
Millions of dollars, except as noted| Item | 2011 (actual) | 2012 (actual) | 2013 (budgeted) | Percent change | |
|---|---|---|---|---|---|
| 2011 to 2012 | 2012 to 2013 | ||||
| Total System expenses 1 | 4,363.6 | 4,695.6 | 5,072.7 | 7.6 | 8.0 |
| Less | |||||
| Revenue from priced services | 478.6 | 449.8 | 423.9 | -6.0 | -5.8 |
| Claims for reimbursement 2 | 485.3 | 506.4 | 539.4 | 4.3 | 6.5 |
| Other income | 1.6 | 2.2 | 2.2 | 38.9 | -2.6 |
| Equals | |||||
| Net System expenses | 3,398.1 | 3,737.1 | 4,107.2 | 10.0 | 9.9 |
Note: Excludes capital outlays as well as assessments for the Consumer Financial Protection Bureau and the Office of Financial Research. Components may not sum to totals and may not yield percentages shown because of rounding.
1. Includes expenses of the Office of Inspector General. Return to table
2. Costs of fiscal agency and depository services provided to the U.S. Treasury, other government agencies, and other fiscal principals that are billed to these agencies. Return to table
Table 3. Expenses of the Federal Reserve System for operations and currency, 2011-13
Millions of dollars, except as noted| Item | 2011 (actual) | 2012 (actual) | 2013 (budgeted) | Percent change | |
|---|---|---|---|---|---|
| 2011 to 2012 | 2012 to 2013 | ||||
| Reserve Banks 1 | 3,261.3 | 3,462.1 | 3,688.2 | 6.2 | 6.5 |
| Personnel | 2,317.2 | 2,491.0 | 2,681.8 | 7.5 | 7.7 |
| Nonpersonnel | 944.1 | 971.1 | 1,006.4 | 2.9 | 3.6 |
| Board of Governors 2 | 452.3 | 512.4 | 586.9 | 13.3 | 14.5 |
| Personnel | 333.1 | 367.3 | 403.4 | 10.3 | 9.8 |
| Nonpersonnel | 119.2 | 145.1 | 183.4 | 21.7 | 26.4 |
| Currency 3 | 650.0 | 721.1 | 797.6 | 10.9 | 10.6 |
| Total System expenses | 4,363.6 | 4,695.6 | 5,072.7 | 7.6 | 8.0 |
Note: Excludes capital outlays as well as assessments for the Consumer Financial Protection Bureau and the Office of Financial Research. Components may not sum to totals and may not yield percentages shown because of rounding.
1. For detailed information on Reserve Bank expenses, see the "Federal Reserve Bank Budgets" section. Return to table
2. Includes expenses of the Office of Inspector General. During 2011, the Board approved a $0.4 million decrease in the Board's initial operating budget of $475.6 million. (See table 4 in the "Board of Governors Budgets" section.) Return to table
3. For more information on currency expenses, see the "Currency Budget" section. Return to table
The distribution of budgeted expenses is similar to that in previous years, with the Reserve Banks' expenses accounting for 73 percent of the total, new currency expenses accounting for 16 percent, and Board expenses accounting for the remainder (figure 1).
System employment is budgeted at 21,196 for 2013, an increase of 428 from the 2012 actual level, primarily due to planned staff additions in the supervision function related to portfolio growth, increased supervisory workload, and requirements under the Dodd-Frank Act.6
Note: Components may not sum to 100 percent because of rounding.
2013 System Budget Initiatives
The Federal Reserve System budget is funding increases for several initiatives, specifically in supervision and monetary policy to address resource needs and for modernization efforts in cash operations and Treasury services. The major factors affecting the 2013 Board and Reserve Bank budgets are outlined in more detail in the "Board of Governors Budgets" section and the "Federal Reserve Bank Budgets" section, respectively.
Trends in Expenses and Employment
From the actual 2004 level to the budgeted 2013 amount, the total expenses of the Federal Reserve System have increased an average of 4.9 percent per year (2.4 percent per year when adjusted for inflation) (figure 2). Over the same period, nondefense discretionary spending by the federal government has increased an average of 2.9 percent per year (figure 3). Over the 2004-2013 period, Federal Reserve System employment has decreased by 1,484 (figure 4).
Note: For 2013, budgeted. Includes expenses of the Office of Inspector General.
1 Calculated with the GDP price deflator.
Figure 3. Cumulative change in Federal Reserve System expenses and federal government expenses, 2004-13
Note: For 2013, budgeted. Federal government expenses are reported on a fiscal-year basis beginning October 1; the Federal Reserve System expenses are reported on a calendar-year basis.
1 Discretionary spending less expenditures on defense. Source: Budget of the United States Government, Fiscal Year 2013: Historical Tables, Table 8.1. Outlays by Budget Enforcement Act Category, 1962-2017.
2 Includes expenses of the Office of Inspector General.
Note: For 2013, budgeted. Employment numbers presented include position counts for the Board and average number of personnel (ANP) for the Reserve Banks.
The most recent budgets reflect increases for resources to address requirements under the Dodd-Frank Act and additional workload from the financial market turmoil and portfolio growth. Reserve Bank expenses associated with the financial crisis, in particular, peaked in 2010 and have since declined, as liquidity programs wind down.7 These increases have been offset by substantial expense and staffing decreases due to restructuring efforts in the check processing function and staff declines and related expenses due to efficiency measures in cash operations and support functions.
2013 Capital Budgets
The capital budgets for the Reserve Banks and the Board total $764.3 million, with $492.1 million budgeted for the Reserve Banks, Federal Reserve Information Technology (FRIT), and Office of Employee Benefits (OEB) and $272.2 million budgeted for the Board.8 As in previous years, the 2013 capital budgets include funding for projects that support the strategic direction outlined by the individual Reserve Banks, System business leaders, and the Board. These strategic goals focus on investments that continue to improve operational efficiencies, enhance services to Bank customers, and ensure a safe and productive work environment. More detailed discussions of the Board and Reserve Bank capital budgets are included in the "Board of Governors Budgets" section and the "Federal Reserve Bank Budgets" section.
References
5. Claims for reimbursementrefers to the costs of fiscal agency and depository services provided to the U.S. Treasury, other government agencies, and other principals, to whom actual costs are reimbursed by those entities. Other income is the fee that depository institutions pay for the settlement component of the Fedwire Security Service transactions. Return to text
6. Employment numbers stated include position counts for the Board and average number of personnel (ANP) for the Reserve Banks. ANP is the average number of employees expressed in terms of full-time positions for the period. For instance, a full-time employee who works one-half of the year counts as 0.5 ANP for that calendar year; two half-time employees who work the full year count as 1 ANP. Return to text
7. Although most of the liquidity programs have ended, the Federal Reserve Bank of New York continues to incur costs for several liquidity programs, including Maiden Lane, Maiden Lane II, Maiden Lane III, and the Term Asset-Backed Securities Loan Facility. Return to text
8. The capital reported for the Board also includes the amount budgeted for the Office of Inspector General. Return to text
