As Prepared for Delivery on July 21, 2022
Before we begin today, I would like to congratulate Chairman Todd M. Harper on his recent swearing in for his new term. Chairman Harper is the first NCUA Board member to be reappointed to a full six-year term, as I understand it, at least in modern times. I know the NCUA Board will greatly benefit from Chairman Harper’s new term because of his significant agency experience, as a Board member, Chairman, and as an NCUA staffer. I also must say that I am delighted Chairman Harper’s recent reappointment opens the door to past, present, and future NCUA Board members who have not had full six-year terms. Having served two terms on the NCUA board, I must say that having previous agency experience benefits not only credit unions but also the NCUA.
Moving on to the mid-year budget, I do think it is great news as we look at today's mid-session budget that we are seeing a residual budget balance or better known as a surplus. And as I said last year, as we look at this surplus, I want to say that staff is drafting the 2023 budget now. I would certainly like to see staff develop a budget that controls cost and gives funds back to credit unions in some form or fashion.
Eugene, based on the mid-year financials, the Board will have an option to return funds back to credit unions, similar to what was done for the 2022 budget. This is something that I pushed for last year. At the mid-year point, what options do we expect the Board to have as we consider a 2023 budget? Thank you. Going forward, we must ask ourselves, when do we recognize the “new normal” operating environment in a post covid world and its impact on the budget? So, I hope we are thinking about that internally.
Finally, yesterday, the NCUA received a letter from NAFCU. In the letter, Dan Berger said, and I quote, “With the reduction in this year’s operating fee, the cash balance in the Operating Fund has begun to plateau after a notable rise from 2016 through 2021. However, NAFCU notes that the cash balance has still doubled in that span, even after scaling to the size of the overall Operating Budget. NAFCU once more calls on the NCUA to scrutinize its cash needs to determine whether these funds are truly necessary, and if so, why the agency’s cash needs have risen so dramatically in such a short period of time.”
Eugene, why do we have such a large cash balance and what can we do to get it back down to a reasonable level?