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Chief Financial Officer's (CFO) Report to the Board

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III. Budget Results - First Quarter 2011

Approved Budget Modifications

The 2011 Budget Resolution delegated to the Chief Financial Officer (CFO) and selected other officials the authority to make certain modifications to the 2011 Corporate Operating Budget.  The following budget reallocations were made during the first quarter in accordance with the authority delegated by the Board of Directors.  None of these modifications changed the total 2011 Corporate Operating Budget as approved by the Board in December 2010 (and amended by the Board in January 2011):

  • In January 2011, the Division of Risk Management Supervision (RMS), the Division of Depositor and Consumer Protection (DCP), the Division of Resolutions and Receiverships (DRR), the Division of Insurance and Research (DIR), and the Division of Administration (DOA) reallocated budget authority among major expense categories within their approved Ongoing Operations budgets.  RMS and DCP realigned $1.0 million and $0.2 million, respectively, from the Travel expense category to various other expense categories.
  • In February 2011, the CFO approved a $3 million increase in the Outside Services – Other expense category of the Ongoing Operations budget for the Office of Public Affairs (OPA), with a corresponding decrease in the Corporate Unassigned budget to fund a public awareness campaign on bank overdraft programs.
  • In February 2011, in conjunction with the recently revised Home Mortgage Disclosure Act (HMDA) validation procedures, the CFO approved the reallocation of $3,562,986 in budget authority from the Corporate Unassigned budget to DCP’s Ongoing Operations budget component.  This adjustment increased DCP’s budget authority in the Salaries and Compensation (+$3,043,878), Travel (+$507,169), and Other Expenses (+$11,939) categories.
  • In March 2011, the CFO approved the reallocation of $137,593 within the Ongoing Operations component of the 2011 Corporate Operating Budget from the Other Expenses category of the DCP budget to RMS to provide additional budget authority in the Travel (+$12,573) and Other Expenses (+$125,020) categories to support the National Minority Depository Institutions conference, which will be conducted by RMS.
  • In March 2011, the CFO approved the reallocation of $616,067 within the Ongoing Operations component from the Corporate Unassigned budget to the Salary and Compensation (+$613,192) and Other Expenses (+$2,875) categories in the Division of Information Technology (DIT) to provide funding for an increase of five positions in DIT’s authorized 2011 staffing.
  • In March 2011, the CFO approved the reallocation of $1,265,600 within the Ongoing Operations budget component from the Corporate Unassigned and Executive Office budgets to DCP to fund ten newly authorized positions and transfer one staff member.  This adjustment included funding for Salaries and Compensation (+$1,167,286), Travel (+$92,770), and Other Expenses (+$5,544).

Following these budget reallocations, the amounts remaining available within the Corporate Unassigned budgets for the Ongoing Operations and Receivership Funding budget components were $16,141,960 and $16,350,002, respectively.

Approved Staffing Modifications

The 2011 Budget Resolution delegated to the CFO the authority to modify approved 2011 staffing authorizations for divisions and offices, as long as those modifications did not increase the total approved in the 2011 Corporate Operating Budget.  The CFO approved the following changes in accordance with the authority delegated to him by the Board of Directors:

  • In February 2011, the CFO approved an increase of 54 authorized positions in DCP to add 17 non-permanent HMDA validation specialists and 37 permanent compliance examiners.  This increase brings the total authorized field examiners up to the full requirements estimated by the examiner staffing model for 2011.
  • In March 2011, the CFO approved an increase of ten authorized positions (eight permanent, two non-permanent) in DCP’s regional offices.  The approved increase included six Assistant Regional Directors (ARDs) to address the increased workload of the current ARDs; two Fair Lending Examination Specialist (FLEX) positions, and two non-permanent Unfair and Deceptive Acts and Practices (UDAP) Specialist positions. 
  • In March 2011, the CFO approved an increase of five authorized positions (four permanent, one non-permanent) in DIT in conjunction with a reorganization within its Infrastructure Services Branch (ISB).  
  • In March 2011, one position was transferred from the Executive Offices to DCP.  This authorized position will assist with duties that have been transferred to DCP.

Spending Variances

Significant spending variances by major expense category and division/office are discussed below.  Significant spending variances for the three months ending March 31, 2011, are defined as those that either (1) exceed the YTD budget by $3 million and represent more than 5 percent for a major expense category or total division/office budget; or (2) are under the YTD budget for a major expense category or division/office by an amount that exceeds $5 million and represents more than 10 percent of the major expense category or total division/office budget.

Significant Spending Variances by Major Expense Category

Ongoing Operations

There were no major expense categories in which a significant spending variance occurred during the first quarter in the Ongoing Operations component of the Corporate Operating Budget.

Receivership Funding

The Receivership Funding component of the 2011 Corporate Operating Budget includes funding for expenses in conjunction with institution failures and the management and disposition of the assets and liabilities of the ensuing receiverships, except for salary and benefits expenses for permanent employees assigned to the receivership management function.

There were significant spending variances in three of the seven major expense categories during the first quarter in the Receivership Funding component of the 2011 Corporate Operating Budget:

  • Outside Services – Personnel ($103 million, or 31 percent, less than budgeted).
  • Buildings ($35 million, or 57 percent, less than budgeted).
  • Other Expenses ($24 million, or 53 percent, less than budgeted).

The variance in the Outside Services – Personnel expense category was attributable to lower-than-budgeted costs during the first quarter of 2011 due to less costly resolutions and lower than anticipated asset management and marketing costs through March, including Receivership Assistance Contracts, loan servicing, loss share, and investigations.  Lower spending occurred in the Buildings category as a result of shorter than expected operations at receivership locations and the lower number of field sites in operation.  The variance in the Other Expenses category was attributable to lower-than-anticipated time required to facilitate the transfer of banking operations and the disposition of failed banks’ assets. 

Significant Spending Variances by Division/Office1

Three organizations had significant spending variances through the end of the first quarter:

  • DRR spent $167 million, or 34 percent, less than budgeted, mostly due to less-than-budgeted spending for resolution and receivership workload activities for the reasons mentioned above.
  • DIT spent $8 million, or 16 percent, less than budgeted.  This variance was largely the result of equipment expenses that were $6 million lower than budget due to timing associated with laptop purchases.  The variance will decrease substantially once the laptops have been received and invoiced.
  • The CIO Council spent $4 million, or 41 percent, more than budgeted.  This variance reflects a decision by the Corporation to fund projects for 2011 that have a total estimated cost in excess of the CIO Council budget, because unexpected project delays have consistently caused under-spending of the CIO Council budget in prior years.  If it appears later in the year that full-year CIO Council expenses will exceed the budget, additional funding will be allocated from the Corporate Unassigned reserve.  Additionally, unbudgeted IT support for the implementation of Dodd-Frank contributed to the variance.  The CIO Council expects to reallocate its existing funds or request additional funding at mid-year to cover any shortfall.


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1Information on division/office variances reflects variances in both the Corporate Operating and Investment Budgets.





Last Updated 06/09/2010 dofbusinesscenter@fdic.gov

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