NASCUS Testifies Before NCUA Board: 2024 Budget Briefing

Posted November 16, 2023

FOR IMMEDIATE RELEASE

November 16, 2023 — The National Association of State Credit Union Supervisors (NASCUS) testified today during the National Credit Union Administration (NCUA) Board budget briefing. As mandated by Congress, the NCUA Board held its hearing on the proposed 2024 budget. The roundtable format of the hearing facilitated an exchange of testimonies, including a segment of questions and answers between stakeholders and the NCUA.

NASCUS President and CEO Brian Knight remarked, “This hearing provided a chance for open discussions that promote transparency and enhance understanding of the budget’s underlying principles, offering the NCUA the perspective of the state system. NASCUS applauds the NCUA Board for the briefing format and for maintaining the public nature of these briefings.”

During the briefing, NASCUS Senior Vice President of Policy and Supervision John Kolhoff provided a state system perspective to the NCUA board and executive team.

NASCUS commended the NCUA for taking measures to restore the OTR to a more equitable ratio. While the 60-basis point reduction in the Overhead Transfer Rate (OTR) is a positive development, additional efforts are needed to fine-tune the methodology and ensure equitable management of the Share Insurance Fund (SIF) for all charters.

Nevertheless, additional remarks centered on the budget’s failure to acknowledge the contributions of state surveillance programs and the state-chartered institutions that funded them. State agency efforts, for instance, play a role in reducing the NCUA’s budget requirements by supporting the SIF’s mission to uphold safety and soundness in the credit union system.

“Based on NCUA’s published December 2022 call report data, state-chartered credit unions reported paying $94 million in state operating fees compared to $109 million in operating fees paid by federal credit unions to NCUA. Those state credit union funds ensured robust, independent oversight throughout the country, funded over 440,000 state examiner hours, and resulted in more than 1,500 state-generated reports, commented Kolhoff. “Much of this state credit union funded work is safety and soundness supervision that benefits the SIF as NCUA is able to rely on much of this work and save itself the direct costs of onsite examination in many FISCUs.”

Concerning further refinement of the Overhead Transfer Rate (OTR) methodology, NASCUS wants to ensure the cost savings afforded by the state programs are appropriately recognized.

The NCUA draft budget representation of the state credit union funding and state agency contributions to the SIF “significantly misrepresents the material expenses borne by state credit unions to fund supervision, understates the significant reliance of those programs by the SIF, and presents an incomplete picture of the beneficial impact state supervisory programs have on the SIF,” Kolhoff further stated.

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