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

Skip Left Navigation Links
 

III. Budget Results - Fourth Quarter 2012

Approved Budget Modifications

The 2012 Budget Resolution delegated to the Chief Financial Officer (CFO) and selected other officials the authority to reallocate funds within the 2012 Corporate Operating Budget, provided that such reallocations did not increase the total amount approved for either the Ongoing Operations or Receivership Funding budget components.  The following budget reallocations were approved during the fourth quarter in accordance with the authority delegated by the Board of Directors.  None of these modifications changed the 2012 Ongoing Operations or Receivership Funding budgets or the total 2012 Corporate Operating Budget approved by the Board.

In December 2012, the CFO approved a reallocation of $836,500 in budget authority within the Ongoing Operations budget component from the Corporate Unassigned contingency reserve to the Executive Offices budget.  This reallocation increased the Outside Services

Personnel budget to provide funding for higher-than-projected expenses of the annual financial audit conducted by the Government Accountability Office and added $11,500 to the Travel budget to provide sufficient funding for the remainder of the year.  In addition, the CFO approved the reallocation of $70,000 in budget authority within the Ongoing Operations component from the Corporate Unassigned contingency reserve to the Salary and Compensation budgets of the Office of Communications (+$50,000) and the Office of International Affairs (+$20,000) for salary and fringe benefit costs that were greater than previously projected.  In addition, the Director of the Office of Minority and Women Inclusion (OMWI) approved the realignment of funds within the OMWI budget between expense categories for an account coding correction.

Following these budget reallocations, the unused amounts remaining within the Corporate   Unassigned contingency reserves for the Ongoing Operations and the Receivership Funding budget components were $19,416,710, and $115,612,907, respectively.

Spending Variances

Significant spending variances by major expense category and division/office are discussed below.  Significant spending variances for the year ending December 31, 2012, are defined as those that either (a) exceed the annual budget for a major expense category or total division/office budget by any amount, 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 all major expense categories in the Ongoing Operations component of the 2012 Corporate Operating Budget.

  • Salaries and Compensation expenditures were approximately $50 million, or 4 percent, less than budgeted.  The Division of Risk Management Supervision (RMS) ($20 million), the Legal Division ($5 million), the Office of Complex Financial Institutions (CFI) ($4 million), the Division of Resolutions and Receivership (DRR) ($3 million), the Division of Insurance and Research (DIR) ($3 million),  the Office of Inspector General (OIG) ($3 million), and the Division of Consumer Protection (DCP) ($3 million) all spent less than budgeted in this expense category, primarily due to vacancies in budgeted positions.  Most of the variances caused by vacancies were related to authorized non-permanent positions.
  • Outside Services – Personnel expenditures were approximately $55 million, or 18 percent, less than budgeted.  Approximately $15 million of this variance was attributable to unused budget authority in the Corporate Unassigned contingency reserve.  The CIO Council spent $9 million less than budgeted, largely due to a shift of certain CIO Council projects to the Corporation’s Investment Budget because their projected cost exceeded the Investment Budget threshold and delays in beginning a number of other planned projects.  CFI spent $6 million less than budgeted as it continued to refine its contracting requirements.  The Division of Administration (DOA) spent $5 million less than budgeted, primarily due to lower-than-anticipated use of contractors for procurement activities, background investigations, human resources support, guards, and mail room services in the regional offices.  The Division of Information Technology (DIT) spent $4 million less than budgeted, primarily due to lower-than-projected spending on internal initiatives including Windows 7 and platform upgrade projects.  The Legal Division spent almost none of the nearly $3 million budgeted to reimburse the Department of Justice for the ongoing goodwill litigation. 
  • Travel expenditures were approximately $17 million, or 16 percent, less than budgeted.  RMS spent $8 million less than budgeted, primarily due to the large number of vacant non-permanent examination positions for which budgeted travel funds were not used.  The Corporate Employee Program in Corporate University (CU-CEP) spent $3 million less than budgeted due to lower average travel costs for CEP participant travel and the cancellation of one scheduled CEP class originally planned for 30 participants.  
  • Building expenditures were approximately $5 million, or 6 percent, less than budgeted, largely due to scheduling delays in the upgrade of the electric system for the National Data Center at Virginia Square; reduced utilities consumption; fewer-than-anticipated office moves; a change in the design/build strategy for the 550 HVAC project that delayed a significant portion of the design costs until the general contractor is brought on board in 2013; lower-than-projected expenses for the Memphis Area Office build-out; cancellation of the redesign of one floor at the San Francisco Regional Office (SFRO); delays in awarding the SFRO boiler replacement contract; and a reduction in the Atlanta Regional Office’s monthly lease payments.
  • Equipment expenditures were approximately $8 million, or 9 percent, less than budgeted.  DIT spent $5 million less than budgeted primarily due to contract protests that impacted purchasing cycles.  In addition, the DOA spent $3 million less than budgeted for furniture, fixture and equipment (FF&E) purchases from tenant improvement allowances and for copiers due to the conversion of a number of copiers to “maintenance only” contract terms.
  • Outside Services – Other expenditures were approximately $4 million, or 21 percent, less than budgeted.  DOA spent $3 million less than budgeted because of lower-than-expected mail-related services; a reduction in catering expenses at meetings and conferences; and reduced printing of deposit insurance materials pending clarification of the need for possible changes in the content of those materials.
  • Other Expenses were approximately $8 million, or 40 percent, less than budgeted.  Approximately $3 million of this variance was attributable to unused budget authority in the Corporate Unassigned contingency reserve.  In addition, the variance reflected substantial underutilization by employees of the funds budgeted for Professional Learning Accounts and lower-than-projected corporate office supply purchases by DOA.

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 and related expenses for permanent employees assigned to the receivership management function.

There were significant spending variances in all the major expense categories through the fourth quarter in the Receivership Funding component of the 2012 Corporate Operating Budget:

  • Salaries and Compensation ($51 million, or 20 percent, less than budgeted).
  • Outside Services - Personnel ($494 million, or 48 percent, less than budgeted).
  • Travel ($15 million, 44 percent, less than budgeted).
  • Buildings ($49 million, or 53 percent, less than budgeted).
  • Outside Services - Other ($4 million, or 35 percent, less than budgeted).
  • Other Expenses ($34 million or 52 percent, less than budgeted).

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 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 Travel category was due to lower-than-budgeted failed bank activity.  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 Equipment category was due to lower-than-anticipated costs for online information services, software purchases, and maintenance costs.  The variance in the Outside Service – Other category was due to lower-than-anticipated costs for advertising, insurance, mail, and bank service fees.  The variance in the Other Expenses category was attributable to the disposition of failed bank assets and the transfer of banking operations to the Dallas office faster than expected at many failed bank sites.

Significant Spending Variances by Division/Office1

Fourteen organizations had significant spending variances through the end of the fourth quarter 2012:

  • DRR spent $497 million, or 40 percent, less than budgeted.  Approximately $490 million of this under spending was in the Receivership Funding Budget component due to lower-than-anticipated resolutions and receivership workload, as explained above.  
  • The Legal Division spent $32 million, or 11 percent, less than budgeted.  This variance was due to under spending of approximately $16 million in the Salaries and Compensation expense category ($5 million in the Ongoing Operations budget component and $11 million in the Receivership Funding budget component), mostly due to vacancies in budgeted non-permanent positions and slower-than-projected hiring to fill those vacancies, and $15 million for outside legal services in the Outside Services – Personnel expense category in the Receivership Funding budget component.
  • RMS spent $31 million, or 6 percent, less than budgeted.   This variance was largely attributable to vacancies in budgeted non-permanent examination positions and lower-than-budgeted examination travel expenses resulting from those vacancies.
  • DOA spent $24 million, or 9 percent, less than budgeted.  This variance was largely attributable to lower-than-budgeted spending for contractor support ($5 million), facilities-related expenses ($5 million), equipment expenses ($3 million), and other expenses ($3 million) from its Ongoing Operations budget, as explained above, and lower-than-projected expenses ($5 million) to support bank closings and related activities from its Receivership Funding budget.
  • DIT spent $15 million, or 5 percent, less than budgeted.  This variance was largely attributable to lower-than-projected expenses to support failed bank closings and delays in planned software procurements.
  • The CIO Council spent $12 million, or 14 percent, less than budgeted.  This variance was largely due to delays in beginning a number of planned projects and a shift in funding certain projects to the Corporation’s Investment Budget, as explained above.  In addition, a planned $3 million document management software purchase to support the IMAC project was delayed until 2013.
  • CFI spent $11 million, or 17 percent, less than budgeted.  This variance was attributable to lower-than-budgeted spending for contractor services.
  • DCP spent $7 million, or 4 percent, less than budgeted.  This variance was primarily attributable to a $3 million variance in Salaries and Compensation resulting from vacancies in budgeted non-permanent examination positions; a $1 million variance in examination travel expenses resulting from those vacancies; and a $2 million variance in contracting expenses due to delays in starting community affairs outreach projects and the biennial banker and unbanked/underbanked surveys.
  • The OIG spent $6 million, or 17 percent, less than budgeted, because of vacancies in budgeted positions and lower-than-projected travel expenses.
  • DIR spent $6 million, or 13 percent, less than budgeted, primarily attributable to vacancies in budgeted positions and slower-than-projected hiring to fill those vacancies ($3 million); and reduced spending for contractual services ($2 million) due to a revised strategy that will rely less on contractors for the failed bank Insight project.
  • The Executive Support Offices spent approximately $5 million, or 17 percent, less than budgeted.  This variance was mostly attributable to lower-than-budgeted spending for contract services and slower-than-projected hiring by the Office of Minority and Women Inclusion and the Office of Corporate Risk Management.
  • The Division of Finance (DOF) spent $5 million, or 12 percent, less than budgeted.  This variance was attributable to vacancies in budgeted positions and slower-than-expected hiring to fill those vacancies.
  • Corporate University spent $7 million, or 16 percent, less than budgeted, including under spending of $5 million in its CU-CEP budget and $2 million in its regular organizational CU-Corporate budget.  The CU-CEP variance was primarily due to lower-than-budgeted travel expenses for CEP participants and the cancellation of one scheduled CEP class that reduced spending for both Salaries and Compensation (including overtime) and Travel.  The CU-Corporate variance was primarily due to lower-than-projected expenditures for certain budgeted projects in the Schools of Supervision, Insurance, Corporate Operations, and the Dallas Learning Center.
  • The Legal Division spent almost none of the $3 million budgeted in the Government Litigation budget because an existing prior-year credit balance with DOJ was sufficient to cover projected FY 2013 expenses for defensive goodwill litigation.
  • The Executive Offices spent $2 million, or 13 percent, less than budgeted.  This variance was primarily attributable to lower-than-projected hiring to fill vacant authorized positions.
  • The Corporate Unassigned contingency reserve had $135 million in unused budget authority remaining at the end of the year.  That unused budget authority lapsed on December 31, 2012.

     

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





Last Updated 04/24/2013 dofbusinesscenter@fdic.gov

Skip Footer back to content