III. Budget Results - Second Quarter 2021
Approved Budget Modifications
The 2021 Budget Resolution delegated to the Chief Financial Officer (CFO) and selected other officials the authority to make certain modifications to the 2021 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 April, the CFO approved an increase of $9.2 million, from $5.3 million to $14.5 million, in the Ongoing Operations budget of the FDIC Tech Lab (FDITECH), primarily in the Salaries and Compensation and Outside Services-Personnel major expense categories. This increase supports the new Chief Innovation Officer’s agenda and funds salaries and benefits for seven newly established permanent positions and a substantial expansion of contract services for planned 2021 FDITECH activities.
- In June, the CFO approved the following mid-year adjustments to 2021 Ongoing Operations budgets, which resulted in a net increase of $7.1 million to the Ongoing Operations budgets of the affected divisions and offices:
- A net increase of $1.8 million in the budget for the Division of Information Technology (DIT) to address updated cost estimates for several projects and provide funding for a small number of high priority new projects.
- A net increase of $4.2 million in the budget for the Division of Administration (DOA) to provide funding for the electronic conversion of Official Personnel Folders, an expansion of consulting services for performance management and compensation programs, consulting support for the new Crisis Readiness and Response Program, the acquisition of additional digital library subscriptions, and the purchase of software to support remote onboarding of new employees.
- A net increase of $765,500 in the budget for the Legal Division. This included increases of $753,000 in the Outside Services–Personnel expense category, primarily to provide funding to support establishment of the Mission Driven Fund (2020 funding for this purpose was not spent) and a Standard Developing Organization, and $12,500 in the Outside Services–Other category to provide funding for FDI Act website enhancement and Honors Attorneys recruiting events.
- An increase of $150,000 in the budget for the Office of Communications in the Outside Services–Personnel expense category to fund contract services for the new Virtual Outreach Center.
- An increase of $200,000 in the budget for the Office of Risk Management and Internal Controls in the Outside Services–Personnel expense category to fund an increase in the number of independent validations of corporate models this year.
Following these second quarter budget modifications, the balances in the Corporate Unassigned contingency reserve for the Ongoing Operations budget component declined from $22.9 million to $7.2 million (excluding the $40 million portion of the reserve set aside to address a potential increase in bank failure activity this year). The balance in the Corporate Unassigned contingency reserve for the Receivership Funding budget component remained unchanged at $22.5 million (excluding the $100 million portion of the reserve set aside to address a potential increase in bank failure activity later this year).
Approved Staffing Modificatons
The 2021 Budget Resolution delegated to the CFO the authority to modify approved 2021 staffing authorizations for divisions and offices, as long as those modifications do not increase the total approved 2021 FDIC Operating Budget. The CFO approved the following modifications to staffing authorizations during the second quarter, in accordance with the authority delegated by the Board of Directors:
- In April, the CFO approved an increase of seven permanent positions, from two to nine, in FDITECH to support the planned innovation program of the new Chief Innovation Officer.
- In June, the CFO approved the following adjustments to the 2021 staffing authorizations of four organizations:
- An increase of one permanent position in DIT’s staffing authorization to provide dedicated acquisitions support to FDITECH. This increased total authorized staffing in DIT from 325 to 326 permanent positions.
- An increase of 14 permanent positions and two non-permanent positions in DOA to augment staffing and classification capabilities in the human resources organization, facilitate technological innovation, strengthen oversight management of contracts, and strengthen the corporate crisis readiness program. This increased total authorized staffing for DOA to 414 positions, including 411 permanent and three non-permanent positions.
- An increase of one supervisory position for Corporate University (CU) to mitigate the supervisory burden in Examiner Learning Programs. This increased total authorized staffing in CU to 67 permanent positions.
- A decrease of one position in the Office of Legislative Affairs (OLA) in recognition of the transfer of an administrative specialist position to DOA. This decreased total authorized staffing for OLA to 11 permanent positions.
Subsequent to these second quarter adjustments, authorized 2021 staffing for the Corporation totaled 5,834 positions (5,791 permanent and 43 non-permanent), a net increase of 24 positions.
Significant Spending Variances by Major Expense Category
Overall spending for the Ongoing Operations budget component was $102.3 million, or 10 percent, below budget through the second quarter in 2021. There were significant spending variances in four major expense categories:
- Spending in the Travel expense category was under budget by $24.4 million, or 86 percent, primarily due to underspending in the Division of Risk Management Supervision (RMS) and the Division of Depositor and Consumer Protection. The variance in the Travel expense category reflects the continuation of pandemic-related FDIC travel restrictions during the first half of the year.
- Spending in the Outside Services – Personnel expense category was under budget by $24.3 million, or 15 percent. The variance was largely attributable to underspending in the following divisions and offices:
- The DIT underspent its budget by $8.4 million, with $4.7 million attributable to delays on IT Modernization initiatives and $3.7 million attributable to lower-than-projected spending on cloud platform operations and maintenance.
- The FDIC Tech Lab (FDITECH) underspent its budget by $3.9 million as a result of delays in starting several budgeted projects due to extended discussions with participating divisions and offices on project scope and approach and consultations with the Legal Division and the Acquisition Services Branch in the DOA about the appropriate procurement approaches.
- The Division of Complex Institution Supervision and Resolution underspent its budget by $2.6 million because of delays in initiating procurement actions to acquire strategic communications and human resources advisory services and other planned contractual services.
- The Office of the Chief Information Security Officer underspent its budget by $2.5 million, principally due to delays in onboarding new security contract personnel.
- RMS underspent its budget by $1.7 million, primarily due to lower-than-anticipated usage of scanning and imaging services and FBI finger printing services during mandatory telework.
- The Legal Division underspent its budget by $1.4 million due to a slower-than-anticipated pace of cases in litigation. It projects that the pace of litigation will speed up and expenses will normalize by year-end.
- Spending in the Equipment expense category was under budget by $10.6 million, or 16 percent. This was mostly attributable to delays in hardware refresh purchases by DIT and digital library subscription and furniture purchases by the DOA during mandatory telework.
- Spending in the Buildings and Leased Space expense category was under budget by $10.4 million, or 20 percent. The underspending was attributable primarily to the reduced use of facilities and related service contracts during mandatory telework ($5.3 million), a delay in the Bair Auditorium Upgrade project ($1.3 million), the decision to discontinue leasing space at 1750 New York Avenue ($1 million), and delays in modifying an architectural and engineering support contract ($1 million).
- RMS spent $38.1 million, or 13 percent, less than its YTD budget. This variance was primarily attributable to underspending of $18 million in the Travel expense category due to pandemic related travel restrictions, $17 million in the Salaries and Compensation expense category due to vacancies in budgeted positions, and $1.7 million in the Outside Services-Personnel category due to lower-than-projected usage of contract services, as noted above.
- DOA underspent its budget by $16.0 million, or 11 percent, through the end of the second quarter. This included underspending of $10.3 million in the Outside Services – Personnel expense category and $1.4 million in the Equipment expense category for the reasons identified above and $2.8 million in the Salaries and Compensation expense category due to vacancies in budgeted positions, primarily in DOA’s regional offices and its Corporate Services and Acquisition Services Branches.
The Receivership Funding component of the 2021 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 were no significant spending variances through the second quarter in the Receivership Funding budget component.
Office of Inspector General
There were no significant spending variances through the second quarter in the Office of Inspector General budget component.
Significant Spending Variances by Division/Office 1
There were two organizations with significant spending variances through the end of the second quarter: