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

III. Budget Results - First Quarter 2018

Approved Budget Modifications

The 2018 Budget Resolution delegated to the Chief Financial Officer (CFO) and selected other officials the authority to make certain modifications to the 2018 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 2018, several divisions and offices reallocated funds among expense categories within their approved budgets to better align their budgets with updated projections of spending by expense category for the year.  Most of these administrative realignments involved very small amounts.

• Corporate University made the largest realignment in the Ongoing Operations budget component, transferring almost $600,000 from the Outside Services – Personnel expense category to the Equipment expense category.  This reallocation was made to properly account for projected spending for on-line information services and IT licenses that had previously been treated as contracts.
• The largest realignment in the Receivership Funding budget component was made by the Division of Resolutions and Receiverships, which reallocated approximately $1 million from the Travel expense category to the Other Expenses category to provide budget resources for anticipated costs associated with tax return preparation.
• In February 2018, the CFO approved the reallocation of $510,000 within the Ongoing Operations budget component from the Corporate Unassigned contingency reserve to the Division of Information Technology’s (DIT) Outside Services – Personnel budget.  These additional funds will be used by DIT for one-time costs associated with the migration of Office of Inspector General (OIG) e-mail to a separate Office 365 online environment.

• In March 2018, the CFO approved the reallocation of $525,164 within the Ongoing Operations budget component from the Corporate Unassigned contingency reserve to various budgets within the Executive Offices.  These funds will ensure adequate resources are available to support updated expense projections for the year.  Funds were adjusted in the Salaries and Compensation and Travel expense categories of several individual offices.

Following these first quarter budget modifications, the balances in the Corporate Unassigned contingency reserves were $23,964,836 in the Ongoing Operations budget component and $23,850,871 in the Receivership Funding budget component.

Approved Staffing Modificatons

The 2018 Budget Resolution delegated to the CFO the authority to modify approved 2018 staffing authorizations for divisions and offices, as long as those modifications did not increase the total approved 2018 FDIC Operating Budget.

• In February, the CFO approved the following staffing modifications:
• After a review of authorized and on-board staffing levels in the Office of Minority and Women Inclusion (OMWI) and an assessment of OMWI’s anticipated workload, the CFO approved the Acting OMWI Director’s request to reduce OMWI’s 2018 permanent staffing allocation by one position.
• One authorized permanent position was realigned from the CFO’s office to the Division of Administration (DOA) to support DOA’s internal review and risk management program.
• In March, the CFO approved an increase of one position in RMS’s 2018 staffing authorization to address a requirement for one additional Supervisory Examiner positon, based on an updated analysis of field office supervisory spans of control.

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, 2018, 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 CategoryOngoing Operations

Ongoing Operations

There were no significant spending variances during the first quarter in any major expense category of the Ongoing Operations budget component of the 2018 FDIC Operating Budget.

Receivership Funding

The Receivership Funding component of the 2018 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 were no significant spending variances during the first quarter in any major expense category of the Receivership Funding budget component of the 2018 FDIC Operating Budget.

Office of Inspector General

There were no significant spending variances during the first quarter in any major expense category of OIG budget component of the 2018 FDIC Operating Budget.

Significant Spending Variances by Division/Office ¹

No organizations had significant spending variances through the end of the first quarter.

Other Matters

An updated analysis of 2018 funding requirements for employee pay and benefits was completed in March, in accordance with the 2018 Budget Resolution. The analysis determined that the projected costs related to fringe benefits had been overestimated during the preparation of the 2018 FDIC Operating Budget by approximately $3.2 million in the Salaries and Compensation expense category. This variance was primarily due to the inclusion of an expected small general fringe benefit cost increase that has not been fully experienced to date. The CFO elected not to exercise his delegated authority to adjust the 2018 FDIC Operating Budget to address this variance, since the net projected budget difference is not material to the total amount of the 2018 Salaries and Compensation budget or to the overall 2018 FDIC Operating Budget.

¹Information on division/office variances reflects variances in the FDIC Operating Budget.