Skip Header

Federal Deposit
Insurance Corporation

Each depositor insured to at least $250,000 per insured bank



Home > About FDIC > Financial Reports > Chief Financial Officer's (CFO) Report to the Board





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

301 Moved Permanently

301 Moved Permanently


openresty
 

III. Budget Results - Second Quarter 2012

Approved Budget Modifications

The 2012 Budget Resolution delegated to the Chief Financial Officer (CFO) and selected other officials the authority to make certain modifications to the 2012 Corporate Operating Budget.  In accordance with the authority delegated by the Board of Directors, the CFO in May 2012 approved modifications to the Salaries and Compensation budget authority of divisions and offices within the Ongoing Operations budget component based on an analysis of year-to-date spending for salaries, bonuses/lump-sum payments, and fringe benefits.  That reallocation realigned existing budget authority among most divisions and offices, but resulted in no change to the total corporate budget for that expense category.

Following that budget reallocation, the unused amounts remaining within the Corporate Unassigned budgets for the Ongoing Operations and the Receivership Funding budget components were $23,948,963 and $113,079,673, respectively.

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, 2012, are defined as those that either (1) exceed the YTD budget by $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 $3 million and represents more than five percent of the major expense category or total division/office budget.

Significant Spending Variances by Major Expense Category

Ongoing Operations

There was a significant spending variance in three major expense categories during the second quarter in the Ongoing Operations component of the 2012 Corporate Operating Budget:

  • Outside Services - Personnel expenditures were approximately $19 million, or 14 percent, less than budgeted.  The CIO Council spent $6 million less than budgeted due to timing differences between planned and actual expenditures for work on approved CIO Council projects.  The Office of Complex Financial Institutions (CFI) spent $3 million less than budgeted as it continued to refine its contract spending requirements.  The Office of Inspector General (OIG) spent $3 million less than budgeted due to changes in workload requirements that resulted in lower-than-budgeted spending on accounting and auditing fees. The Division of Insurance and Research (DIR) spent $2 million less than budgeted due to a modified strategy for the Failed Bank Insight Project, resulting in the use of internal resources rather than contract funds. In addition, Corporate University spent $2 million less than budgeted, largely due to lower-than-projected expenses for various training and development projects.
  • Building expenditures were approximately $4 million, or 9 percent, less than budgeted.  The Division of Administration (DOA) spent $4 million less than budgeted, largely due to delays in awarding the contract to upgrade the National Data Center and a change in the design approach for the 550 HVAC project, which will result in some expenses being incurred later than originally planned.
  • Travel expenditures were approximately $4 million, or 7 percent, less than budgeted.  The Division of Risk Management Supervision (RMS) spent $2 million less than budgeted, largely due to vacancies in non-permanent examination positions, resulting in lower regular duty and relocation travel expenses.  Corporate University’s Corporate Employee Program (CEP) spent $1 million less than budgeted due primarily to less travel than planned by Financial Institution Specialists in the CEP. 

Receivership Funding

The Receivership Funding component of the 2012 Corporate 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 significant spending variances in five of the seven major expense categories through the second quarter in the Receivership Funding component of the 2012 Corporate Operating Budget:

  • Salaries and Compensation ($26 million, or 20 percent, less than budgeted).
  • Outside Services - Personnel ($179 million, or 39 percent, less than budgeted).
  • Buildings ($27 million, or 57 percent, less than budgeted).
  • Other Expenses ($9 million, or 31 percent, less than budgeted).
  • Travel ($6 million or 32 percent, less than budgeted).

The variance in the Outside Services-Personnel expense category was due to less costly resolutions and lower-than-anticipated asset management and marketing costs and contract support costs for failed bank resolutions.  The variance in the Buildings expense category occurred as a result of shorter-than-expected operations at the site of failed banks.  The variance in the Salaries and Compensation category was attributable to vacancies in budgeted non-permanent positions, primarily in the temporary satellite offices.  The variance in the Travel category was due to lower-than-anticipated travel expenses attributed to the proximity of failed banks to the temporary satellite offices.

Significant Spending Variances by Division/Office1

Six organizations had significant spending variances through the end of the second quarter 2012:

  • DRR spent $229 million, or 37 percent, less than budgeted, mostly due to less-than-budgeted spending for resolution and receivership management activities.  Over recent quarters, the size of financial institution failures has been below levels anticipated during the 2012 budget formulation process.  
  • The Legal Division spent $19 million, or 12 percent, less than budgeted.  Approximately $18 million of this variance was in the Receivership Funding budget component and was largely attributable to lower-than-budgeted spending for outside legal services and slower-than-projected hiring to fill budgeted positions.
  • The CIO Council spent $9 million, or 21 percent, less than budgeted, largely due to timing differences between planned and actual expenditures for approved CIO Council projects.
  • OIG spent $6 million, or 28 percent, less than budgeted.  OIG operated for virtually all of the fourth quarter in 2011 under a continuing resolution which effectively froze OIG spending at its FY 2011 appropriation level.  These funding limitations precluded the OIG from filling vacant authorized positions and executing certain procurement actions, thus resulting in lower-than-anticipated expenditures in 2012.
  • DIR spent $4 million, or 17 percent, less than budgeted largely due to a substantial number of vacancies in budgeted positions and a modified strategy for the Failed Bank Insights Project that will make use of predominantly internal resources rather than contract resources to carry out the project.
  • CFI spent $4 million, or 13 percent, less than budgeted.  This variance was attributable to lower-than-budgeted spending for contractual services and slower-than-projected hiring to fill budgeted positions.

Other Matters

  • In conjunction with the 2012 Budget Resolution provision relating to “administrative adjustments to the salaries and compensation expense category”, an analysis of 2012 funding requirements for employee pay and benefits was completed.  The analysis determined that those costs had been under-estimated during the preparation of the 2012 Corporate Operating Budget by approximately $1.1 million and $0.6 million in the Ongoing Operations and Receivership Funding budget components, respectively.  The CFO elected not to exercise his delegated authority to increase the 2012 Corporate Operating Budget due to expectations that projected vacancies in budgeted positions will likely offset this shortfall during the year.  Accordingly, no changes were made to either the Ongoing Operations or Receivership Funding budget authority under this provision of the Board Resolution.

___________________________________________________
1Information on division/office variances reflects variances in both the Corporate Operating and Investment Budgets.





Last Updated 12/06/2011 dofbusinesscenter@fdic.gov

Skip Footer back to content