Both NAFCU and the CEO of a prominent credit union have questioned the agency’s proposed 2023 operating budget.
Previewing what may be the industry’s reaction to the NCUA’s 2023 budget, two credit union executives say the agency wants to spend too much money next year—particularly in the current economic environment.
“As NCUA considers its budget, please know any additional costs being passed on to credit unions are magnified given the inflationary environment we are operating in,” Paul Gentile, president/CEO of Merck Employees Federal Credit Union in New Jersey, wrote, in a letter to the agency.
The NCUA has proposed an operating budget of $350 million next year—a 9.6% increase over this year’s budget. The agency also wants to add 25 new positions to its staff.
“While NAFCU supports an engaged and supportive NCUA, we do not support the agency’s decision to propose unreasonable increases in its 2023–2024 proposed budget,” NAFCU President/CEO B. Dan Berger said, shortly after the budget was released.
The NCUA will hold a hearing on its budget plan on Oct. 19; comments on the plan will be accepted until Oct. 28.
Travel Budget Increase
The pandemic has demonstrated that the NCUA can conduct remote exams, Gentile wrote. As a result, the agency should place more emphasis on those evaluations, which, he maintained, could eliminate the need for a $5 million increase in the NCUA’s travel budget.
“Data is data,” he said. “Whether NCUA visits to see that data or has it provided electronically, the data does not change.”
Berger agreed that the travel budget increase is not warranted.
“The NCUA’s decision to increase its travel budget, in a still remote-heavy environment, and its proposal for significantly higher staffing levels will be detrimental to credit unions,” he stated.
Gentile noted further that the NCUA should extend its 18-month exam cycle to include well-managed credit unions with more than $1 billion. That, he said, would allow the agency to focus exam resources where they are needed.
The NCUA’s staffing level is approaching the highest level since 2016, Gentile added. He stated that while all credit unions want a well-staffed agency, the NCUA should recognize the deep reduction in the number of credit unions and adjust its staffing accordingly.
Gentile noted that the agency has said it needs more money to help monitor risk factors such as cybersecurity and credit risk. He questioned the increase in the contracted services budget, contending that those areas already are part of the agency’s exam process.
The NCUA’s budget calls for a 30% increase in spending on contracted services.