As Prepared for Delivery on December 17, 2024
The final 2025–2026 Budget looks significantly different from where we started. We went from a proposed 12.2 percent budget increase to a 2.5 percent increase. This is excellent news. These adjustments reflect hard work of our staff, thoughtful input from stakeholders, and good-faith discussions among the Board. I’d like to thank Chairman Harper for fostering an environment of open and constructive communication amongst the Board offices.
I’d also like to thank those who provided comments. We received 18 formal comments, and the public budget hearing provided productive exchanges between stakeholders and the Agency. I believe these collaborative efforts benefited all parties involved.
My view on the budget has been consistent. The dramatic increase that we saw in the staff draft budget is the result of our process and of human nature, not anything unique to the NCUA. Government budgets are most-often written by those receiving the funds, NOT by those funding them. In addition, there is little downside for any department head that asks for more and more resources. Naturally, those receiving the cash see their requests as more reasonable than do those paying the bill.
If you compare the initial 12.2 percent budget increase to the inflation rate of 2.7 and the projected asset growth in credit unions of 4.2 percent, you can see why credit unions thought the original budget was out of step. If all we had was the income produced by the Share Insurance Fund, a 12.2 percent budget increase is mathematically unsustainable.
I approach the budget with a focus on the process. Nearly 75 percent of the Agency’s budget is put towards compensation and benefits – a large, compounding expense. NCUA’s process inherently leads to requests for more and more staff. For instance, when we asked our 23 offices in June what they needed to be most effective, out of 23 offices, not a single office requested fewer staff.
That said, I want to thank the offices that achieve their missions without the addition of new positions or over-hires. It can be difficult to show budgetary restraint in the absence of market pressures, like those faced by our regulated entities. So, I appreciate the restraint it took for these offices not to request new staff.
Let me be clear, this Agency’s greatest assets are its dedicated people. It’s certainly a useful exercise to solicit input from our staff on their needs. However, like credit unions and other private businesses, we must balance those needs against income projections, priorities, and fiscal constraints. We owe it to America’s credit unions and their members to ensure our priorities align with the difficult decisions they make every day.
The initial staff draft budget also included the creation of a new Office of the Executive Secretary and two additional positions, which would have increased our department total from 23 to 24. I am pleased to note that this office was NOT included in the budget we are voting on today.
One way to look at what we’ve accomplished today is that a $100 million credit union will get a bill that’s about $200 lower than the bill they paid this year. I’d guess that their other insurance costs, such as property and casualty insurance, will not be going down next year.
In closing, I’d like to thank the staff, management, and my fellow Board Members for their willingness to work together on this budget. I am also grateful to the stakeholders who took the time to digest the initial budget and offer constructive ideas for improvement. Thank you all.