ALEXANDRIA, Va.-Amidst a peppering of the usual community charter conversions, the NCUA Board will take up many contentious items in the remaining months of 2001. Every year the board must approve an overhead transfer rate, the agency budget, the operating fee scale, and the National Credit Union Share Insurance Fund (NCUSIF) operating level. The setting of the overhead transfer rate caused a big stir inside the credit union movement when the board voted to increase the amount from the historic 50% to 66.72% at its October board meeting last year. The percentage indicates how much of the agency budget is covered by the insurance fund due to insurance related expenses incurred by NCUA. State credit unions have voiced through the National Association of State Credit Union Supervisors (NASCUS) (see related story page 1) that they feel federally insured, state chartered credit unions unfairly fund the federal credit union regulator. President and CEO Doug Duerr has previously pointed out that state regulators turn over examination documents to NCUA without charge and that NCUA should not be compensated via the insurance fund for performing its own examinations on federally insured, state chartered credit unions. NAFCU, representing the interests of federally chartered credit unions, has stated that between 1990 and 2000, the NCUSIF should have paid in an additional $31.71 million. NAFCU additionally asked that a budget audit be performed in conjunction with the overhead transfer rate study, which was denied. CUNA, which represents about 90% of the entire credit union community (state and federal), has commented only that the decision needs to be fair and open. Upon raising the transfer rate last year, the NCUA Board ordered an outside study be performed to determine a fair rate of transfer. Deloitte and Touche is expected to have the study complete before NCUA makes its decision on the 2002 overhead transfer rate. The federal credit union operating fee was cut by 20.38% last year in November, mainly because of the rise in the overhead transfer rate. The operating fee needs to be explored again this year annually. Also, highly debated is the setting of the NCUA budget, which credit unions have long felt was increasing too rapidly while the number of credit unions continues to shrink since the mid-seventies. NCUA's 2001 budget ($140.57 million) was only 4.17% over the 2000 budget, the smallest increase in recent memory. Part of the reason for the dwindling increase was the elimination of 20.32 vacant full-time equivalent positions. NCUA Chairman Dennis Dollar anticipates cutting more positions and budget dollars through attrition throughout the remainder of his term ending in 2003. He has set a goal of a 4% budget decrease over the next two years. In setting the agency's 2001 budget, the board also projected a 5.02% increase for the 2002 budget to $147.6 million. Additionally, Dollar has opened up the NCUA budget procedure and setting to public debate. A public forum for this year's budget is set for November 1, where members of the credit union community will be able to provide input to the budget process. The operating level of the NCUSIF must also be set every year. Statute requires it be set between 1.2% and 1.5% and was placed at 1.3% for the 2000 fiscal year. The operating level is defined as the ratio of the fund equity less unreserved contingent liabilities divided by the aggregate amount of all insured shares. Any funds over the 1.3% are returned to credit unions as a dividend. Historically, this had been announced during the final quarter of the year, however, the Credit Union Membership Access Act mandated that starting with 2000 the dividend must be figured on actual data rather than projections. The dividend was not announced for 2000 until March of 2001 and will continue in the first quarter of the New Year. The change caused some confusion around the credit union community for 2001. The NCUA Board also annually sets the interest rate for loans from the Community Development Revolving Loan Program and when credit unions may apply for loan and grant assistance. Last year the interest rate on the loans was set at 2%, as it has since January 1999. NCUA must also approve its Annual Performance Plan, which evaluates whether the agency met the previous year's goals and sets new ones. Among all of these issues, NCUA must make time to consider Dollar's Reg-Flex proposal, almost two years in the making. Repealing the Community Action Plan, which becomes effective January 1, 2002, may also become a target of the board. [email protected]