|
|
III.
Budget Results - Third Quarter 2010
Approved
Budget Modifications
The 2010 Budget Resolution delegated to the Chief Financial Officer (CFO) and selected other officials the authority to make certain modifications to the 2010 Corporate Operating Budget. The following budget reallocations were made during the third quarter in accordance with the authority delegated by the Board of Directors. None of these modifications changed the total 2010 Corporate Operating Budget approved by the Board.
- In early August 2010, the CFO approved the reallocation of existing budget authority within the Ongoing Operations and Receivership Funding components of the 2010 Corporate Operating Budget following the mid-year reassessment of actual and projected spending and the second quarter analysis of spending for salaries, bonuses, and fringe benefits. Funding was also provided for 219 newly authorized positions. The budgets for all divisions and offices and all major expense categories were adjusted in this reallocation. In conjunction with these reallocations, the Corporate Unassigned budgets were reduced by $16,793,089 and $8,528,963, respectively, in the Ongoing Operations and Receivership Funding budget components. This reallocation was made effective in July 2010.
- In August 2010, in conjunction with the establishment of the Office of Complex Financial Institutions (CFI) by the Board of Directors, the CFO approved the reallocation of $2,356,537 in budget authority from the Division of Supervision and Consumer Protection (DSC) Ongoing Operations budget to the Ongoing Operations budget of the new CFI. This adjustment realigned budget authority within the Salaries and Compensation, Outside Services-Personnel, Travel, and Other Expenses categories.
- In August 2010, the CFO approved a $1,953,530 million increase in the Ongoing Operations budget for the Division of Information Technology (DIT) with an offsetting decrease of $1,953,530 in DIT’s Receivership Funding budget. This adjustment provided additional budget authority for contractual services in the Ongoing Operations budget component for infrastructure support and removed excess budget authority for these services in the Receivership Funding budget component. The Corporate Unassigned budget authority for the Ongoing Operations and Receivership Funding budget components were adjusted by like amounts to fund this adjustment within the Outside Services-Personnel expense category.
- In October, the CFO approved a reallocation of $775,000 in budget authority within the Ongoing Operations component of the 2010 Corporate Operating Budget from the Corporate Unassigned budget to the Chief Financial Officer’s Ongoing Operations budget to cover higher-than budgeted expenses for the 2009 audit conducted by the Government Accountability Office (GAO). This reallocation was made effective in September 2010.
Following these budget reallocations, the amounts remaining available within the Corporate Unassigned budgets for the Ongoing Operations and Receivership Funding budget components are $9,781,136 and $183,513,744, respectively.
Approved
Staffing Modifications
The 2010 Budget Resolution delegated to the CFO the authority to modify approved 2010 staffing authorizations for divisions and offices, as long as those modifications did not increase the total approved 2010 Corporate Operating Budget. The following changes were approved by the CFO in accordance with the authority delegated to him by the Board of Directors:
- In August 2010, the CFO approved an increase of 219 authorized positions (49 permanent, 170 non-permanent) within four divisions. Authorized staffing was increased by 150 positions (all non-permanent) in the Division of Resolutions and Receiverships (DRR) to provide increased contractor oversight capabilities; by 45 positions (43 permanent, 2 non-permanent) in DSC, largely for additional field compliance examiner positions; by 12 positions (5 permanent, 7 non-permanent) in DIT for increased information security activities; and by 12 positions (1 permanent, 11 non-permanent) in the Division of Administration (DOA) for a permanent Information Security Manager and non-permanent Contract Specialists to address the substantial increase in DRR contracting.
- In August 2010, the CFO approved an initial authorization of 148 positions (all permanent) for CFI, through the transfer of 35 previously-authorized positions from DSC and the establishment of 113 newly authorized positions.
Spending Variances
Significant spending variances by major expense category and division/office are discussed below. Significant spending variances for the nine months ending September 30, 2010, are defined as those that either (1) exceed the YTD budget by $1 million and represent more than 2 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 $2 million and represents more than 4 percent of the major expense category or total division/office budget.
Significant
Spending Variances by Major Expense Category
Ongoing
Operations
There were significant spending variances in five major expense categories through the third quarter in the Ongoing Operations component of the 2010 Corporate Operating Budget:
- Outside Services-Personnel expenditures were $25.6 million, or 14 percent, less than budgeted. Approximately $5.5 million of this variance was attributable to under spending by DIT for internal operations due to delays in starting several internal initiatives, and $4.2 million was attributable to the budget timing on the CIO Council discretionary funds and development projects. Department of Justice expenses for the goodwill litigation were $5.0 million lower than expected through the third quarter. DRR spent $3.2 million less than budgeted due to postponement of training of new employees in the use of the Claims Administration System (CAS) and the Asset Liability Management System (ALMS) as well as delays in the initiation of various business process improvements. In addition, CU spent $2.7 million less than budgeted, largely due to delays in obtaining subject matter experts (SMEs) for College of Corporate Business projects.
- Buildings expenditures were $4.2 million, or 7 percent, less than budgeted, largely due to generous landlord concessions in the New York Regional Office and the Courthouse building, and surpluses in the maintenance, repairs and improvements budgets.
- Equipment expenditures were approximately $16.0 million, or 26 percent, less than budgeted, primarily due to timing issues on hardware/software purchases. Major procurements have been initiated for key components including laptops, printers and servers. Once these components are received, this variance will be significantly reduced.
- Outside Services-Other expenditures were $3.3 million, or 20 percent, less than budgeted. DOA spent $1.7 million less than budgeted, largely due to lower unit shipping costs resulting from the decision to incorporate General Services Administration’s (GSA) Strategic Source Initiative; significant savings from establishing ground service as the default for express mail services; and lower-than-budgeted spending for insurance. In addition, OPA spent $1.3 million less than budgeted for its advertising and publicity campaigns due to the office’s need to redirect its attention to more urgent matters relating to the implementation of Dodd-Frank legislation.
- Other Expenses expenditures were $3.6 million, or 32 percent, less than budgeted. The variance was mostly due to significant underutilization of Professional Learning Account budgets and off-site conferences by employees in order to meet ongoing workload priorities.
Receivership
Funding
The Receivership Funding component of the 2010 Corporate Operating Budget includes funding for expenses that are incurred in conjunction with insured 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 six of the seven major expense categories through the third quarter in the Receivership Funding component of the 2010 Corporate Operating Budget:
- Salaries & Compensation ($28.2 million, or 15 percent, less than budgeted).
- Outside Services-Personnel ($157.7, million or 15 percent, less than budgeted).
- Travel ($13.4 million, or 30 percent, less than budgeted).
- Equipment ($6.5 million, or 23 percent, less than budgeted).
- Outside Services-Other ($40.0 million, or 202 percent, more than budgeted).
- Other Expenses ($75.2 million, or 70 percent, more than budgeted).
The variance in the Salaries and Compensation category was attributable to slower than projected hiring of non-permanent staff. The variances in the Outside Services-Personnel expense category were attributable to fewer-than-anticipated resolutions through the third quarter of 2010; lower than expected costs for records management and storage services, guard services, and administrative contract expenses associated with bank closing activities. In addition, more FDIC staff and fewer contractors were used to reconfigure and test bank closing telecommunications equipment and to setup telecommunications support at bank closings. The variance in the Travel category was due to a lower-than-anticipated number of resolutions through the third quarter of 2010. The variance in the Equipment category was primarily attributable to lower laptop prices and lower than anticipated costs for the Midwest Temporary Satellite Office (MWTSO). The variance in the Outside Services-Other expense category reflected approximately $43.3 million in unbudgeted guarantee fee costs that were incurred in conjunction with a Limited Liability Company (LLC) transaction. The variance in the Other Expense category was attributable to the extensive time required to facilitate the transfer of banking operations and the disposition of the failed bank assets.
Significant
Spending Variances by Division/Office1
Twelve organizations had significant spending variances through the end of the third quarter:
- DRR spent $63.8 million, or 4 percent, less than budgeted, mostly due to less-than-budgeted spending for resolution and receivership workload activities for the reasons identified above. This was slightly offset by the payment of a large, unbudgeted guarantee fee and greater-than-budgeted expenses in the Other Expense category in connection with disposition of failed bank assets.
- DIT spent $37.7 million, or 20 percent, less than budgeted. This variance was largely attributable to the timing of equipment purchases; lower-than-anticipated expenses for the MWTSO facility and laptops; delays in starting some internal DIT initiatives and vacancies in budgeted positions.
- DOA spent $15.1 million, or 7 percent, less than budgeted. This variance was largely attributable to generous landlord concessions in the Courthouse building and the New York Regional Office; surpluses in maintenance, repairs and improvements; lower-than-budgeted spending for Insurance; lower unit shipping costs from incorporating GSA’s Strategic Sourcing Initiative; significant savings realized by establishing ground services as the default for express mail services; and delays in filling budgeted vacancies.
- The Legal Division spent $10.6 million, or 5 percent, less than budgeted. This variance included approximately $8.4 million in under spending for Receivership Funding salaries due to slower than projected hiring to fill budgeted positions.
- Government Litigation was $5.0 million, or 74 percent, less than budgeted. This variance was attributable to lower than expected expense reimbursements to the Department of Justice for litigation expenses on the Goodwill cases.
- The CIO Council spent $4.1 million, or 9 percent, less than budgeted. This variance was primarily attributable to delays in the development projects to which funds were allocated by the CIO Council and under spending for discretionary funds by divisions and offices for small enhancements.
- The Division of Finance spent $4.2 million, or 15 percent, less than budgeted. This variance was attributable to lower than expected requirements for contractor services for temporary DOF accounting and auditing work and slower than expected hiring.
- The Office of the Inspector General spent $3.8 million, or 13 percent, less than budgeted. This variance included approximately $1.7 million in under spending for Outside Services-Personnel due to a delay in awarding audit contracts. The OIG was under a continuing resolution for the first quarter of the fiscal year, which delayed spending in this area during the following quarter.
___________________________________________________
1Information on division/office variances reflects variances in both the Corporate Operating and Investment Budgets.
|
