Notice2026-21948
NCUA Draft 2027-2028 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
October 28, 2026
Issuing agencies
National Credit Union Administration
Abstract
NCUA's 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 enabling access to financial services by facilitating safe, sound, and resilient credit unions. Comment instructions are included in the SUPPLEMENTARY INFORMATION section.
Full Text
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<title>Federal Register, Volume 91 Issue 207 (Wednesday, October 28, 2026)</title>
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[Federal Register Volume 91, Number 207 (Wednesday, October 28, 2026)]
[Notices]
[Pages 67862-67875]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2026-21948]
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NATIONAL CREDIT UNION ADMINISTRATION
[NCUA-2026-2146]
NCUA Draft 2027-2028 Budget
AGENCY: National Credit Union Administration (NCUA)
ACTION: Notice.
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SUMMARY: NCUA's 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 enabling access to financial services by
facilitating safe, sound, and resilient credit unions. Comment
instructions are included in the SUPPLEMENTARY INFORMATION section.
DATES: Requests to deliver an in-person statement at the November 17,
2026, budget hearing must be received on or before November 6, 2026.
Written statements for those scheduled to appear at the budget hearing
must be received on or before 12 noon Eastern, November 12, 2026.
Written comments may be submitted by November 30, 2026.
ADDRESSES: You may submit written comments by either of the following
methods:
<bullet> In-person presentation at public budget hearing: submit
requests to deliver a statement to <a href="/cdn-cgi/l/email-protection#8fcdfaebe8eafbc7eaeefde6e1e8cfe1ecfaeea1e8e0f9"><span class="__cf_email__" data-cfemail="327047565557467a5753405b5c55725c5147531c555d44">[email protected]</span></a> by November
6, 2026. Include your name, title, affiliation, mailing address, email
address, and telephone number. The NCUA Board Secretary will inform you
if you have been approved to make a presentation. In order to present
at the hearing, you must submit a statement. Your statement must be
submitted to <a href="/cdn-cgi/l/email-protection#034176676466774b6662716a6d64436d6076622d646c75"><span class="__cf_email__" data-cfemail="5f1d2a3b383a2b173a3e2d3631381f313c2a3e71383029">[email protected]</span></a> by 12 noon Eastern, November 12,
2026. Your presentation must be delivered in person at the public
budget hearing. You will be allotted five minutes to deliver your
remarks.
<bullet> Written comments without an in-person presentation: submit
written comments by November 30, 2026, through the Federal eRulemaking
Portal: <a href="https://www.regulations.gov">https://www.regulations.gov</a>. The docket number is NCUA-2026-
2146. Follow the instructions for submitting comments.
Copies of NCUA's draft 2027-2028 budget and associated materials
are also available on NCUA's 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. NCUA's Budget in Brief
III. Key Themes of the Proposed 2027-2028 Budget
IV. Operating Budget
V. Capital Budget
VI. Share Insurance Fund Administrative Budget
VII. Financing 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 NCUA's entire draft budget for
2027-2028 in this Notice.
The draft budget details the resources required to support NCUA's
mission. The 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 draft budget are to carry out the
agency's operations in 2027 and 2028. This document is a draft, staff-
level budget proposal made available to the NCUA Board and the public
for their consideration and comment. The NCUA Board directed NCUA's
Executive Director to develop the draft budget under delegated
authority. The draft budget may change based on public comments, Board
decisions, and staff's ongoing consideration of estimates and programs
that impact the budget.
NCUA's Chief Financial Officer will present the draft budget at a
hearing open to the public on Tuesday, November 17, 2026, at 10:00 a.m.
Eastern at NCUA's headquarters, 1775 Duke Street, Alexandria, Virginia
22314. Interested parties unable to attend in person may visit the
agency's homepage (<a href="https://www.ncua.gov/">https://www.ncua.gov/</a>) to access the provided
webcast link.
If you wish to participate in the hearing and deliver a statement,
you must email a request to <a href="/cdn-cgi/l/email-protection#99dbecfdfefcedd1fcf8ebf0f7fed9f7faecf8b7fef6ef"><span class="__cf_email__" data-cfemail="286a5d4c4f4d5c604d495a41464f68464b5d49064f475e">[email protected]</span></a> by November 6, 2026.
Your request must include your name, title, affiliation, mailing
address, email address, and telephone number. Statements must be
delivered in person at the hearing. NCUA will work to accommodate as
many public statements as possible. The Board Secretary will inform you
if you have been approved to make a presentation and you will be
allotted five minutes during the budget hearing to deliver your
remarks. A written copy of your statement must be delivered to the
Board Secretary by email by 12 noon Eastern, November 12, 2026. In
addition to delivering their remarks at the budget hearing, registered
presenters will be provided the opportunity to ask questions of NCUA
staff about the draft budget. The initial round of questions will be
limited to five minutes per presenter, and one subsequent round of
questions, limited to five minutes per
[[Page 67863]]
presenter, may be permitted by the Chairman if time allows.
Written comments on the draft budget will be accepted by November
30, 2026, through the Federal eRulemaking Portal: <a href="https://www.regulations.gov">https://www.regulations.gov</a>. The docket number is NCUA-2026-2146. Commenters
should follow the portal instructions for submitting comments.
All comments should provide specific, actionable recommendations
about the draft budget rather than general remarks. NCUA's Board will
review and consider any comments from the public before approving
NCUA's 2027-2028 budget.
By the National Credit Union Administration Board on October 23,
2026.
Melane Conyers-Ausbrooks,
Secretary of the Board.
I. Introduction
About the National Credit Union Administration
Created by the U.S. Congress in 1970, the National Credit Union
Administration (NCUA) is the federal agency that insures deposits at
federally insured credit unions, protects the members who own credit
unions, and charters and regulates federal credit unions.
NCUA's mission is to enable access to financial services by
facilitating safe, sound, and resilient credit unions.
The agency operates its headquarters in Alexandria, Virginia; its
Asset Management and Assistance Center (AMAC) in Austin, Texas, which
liquidates credit unions and recovers assets; and three regional
offices, which carry out the agency's supervision and examination
program.
Backed by the full faith and credit of the United States, the
National Credit Union Share Insurance Fund (Share Insurance Fund)
provides up to $250,000 of federal share insurance to millions of
account holders in all federal credit unions and most state-chartered
credit unions.
As of June 30, 2026, NCUA regulates and supervises 4,214 federally
insured credit unions, which have approximately 146 million members and
$2.5 trillion in assets.\1\
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\1\ Source: NCUA quarterly call report data, second quarter
2026.
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Statutory Authority
Pursuant to the Federal Credit Union Act (FCU Act), the NCUA Board
(the Board) determines the resources needed for carrying out 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 FCU Act authorizes two primary sources to fund 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].''.\4\
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\4\ See 12 U.S.C. 1783(a); 12 U.S.C. 1766(j)(3). An annual
operating fee is paid by federal credit unions pursuant to 12 U.S.C.
1755. NCUA is not funded through the annual Congressional
appropriations process.
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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.\5\
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\5\ See 12 U.S.C. 1783(a).
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In December 2023, the Board approved and published in the Federal
Register the current federal credit union annual operating fee
methodology, which is the basis for how the operating fee is
calculated.\6\ The Board delegated authority to the Chief Financial
Officer to calculate the annual operating fee for federal credit unions
and to set the fee schedule as calculated using the approved method.
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\6\ See <a href="http://www.federalregister.gov/documents/2023/12/26/2023-28303/national-credit-union-administration-operating-fee-schedule-methodology">www.federalregister.gov/documents/2023/12/26/2023-28303/national-credit-union-administration-operating-fee-schedule-methodology</a>.
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Pursuant to the FCU Act, NCUA deposits fees collected in the
agency's Operating Fund at the Treasury of the United States, and NCUA
uses those fees to defray the cost of carrying out the agency's
operations, including examining and supervising federal credit
unions.\7\
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\7\ See 12 U.S.C. 1755(d).
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NCUA's Annual Budget Process
The FCU Act requires NCUA to publish an annual draft budget in the
Federal Register for public comment and hold a public hearing on the
budget.\8\ NCUA stands out as the only Financial Institutions Reform,
Recovery, and Enforcement Act (FIRREA) agency that releases a detailed
draft budget and solicits public comments on it.
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\8\ See 12 U.S.C. 1789(b).
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NCUA develops a two-year draft budget by identifying the necessary
resources, including supporting justifications, to achieve the agency's
mission, goals, requirements, and objectives. This effort includes a
field-level review of every federally insured credit union to estimate
the workload to examine and supervise the credit union in the
forthcoming year, which is translated into the cost of the staff and
associated expenses for such functions. In addition to this workload
analysis, each NCUA office reviews its fixed and recurring expenses,
including:
<bullet> Employee travel.
<bullet> Rental payments for leased property.
<bullet> Operations and maintenance for owned facilities or equipment.
<bullet> Supplies.
<bullet> Telecommunications services.
<bullet> Major capital investments.
<bullet> Other administrative and contracted services costs.
Before arriving at the final budget, the NCUA Board reviews any
comments from the public and evaluates other considerations. Once the
budget is approved, the OTR and federal credit union annual operating
fee rates are set for the first year of the two-year budget.
II. NCUA's Budget in Brief
Proposed 2027 and 2028 Budgets
NCUA's 2027-2028 draft budget includes three separate budgets: the
Operating Budget, the Capital Budget, and the Share Insurance Fund
Administrative Expenses Budget.\9\
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\9\ Budget information presented in this document excludes
funding for the Central Liquidity Facility (CLF), which has its own
budget that is reviewed and decided upon separately by the CLF
Board.
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[[Page 67864]]
[GRAPHIC] [TIFF OMITTED] TN28OC26.009
Combined, these three proposed 2027 budgets total $325.4 million,
an increase of 2.9 percent compared to the 2026 Board-approved budget,
and consistent with the 2027 funding level approved by the NCUA Board
as part of the 2026-2027 budget.
There are three main factors contributing to the draft 2027 budget
growth compared to 2026:
<bullet> Growth in employee compensation budgets, reflecting the
pay raise terms in the agency's compensation agreement with its
employee union, inflationary adjustments for employee benefits, and
five proposed additional positions required to meet emerging needs
related to new legislation as well as the Administration's priorities.
<bullet> An increase in contracted services budgets, resulting from
inflationary cost increases, cybersecurity investments, and because the
agency projects $10.0 million less in offsetting, prior-year surpluses
than 2026.
<bullet> An increase in the Share Insurance Fund Administrative
Expenses Budget. NCUA used the proceeds from the sale of its Austin
office building to offset the 2026 budget, which was a one-time offset.
These increases are partially offset by a comparative decrease to
NCUA's Capital Budget for 2027. The 2026 Capital Budget included $16
million for reorganization-related investments in systems and process
improvements that align with government efficiency goals and other
Administration priorities. The 2027 Capital Budget does not include any
additional funding for reorganization-related investments or projects.
Proposed 2028 Budget: $344.2 Million
The 2028 combined total for the three proposed budgets is $344.2
million, which is 5.8 percent higher than the proposed 2027 combined
total.
For planning purposes, the 2028 draft budget projects the same rate
of compensation growth as in 2027, and 3.0 percent budgetary growth in
all non-compensation spending categories plus certain discrete
adjustments in cases where project cost growth is expected to exceed
3.0 percent. The remaining growth results from a lower estimate of
prior-year surpluses offsetting the 2028 budget compared to the surplus
used in 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 2027-2028 Budget
NCUA Reorganization
Since the start of its Voluntary Separation Program in 2025, which
resulted in a 23 percent reduction to its staffing, NCUA has been
developing reorganization plans to build more productive, efficient
agency operations. Throughout 2025 and 2026, NCUA has increased its
operational efficiency and improved service delivery. The agency has
been removing unnecessary and burdensome regulations, streamlining its
business processes, and identifying technological improvements, and
will continue to do so in 2027 and 2028.
The draft 2027-2028 budget supports NCUA's strategic restructuring
plans. The agency's reorganization process is actively underway and
targeted for completion by December 2027. The agency's reorganization
efforts focus on prioritizing NCUA's statutory authorities and its most
critical work, reducing and consolidating business units with like
functions, achieving a higher supervisor to employee ratio, and
leveraging technology to increase staff efficiency.
Technology Modernization: Enhanced Cybersecurity and SI/AI Strategy
NCUA must continue investing in modern information technology to
keep pace with innovation while defending against evolving threats that
could impact its ability to supervise America's credit unions. By
integrating its cybersecurity framework with a forward-looking super
intelligence/artificial intelligence (SI/AI) strategy, NCUA seeks to
optimize business operations, harden agency systems against evolving
digital threats, and foster a secure environment that supports
responsible innovation across the credit union landscape.
The draft 2027-2028 budget includes resources to expand the
agency's zero-trust cybersecurity strategy, with investments in
advanced threat protection to address evolving digital risks and
fulfill new federal requirements. To comply fully with federal
directives, NCUA must acquire enhanced cybersecurity capabilities. The
draft budget's investments will reduce reliance on manual processes,
reinforce the organization's IT infrastructure, and ensure that NCUA
can continue innovating by integrating SI/AI tools into its operations.
When combined with a portion of the agency's 2026 reorganization
and innovation funding, the draft budget provides funding to continue
deploying SI/AI and advanced analytic tools across the agency. NCUA's
SI/AI strategy aligns with the Administration's direction and will both
enhance examination and supervision capabilities and deliver
operational efficiencies.
[[Page 67865]]
Deregulation, Examination Priorities, and Workforce
The draft 2027-2028 budget includes resources to reduce regulatory
burden on credit unions and focus NCUA's examination program on
material risks.
NCUA's Deregulation Project is a multi-year initiative to review,
streamline, and modernize the agency's regulatory framework. The
Deregulation Project will continue in 2027, and will address more
complex regulations with broader policy and operational implications.
The draft budget supports this project and other rulemaking and related
implementation efforts associated with new legislation and the
Administration's priorities, such as the Guiding and Establishing
National Innovation for U.S. Stablecoins Act (GENIUS Act) for Permitted
Payment Stablecoin Issuers.
NCUA continues to invest in its efforts to:
<bullet> Focus examination attention on areas posing material risk.
<bullet> Streamline examination practices to increase efficiency
<bullet> Adopt advanced capabilities to improve risk and problem
identification
<bullet> Train, develop, and resource staff to ensure the agency has
the necessary expertise to supervise complex and new activities
<bullet> Facilitate responsible innovation by credit unions
IV. Operating Budget: $312.4 Million
Overview
The proposed 2027 Operating Budget is $312.4 million, which
provides the resources required for the agency to conduct activities
prescribed by the FCU Act. These mandates include but are not limited
to:
<bullet> Chartering new federal credit unions
<bullet> Approving field of membership applications of federal credit
unions
<bullet> Promulgating regulations and providing guidance
<bullet> Performing examinations, supervision, and enforcement
NCUA also implements requirements of other statutes and Executive
Orders including those related to the Bank Secrecy Act, various
consumer financial protection laws, and various requirements for
federal agencies.
Operating Budget Categories
This section explains how the Operating Budget funds NCUA's major
expense categories, as summarized in the following chart.
BILLING CODE 7535-01-P
[GRAPHIC] [TIFF OMITTED] TN28OC26.010
[[Page 67866]]
[GRAPHIC] [TIFF OMITTED] TN28OC26.011
BILLING CODE 7535-01-C
Pay and Benefits. Pay and benefits make up approximately 80 percent
of the proposed 2027 NCUA Operating Budget. The proposed 2027 budget
for pay and benefits increases by 4.2 percent compared to 2026, for a
total of $250.5 million. There are three primary drivers of increased
costs in 2027 for the pay and benefits category:
<bullet> Merit and locality pay increases for NCUA's employees,
which are paid according to the terms of the agency's compensation
agreement with its employee union and its merit-based pay system.\10\
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\10\ The FCU Act requires 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,
approximately 94 percent of NCUA's workforce has earned a bachelor's
degree or higher, compared to approximately 39 percent of the
private-sector workforce.
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<bullet> Contributions for employee health insurance, which are set
by OPM and cannot be changed by NCUA.
<bullet> Costs associated with other mandatory employer
contributions such as Social Security, Medicare, transportation
subsidies, unemployment insurance, and workers' compensation, which are
set by other agencies and cannot be changed by NCUA.
<bullet> The proposed 2028 budget for pay and benefits is estimated
at $260.3 million, a 3.9 percent increase from the proposed 2027 level.
The proposed 2027 and 2028 Operating Budgets support a total agency
staffing level of 972 positions.\11\ This is an increase of five
positions (0.5 percent) compared to the agency's 2026 approved position
level. NCUA's Strategic Hiring Committee will allocate these new
positions to address emerging needs related to new legislation, such as
the GENIUS Act and the 21st Century Road to Housing Act, as well as for
other emerging Administration and agency priorities, such as SI/AI
implementation and cybersecurity enhancements.
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\11\ Does not include five positions assigned to the CLF.
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Approximately 63 percent, or 609 proposed positions, would conduct
NCUA's examination and supervision functions, while the remaining 37
percent, or 363 proposed positions, would perform other necessary
functions, including legal services, policy development and analysis,
and agency administration.
The following chart illustrates NCUA's approved position levels in
recent years.
BILLING CODE 7535-01-P
[[Page 67867]]
[GRAPHIC] [TIFF OMITTED] TN28OC26.012
BILLING CODE 7535-01-C
Travel. The proposed travel budget decreases by $2.7 million (13.6
percent) compared to 2026, for a total of $17.4 million. 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 2028 budget for travel is estimated at $18.9 million,
an 8.7 percent increase compared to the 2027 level. This budget level
reflects travel-related cost inflation in 2028 and an agency-wide
training event.
Rent, Communications, and Utilities. The proposed budget for rent,
communications, and utilities increases by $2.1 million in 2027 (43.5
percent) compared to 2026, for a budget of $7.0 million. The 2026 rent,
communications, and utilities budget was reduced by a one-time offset
of $1.7 million from the sale of the Austin, TX office building.\12\
Excluding this change in the offset, the 2027 increase is $0.4 million.
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\12\ Some proceeds from the sale of the Austin, TX office
building were also used to offset the Share Insurance Fund
Administrative Expenses Budget because its purchase was partially
funded by the Share Insurance Fund.
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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 leased offices and disaster recovery
and continuity of operations sites, utilities, meeting space rental for
offsite events, and postage.
The proposed 2028 budget for the rent, communications, and
utilities category is a 3.0 percent increase compared to 2027.
Administrative. The draft budget proposes a $0.8 million increase
in administrative expenses for 2027 (21.1 percent) compared to 2026,
for a budget of $4.6 million. Recurring costs in the administrative
expenses category include employee relocation expenses, recruitment
expenses, shipping, printing, subscriptions, examiner training and
meeting supplies, office furniture, legal settlements, and employee
supplies and materials. 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 2028 budget for administrative expenses is $4.8
million, an increase of 3.4 percent compared to the level proposed for
2027.
Contracted Services. The proposed budget for contracted services
increases by $13.5 million in 2027 (69.8 percent) compared to 2026, for
a budget of $32.9 million. The substantial percentage increase in the
contracted services budget is driven largely by a reduction in the
amount of prior-year unspent budget surpluses used to offset the 2027
budget.\13\ The proposed 2027 budget for contracted services assumes an
offset of $39.3 million from prior-year unspent budget balances.
Excluding the offset, the 2027 proposed budget assumes total contracted
services expenditures of $72.2 million, compared to $68.7 million in
2026, a 5.1 percent increase.
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\13\ NCUA has historically applied unspent budget amounts from
previous years to reduce its budget levels in the following two-year
budget.
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NCUA uses contracted services because acquiring specific expertise
or services from contract providers is often the most viable and cost-
effective way for NCUA to accomplish its mission.
[[Page 67868]]
Contracted services include critical mission support such as
information technology 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 NCUA's supervision framework,
core NCUA 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 (50.7 Percent of
Contracted Services)
<bullet> IT network support services and help desk support
<bullet> Contractor program and web support and network and equipment
maintenance services
<bullet> Administration of software products and audio-visual services
2. Administrative Support and Other Services (16.4 Percent of
Contracted Services)
<bullet> Examination and supervision program support
<bullet> Technical support for examination and cybersecurity training
programs
<bullet> Equipment maintenance services
<bullet> Legal services and other expert consulting support
<bullet> FFIEC reimbursements
3. IT Security (16.9 Percent of Contracted Services)
<bullet> Secure data storage and operations
<bullet> Information security programs
<bullet> Security system assessment services
4. Accounting, Procurement, Payroll, and Human Resources Systems (4.6
Percent of Contracted Services)
<bullet> Accounting and procurement systems and support
<bullet> Human resources, payroll, and employee services
<bullet> Equal Employment Opportunity programs, as required by law
5. Building Operations, Maintenance, and Security (5.1 Percent of
Contracted Services)
<bullet> Headquarters facility operations and maintenance
<bullet> Building security and continuity programs
<bullet> Personnel security and administrative programs
6. Audit and Financial Management Support (4.4 Percent of Contracted
Services)
<bullet> Annual audit support services
<bullet> Material loss reviews
<bullet> Investigation support services
<bullet> Financial management support services
7. Training (1.9 Percent of Contracted Services)
<bullet> Technical and specialized training and professional
development for staff
The following chart illustrates the breakout of the seven
categories for the total proposed 2027 contracted services budget:
[GRAPHIC] [TIFF OMITTED] TN28OC26.013
The proposed contracted services budget for 2028 is $39.7 million,
which includes an assumption of $35.5 million in unspent balances as an
offset. After adjusting for unspent prior-year budgets in both years,
the 2028 budget level represents an increase of approximately $3.1
million, or 4.3 percent, over the proposed 2027 level.
V. Capital Budget: $7.9 Million
Overview
The proposed 2027 Capital Budget is $7.9 million, a decrease of
$16.2 million (67.2 percent) compared to the 2026 Board-approved
budget.
[[Page 67869]]
[GRAPHIC] [TIFF OMITTED] TN28OC26.014
The proposed Capital Budget for 2028 is $8.0 million, an increase
of 1.0 percent compared to the 2027 level.
Summary of 2027 Capital Projects
Each year NCUA carries out an extensive review of the agency's
needs for improvement, repair, or replacement of information
technology, facilities, equipment, and other capital investments. The
proposed 2027 Capital Budget supports continuing investments in the
agency's highest priority needs as follows: \14\
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\14\ See Appendix for more details.
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Strengthening Agency Cybersecurity ($4.7 million). The 2027 Capital
Budget invests in multiple projects that directly strengthen
cybersecurity at NCUA. These investments reinforce the agency's focus
systems that are secure, available, and protected against emerging
technological risks. Key projects within this category include:
<bullet> Firewall Hardware Refresh--Strengthens network perimeter
defenses and reduces outage risks, which are core requirements for safe
operations.
<bullet> Network Access Control / Network Segmentation--Supports
identity-based cybersecurity, mitigating threats that target user
identity.
<bullet> Modernizing Network Internet Protocols--Ensures NCUA can
communicate with the public and credit unions using the latest digital
communications standards.
<bullet> Identity Verification and Data Interchange Security--
Modernizes and improves personal and system security through an
enhanced technologies aligned to prevailing government and industry
standards.
Modernizing Agency Systems and Workflow Transformation ($1.7
million). The Capital Budget includes several investments to ensure the
agency keeps pace with innovation across the credit union system. These
projects adopt data-driven practices to expand access to financial
services, support new credit unions, and strengthen the financial
system. Key projects within this category include:
<bullet> Community Development Revolving Loan Fund (CDRLF) Grant &
Loan Management System--Modernizes the agency's outdated system to
reduce staff workload and ensure compliance with federal grant
management requirements.
<bullet> Consumer Assistance Center / Relationship Management
System--Modernizes customer relationship management infrastructure and
supports interagency collaboration.
<bullet> New Charter System Improvements--Fully digitizes
chartering workflows, reduces burden for new credit union applicants,
and meets requirements of the 21st Century Road to Housing Act.
<bullet> eDiscovery Tool--Strengthens legal research capabilities
and reduces manual discovery through a modern data-filtering and
investigation engine.
Enhancing Engagement, Transparency, and Operational Reliability
($1.3 million). The Capital Budget strengthens technological readiness
through investments that modernize communication with customers and
enable compliance with evolving regulatory requirements. Key projects
within this category include:
<bullet> Unified Communications and Collaboration Modernization--
Improves hybrid meeting reliability for Board and public engagement
functions.
<bullet> Technical Support for Board Priorities--Maintains
flexibility to act on emerging regulatory changes that require system
reengineering, such as the GENIUS Act and the 21st Century Road to
Housing Act requirements.
Headquarters Building Minor Construction and Maintenance Projects
($0.3 million). The proposed 2027 Capital Budget supports 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.
Reorganization and Technology Investment Fund. The 2026 Capital
Budget included a $16.0 million reorganization and technology
investment fund--available over multiple years--to make appropriate
information technology and process improvement investments that aid in
the agency's reorganization. To ensure that NCUA can fully leverage SI/
AI, the agency plans to allocate $4.3 million of these funds to develop
a structured strategy that harnesses SI/AI-powered tools essential for
future supervision, analytics, and fraud detection. Through September
2026, the agency also spent approximately $1 million on efficiency-
related technology investments, business process analysis, and
reorganization planning support.
VI. Share Insurance Fund Administrative Expenses Budget: $5.1 Million
Overview
The proposed 2027 Share Insurance Fund Administrative Expenses
Budget is $5.1 million, which is $1.7 million, or 52.6 percent, higher
than the 2026 Board-approved budget. The 2026 Share Insurance Fund
Administrative Expenses Budget was reduced by a one-time offset of $1.7
million from the sale of the Austin, TX office building.\15\ Excluding
this change in the offset, the proposed 2027 increase is $0.04 million.
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\15\ Some of the proceeds for the sale were also used to offset
the Share Insurance Fund Administrative Expenses Budget as it was
partially funded by the Share Insurance Fund.
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The Share Insurance Fund Administrative Expenses Budget funds
direct costs associated with authorized Share Insurance Fund
activities, including the following for 2027: \16\
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\16\ 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 FCU Act, and for providing
assistance and making expenditures under Section 1788 of the FCU 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> $2.7 million for operating and maintenance costs of the
internal analytical capabilities to conduct supervisory stress testing
analyses and
[[Page 67870]]
to perform other quantitative risk assessments of large credit unions.
<bullet> $0.8 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
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> $0.4 million for certain insurance-related activities and
AMAC expenses related to liquidations and conservatorships and for
staff travel for consultation on complex or problem cases.
<bullet> $64.0 thousand for corporate resolution program legacy
asset valuation models, analytic support, and data.
<bullet> $0.1 million in capital funding to modernize AMAC's
liquidation support tracking tool. AMAC currently uses an end-of-life
software platform to track various legal and financial claims during
liquidation case management. In 2027, AMAC will deploy a modernized
application to replace its current tool.
BILLING CODE 7535-01-P
[GRAPHIC] [TIFF OMITTED] TN28OC26.015
[[Page 67871]]
BILLING CODE 7535-01-C
The proposed 2028 Share Insurance Fund Administrative Expenses
budget is $5.2 million, an increase of 2.0 percent compared to the
proposed 2027 budget.
VII. Financing NCUA's Programs
Overview
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.\17\ When
formulating the annual budget, 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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\17\ Some costs are directly charged to the Share Insurance Fund
when appropriate to do so.
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The FCU Act authorizes two primary sources to fund the Operating
and Capital Budgets:
(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,''
\18\ and.
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\18\ 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].'' \19\ Among
the fees levied under the Act are annual Operating Fees, which are
required for federal credit unions under 12 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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\19\ 12 U.S.C. 1766(j)(3). Other sources of income for the
Operating Budget may include interest income, 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 1973, the U.S. Government Accountability Office recommended NCUA
adopt a method for allocating Operating Budget costs--that is, the
portion of NCUA's budget funded by requisitions from the Share
Insurance Fund and the portion covered by operating fees paid by
federal credit unions.\20\ NCUA has since used an allocation
methodology known as the OTR to determine how much of the Operating and
Capital Budgets to fund with a requisition from the Share Insurance
Fund.
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\20\ See <a href="http://www.gao.gov/products/b-1640314-31">www.gao.gov/products/b-1640314-31</a>.
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NCUA uses the OTR methodology to allocate agency expenses between
these two primary funding sources. Specifically, the OTR is the formula
NCUA uses to allocate insurance-related expenses to the Share Insurance
Fund under Title II of the FCU Act. Almost all other operating expenses
are funded by collecting annual operating fees from federal credit
unions.\21\
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\21\ 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 NCUA's Operating
Budget and the OTR. First, expenses funded from the Share Insurance
Fund must carry out the purposes of Title II of the FCU Act, which
relates to share insurance.\22\ Second, NCUA may not fund its entire
Operating Budget through charges to the Share Insurance Fund.\23\
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\22\ 12 U.S.C. 1783(a).
\23\ 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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Overhead Transfer Rate
The OTR represents the percentage of the agency's operating budget
paid for by a transfer from the Share Insurance Fund. The OTR is
designed to cover 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 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 an indirect cost to all federally insured credit unions.
The NCUA Board approved the current methodology for calculating the
OTR at its November 2017 open meeting.\24\ In 2023, the Board published
a request for comment in the Federal Register regarding the OTR
methodology but did not propose or adopt any changes to the current
methodology.\25\
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\24\ 82 FR 55644 (Nov. 22, 2017).
\25\ See <a href="http://www.federalregister.gov/documents/2023/12/20/2023-28000/request-for-comment-regarding-overhead-transfer-rate-methodology">www.federalregister.gov/documents/2023/12/20/2023-28000/request-for-comment-regarding-overhead-transfer-rate-methodology</a>.
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The minor variations in the OTR since 2018 are the result of
routine, small fluctuations in the variables that affect the OTR,
including normal variations in the workload budget from one calendar
year to the next.
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 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 NCUA's examination program,
including workload estimates that are refined by regional managers and
submitted to NCUA headquarters for the annual budget proposal. The OTR
methodology excludes state regulator costs, including state examiner
hours.
Based on the Board-approved methodology and the proposed budget,
the OTR for 2027 is estimated to be 62.0 percent, which is an increase
of 20 basis points from 2026. Thus, 62.0 percent of the proposed 2027
Operating Budget is estimated to be paid out of the Share Insurance
Fund. The remaining 38.0 percent of the proposed 2027 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 is shown in the table below:
[[Page 67872]]
[GRAPHIC] [TIFF OMITTED] TN28OC26.016
The following chart illustrates the share of the proposed 2027
Operating Budget that would be paid by federal credit unions (70.4
percent) and federally insured, state-chartered credit unions (29.6
percent).
[GRAPHIC] [TIFF OMITTED] TN28OC26.017
Operating Fee
The Board delegated authority to the Chief Financial Officer to
calculate the annual operating fee for federal credit unions and to set
the fee schedule as calculated using 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.\26\
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\26\ See <a href="http://www.federalregister.gov/documents/2023/12/26/2023-28303/national-credit-union-administration-operating-fee-schedule-methodology">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 natural person federal credit unions, 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.\27\ Natural person federal credit
unions with assets less than approximately $2.3 million are not
assessed an operating fee and their assets are therefore excluded from
this calculation.\28\ Corporate federal credit unions also pay an
annual operating fee based on a different scale.
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\27\ To determine the assessment scale for 2027, 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 2025 and the first two quarters
of 2026) and the previous four quarters (that is, the third and
fourth quarters of 2024 and the first two quarters of 2025). The
result of the calculation is 4.81 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.
\28\ The exemption threshold for 2027 is estimated at $2,259,851
which accounts for 4.81 percent aggregate growth in credit union
system assets.
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Based on the Board-approved operating fee methodology, as shown in
the following tables, the share of the proposed 2027 budget funded by
the operating fee is $116.9 million. The calculated operating fee rate
for 2027 decreases by 49 basis points compared to the rate in 2026.
[[Page 67873]]
As part of the Board-approved operating fee methodology, NCUA
analyzes the agency's future cash flow requirements compared to
available balances. Any projected surplus cash from past years' fee
collections that is not required to finance agency operations can be
used to lower the operating fee share of the proposed budget. Because
these 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 2027-2028 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.
BILLING CODE 7535-01-P
[GRAPHIC] [TIFF OMITTED] TN28OC26.018
Operating Fee Scale
To illustrate the rate for each asset tier for which operating fees
are charged, the table below shows the effect of the average 49 basis
point decrease in the estimated 2027 annual operating fee for natural
person federal credit unions, using a $2.3 million exemption threshold.
[GRAPHIC] [TIFF OMITTED] TN28OC26.019
[[Page 67874]]
VIII. Appendix: Supplemental Budget Information
Office Budgets <SUP>29 30</SUP>
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\29\ Minor rounding differences may occur in totals.
\30\ Budget allocations by office reflect NCUA's current
organizational structure as the agency transitions to a new,
streamlined organizational structure as part of its strategic
restructuring plans. The reorganization process is actively underway
and is expected to be completed by December 2027.
[GRAPHIC] [TIFF OMITTED] TN28OC26.020
[[Page 67875]]
Capital Projects
[GRAPHIC] [TIFF OMITTED] TN28OC26.021
[FR Doc. 2026-21948 Filed 10-27-26; 8:45 am]
BILLING CODE 7535-01-C
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</html>Indexed from Federal Register on October 28, 2026.
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.