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III.
Budget Results - Fourth Quarter 2009
Approved
Budget Modifications
The 2009 Budget Resolution
delegated to the Chief Financial Officer (CFO) and selected other
officials the authority to make certain modifications to the 2009 Corporate
Operating
Budget. The following budget reallocations were made during the
fourth quarter in accordance with the authority delegated by the Board
of Directors.
None of these modifications changed the total 2009 Corporate Operating
Budget approved by the Board in December 2008:
- In
November 2009, existing budget authority within the Ongoing Operations
Budget component was reallocated among certain Executive Offices
and between expense categories. All reallocations were less than
$25,000 between expense categories and less than $12,000 between
offices.
- In December
2009, the CFO approved the reallocation of existing budget authority
within the Salaries and Compensation expense category of the
Ongoing Operations component of the 2009 Corporate Operating
Budget to reflect updated salary and benefit expense estimates
for several divisions and offices. This reallocation was based
upon an analysis of actual spending for salaries, bonuses, and
fringe benefits through November 30, 2009, and on-board staffing
estimates through year-end.
- In
December 2009, the CFO approved the reallocation of $103,000
in existing budget authority in the Executive Offices within
the Travel expense category of the Ongoing Operations component
of the 2009 Corporate Operating Budget.
Approved
Staffing Modifications
The 2009 Budget Resolution
delegated to the CFO the authority to modify approved 2009 staffing authorizations
for divisions and offices, as long as those modifications did not increase
the total approved 2009 Corporate Operating Budget. The following change
was approved by the CFO in accordance with the authority delegated to
him by the Board of Directors:
- In November
2009, one position was transferred from the COO to the CFO
within the Executive Offices. This authorized position will
assist with
duties that have been recently transferred to the CFO.
Spending Variances
Significant spending
variances by major expense category and division/office are discussed
below. Significant spending variances for the year ending December
31, 2009, 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 3
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 2009 Corporate Operating Budget:
- Outside Services – Personnel
expenditures were approximately $9.9 million, or 5 percent, less
than budgeted. Approximately $4.6 million (46 percent) of this
variance was attributable to under spending for contract support
for DIT internal operations and systems development and maintenance
activities overseen by the CIO Council. Under spending for DIT
operations was largely attributable to delays in project startups
as attention was redirected to failed financial institution closing
support. In addition, the Legal Division spent $3.2 million less
than budgeted largely due to an earlier-than-planned reduction
in contracting support for the Tier 2 Deposit Insurance Call
Center. The Office of Inspector General (OIG) also spent $1.3
million less than budgeted due to lower levels of contract work
than was expected during the year.
- Travel
expenditures were $2.9 million, or 4 percent, greater than budgeted,
largely due to the increase in the number of examinations conducted
and the rapid increase in the number of examination staff.
- Buildings
expenditures were $8.0 million, or 11 percent, less than budgeted,
largely due to tenant improvement allowance savings in the New
York Regional Office, Boston Area and field offices, and the
Chicago Regional
Office.
- Equipment
expenditures were approximately $4.8 million, or 7 percent, more
than budgeted, primarily due to increased security software licensing
costs
attributable to the larger number of FDIC employees and contractors
on board and software purchased by the CIO Council in support
of the E-Discovery project; the purchase of FF&E for an expanded
number of staff in the newly-leased New York Regional Office
and many field
offices; and increased costs for online library services.
- Outside
Services – Other expenditures were approximately $1.7 million,
or 8 percent, less than budgeted. The variance was largely due
to significant under spending for the deposit insurance awareness
campaign. All remaining
campaign elements are expected to be completed before the existing
support contract expires on March 31, 2010.
- Other Expenses
were approximately $3.1 million, or 23 percent, less than budgeted.
The variance was fully attributable to under spending of budgeted
allowances for Professional Learning Accounts.
Receivership
Funding
The Receivership Funding
component of the 2009 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. It does not, however, include salary and benefits
expenses
for permanent employees who form the base staffing platform for
potential resolution and receivership management activity. Those expenses
are included
in the Ongoing Operations component of the operating budget.
Significant spending
variances occurred in all seven major expense categories for the
year in the Receivership Funding component of the 2009 Corporate
Operating Budget:
- Salaries and Compensation ($16.6 million, or 15 percent, less than budgeted).
- Outside
Services – Personnel ($101.5 million, or 12 percent, less than
budgeted).
- Travel
($32.6 million, or 54 percent, less than budgeted).
- Buildings
($18.5 million, or 13 percent, less than budgeted).
- Equipment
($12.5 million, or 28 percent, less than budgeted).
- Outside
Services – Other ($5.7 million, or 27 percent, less than budgeted).
- Other
Expenses ($15.1 million, or 31 percent, less than budgeted).
These variances were
all attributable to lower-than-planned resolutions and receivership
activity during the fourth quarter. The Receivership Funding component
of the budget was increased by $300 million in December 2009 to ensure
that ample budget authority existed to fund the continuing costs of
active receiverships, the management of assets already in inventory,
and the resolution of all bank failures that were potentially expected
to occur through year-end. Although actual failures and their resultant
expenses were substantial and exceeded the original 2009 Receivership
Funding budget authority, these expenses fell short of the additional
budgeted authority provided by the Board. Such variances occur frequently
in the Receivership Funding component of the budget due to the need
to maintain adequate funding for sudden and unexpected failure resolution
expenses.
Significant
Spending Variances by Division/Office1
Seven organizations
had significant spending variances for the year:
- The
Division of Resolutions and Receiverships spent approximately
$179.2 million, or 15 percent, less than budgeted. The variance
was attributable to lower-than-budgeted spending in the Receivership
Funding budget component, as explained above.
- The
Division of Administration spent approximately $19.6 million,
or 8 percent, less than budgeted. This variance was largely due
to spending nearly $14.4 million less than budgeted in the combined
Buildings expense categories of the Ongoing Operations and Receivership
Funding Budget components. This was attributable to lower expenses
resulting from landlord concessions as well as unused Receivership
Funding Budget authority for unexpected administrative support
requirements related to the resolution of failed institutions.
- The
Division of Information Technology spent approximately $10.1
million, or 4 percent, less than budgeted for the year. Nearly
$8.5 million of this variance was in the Receivership Funding
budget component and was primarily the result of lower-than-planned
resolutions and receivership activity in the fourth quarter.
- The OIG
spent approximately $3.8 million, or 13 percent, less than budgeted.
The variance was principally due to the fact that the OIG operated
for virtually all of the fourth quarter under a continuing resolution,
which effectively froze OIG spending at its FY 2009 appropriation
level, which was 38 percent below the level authorized under
the FY 2010 appropriation. These funding limitations precluded
the OIG from filling vacant authorized positions and executing
certain procurement actions, thus resulting in less-than-anticipated
expenditures
in the fourth quarter.
- Corporate
University spent approximately $3.6 million, or 7 percent,
less than budgeted. This variance was primarily due to fewer travel
and
overtime
expenses for Financial Institution Specialists to participate
in closings and other receivership related matters as well
as adjustments to client
project timeframes.
- The Executive
Support spent approximately $3.1 million, or 11 percent, less
than budgeted. This variance was largely due to lower-than-budgeted
spending
on the deposit insurance awareness campaign by the Office of
Public Affairs and unspent Receivership Funding budget authority
of $1.1 million
for Salaries and Compensation in the Office of the Ombudsman
due to delays in hiring staff at the temporary satellite offices.
- The Executive
Offices spent $1.2 million, or 13 percent, less than budgeted,
due to vacancies in budgeted positions in certain offices during
the year
and unspent Travel budget authority in Office of the Chief Operating
Officer.
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1Information on division/office variances reflects variances in both the Corporate Operating and Investment Budgets.
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