Four key changes to the methodology for determining the “overhead transfer rate” (OTR) of funds from the National Credit Union Share Insurance Fund (NCUSIF) to cover a percentage of the annual NCUA budget are outlined in a new summary published by NASCUS.
In late June, the NCUA Board issued a proposed rule designed to enhance the “transparency” of the OTR by, the agency stated, simplifying the rate’s methodology. Last year, the board set the OTR at 67.7% — meaning that funds from the insurance fund would cover a little more than two-thirds of the agency’s operating budget. The summary points out that NCUA is proposing four key changes for setting rate in the future:
- Time spent examining and supervising federal credit unions would be allocated as 50% insurance related;
- All time and costs that the agency expends in supervising or evaluating the risks posed by federally insured, state-chartered credit unions (or other entities, such as vendors or CUSOs) will be allocated as 100% insurance-related;
- Time and costs related to NCUA’s role as charterer and enforcer of consumer protection and other non-insurance-based laws governing the operation of credit unions (such as field of membership requirements) are allocated as 0% insurance related;
- Time and costs related to NCUA’s role in administering federal share insurance and the Share Insurance Fund are allocated as 100% insurance related.
“NCUA would use the above principles to categorize hours allocated in its budget in order to formulate a portion of the OTR,” the NASCUS summary points out.
A 60-day comment period has been set by the agency for the proposed rule; comments are due Aug. 29.