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The NCUA Board Friday again approved all items on its agenda – including the agency's 2021-2022 budget and a final rule on annual operating fee assessment – on the final day of its two-day meeting. Earlier in the week, the board approved a final rule on subordinated debt and a proposed rule related to overdraft policy.

2021- 2022 Budget

In a 2-1 vote, the board finalized the agency's 2021-2022 budget with a revised combined total budget of $341.3 million, including an operating budget of $314.6 million. Of note, this marks the first year-over-year budget reduction in some time.

Additionally, in line with NAFCU's recommendations, the 2021 travel expenses budget was revised downward by 10.1 percent. The 2022 drafting operating budget decreased by $24.9 million to reflect lower levels of employee travel throughout the year.

During the agency's public hearing for the 2021-2022 budget, NAFCU Chief Economist and Vice President of Research Curt Long offered recommendations for cost saving measures and ways to improve overall budget efficiency.

Annual Operating Fee Assessment

As finalized, the NCUA's rule on annual operating fee assessment excludes any loan a federal credit union (FCU) reports under the paycheck protection program (PPP) or similar future programs from total assets. The rule also amends the period used for the calculation of an FCU's total assets to the average total assets reports on the FCU's previous four call reports, reducing the risk the NCUA under- or over-collects operating fees relative to the board-approved budget and providing more certainty for the forthcoming year.

NAFCU earlier this year offered its support for providing FCUs greater certainty on operating fees owed, but also reiterated its call for prudent budget management. The association will continue to urge the NCUA to exclude any PPP loans and similar future programs from total assets.

The board also received a briefing on the agency's operating fee schedule methodology and overhead transfer rate (OTR). As finalized, the approved changes to the operating fee schedule methodology would clarify how capital project budgets and miscellaneous revenues are calculated and modify the approach for calculating the operating thresholds for operating fee rate tiers. Of note, no changes were made to the OTR methodology. NAFCU is generally supportive of the changes but previously suggested an ongoing evaluation of the OTR methodology.

Following the meeting, NAFCU updated its operating fee calculator to reflect the new budget and rules related to the operating fee.

The NCUA recently released its fall rulemaking agenda, featuring several items NAFCU has been advocating for and others that have been already introduced or included on previous rulemaking agendas.

Additional insights into the NCUA's and other federal agencies' fall rulemaking agendas can be found in NAFCU's member-only Compliance, Risk & BSA Network.

Stay tuned to NAFCU Today for the latest on the NCUA. NAFCU will detail the proposed and final rules in upcoming Regulatory Alerts.