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

III. Budget Results - Second Quarter 2019

Approved Budget Modifications

The 2019 Budget Resolution delegated to the Chief Financial Officer (CFO) and selected other officials the authority to make certain modifications to the 2019 FDIC Operating Budget.  The following budget reallocations were approved during the second quarter in accordance with the authority delegated by the Board of Directors.

There were no changes to the Receivership Funding budgets for any organization.

Following these second quarter budget modifications, the balances in the Corporate Unassigned contingency reserves were $4,089,141 in the Ongoing Operations budget component and $14,894,445 in the Receivership Funding budget component.

Approved Staffing Modificatons

The 2019 Budget Resolution delegated to the CFO the authority to modify approved 2019 staffing authorizations for divisions and offices, as long as those modifications did not increase the total approved 2019 FDIC Operating Budget.  

Spending Variances

Significant spending variances by major expense category and division/office are discussed below.  Significant spending variances for the six months ending June 30, 2019, are defined as those that either (1) exceed the YTD budget by more than $2 million and represent more than three 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 $10 million and represents more than ten percent of the major expense category or total division/office budget.

Significant Spending Variances by Major Expense CategoryOngoing Operations

Ongoing Operations

There was a significant spending variance through the second quarter in one major expense category of the Ongoing Operations budget component.

Spending in the Equipment expense category was under the YTD budget by $14.4 million, or 23 percent.  This variance was attributable primarily to underspending by DIT of $15.9 million, or 39 percent, of its YTD budget for Equipment.  This included $6 million of underspending for technology refreshment purchases.  In addition, equipment purchases were delayed for several projects including the mainframe replacement, a virtual desktops pilot project, and redesign of the wide-area network.

The application segmentation project was cancelled, and budgeted funds for equipment purchases related to that project will not be used.

Receivership Funding

The Receivership Funding component of the 2019 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 and other expenses required to ensure readiness without regard to whether failures occur. 

There was a significant spending variance through the second quarter in one major expense category of the Receivership Funding budget component.  Outside Services – Personnel expenses through the second quarter were $35 million, or 50 percent, less than budgeted. This variance primarily reflected underspending by the Division of Resolutions and Receiverships (DRR) ($20.9 million, or 52 percent of its YTD budget) and the Legal Division ($13.7 million, or 48% of its YTD budget). DRR underspending was attributable to the absence of insured institution failures for which funds had been budgeted.  The variance for the Legal Division was attributable to lower-than-projected spending for outside counsel because cases were settled before going to trial and more work has been done by FDIC attorneys.

Office of Inspector General

There were no significant spending variances through the second quarter in any major expense category of the Office of the Inspector General budget component.

Significant Spending Variances by Division/Office 1

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