As Prepare for Delivery on September 23, 2021
Thank you, Eugene, for your midsession briefing on the 2021 budget and proposed revisions. As always, I appreciate your team’s careful attention to these important matters.
While we project that year-end spending on employee pay and benefits is on track, we anticipate spending much less than budgeted for non-employee-related expenses. Even though we pared back our estimated travel spending in the 2021 budget, the ongoing COVID-19 pandemic has severely restricted our ability to return safely to onsite examinations at federally insured credit unions. As a result, we now project a year-end surplus of nearly $15 million.
Like a hard-working family living on a budget who receives an unexpected windfall, this surplus presents the NCUA with an opportunity. Should we save it for a rainy day? Should we use it to fix our infrastructure? Or, should we make sensible investments to address important short- and long-term needs? All of these options are reasonable.
There is, however, one certain thing: We should not splurge. As a steward of the credit union system, the NCUA Board has a responsibility to spend — and save — these extra dollars wisely. Credit union members are counting on us to use restraint so that their credit union will send fewer dollars to the NCUA. With such savings, members might receive slightly more interest on their share deposits and pay slightly less interest on their mortgages and other loans.
The proposed changes to the 2021 budget and staffing levels make prudent investments and pragmatic commitments aimed at achieving important policy goals related to cybersecurity, ethics, agency operations, and workforce diversity, equity, and inclusion. Even after making these changes, the agency will have a residual budget balance of approximately $24.6 million from the 2020 and 2021 budgets, which the NCUA can use to offset future budget needs.
Since the start of the year, there has been a steady stream of cybersecurity attacks. On several occasions, hackers have used ransomware to abruptly grind companies and large sectors of the U.S. economy to a halt, including those in the financial services industry. These risks are likely to continue and accelerate. As such, national security officials and agencies across the federal government have made stopping these cyberattacks a priority by instituting new policies and procedures.
To protect the information that the NCUA maintains and to strengthen our defenses, we need to comply with these new government-wide mandates. Not only do we need to adjust our operations, adopt new procedures, and implement reforms, we also need to hire three new cybersecurity professionals. One of these new positions will organize, coordinate, and advise on cybersecurity and critical infrastructure matters across all NCUA offices. Once selected, this leader will improve the NCUA Board’s understanding and policymaking related to cybersecurity issues going forward.
Additionally, the midsession budget revisions complete a process begun under Chairman Hood, whose leadership created our Office of the Chief Ethics Counsel. To certify the agency’s compliance with relevant federal ethics laws and regulations, promote accountability and ethical conduct, and help ensure the success of the NCUA’s ethics programs, the Office of Chief Ethics Counsel needs three additional slots. By incorporating these positions into the baseline workforce count — instead of keeping them as overhires and outside of the official employee tallies — we are presenting a more realistic picture of the agency’s actual resource and human capital needs to the credit union system.
The final position would add a deputy in the Board Secretary’s office. Our Board Secretary has long been under-resourced. The volume of work exceeds the capacity of the two positions currently assigned to this function, and there are limits on the type of work that can be delegated. Moreover, a deputy position provides additional backup and will aid in succession planning for this essential agency function. I am very supportive of this sensible change.
Finally, there are two other midsession budget initiatives related to human capital that I will highlight. One project will conduct an analysis of the NCUA’s compensation plans. This study will help the agency determine equitable compensation adjustments for future years and as it engages in contract negotiations with the National Treasury Employees Union. And, the second project will support analytic and consultative work about the NCUA’s diversity, equity, and inclusion programs and practices. I am very supportive of both items.
In closing, I support the midsession budget revisions and thank my colleagues for working together to adopt them today. That concludes my remarks. Vice Chairman Hauptman, you are recognized for your comments.