Notice2025-18856
The NCUA Staff Draft 2026-2027 Budget
Primary source
Metadata and text below are from the Federal Register, a public-domain U.S. government work. Always verify the official published version before relying on it for any legal matter.
Published
September 29, 2025
Issuing agencies
National Credit Union Administration
Abstract
The NCUA's staff draft "detailed business-type budget" is being made available for public review as required by federal statute. The proposed resources will finance the agency's annual operations and capital projects, both of which are necessary for the agency to accomplish its mission of protecting the system of cooperative credit and its member-owners through effective chartering, supervision, regulation, and insurance. Comment instructions are included in the supplementary information section. The schedule for a public hearing about the budget will be announced in a future notice.
Full Text
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<title>Federal Register, Volume 90 Issue 186 (Monday, September 29, 2025)</title>
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[Federal Register Volume 90, Number 186 (Monday, September 29, 2025)]
[Notices]
[Pages 46640-46660]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2025-18856]
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NATIONAL CREDIT UNION ADMINISTRATION
[NCUA-2025-0543]
The NCUA Staff Draft 2026-2027 Budget
AGENCY: National Credit Union Administration (NCUA).
ACTION: Notice.
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SUMMARY: The NCUA's staff draft ``detailed business-type budget'' is
being made available for public review as required by federal statute.
The proposed resources will finance the agency's annual operations and
capital projects, both of which are necessary for the agency to
accomplish its mission of protecting the system of cooperative credit
and its member-owners through effective chartering, supervision,
regulation, and insurance. Comment instructions are included in the
supplementary information section. The schedule for a public hearing
about the budget will be announced in a future notice.
DATES: Written comments may be submitted by October 24, 2025.
ADDRESSES: You may submit written comments by October 24, 2025, through
the Federal eRulemaking Portal: <a href="https://www.regulations.gov">https://www.regulations.gov</a>. The docket
number is NCUA-2025-0543. Follow the instructions for submitting
comments.
Copies of the NCUA Staff Draft 2026-2027 Budget and associated
materials are also available on the NCUA website at <a href="https://www.ncua.gov/About/Pages/budget-strategic-planning/supplementary-materials.aspx">https://www.ncua.gov/About/Pages/budget-strategic-planning/supplementary-materials.aspx</a>.
FOR FURTHER INFORMATION CONTACT: Melissa M. Lowden, Acting Chief
Financial Officer, National Credit Union Administration, 1775 Duke
Street, Alexandria, Virginia 22314-3428, or telephone: (703) 518-1182.
SUPPLEMENTARY INFORMATION: The following itemized list details the
sections in this Notice made available for public review:
I. Introduction
II. The NCUA Budget in Brief
III. Key Themes of the Proposed 2026-2027 Budget
IV. Operating Budget
V. Capital Budget
VI. Share Insurance Fund Administrative Budget
VII. Financing the NCUA's Programs
VIII. Appendix: Supplemental Budget Information
Section 212 of the Economic Growth, Regulatory Relief, and Consumer
Protection Act amended 12 U.S.C. 1789(b)(1)(A) to require the NCUA
Board (Board) to ``on an annual basis and prior to the submission of
the detailed business-type budget make publicly available and publish
in the Federal Register a draft of the detailed business-type budget.''
Although 12 U.S.C. 1789(b)(1)(A) requires publication of a ``business-
type budget'' only for the agency operations arising under the Federal
Credit Union Act's subchapter on insurance activities, in the interest
of transparency the Board is providing the NCUA's entire staff draft
budget for 2026-2027 in this Notice.
The staff draft budget details the resources required to support
NCUA's mission. The staff draft budget includes personnel and dollar
estimates for three major budget components: (1) the Operating Budget;
(2) the Capital Budget; and (3) the Share Insurance Fund Administrative
Budget. The resources proposed in the staff draft budget are to carry
out the agency's operations in 2026 and 2027. This document is a draft,
staff-level budget proposal made available to the NCUA Board members
and the public for their consideration and comment. The NCUA Board
directed the NCUA Executive Director to develop the staff draft budget
under delegated authority. The staff draft budget may change based on
public comments, Board member decisions, and staff's ongoing
consideration of estimates and programs that impact the budget.
The NCUA Chief Financial Officer will present the staff draft
budget at a budget hearing open to the public, the schedule for which
will be announced in a future notice.
Written comments on the staff draft budget will be accepted by
October 24, 2025, through the Federal eRulemaking Portal: <a href="https://www.regulations.gov">https://www.regulations.gov</a>. The docket number is NCUA-2024-0543. Commenters
should follow the portal instructions for submitting comments.
All comments should provide specific, actionable recommendations
about the staff draft budget rather than general remarks. The NCUA
Board will review and consider any comments from the public prior to
approving the NCUA 2026-2027 budget.
By the National Credit Union Administration Board on September
25, 2025.
Melane Conyers-Ausbrooks,
Secretary of the Board.
I. Introduction
About the National Credit Union Administration (NCUA)
Created by the U.S. Congress in 1970, the National Credit Union
Administration is a federal agency that
[[Page 46641]]
insures deposits at federally insured credit unions, protects the
members who own credit unions, charters and regulates federal credit
unions, and promotes widespread financial education and consumer
protection. The NCUA protects the safety and soundness of the credit
union system by identifying, monitoring, and reducing risks to the
National Credit Union Share Insurance Fund. Backed by the full faith
and credit of the United States, the Share Insurance Fund provides up
to $250,000 of federal share insurance to more than 142.3 million
account holders in all federal credit unions and the overwhelming
majority of state-chartered credit unions. No credit union member has
ever lost a penny of share deposits insured by the Share Insurance
Fund.
As of June 30, 2025, the NCUA regulates and supervises 4,370
federally insured credit unions, which have approximately 144 million
members and more than $2.4 trillion in assets across all states and
U.S. territories.\1\
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\1\ Source: NCUA quarterly call report data, second quarter
2025.
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Statutory Authority
Pursuant to the Federal Credit Union Act, the NCUA Board determines
the resources needed for carrying out the NCUA's responsibilities under
the Act.\2\ The Board is authorized to expend such funds and perform
such other functions or acts as it deems necessary or appropriate,
according to the rules, regulations, or policies it establishes.\3\
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\2\ See 12 United States Code (U.S.C.) 1752a.
\3\ See 12 U.S.C. 1766(i)(2).
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The Federal Credit Union Act authorizes two primary sources to fund
the NCUA: (1) Requisitions from the Share Insurance Fund ``for such
administrative and other expenses incurred in carrying out the purposes
of [Title II of the Act] as [the Board] may determine to be proper''
and (2) ``fees and assessments (including income earned on insurance
deposits) levied on insured credit unions under [the Act].'' 12 U.S.C.
1783(a); 12 U.S.C. 1766(j)(3).\4\
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\4\ The NCUA is not funded through the annual Congressional
appropriations process.
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Upon determination of the budgeted annual expenses for the agency's
operations, the Board determines an operating fee schedule to assess
federal credit unions. The Board considers federal credit unions'
ability to pay such a fee, and the necessity of the expenses that the
NCUA will incur, in carrying out its responsibilities in connection
with federal credit unions.\5\ These fees are assessed on federal
credit unions once a year. Pursuant to the law, the NCUA deposits fees
collected in the agency's Operating Fund at the Treasury of the United
States, and those fees are expended by the Board to defray the cost of
carrying out the agency's operations, including the examination and
supervision of federal credit unions.\6\ In December 2023, the Board
approved a notice with changes to its methodology for determining the
operating fees due from federal credit unions.\7\
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\5\ See 12 U.S.C. 1755(a)-(b).
\6\ See 12 U.S.C. 1755(d).
\7\ See <a href="https://www.federalregister.gov/d/2023-28303">https://www.federalregister.gov/d/2023-28303</a>.
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Pursuant to its authority to use the Share Insurance Fund to carry
out its insurance-related responsibilities, the Board approved an
Overhead Transfer Rate (OTR) methodology and authorized the Office of
the Chief Financial Officer to transfer resources from the Share
Insurance Fund to the Operating Fund to account for insurance-related
expenses.\8\ The statutory requirement to annually publish a draft
budget in the Federal Register and hold a public hearing on the budget
is found in 12 U.S.C. 1789(b).
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\8\ See 12 U.S.C. 1783(a).
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The NCUA's Annual Budget Process
Each year, all the directors of each component of the NCUA develop
an initial budget request identifying the resources necessary,
including the supporting justifications, for their office to support
the agency's mission, goals, and objectives. This effort also includes
a field-level review of every federally insured credit union to
estimate the workload to carry out credit union examinations and
supervision in the forthcoming year, which is translated into the cost
of the staff and associated expenses. In addition to this workload
analysis, each NCUA office estimates its fixed and recurring expenses,
such as for employee travel, rental payments for leased property,
operations and maintenance for owned facilities or equipment, supplies,
telecommunications services, major capital investments, and other
administrative and contracted services costs.
The NCUA stands out as the only Financial Institutions Reform,
Recovery, and Enforcement Act agency that releases a detailed draft
budget and solicits public comments on it. As required by statute,
before adopting a budget, the NCUA presents a draft budget to the
public on the agency's website and in the Federal Register, allowing
credit unions and the public to provide feedback to the Board on the
budget. The Board also holds a public hearing on the draft budget.
The NCUA Board reviews the comments from the public and evaluates
other considerations, including any direction from the Administration,
in arriving at a final budget. The Board then approves the final
budget. Once the budget is approved, the operating fees to be paid by
federal credit unions to finance the agency's programs and the OTR are
set for the first year of the two-year budget.
II. The NCUA Budget in Brief
Proposed 2026 and 2027 Budgets <SUP>9</SUP>
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\9\ Budget information presented in this document excludes
funding for the CLF, which has its own budget reviewed and decided
upon separately by the CLF Board.
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The NCUA's 2026-2027 staff draft budget includes three separate
budgets: the Operating Budget, the Capital Budget, and the Share
Insurance Fund Administrative Expenses Budget. Combined, these three
proposed 2026 budgets total $313.8 million, which is $105.7 million
(25.2 percent) lower than the $419.5 million 2026 funding level
approved by the NCUA Board as part of the two-year 2025-2026 budget.
The three proposed 2026 budgets combined are $81.6 million (20.6
percent) lower than the $395.4 million 2025 budget.
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[GRAPHIC] [TIFF OMITTED] TN29SE25.017
There are three main drivers that contribute to the reduction in
proposed 2026 budget levels compared to the NCUA's approved 2025
budget:
1. A 23 percent reduction to NCUA staffing levels, which generates
a corresponding reduction to employee compensation budgets.
2. A 34 percent reduction to contracted services budgets,
reflecting the NCUA's efforts to lower its total spending pursuant to
the Administration's directives.
3. A 13 percent reduction in budgets for employee travel.
These reductions are partially offset by an increase in the NCUA's
Capital Budget for 2026, which includes $10.0 million for
implementation of the NCUA's reorganization plan and investment in
systems and process improvements that align with government efficiency
goals and other Administration priorities.
Proposed 2027 Budget: $344.7 Million
The proposed 2027 combined total for the three budgets for the NCUA
is $344.7 million, which is $30.9 million, or 9.8 percent, higher than
the proposed 2026 total budget. However, the proposed 2027 combined
total for the three budgets is $50.7 million (12.8 percent) lower than
the 2025 total budget.
For planning purposes, the draft budget projects 3 percent
budgetary growth in all spending categories. A lower projected level of
unspent past-year budget surpluses in 2027 compared to 2026, in
addition to the one-time proceeds from the sale of the Austin, TX
building, accounts for the remaining change in the proposed total
budget for 2027. While the agency presents a two-year draft budget for
planning purposes, the Board's practice has been to revisit each year's
budget before that budget year begins.
III. Key Themes of the Proposed 2026-2027 Budget
NCUA Staffing and Organizational Changes
On February 26, 2025, the U.S. Office of Management and Budget
(OMB) and the U.S. Office of Personnel Management (OPM) issued a
memorandum titled Guidance on Agency RIF and Reorganization Plans
Requested by Implementing the President's ``Department of Government
Efficiency'' Workforce Optimization Initiative. Consistent with the
President's order and this memorandum, the agency has been developing
reorganization plans that focus on more productive, efficient agency
operations. Throughout 2025, the NCUA focused on increasing efficiency,
improving service delivery, and aligning resources to statutory and
Administration priorities.
To facilitate a reorganization to achieve a smaller, more efficient
agency structure, the NCUA Board voted on March 21, 2025, to approve a
Voluntary Separation Programs (VSP) for agency staff. The VSP required
participating staff to end their employment at the NCUA by no later
than December 31, 2025. A total of 262 eligible staff elected to
participate in the VSP. In addition, the hiring freeze and normal
levels of employee attrition resulted in further reductions. As a
result, the staff draft budget anticipates a total staffing level of
967 employees whose compensation will be funded by the operating budget
in 2026, a reduction of 23 percent compared to the 2025 budget
level.\10\ The 967 positions for 2026 includes funding to rehire up to
23 positions after the VSP departures.\11\ What positions to fill will
be determined after the budget and reorganization plans are approved.
Allocation of any of these 23 positions will reflect the
Administration's direction and priorities, address the highest need
areas, and be approved by the Chairman.
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\10\ Compensation for three additional staff will be funded by
the CLF in 2026.
\11\ Any additional attrition may allow for more than 23 re-
hires.
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While other specific organizational changes will not be finalized
until later in 2025, the draft 2026-2027 budget supports implementation
of those revisions throughout 2026. The proposed capital budget for
2026 includes $10.0 million for reorganization costs and investment in
technology to increase productivity and effectiveness and implement
Administration priorities, including improvements to the customer
experience. As the NCUA finalizes its plans for a new organizational
structure and revised business processes, the Chairman will approve
allocation of this funding for projects and investments that best meet
these needs.
Reductions to NCUA Non-Payroll Budgets
At the start of 2025, the NCUA's leadership conducted a
comprehensive analysis of non-payroll budgets for travel, contracted
services, software licenses, computer applications, and IT
infrastructure to identify opportunities for cost savings. The draft
2026 budget formalizes such reductions, which are based on efforts
currently underway to eliminate non-essential activities while
simultaneously modifying operating processes to increase efficiency and
effectiveness. The draft budget reflects a reduction of 25 percent in
non-payroll budgets from 2025 to 2026 because of these efforts.
Credit Union Examination Schedules
In April 2025, the NCUA Board approved changes to examination
timeframes to prudently extend the maximum examination timeframe for
credit unions meeting certain criteria. These changes allow Regional
Directors and the ONES Director to allocate examination and supervision
resources
[[Page 46643]]
to where they are most needed. The Regional Directors and the ONES
Director, supported by the Office of Examination and Insurance, will
continue to use offsite analytics, quality controls, and sound judgment
to employ the flexibility provided by the changes. The NCUA's Regions
and ONES will continue to work with state supervisory authorities on
scheduling and examining federally insured, state-chartered credit
unions to optimize state and federal resources. The draft 2026 budget
assumes that examination timeframes will continue on the schedule
approved in 2025, resulting in increased cost efficiency for the
examination program while ensuring effective supervision over credit
unions.
IV. Operating Budget: $292.4 Million
Overview
The proposed 2026 Operating Budget is $292.4 million, or $90.0
million lower than the 2025 Board-approved budget.
The NCUA Operating Budget provides the resources required for the
agency to conduct activities prescribed by the Federal Credit Union
Act. These mandates include: (1) chartering new federal credit unions;
(2) approving field of membership applications of federal credit
unions; (3) promulgating regulations and providing guidance; (4)
performing regulatory compliance and safety and soundness examinations;
(5) implementing and administering enforcement actions, such as
prohibition orders, orders to cease and desist, orders of
conservatorship and orders of liquidation; and (6) administering the
Share Insurance Fund. The NCUA also implements requirements of other
statutes and Executive Orders including those related to Bank Secrecy
Act compliance and consumer financial protection, and various
requirements for federal agencies.
Operating Budget Categories
This section explains how these expenditures support the NCUA's
operations and presents an overview of the Operating Budget. The
following charts present the major categories of spending supported by
the proposed 2026 Operating Budget.
BILLING CODE 7535-01-P
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[GRAPHIC] [TIFF OMITTED] TN29SE25.019
BILLING CODE 7535-01-C
Pay and Benefits. Pay and benefits costs make up approximately 82
percent of the proposed 2026 NCUA Operating Budget. The proposed 2026
budget for pay and benefits decreases by $72.1 million (23 percent)
compared to 2025, for a total of $239.6 million. The reduction in pay
and benefits is driven by the elimination of 23 percent of the
authorized staff positions in 2025, which is partially offset by other
drivers that increase costs expected in 2026 for remaining staff
positions, such as:
<bullet> Merit and locality pay increases for the NCUA's employees,
which are paid according to the terms of the agency's Collective
Bargaining Agreement (CBA) and its merit-based pay system.\12\
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\12\ The Federal Credit Union Act requires the NCUA to maintain
pay comparability with the other banking agencies, stating, ``In
setting and adjusting the total amount of compensation and benefits
for employees of the Board, the Board shall seek to maintain
comparability with other federal bank regulatory agencies.'' See 12
U.S.C. 1766(j)(2). Also, more than 85 percent of the NCUA workforce
has earned a bachelor's degree or higher, compared to approximately
35 percent of the private-sector workforce.
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<bullet> Contributions for employee retirement to the Federal
Employee Retirement System (FERS), which are set by OPM based on
actuarial estimates and cannot be negotiated or changed by the NCUA.
<bullet> Contributions for employee health insurance, which are
also set by OPM.
<bullet> Costs associated with other mandatory employer
contributions such as Social Security, Medicare, transportation
subsidies, unemployment insurance, and workers' compensation.
The proposed 2026 Operating Budget supports a total agency staffing
level of 967 positions.\13\ This is a decrease of 288 positions (23
percent) compared to the agency's 2025 approved position level. The
draft 2026 budget for the 967 proposed positions includes funding to
rehire up to 23 positions after the VSP departures.\14\ What positions
to fill will be determined after the budget and reorganization plans
are approved. Allocation of any of these 23 positions will reflect the
Administration's direction and priorities, address the highest need
areas, and be approved by the Chairman.
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\13\ Does not include three positions assigned to the CLF.
\14\ Any additional attrition may allow for more than 23 re-
hires.
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The following chart illustrates the NCUA's staffing levels in
recent years.
BILLING CODE 7535-01-P
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[GRAPHIC] [TIFF OMITTED] TN29SE25.020
BILLING CODE 7535-01-C
The proposed 2027 budget for pay and benefits is estimated at
$246.8 million, a $7.2 million increase from the proposed 2026 level.
Travel. The proposed travel budget decreases by $3.1 million (13
percent) compared to 2025, for a total of $20.1 million. Because the
proposed 2026 staffing levels are lower than the 2025 budget, travel
expenses are similarly lower. The travel cost category includes
expenses for employees' airfare, lodging, meals, auto rentals,
reimbursements for privately owned vehicle usage, and other travel-
related expenses. These are necessary expenses for onsite work in
credit unions and other assignments involving travel.
The proposed 2027 budget for travel is estimated at $20.7 million,
a 3 percent increase compared to the 2026 level. This budget level
reflects an expectation for travel-related cost inflation in 2027.
Rent, Communications, and Utilities. The proposed budget for rent,
communications, and utilities decreases by $0.9 million in 2026 (16
percent) compared to 2025, for a budget of $4.9 million. The 2026
decrease is largely driven by reductions in expected telecommunications
spending and rental costs for group meetings. Additionally, the sale of
the Southern Region office building in Austin, TX will result in lower
utilities spending because the NCUA's new office lease includes such
services.
Funding within this budget category pays for facilities-related
costs, telecommunications services, data storage, and information
technology network support. Telecommunications charges include leased
data lines and data service subscriptions, Voice over internet Protocol
and mobile telephony, and other network charges. Facilities-related
budgets pay for the cost of the office leases, utilities, rental of the
disaster recovery and continuity of operations sites, meeting space
rental for offsite events, and postage.
The proposed 2027 budget for the rent, communications, and
utilities category is a $6.8 million (38.8 percent) increase compared
to 2026. The 2026 budget for rent, communications, and utilities
includes a one-time $1.7 million offset that results from the sale of
Austin, TX office building. This offset is not available for the 2027
budget.
Administrative Expenses. The draft budget proposes a $1.4 million
decrease in administrative expenses for 2026 (27 percent) compared to
2025, for a budget of $3.7 million. The 2026 decrease is driven mainly
by lower planned spending on data and analytic services, reduced supply
purchases, and lower planned recruitment costs. Recurring costs in the
administrative expenses category include employee relocation expenses,
recruitment and advertising expenses, shipping, printing,
subscriptions, examiner training and meeting supplies, office
furniture, and employee supplies and materials. The NCUA pays
relocation costs to employees who are competitively selected for a
promotion or new job within the agency in a different geographic area
than where they live.
The proposed 2027 budget for administrative expenses is $3.8
million, an increase of $0.1 million (3 percent) compared to the level
proposed for 2026.
Contracted Services. The proposed budget for contracted services
decreases by $12.4 million in 2026 (34 percent) compared to 2025, for a
net budget of $24.0 million. The contracted services budget for 2026
assumes that an additional $44.8 million from prior-year unspent budget
balances will be used for this function next year, resulting in a total
2026 contracted services budget of $68.8 million. Since 2021, the NCUA
has used unspent budget amounts from previous years to reduce its
budget levels in the following year.
The NCUA uses contracted services because acquiring specific
expertise or services from contract providers is often the most viable
and cost-effective way for the NCUA to accomplish its mission. Such
services include critical mission support such as information
technology
[[Page 46646]]
equipment and software development, accounting and auditing services,
and specialized subject matter expertise that enable staff to focus on
executing core mission requirements. The contracted services category
supports the NCUA's supervision framework, core NCUA business operation
systems such as accounting and payroll processing, and various
recurring costs, as described in the following seven major categories:
1. Information Technology Operations and Maintenance (49.2 percent of
contracted services)
--IT network support services and help desk support
--Contractor program and web support and network and equipment
maintenance services
--Administration of software products such as Microsoft Office,
SharePoint, and audio-visual services
2. Administrative Support and Other Services (17.5 percent of
contracted services)
--Examination and supervision program support
--Technical support for examination and cybersecurity training
programs
--Equipment maintenance services
--Legal services and other expert consulting support
--FFIEC reimbursements
3. IT Security (16.4 percent of contracted services)
--Secure data storage and operations
--Information security programs
--Security system assessment services
4. Accounting, Procurement, Payroll, and Human Resources Systems (5.2
percent of contracted services)
--Accounting and procurement systems and support
--Human resources, payroll, and employee services
--Equal Employment Opportunity programs, as required by law
5. Building Operations, Maintenance, and Security (5.1 percent of
contracted services)
--Headquarters facility operations and maintenance
--Building security and continuity programs
--Personnel security and administrative programs
6. Audit and Financial Management Support (4.5 percent of contracted
services)
--Annual audit support services
--Material loss reviews
--Investigation support services
--Financial management support services
7. Training (2.1 percent of contracted services)
--Technical and specialized training and professional development
for staff
The following chart illustrates the breakout of the seven
categories for the total proposed 2026 contracted services budget:
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[GRAPHIC] [TIFF OMITTED] TN29SE25.021
The proposed contracted services budget for 2027 is $42.8 million,
net, plus an additional $28.0 million in expected unspent balances.
After adjusting for unspent prior-year budgets in both years, the 2027
budget level represents a net increase of approximately $2.1 million,
or 3.0 percent.
V. Capital Budget: $18.1 Million
Overview
The proposed 2026 Capital Budget is $18.1 million, or $10.8 million
higher than the 2025 Board-approved budget.
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[GRAPHIC] [TIFF OMITTED] TN29SE25.022
BILLING CODE 7535-01-C
The proposed Capital Budget for 2027 is $18.5 million, an increase
of approximately $0.4 million (1.9 percent) compared to the 2026 level,
to cover any inflationary increases.
Summary of 2026 Capital Projects
Each year the NCUA carries out a rigorous review of the agency's
needs for improvement, repair, or replacement of IT, facilities,
equipment, and other capital investments. The proposed 2026 Capital
Budget supports continuing investments in the agency's highest priority
needs as follows:
Priority Investments for Reorganization, Productivity, and
Administration Priorities ($10.0 Million)
The proposed 2026 budget includes $10.0 million for capital
projects that will support the NCUA's forthcoming reorganization and
invest in technologies that increase productivity and effectiveness,
and to implement Administration priorities, including improvements to
the customer experience. As the NCUA finalizes its plans for a new
organizational structure and revised business processes, the Chairman
will approve allocation of this funding for projects and investments
that best meet these needs.
Enterprise Computer Refresh ($3.2 Million)
The agency's current computers are nearing their end of life. This
capital investment will fund replacement computers that offer advanced
security features to better combat evolving cyber threats, and improved
productivity and mobility features. The funds support not only
acquisition of the computers but also the costs of testing,
configuration, and deployment.
Examination and Supervision Solution/MERIT Enhancements ($2.9 Million)
Investments in the MERIT platform in 2026 will focus on security
improvements and further streamlining navigation flow to deliver
additional efficiencies for users of MERIT, including NCUA employees,
state examiners, and credit unions. In addition, capital funds will be
used to re-platform loan and share data analytics applications to the
NCUA's common analytics platform, resulting in future operations and
maintenance efficiency.
OCFP Consumer Assistance Center--Customer Relationship Management
System ($1.0 Million)
This capital project will upgrade the customer relationship
management system used by the Office of Consumer Financial Protection
to track consumer inquiries and formal complaints against credit
unions. The current version of the system is no longer supported by the
vendor, and the upgrade will provide NCUA employees and customers with
a more efficient, innovative, and user-friendly platform.
Information Technology Infrastructure, Platform, and Security Refresh
($0.9 Million)
This capital project will improve system availability and stability
by replacing outdated or end-of-life network and platform hardware to
ensure business continuity and efficient operations. Proposed projects
for 2026 include refreshing hardware and software as well as investment
in backup storage at the NCUA's disaster recovery site.
Headquarters Building Minor Construction and Maintenance Projects ($0.1
Million)
The proposed 2026 budget supports the NCUA's multi-year
headquarters building improvement plan that identifies projects that
can be completed incrementally, prioritizing the replacement of health
and safety infrastructure. The ongoing multi-year approach recognizes
the critical building management and maintenance needs while reducing
the potential budgetary impact of such projects in a single budget
year.
VI. Share Insurance Fund Administrative Expenses Budget: $3.3 Million
Overview
The proposed 2026 Share Insurance Fund Administrative Expenses
Budget is $3.3 million, which is $2.4 million lower than the 2025
Board-approved budget. The reduction is occurring largely because the
NCUA will use approximately $1.7 million in proceeds from the sale of
an agency-owned building in Austin, TX to pay for a portion of the
activities funded by this budget. Given the increase in virtual
training, the proposed 2026 budget also incorporates savings related to
state credit union examiner travel reimbursements for NCUA-sponsored
training.
The Share Insurance Fund Administrative Expenses Budget funds
direct costs associated with authorized Share Insurance Fund
activities, including the following for 2026: \15\
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\15\ Direct costs do not include any costs that are shared with
the Operating Fund through the OTR, and with payments available upon
requisition by the Board, without fiscal year limitation, for
insurance under Section 1787 of the Federal Credit Union Act, and
for providing assistance and making expenditures under Section 1788
of the Federal Credit Union Act in connection with the liquidation
or threatened liquidation of insured credit unions as it may
determine to be proper.
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<bullet> $2.5 million for operating and maintenance costs of the
internal analytical capabilities to conduct supervisory stress testing
analyses and to perform other quantitative risk assessments of large
credit unions.
<bullet> $1.1 million for state examiner travel to NCUA-sponsored
training classes and $0.2 million to ensure that state supervisory
authorities can securely and efficiently access NCUA applications and
the NCUA's MERIT system for state examination and supervision
activities.
<bullet> $0.8 million for financial reporting, including the Share
Insurance Fund's annual financial audit and support to ensure effective
internal controls for the fund.
<bullet> $0.3 million for certain insurance-related activities and
expenses of AMAC
[[Page 46648]]
related to liquidations and conservatorships and for staff travel for
consultation on complex or problem cases.
<bullet> $65.0 thousand for corporate resolution program legacy
asset waterfall models and valuation analysis support and data. The
budget for corporate resolution program legacy asset support decreases
by 43.0 percent in 2026 when compared to the 2025 level given the
significantly reduced size of the portfolio.
BILLING CODE 7535-01-P
[GRAPHIC] [TIFF OMITTED] TN29SE25.023
BILLING CODE 7535-01-C
The proposed 2027 budget is $1.9 million higher than the proposed
2026 level largely because of the $1.7 million in proceeds from the
sale of the Austin, TX building that offsets the 2026 budget. When
excluding this one-time revenue, the 2027 budget increases $150,000, or
3 percent, compared to the 2026 level.
VII. Financing the NCUA's Programs
Overview
The NCUA incurs various expenses to satisfy its statutory
requirements, including those involved in examining and supervising
federally insured credit unions. The NCUA Board adopts an Operating
Budget, a Capital Budget, and a Share Insurance Fund Administrative
Expenses Budget each year to fund most of the costs to operate the
agency.\16\ When formulating the annual budget, the NCUA is mindful
that its funding comes from credit unions and strives to operate in an
efficient, effective, transparent, and fully accountable manner.
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\16\ Some costs are directly charged to the Share Insurance Fund
when appropriate to do so. For example, costs for training and
equipment provided to State Supervisory Authorities (SSAs) are
directly charged to the Share Insurance Fund.
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The Federal Credit Union Act authorizes two primary sources to fund
the Operating Budget:
(1) Requisitions from the Share Insurance Fund ``for such
administrative and other expenses incurred in carrying out the purposes
of [Title II of the Act] as [the Board] may determine to be proper,''
\17\ and
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\17\ 12 U.S.C. 1783(a).
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(2) ``[F]ees and assessments (including income earned on insurance
deposits) levied on insured credit unions under [the Act].'' \18\ Among
the fees levied under the Act are annual Operating Fees, which are
required for federal credit unions under 12 United States
[[Page 46649]]
Code (U.S.C.) 1755 ``and may be expended by the Board to defray the
expenses incurred in carrying out the provisions of [the Act,]
including the examination and supervision of [federal credit unions].''
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\18\ 12 U.S.C. 1766(j)(3). Other sources of income for the
Operating Budget have included interest income, funds from
publication sales, parking fee income, and rental income.
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Taken together, these authorities effectively require the Board to
determine which expenses are appropriately paid from each source while
giving the Board broad discretion in allocating expenses.
In 1972, the U.S. Government Accountability Office recommended the
NCUA adopt a method for allocating Operating Budget costs--that is, the
portion of the NCUA's budget funded by requisitions from the Share
Insurance Fund and the portion covered by operating fees paid by
federal credit unions.\19\ The NCUA has since used an allocation
methodology known as the OTR to determine how much of the Operating
Budget to fund with a requisition from the Share Insurance Fund.
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\19\ See <a href="https://www.gao.gov/products/b-1640314-31">https://www.gao.gov/products/b-1640314-31</a>.
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The NCUA uses the OTR methodology to allocate agency expenses
between these two primary funding sources. Specifically, the OTR is the
formula the NCUA uses to allocate insurance-related expenses to the
Share Insurance Fund under Title II of the Act. Almost all other
operating expenses are funded through collecting annual operating fees
paid by federal credit unions.\20\
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\20\ Annual operating fees must ``be determined according to a
schedule, or schedules, or other method determined by the NCUA Board
to be appropriate, which gives due consideration to the expenses of
the [NCUA] in carrying out its responsibilities under the [Act] and
to the ability of [federal credit unions] to pay the fee.'' 12
U.S.C. 1755(b).
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Two statutory provisions directly limit the Board's discretion with
respect to Share Insurance Fund requisitions for the NCUA's Operating
Budget and, hence, the OTR. First, expenses funded from the Share
Insurance Fund must carry out the purposes of Title II of the Act,
which relates to share insurance.\21\ Second, the NCUA may not fund its
entire Operating Budget through charges to the Share Insurance
Fund.\22\
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\21\ 12 U.S.C. 1783(a).
\22\ The Act in 12 U.S.C. 1755(a) states, ``[i]n accordance with
rules prescribed by the Board, each [federal credit union] shall pay
to the [NCUA] an annual operating fee which may be composed of one
or more charges identified as to the function or functions for which
assessed.'' See also 12 U.S.C. 1766(j)(3).
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The NCUA conducts a comprehensive workload analysis annually. This
analysis estimates the amount of time necessary to conduct examinations
and supervise federally insured credit unions to carry out the NCUA's
dual mission as insurer and regulator. This analysis starts with a
field-level review of every federally insured credit union to estimate
the number of workload hours needed for the year. These estimates are
informed by the overall parameters of the NCUA's examination program,
including workload estimates that are refined by regional managers and
submitted to the NCUA headquarters for the annual budget proposal. The
OTR methodology accounts for the costs of the NCUA, not the costs of
state regulators. Therefore, there are no calculations made for state
examiner hours.
Overhead Transfer Rate
There have not been any major changes to the parameters of the
examination program since the current OTR methodology went into
effect.\23\ The minor variations in the OTR since 2018 are the result
of routine, small fluctuations in the variables that affect the OTR,
including normal fluctuations in the workload budget from one calendar
year to the next.
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\23\ On November 16, 2017, the NCUA Board adopted a new
methodology for calculating the OTR starting with the 2018 OTR. 82
FR 55644, November 22, 2017.
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The NCUA Board approved the current methodology for calculating the
OTR at its November 2017 open meeting.\24\ In 2023, the Board published
in the Federal Register a request for comment regarding the OTR
methodology but did not propose or adopt any changes to the current
methodology.\25\ The OTR is designed to cover the NCUA's costs of
examining and supervising the risk to the Share Insurance Fund posed by
all federally insured credit unions, as well as the costs of
administering the fund. The OTR represents the percentage of the
agency's operating budget paid for by a transfer from the Share
Insurance Fund. Federally insured credit unions are not billed for and
do not have to remit the OTR amount; instead, it is transferred
directly to the Operating Fund from the Share Insurance Fund. This
transfer, therefore, represents a cost to all federally insured credit
unions.
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\24\ 82 FR 55644 (Nov. 22, 2017).
\25\ See <a href="https://www.federalregister.gov/documents/2023/12/20/2023-28000/request-for-comment-regarding-overhead-transfer-rate-methodology">https://www.federalregister.gov/documents/2023/12/20/2023-28000/request-for-comment-regarding-overhead-transfer-rate-methodology</a>.
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Based on the Board-approved methodology and the proposed budget,
the OTR for 2026 is estimated to be 61.8 percent, which is an increase
of one basis point from 2025. Thus, 61.8 percent of the total 2026
Operating Budget is estimated to be paid out of the Share Insurance
Fund. The remaining 38.2 percent of the Operating Budget is estimated
to be paid for by operating fees collected from federal credit unions.
The explicit and implicit distribution of total Operating Budget costs
for federal credit unions and federally insured, state-chartered credit
unions (FISCUs) is shown in the table below:
BILLING CODE 7535-01-P
[GRAPHIC] [TIFF OMITTED] TN29SE25.024
The following chart illustrates the share of the proposed 2026
Operating Budget that would be paid by federal credit unions (69.8%)
and FISCUs (30.2%).
[[Page 46650]]
[GRAPHIC] [TIFF OMITTED] TN29SE25.025
BILLING CODE 7535-01-C
Operating Fee
The Board delegated authority to the Chief Financial Officer to
administer the methodology approved by the Board for calculating the
operating fee and to set the fee schedule as calculated per the
approved methodology. In December 2023, the Board approved and
published in the Federal Register the current operating fee
methodology, which forms the basis for how the operating fee is
calculated in this section.\26\
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\26\ See <a href="https://www.federalregister.gov/documents/2023/12/26/2023-28303/national-credit-union-administration-operating-fee-schedule-methodology">https://www.federalregister.gov/documents/2023/12/26/2023-28303/national-credit-union-administration-operating-fee-schedule-methodology</a>.
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Under the current methodology to determine the annual operating fee
assessed on federal credit unions serving consumers, the NCUA first
calculates the average of total assets reported in the preceding four
calendar quarters available at the time of the calculation, net of any
reported Paycheck Protection Program loans. Credit unions with assets
less than approximately $2.2 million are not assessed an operating fee
and their assets are therefore excluded from this calculation.\27\
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\27\ The exemption threshold for 2026 is estimated at
$2,153,676, which accounts for 3.60% aggregate growth in credit
union system assets.
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Based on the Board-approved operating fee methodology, which is
summarized in the following tables, the share of the proposed 2026
budget funded by the operating fee is $112.4 million. This equates to
0.00935 percent of the actual average of natural person federal credit
union assets for the four calendar quarters ending on June 30, 2025.
The calculated operating fee rate for 2026 decreases by 23.6 percent
compared to the rate in 2025. This computation is shown in the table on
the following page.
As part of the Board-approved operating fee methodology, the NCUA
can adjust the share of the budget funded by the operating fee based on
an analysis of the agency's future cash flow requirements compared to
past years' collections that were not spent as planned. Any projected
surplus cash from past years' fee collections not required to finance
agency operations can accordingly be used to lower the operating fee
share of the proposed budget. Because such cash surpluses result from
past years' operating fee collections, they do not offset the portion
of the budget funded by the OTR. As the final 2026-2027 budget is
prepared for consideration by the NCUA Board, the Chief Financial
Officer will evaluate the agency's cash position and make a
recommendation about any surplus cash that can be credited to the
operating fee.
To set the assessment scale for 2026, total growth in natural
person federal credit union assets is calculated as the change between
the average of the four most current quarters (that is, the third and
fourth quarters of 2024 and the first two quarters of 2025) and the
previous four quarters (that is, the third and fourth quarters of 2023
and the first two quarters of 2024), which is calculated as 3.6
percent. The fee exemption threshold and the asset level dividing
points for the fee tiers are likewise increased by this same growth
rate to preserve the same relative relationship of the scale to the
applicable asset base.
BILLING CODE 7535-01-P
[[Page 46651]]
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Operating Fee Scale
To illustrate the rate for each asset tier for which operating fees
are charged, the tables below show the effect of the average 23.6
percent decrease in the operating fee for natural person federal credit
unions, using the $2.2 million exemption threshold.
[GRAPHIC] [TIFF OMITTED] TN29SE25.027
[[Page 46652]]
VIII. Appendix: Supplemental Budget Information
Office Budget Summary
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[[Page 46653]]
Office Budgets
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[[Page 46654]]
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[[Page 46655]]
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[[Page 46656]]
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[[Page 46657]]
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[[Page 46658]]
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[[Page 46659]]
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[[Page 46660]]
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Capital Projects
[FR Doc. 2025-18856 Filed 9-26-25; 8:45 am]
BILLING CODE 7535-01-C
</pre></body>
</html>Indexed from Federal Register on September 29, 2025.
This is legal information, not legal advice. Laws vary by jurisdiction and change frequently. Always verify current law with official sources and consult a licensed attorney in your jurisdiction for advice on your specific situation.