Chief Financial Officer's (CFO) Report to the Board
III. Budget Results - Third 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 third quarter in accordance with the authority delegated by the Board of Directors.
- In July 2017, the Division of Administration (DOA) implemented an internal realignment of its existing Ongoing Operations budget to increase the Buildings expense category by $1,878,500 and decrease the Equipment and Outside Services-Personnel expense categories by $1,159,500 and $719,000, respectively.
- In August 2017, the CFO approved the following budget increases and realignments, primarily through the realignment of funds from the Corporate Unassigned contingency reserve:
- An increase of $116,500 to the Outside Services-Personnel expense category of the Ongoing Operation budget of the Division of Information Technology (DIT). This increase provided continuing contract support for the CIO’s internal communications program.
- An increase of $533,319 to the Outside Services-Personnel expense category of the Ongoing Operations budget of DIT to complete a Phase I pilot of the Data Protection Program (planning funds for this initiative were included in the initial 2017 DIT Ongoing Operations budget). This program will protect FDIC data by developing standards for classification of data, assigning classifications to all FDIC information, and implementing tools to secure data according to its classification.
- Following all third quarter budget modifications, the balances in the Corporate Unassigned contingency reserves were $25,764,771 in the Ongoing Operations budget component and $30,524,390 in the Receivership Funding budget component.
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. There were no approved staffing modifications in the third quarter.
Significant spending variances by major expense category and division/office are discussed below. Significant spending variances for the nine months ending September 30, 2017, are defined as those that either (1) exceed the YTD budget by more than $1 million and represent more than two 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 $7 million and represents more than seven percent of the major expense category or total division/office budget.
Significant Spending Variances by Major Expense CategoryOngoing Operations
There was only one significant spending variance in a major expense category in the Ongoing Operations budget component through the third quarter:
- Expenditures for Equipment were $8.8 million, or 15% less than budgeted. This variance was largely attributable to lower-than-budgeted spending by the DIT on technology refreshment purchases and software maintenance.
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 only one significant spending variance in a major expense category in the Receivership Funding budget component through the third quarter:
- Outside Services-Personnel expenditures were $22.5 million, or 15 percent, less than budgeted. This variance was mostly attributable to lower-than-budgeted spending for outside counsel services by the Legal Division, which spent $20 million, or 35 percent, less than budgeted. The Legal Division attributes this underspending to the significant amount of litigation that was on hold while waiting for the court to rule on motions.
Office of Inspector General
There were no significant spending variances during the second 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
Two organizations had significant spending variances through the end of the third quarter:
- The Legal Division spent $29 million, or 17%, less than budgeted, due mostly to a lower-than-anticipated use of outside legal counsel in the Receivership Funding component and due to vacancies in budgeted staffing positions.
- DOA spent $15 million, or 8%, less than budgeted, largely due to lower-than-budgeted spending on building operating costs, maintenance and repairs, and construction projects that have been deferred, partially or wholly, to 2018. Additionally, lower spending for security services from Global Resource Solutions, Inc. and the Office of Personnel Management contributed to the variance.
- The Division of Resolutions and Receiverships spent $14 million, or 7%, less than budgeted, largely due to lower than budgeted salaries and compensation expenses in both the Ongoing Operations and Receivership Funding budget components, and less than anticipated spending in the Buildings expense category of the Receivership Funding budget component.