Chief Financial Officer's (CFO) Report to the Board
III. Budget Results - Third Quarter 2020
Approved Budget Modifications
The 2020 Budget Resolution delegated to the Chief Financial Officer (CFO) and selected other officials the authority to make certain modifications to the 2020 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 August, the CFO approved the following adjustments to 2020 Ongoing Operations budgets:
- A decrease of $910,000 in the budget of the Division of Information Technology (DIT) and an increase of the same amount in the budget of the Office of Communications to correct an error made during the mid-year budget review. These adjustments did not change the total corporate budget.
- An increase of $500,000 in the budget of the Office of the Chief Information Security Officer (OCISO) to support the transition to a new support contract. As a result, the Corporate Unassigned contingency reserve in the Ongoing Operations budget component was decreased by $500,000.
Following these third quarter budget modifications, the balances in the Corporate Unassigned contingency reserves were $16,703,552 in the Ongoing Operations budget component and $18,917,515 in the Receivership Funding budget component.
Approved Staffing Modificatons
The 2020 Budget Resolution delegated to the CFO the authority to modify approved 2020 staffing authorizations for divisions and offices, as long as those modifications did not increase the total approved 2020 FDIC Operating Budget.
- In July, the CFO approved a net decrease of 48 positions, to 2,358 positions, in the permanent staffing authorization for the Division of Risk Management Supervision (RMS) to support RMS’s workforce reshaping plans. Those plans included the establishment of 26 new authorized positions and the elimination of 74 authorized positions. The eliminated positions that are currently occupied were designated as “incumbency-only,” to be eliminated when they become vacant. The new positions add needed skills in the areas of application and supervisory oversight, capital markets data analytics and risk monitoring, examiner training, and emerging risk monitoring, primarily in RMS’s Washington office.
- In July, the CFO approved the realignment of two authorized permanent positions among the Office of the Deputy to the Chairman and Chief Operating Officer, the Office of Minority and Women Inclusion, and the Division of Administration. There was no immediate impact on total budget or authorized staffing levels for the FDIC.
Following these changes, total authorized staffing for the Corporation totaled 5,722 (comprised of 5,717 permanent and 5 non-permanent positions).
Significant spending variances by major expense category and division/office are discussed below. Significant spending variances for the quarter ending September 30, 2020, are defined as those that either (1) exceeded the YTD budget for a major expense category or division/office by more than $1 million and represented more than two percent of the major expense category or total division/office budget; or (2) were under the YTD budget for a major expense category or division/office by more than $7 million and represented more than seven percent of the major expense category or total division/office budget.
Significant Spending Variances by Major Expense Category
There were significant spending variances through the third quarter in two major expense categories of the Ongoing Operations budget component.
- Spending in the Travel expense category was under the YTD budget by $37.4 million, or 64 percent. This variance was primarily attributable to the mandatory telework and travel restrictions that were implemented in March 2020 in response to the COVID-19 pandemic. The variance largely reflects underspending for travel related to examinations and other supervisory activities by RMS ($24.6 million, or 64 percent of its 2020 YTD budget), the Division of Depositor and Consumer Protection (DCP) ($6.5 million, or 65 percent of its 2020 YTD budget), Corporate University – Corporate Employee Program ($1.9 million, or 72 percent of its 2020 YTD budget), and the Division of Complex Institution Supervision and Resolution ($1.9 million, or 83 percent of its 2020 YTD budget).
- Spending in the Equipment expense category was under the YTD budget by $11.2 million, or 14 percent. The variance was attributable primarily to underspending by DIT and OCISO of $8.3 million and $2.1 million, respectively, due to later-than-anticipated ordering and delivery of IT equipment.
There was a significant spending variance through the third quarter in one major expense category of the Receivership Funding budget component.
- Spending in the Outside Services-Personnel expense category was under the YTD budget by $13.6 million, or 35 percent. The variance was primarily attributable to underspending by the Legal Division of $11.1 million, or 53 percent of its YTD budget, and by the Division of Resolutions and Receiverships (DRR) of $2.7 million, or 16 percent of its 2020 YTD budget. The Legal Division’s underspending was the result of reduced use of outside legal services due to settlements, a decision to perform new professional liability investigations with FDIC staff, and delays in pending litigation due to the COVID-19 pandemic. DRR’s underspending was largely due to fewer-than-budgeted bank closings and the small size of closed institutions.
Significant Spending Variances by Division/Office 1
Three organizations had significant spending variances through the end of third quarter.
- The Legal Division underspent its YTD budget by $17.1 million, or 14 percent, primarily in the Outside Services-Personnel major expense category in the Receivership Funding budget component, for the reasons noted above. It also underspent its YTD Salaries and Compensation budget in the Ongoing Operations budget component due to a high number of vacancies in budgeted positions.
- DCP underspent its YTD budget by $11.1 million, or eight percent, primarily in the Travel and Outside Services-Personnel major expense categories in the Ongoing Operations budget component due to the impact of mandatory telework and delays in planned contractual services for MoneySmart. In addition, it underspent its YTD Salaries and Compensation budget due to vacancies in budgeted positions and low utilization of its awards budget.
- DRR underspent its YTD budget by $8.4 million or eight percent, primarily in the Outside Services-Personnel major expense category in the Receivership Funding budget component, for the reasons noted above. In addition, in the Ongoing Operations budget component, it underspent its Outside Services-Personnel budget due to an accounting error and a delay in the onboarding of contractor resources for IT Resolutions and Receivership Support, and its Salaries and Compensation budget due to delays in filling vacancies in budgeted positions and lower-than-anticipated overtime expenses.