Summary of OTR proposal points out four key changes

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.

LINK:
NASCUS Summary: Proposed rule, NCUA Revised Overhead Transfer Rate Methodology