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III. Budget Results - Fourth Quarter 2008
Approved
Budget and Staffing Modifications
The Deputy to the Chairman
and Chief Financial Officer (CFO) approved five modifications to
the 2008 Corporate Operating Budget and/or authorized staffing during
the
quarter, in accordance with authority delegated by the Board of
Directors in the 2008 Budget Resolution:
- In
October 2008, the CFO approved an increase of 100 authorized
positions for the Legal Division, of which 76 were to support
increased resolutions and receivership management workload. A
total of 94 of the 100 new positions are non-permanent.
- The
CFO also approved in October 2008 the reallocation of existing
budget authority among eight divisions/offices and among most
major expense categories within the Receivership Funding budget
component to reflect updated 2008 expense projections. The most
significant was the reallocation of $6.5 million in budget authority
from the Division of Resolutions and Receiverships (DRR) to the
Division of Information Technology (DIT) to contract for data
management services in conjunction with the large volume of downloaded
data from insured institutions. In addition, approximately $2.9
million in budget authority was reallocated from the Legal Division
to five divisions and offices to provide additional resources
for Salaries and Compensation and Travel in those organizations.
- In
November 2008, the CFO approved a request to reallocate approximately
$1.2 million of budget authority within the Receivership Funding
budget component of the Corporate Operating Budget from the Buildings
expense category of the Division of Administration (DOA) budget
to the Equipment expense category of the DIT budget. These funds
were required to purchase equipment for the new temporary West
Coast Satellite Office (WCSO).
- In December
2008, the CFO approved a request to reallocate $2.6 million of
budget authority among divisions and offices within the Salaries
and Compensation expense category of the Ongoing Operations budget.
The Division of Supervision and Consumer Protection (DSC) received
$2.1 million to cover unbudgeted expenses associated with the
2008 Annual Leave Buy-Back Program. Corporate University (CU)
received $350,000 for unbudgeted Salaries and Compensation expenses
for detailees to CU from other organizations and for the extended
assignment of Financial Institutions Specialists in the first
year Corporate Employee Program to DRR to assist with increased
bank closing activities. Three smaller organizations received
a combined total of $150,000 for projected shortfalls also caused
by detailees and other factors. Offsetting reductions were made
in the budgets of the Legal Division ($1.0 million), DRR ($1.0
million), and the Division of Finance ($600,000). Funds were
available in the budgets of these organizations because of vacancies
in budgeted positions.
- In
December 2008, the CFO approved a request to add $17 million
in Receivership Funding budget authority to the Outside Services – Personnel
expense category of the DRR budget. This was offset by reductions
of $13 million in DRR’s budget for Salaries and Compensation,
$1.5 million in the Legal Division’s budget for Salaries
and Compensation, and $2.5 million in the Legal Division’s
Outside Services – Personnel budget. The reallocated budget
authority from the Salaries and Compensation expense category
was available due to vacancies in budgeted positions. The excess
budget authority in the Legal Division’s Outside Services – Personnel
budget was attributable to lower-than-anticipated spending for
outside legal counsel services.
One modification
was made during the fourth quarter to estimated 2008 spending for an
approved Investment Budget project. In November 2008, estimated 2008
spending for the CDR Call Development investment project was reduced
by approximately $644,000. These funds are available for use in future
years in accordance with the Board resolution establishing the multi-year
investment budget for the project. A detailed quarterly report on the
status of IT investment projects, including the CDR Call Development
project, is provided separately to the Board by the Capital Investment
Review Committee (CIRC). Significant
Spending Variances
Significant spending
variances by major expense category and division/office are discussed
below. Significant spending variances for the year ending December
31, 2008, are defined as those that either (a) exceed the annual budget
for
a major expense category or total division/office budget, or (b)
are under the annual budget for a major expense category or division/office
by an amount that exceeds $1 million and represents more than three
percent
of the major expense category or total division/office budget.
Significant
Spending Variances by Major Expense Category
Ongoing
Operations
There were significant
spending variances in six major expense categories for the year
in the Ongoing Operations component of the 2008 Corporate Operating
Budget:
- Salaries
and Compensation expenditures were $293,000 greater than budgeted.
This overage equates to only 0.04 percent of the budget in this
expense category.
- Outside
Services-Personnel expenditures were approximately $11 million,
or 6 percent, less than budgeted. The variance was largely due
to lower-than-anticipated litigation expenses reimbursed to the
U.S. Department of Justice for the Goodwill cases; a decision
by DIT to reduce contract spending on discretionary IT efforts
because of competing workload priorities; the continuing delay
in starting the interagency SNC Modernization project; and the
deferral of plans to conduct an Identity Theft Media Campaign.
- Buildings
expenditures were $804,000, or 1 percent, greater than budgeted,
largely due to significant increases in property taxes and utilities
that could not be fully absorbed within the approved budget authority
for this expense category.
- Equipment
expenditures were approximately $2 million, or 5 percent, more
than budgeted, primarily due to higher-than-expected maintenance
costs for commercial software licenses required to support the
large increase in FDIC’s staff and contractors during 2008.
- Outside
Services-Other expenditures were approximately $3 million, or
13 percent, less than budgeted. The variance was largely due
to delayed execution of contracts for the FDIC’s 75th Anniversary
Public Education and public service announcement campaigns.
- Other
Expenses were approximately $1 million, or 10 percent, less than
budgeted. The variance was largely due to under spending of budgeted
allowances for Professional Learning Accounts.
Receivership
Funding
The Receivership Funding
component of the 2008 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. There were five major expense categories
in which significant
spending variances occurred for the year in the Receivership Funding
component of the 2008 Corporate Operating Budget:
- Outside
Services-Personnel expenditures were approximately $7 million,
or 8 percent, greater than budgeted. This variance largely reflected
the high level of contractor expenses paid by DRR for receivership
management support during the fourth quarter for institutions
that failed during the first nine months of the year. Substantially
higher contract expenses were paid in December for the receiverships
associated with those failures than were paid in October and
November. This appears to reflect a failure to track obligations
that had been incurred earlier in the year and to enter invoices
promptly into the accounting system for processing. As a result,
no additional budget authority was requested to cover these contractor
expenses. DRR, DOA, and the Division of Finance (DOF) are working
together to improve tracking and coding of contract expenses
for receivership management contracts in 2009.
- Buildings
expenditures were approximately $3 million, or 22 percent, less
than budgeted due to delays in the build-out of the temporary
WCSO.
- Equipment
expenditures were $59,000, or 0.5 percent, greater than budgeted,
due to the purchase of IT equipment to support the temporary
WCSO.
- Outside
Services-Other expenditures were approximately $1 million, or
64 percent, greater than budgeted, primarily due to the unanticipated
increases in various receivership and resolution expenses during
the year. These expenses included telephone lines for call-in
centers, real estate and personal property taxes, filing fees
and other court costs, advertising costs, and bank service fees.
- Other
Expenses were approximately $5 million, or 53 percent, less than
budgeted, primarily due to under spending in the Other Expenses
account for miscellaneous receivership costs.
Significant
Spending Variances by Division/Office1
Seven organizations
had significant spending variances for the full 2008 fiscal year:
- DRR
spent approximately $10.9 million, or 7 percent, more than budgeted,
including $9.9 million more than budgeted in the Receivership
Funding component of its 2008 operating budget. This was attributable
primarily to higher contractor expenses than expected. DRR also
spent approximately $0.7 million, or 776 percent, more than estimated
during 2008 for approved investment projects, including both
the 4C and Claims Administration System (CAS) investment projects.2
- Executive
Support Offices spent approximately $3.3 million, or 11 percent,
less than budgeted. This variance was largely due to delayed
execution of contracts for the FDIC’s 75th Anniversary
Public Education and public service announcement campaigns.
- The
Office of Inspector General spent approximately $2.4 million,
or 9 percent, less than budgeted. This variance was primarily
due to vacancies in budgeted positions during the year.
- The
Executive Offices spent approximately $1.2 million, or 14 percent,
less than budgeted. This variance was primarily due to lower-than-anticipated
costs for the annual audit by GAO.
- DSC
spent approximately $0.2 million, or 0.04 percent, more than
budgeted.
- DIT
spent approximately $4.2 million, or 15 percent, less than estimated
for investment projects during the year. This was primarily attributable
to $3.9 million in under spending for the multi-year CAS investment
project due to delays by the contractor in meeting project milestones.
[Note: This unused Investment Budget authority will be carried
over for use in future periods, but may be used only for CAS.]3
- The
Division of Insurance and Research (DIR) spent approximately
$0.1 million, or 15 percent, more than estimated for investment
projects. This was attributable to spending slightly more than
estimated for 2008 on the CDR Call Development investment project.4
However, total spending for the project is within the multi-year
investment budget approved for this project.
___________________________________________________
1 Information
on division/office variances reflects variances in both the Corporate
Operating and Investment Budgets.
2 A
detailed quarterly report on the status of IT investment projects,
including the CAS and 4C projects, is provided separately to
the Board by the CIRC.
3 A
detailed quarterly report on the status of IT investment projects,
including the CAS, is provided separately to the Board by the CIRC.
4 A
detailed quarterly report on the status of IT investment projects,
including the CDR Call Development project, is provided separately
to the Board by the CIRC.
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