Chief Financial Officer's (CFO) Report to the Board
III. Budget Results - First Quarter 2017
Approved Budget Modifications
The 2017 Budget Resolution delegated to the Chief Financial Officer (CFO) and selected other officials the authority to make certain modifications to the 2017 FDIC 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 2017, several divisions and offices reallocated their approved budgets within their existing expense categories to better align their budgets with anticipated spending by expense category for the year. Most of these administrative realignments were very small amounts.
- The largest realignments in the Ongoing Operations budget component were made by the Chief Information Officer (CIO) Council, the Division of Information Technology (DIT), and the Information Security and Privacy Staff (ISPS). The CIO Council reallocated $2.5 million (4.9 percent of its total Ongoing Operations budget) from the Outside Services–Personnel expense category to the Equipment expense category for the purchase of subscriptions for an Enterprise Shared Services platform to deliver an Enterprise Public Inquires and Complaints (EPIC) application. The FDIC will use EPIC to track and manage inquiries and complaints, replacing three legacy systems in the process. DIT reallocated $1.5 million (0.7 percent of its total Ongoing Operations budget) from the Outside Services–Personnel expense category to the Buildings ($1,354,229), Equipment ($175,000), and Outside Services – Other ($13,679) expense categories, largely to align projected spending across expenses categories related to the off-site data service center. ISPS redistributed $1.5 million, or 4.0 percent of its budget, from the Outside Services–Personnel expense category to the Equipment category for IT security subscription costs for the year. Eight other organizations made small administrative reallocations between expense categories within their approved Ongoing Operations budgets.
- The largest realignment in the Receivership Funding budget component was made by the Division of Resolutions and Receiverships (DRR) which realigned $770,000, or 0.5 percent of its total Receivership Funding budget, from Outside Services–Personnel to the Other Expenses category to provide additional funds for receivership tax preparation services. DIT realigned $271,393 of its budget from Equipment to various other expense categories based on updated spending projections.
- The Office of Inspector General also realigned $148,966, or 0.4 percent of its budget, from the Equipment expense category to the Outside Services – Personnel and Outside Services – Other expense categories.
Budget resources initially realigned constituted approximately 0.3 percent of the total 2017 FDIC Operating Budget. None of these initial budget realignments increased or decreased the total Board-approved budget for the Ongoing Operations, Receivership Funding, or Office of Inspector General Budget components or for any individual division/office total budget.
- The CFO approved in January 2017 the realignment of $22,267,557 from the Ongoing Operations budgets of DIT (-$20,861,977) and ISPS (-$1,405,580) to the Corporate Unassigned contingency reserve. These funds were originally provided to DIT and ISPS for Technology Refreshment (Tech Refresh), but the CIO requested time to reassess annual Tech Refresh requirements. These funds will be managed separately within the Corporate Unassigned contingency reserve and released to DIT and ISPS quarterly based upon Tech Refresh spending plans submitted in advance. This new procedure will enhance the transparency of spending for Tech Refresh.
- The CFO also approved in January the realignment of $326,930 from DIT ($324,930 in Salaries and Compensation and $2,000 in Other Expenses) to the Office of Communications (OCOM) in conjunction with a transfer of functions (see below).
- In March, DIT realigned an additional $1,960,000 from its Outside Services – Personnel expense category to the Outside Services–Other ($1,460,000) and Buildings ($500,000) expense categories to reflect its projected expenses for telecommunication services and the off-site data center, respectively.
- Later in March, DIT realigned an additional $3,976,301 from its Outside Services–Personnel expense category to the Equipment expense category for subscriptions and Wide Area Network services ($2,865,971) and the Outside Services–Other expense category for telecommunication services ($1,110,330).
- The CFO approved in March a reallocation of $3,158,376 from the Corporate Unassigned contingency reserve to DIT’s Ongoing Operations budget, to provide funding for various high-priority security and continuity of operations initiatives. The funds were reallocated to DIT’s Outside Services–Personnel ($2,632,878) and Equipment ($525,498) budgets.
Following all budget reallocations during the first quarter, the remaining budget available within the Corporate Unassigned contingency reserve for the Ongoing Operations budget component was $44,109,181 (including $22,267,557 set aside for Tech Refresh and $21,841,624 in undesignated reserves). The Corporate Unassigned reserve within the Receivership Funding budget component was unchanged at $30,358,032.
Approved Staffing Modificatons
The 2017 Budget Resolution delegated to the CFO the authority to modify approved 2017 staffing authorizations for divisions and offices, as long as those modifications did not increase the total approved 2017 FDIC Operating Budget. The following changes were approved by the CFO in accordance with the authority delegated to him by the Board of Directors:
- In January 2017, the CFO approved the transfer of one authorized permanent position from ISPS to the Division of Administration in conjunction with the transfer of the FDIC’s intelligence support function, including the responsibilities of the Federal Senior Intelligence Coordinator position.
- The CFO also approved in January the transfer of two authorized permanent positions from DIT to OCOM in conjunction with the transfer to OCOM of responsibility for the ongoing administration and modernization of the FDIC’s websites.
Significant spending variances by major expense category and division/office are discussed below. Significant spending variances for the three months ending March 31, 2017, are defined as those that either (1) exceed the YTD budget by more than $3 million and represent more than five percent of 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 $15 million and represents more than fifteen percent of the major expense category or total division/office budget.
Significant Spending Variances by Major Expense Category
There were no significant spending variances during the first quarter in any major expense category of the Ongoing Operations budget component of the 2017 FDIC Operating Budget.
The Receivership Funding component of the 2017 FDIC 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 was a significant spending variance in only one of the seven major expense categories during the first quarter in the Receivership Funding budget component of the 2017 FDIC Operating Budget:
- Outside Services-Personnel expenditures were $15 million, or 30 percent, less than budgeted. This variance was attributable to both DRR and the Legal Division. DRR spent $8 million less than budgeted because Owned Real Estate was liquidated faster than forecast, therefore reducing contractual support expenses for those properties; fewer loss share/LLC agreement compliance reviews were conducted than had been planned, fewer security sales occurred (with less associated contractual support expenses) than anticipated; and less-than-projected expenses related to records management initiatives were incurred. The Legal Division spent $7 million less than budgeted because of lower-than-anticipated outside legal counsel requirements for professional liability cases and receivership claims activities.
Office of Inspector General
There were no significant spending variances during the first quarter in any major expense category of the Office of Inspector General budget component of the 2017 FDIC Operating Budget.
Significant Spending Variances by Division/Office 1
No organization had significant spending variances during the first quarter.