III. Budget Results - Second Quarter 2005

Note: Significant Spending Variances for the six months ending June 30, 2005, are defined as those that exceed the YTD budget by $2 million and represent more than three percent of a budget category or the total budget for a division/office, or those that are under the YTD budget by more than $3 million and represent more than five percent of a budget category or the total budget for a division/office.

Significant Spending Variances by Major Expense Category

Ongoing Operations

There was only one Major Expense Category in which a Significant Spending Variance occurred through the second quarter in the Ongoing Operations component of the Corporate Operating Budget:

• Outside Services-Personnel expenditures were approximately $4 million, or seven percent, less than budgeted, primarily due to lower-than-anticipated services provided to the resolution and receivership program, reduced maintenance costs for the Central Data Repository (FFIEC Call Modernization project) due to a delay in the originally-planned system implementation date, and delays and cancellations in the development of new training courses.
  

Receivership Funding

There was only one Major Expense Category in which a Significant Spending Variance occurred through the second quarter in the Receivership Funding component of the Corporate Operating Budget:

• Outside Services-Personnel expenditures were $28 million, or 90 percent, less than budgeted, because there was less resolution and receivership management activity than budgeted through the second quarter.
  

Significant Spending Variances by Division/Office¹

There were three organizations that had Significant Spending Variances through the second quarter:

• The Division of Resolutions and Receiverships (DRR) spent $26 million, or 38 percent, less than budgeted. This was largely because expenses for contractual services were $22 million lower-than-budgeted through the second quarter in the Receivership Funding portion of DRR’s budget, due to less resolution and receivership management workload than budgeted.
  
  
• The Legal Division spent $4 million, or nine percent, less than budgeted. This was primarily because contractual services were about $6 million lower-than-budgeted through the second quarter in the Receivership Funding portion of the Legal Division’s budget, due to less resolution and receivership management workload than budgeted. Salary and Compensation costs were slightly higher than budgeted due to employee buyouts, which offset a portion of this variance. These buyout costs will be offset by net Salary and Compensation savings from the buyout during the third and fourth quarters.
  
  
• The Division of Information Technology spent about $1 million, or 1 percent, less than budgeted through June 30, 2005, in its combined Corporate Operating and Investment Budgets. It exceeded its Corporate Operating Budget by $3.4 million, or four percent, but spent about $4.7 million, or 35 percent, less than estimated in the Investment Budget. (These variances would ordinarily have been treated as Significant Spending Variances requiring explanation if they had not offset one another.) The overspending in the Ongoing Operations component of the Corporate Operating Budget was primarily due to higher Salary and Compensation costs resulting from employee buyouts. These buyout expenses will be offset by net Salary and Compensation savings in the third and fourth quarters. The Investment Budget spending variance was due to lower-than-estimated spending to date for the Infrastructure Modernization and New Financial Environment projects. A detailed quarterly report on the status of those projects is provided separately to the Board by the Capital Investment Review Committee.
  

 

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