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III.
Budget Results - First Quarter 2012
Approved
Budget Modifications
The 2012 Budget Resolution delegated to the Chief Financial Officer (CFO) and selected other officials the authority to make certain modifications to the 2012 Corporate Operating Budget. The following budget reallocations were approved during the first quarter in accordance with the authority delegated by the Board of Directors.
- In January 2012, the CFO approved the reallocation of $75,000 of budget authority from the Ongoing Operations budget of the Division of Administration (DOA) to the Corporate Unassigned budget. These funds were budgeted for a planned conference and were inadvertently left in the DOA budget rather than being placed in the Corporate Unassigned budget, in accordance with new conference approval procedures, prior to final approval of the 2012 Corporate Operating Budget.
- In March 2012, the CFO approved the reallocation of $126,037 in budget authority in the Ongoing Operations component from the Corporate Unassigned budget to the Salaries and Compensation budget component of the Office of International Affairs to fund the expenses for a newly-approved “overhire” position.
Following these budget reallocations, the unused amounts remaining within the Corporate Unassigned budgets for the Ongoing Operations and the Receivership Funding budget components were $23,948,963 and $113,079,673 respectively.
Approved
Staffing Modifications
The 2012 Budget Resolution delegated to the CFO the authority to modify approved 2012 staffing authorizations for divisions and offices, as long as those modifications did not increase the total approved 2012 Corporate Operating Budget. The CFO approved one change during the quarter, increasing the Legal Division’s 2012 non-permanent staffing authorization in three positions to address an increase in supervisory enforcement workload (see page 11).
Spending Variances
Significant spending variances by major expense category and division/office are discussed below. Significant spending variances for the three months ended March 31, 2012, are defined as those that either (1) exceed the YTD budget by $3 million and represent more than five 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 ten percent of the major expense category or total division/office budget.
Significant
Spending Variances by Major Expense Category
Ongoing
Operations
There was a significant spending variance in only one major expense category during the first quarter in the Ongoing Operations component of the 2012 Corporate Operating Budget:
- Outside Services - Personnel expenditures were $8.3 million, or 13 percent, less than budgeted. The Office of Complex Financial Institutions (CFI) spent $2.5 million less than budgeted as they continued to refine contract requirements. The CIO Council spent $2.0 million less than budgeted due to timing differences between planned and actual expenditures for client discretionary funds and project work. Corporate University spent $1.0 million less than budgeted, largely due to lower expenses for training and development projects than projected. The Office of Inspector General spent $1.9 million less than budgeted because it had to delay various projects while operating under a continuing resolution during the fourth quarter of 2011. Those delays were carried over into the first quarter of 2012. In addition, fewer Material Loss Reviews were conducted than planned.
Receivership
Funding
The Receivership Funding component of the 2012 Corporate Operating Budget includes funding for expenses that are incurred 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 four of the seven major expense categories during the first quarter in the Receivership Funding component of the 2012 Corporate Operating Budget:
- Salaries and Compensation ($15 million, or 22 percent, less than budgeted).
- Outside
Services - Personnel ($78 million, or 34 percent, less than
budgeted).
- Buildings
($13 million, or 53 percent, less than budgeted).
- Other
Expenses ($8 million, or 55 percent, less than budgeted).
The variance in the Salaries and Compensation category was attributable to vacancies in budgeted positions. The variance in the Outside Services – Personnel expense category was attributable to lower-than-budgeted expenses during the first quarter of 2012 due to less costly resolutions and lower-than-anticipated asset management and marketing costs incurred under Receivership Assistance Contracts and contracts for Due Diligence, Owned Real Estate, Loan Servicing, Shared-Loss, and Business Information Systems. Lower spending occurred in the Buildings category as a result of shorter-than-expected operations at failed financial institution sites. The variance in the Other Expenses category included approximately $12 million for escrow payments and other advances. These expenses should not have been charged to this expense category and the error will be corrected during the second quarter.
Significant
Spending Variances by Division/Office1
Two organizations had significant spending variances through the end of the first quarter 2012:
- The Division of Resolutions and Receiverships spent $88 million, or 28 percent, less than budgeted, mostly due to less-than-budgeted spending for resolution and receivership management activities. Over recent quarters, the number and size of financial institution failures has been below levels anticipated during the 2012 budget formulation process.
- The Legal Division spent $13 million, or 17 percent, less than budgeted. Approximately $11 million of this variance was in the Receivership Funding budget component and was largely attributable to lower-than-budgeted spending for legal services contracting and slower-than-projected hiring to fill budgeted positions.
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1Information on division/office variances reflects variances in both the Corporate Operating and Investment Budgets.
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