81 FR 4674 - Request for Comment Regarding National Credit Union Administration Operating Fee Schedule Methodology
NATIONAL CREDIT UNION ADMINISTRATION Federal Register Volume 81, Issue 17 (January 27, 2016)
Federal Register Volume 81, Issue 17 (January 27, 2016)
| Page Range | 4674-4679 | |
| FR Document | 2016-01623 |
[Federal Register Volume 81, Number 17 (Wednesday, January 27, 2016)] [Notices] [Pages 4674-4679] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2016-01623] ======================================================================= ----------------------------------------------------------------------- NATIONAL CREDIT UNION ADMINISTRATION Request for Comment Regarding National Credit Union Administration Operating Fee Schedule Methodology AGENCY: National Credit Union Administration (NCUA). ACTION: Request for comment. ----------------------------------------------------------------------- SUMMARY: The NCUA Operating Budget has two primary funding mechanisms: (1) An Overhead Transfer, which is funded by federal credit unions (FCUs) and federally insured state-chartered credit unions (FISCUs); and (2) annual Operating Fees, which are charged only to FCUs. In a voluntary effort to invite input from stakeholders representing federal and state-chartered credit unions, the NCUA Board (Board) is simultaneously requesting comments on the methodologies for both funding mechanisms in separate notices in the Federal Register. This request for comments focuses on the methodology NCUA uses to determine the aggregate amount of Operating Fees charged to federal credit unions, including the fee schedule that allocates the Operating Fees at different rates among FCUs according to various asset thresholds. While the NCUA Board is interested in all comments from the public and stakeholders, commenters are also asked to consider the following questions when responding: (1) Are the asset determination thresholds reasonable; and (2) is the method for forecasting projected asset growth for the credit union system reasonable? Responding to these questions will provide valuable insight to the NCUA Board with respect to how the Operating Fee is administered. To be most instructive to the Board, commenters are encouraged to provide the specific basis for their comments and recommendations, as well as documentation to support their proposed adjustments or alternatives. DATES: Comments must be received on or before April 26, 2016 to be assured of consideration. ADDRESSES: You may submit comments by any of the following methods (Please send comments by one method only):NCUA Web site: http://www.ncua.gov. Please follow the instructions for submitting comments under the ``Board Comments'' section of the NCUA Web site. Email: Address to [email protected]. Include ``[Your name]--Comments on Operating Fee Schedule Methodology'' in the email subject line. Fax: (703) 518-6319. Include your name and the following subject line: ``Comments on Operating Fee Schedule.'' Mail: Address to Gerard Poliquin, Secretary of the Board, National Credit Union Administration, 1775 Duke Street, Alexandria, Virginia 22314-3428. Hand Delivery/Courier: Same as mail address. Public Inspection: You can view all public comments on NCUA's Web site [[Page 4675]] at http://www.ncua.gov/about/pages/board-comments.aspx as submitted, except for those we cannot post for technical reasons. NCUA will not edit or remove any identifying or contact information from the public comments submitted. You may inspect paper copies of comments at NCUA's headquarters at 1775 Duke Street, Alexandria, Virginia 22314, by appointment weekdays between 9 a.m. and 3 p.m. To make an appointment, call (703) 518-6570 or send an email to [email protected]. FOR FURTHER INFORMATION CONTACT: Rendell Jones, Chief Financial Officer, National Credit Union Administration, 1775 Duke Street, Alexandria, Virginia 22314-3428 or telephone: (703) 518-6570. Authority: 12 U.S.C. 1755. SUPPLEMENTARY INFORMATION: I. Legal Background II. Historical Practice in Assessing the Operating Fee III. Methodology for Determining the Aggregate Operating Fee Amount IV. Methodology for Determining the Operating Fee Schedule I. Legal Background NCUA charters, regulates and insures deposits in federal credit unions (FCUs) and insures deposits in state-chartered credit unions that have their shares insured through the National Credit Union Share Insurance Fund (Share Insurance Fund). To cover expenses related to its statutory mission, the Board adopts an Operating Budget in the fall of each year (Operating Budget). The Federal Credit Union Act (FCU 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 FCU Act] as [the Board] may determine to be proper''; \1\ and (2) ``fees and assessments (including income earned on insurance deposits) levied on insured credit unions under [the FCU Act].'' \2\ The latter of fees are referred to herein as annual Operating Fees, which ``may be expended by the Board to defray the expenses incurred in carrying out the provisions of [the FCU Act,] including the examination and supervision of [FCUs].'' \3\ --------------------------------------------------------------------------- \1\ 12 U.S.C. 1783(a). \2\ 12 U.S.C. 1766(j)(3). Other sources of income for the Operating Budget include interest income, funds from publication sales, parking fee income, and rental income. \3\ 12 U.S.C. 1755(d). --------------------------------------------------------------------------- With regard to the Operating Fee, the FCU Act requires each FCU to, ``in accordance with rules prescribed by the Board, . . . 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.'' \4\ The fee must ``be determined according to a schedule, or schedules, or other method determined by the Board to be appropriate, which gives due consideration to the expenses of the [NCUA] in carrying out its responsibilities under the [FCU Act] and to the ability of [FCUs] to pay the fee.'' \5\ The statute requires the Board to, among other things, ``determine the periods for which the fee shall be assessed and the date or dates for the payment of the fee or increments thereof.'' \6\ --------------------------------------------------------------------------- \4\ 12 U.S.C. 1755(a). \5\ 12 U.S.C. 1755(b). \6\ Id. --------------------------------------------------------------------------- Accordingly, the FCU Act imposes three requirements on the Board in connection with assessing an Operating Fee on FCUs: (1) The fee must be assessed according to a schedule or schedules, or other method that the Board determines to be appropriate, which gives due consideration to NCUA's responsibilities in carrying out the FCU Act and the ability of FCUs to pay the fee; (2) the Board must determine the period for which the fee will be assessed and the due date for payment; and (3) the Board must deposit collected fees into the Treasury to defray the Board's expenses in carrying out the FCU Act. The Operating Fee methodology that this document describes meets all three legal requirements. First, the Board is assessing the Operating Fee under a schedule presented later in this document. The schedule sets forth assessment rates for FCUs based on asset size and takes account of NCUA's responsibilities in carrying out the FCU Act as well as the ability of FCUs to pay. Specifically, the schedule reflects consideration of NCUA's expenses in various areas of responsibility under the FCU Act and is scaled by asset size to account for the ability to pay. Second, this document specifies the applicable time period for the assessment, 2016, and notes that a later publication will update the due date. Third, NCUA will deposit collected fees in the United States Treasury, and the collected fees will fund some of NCUA's expenses in carrying out its responsibilities under the FCU Act. II. Historical Practice in Assessing the Operating Fee NCUA has a regulation that governs Operating Fee processes.\7\ The regulation establishes (i) the basis for charging Operating Fees (i.e., total assets), (ii) a notice process, (iii) rules for new charters, conversions, mergers, and liquidations, and (iv) administrative fees and interest for late payment, among other principles and processes.\8\ Certain aspects of and adjustments to the Operating Fee process, such as the asset tier of FCUs that are exempt from Operating Fees and the multipliers that are used to determine fees applicable to higher asset tiers, are usually not published in the Federal Register. Instead, the Board traditionally set the Operating Fee during an open meeting each November, after determining the Operating Budget and Overhead Transfer at the same open meeting. At an open meeting in November 2015, the Board delegated authority to the Chief Financial Officer to administer the Board-approved Operating Fee methodology, and to set the Operating Fees as calculated per the approved methodology each annual budget cycle beginning with 2016.\9\ --------------------------------------------------------------------------- \7\ 12 CFR 701.6. \8\ Id. --------------------------------------------------------------------------- Although it is not required to do so under the Administrative Procedure Act, the Board now chooses to specifically solicit public comments on the methodology and process NCUA uses for the fee schedule through this Federal Register publication, as it has done on occasion in the past. The Board adopted the current Operating Fee methodology in 1979, after Congress passed the Financial Institutions Regulatory and Interest Rate Control Act of 1978.\10\ This legislation permitted the Board to consolidate previously separate chartering, supervision, and examination fees into a single Operating Fee, charged ``in accordance with schedules, and for time periods, as determined by the Board, in an amount necessary to offset the expenses of the Administration at a rate consistent with a credit union's ability to pay.'' \11\ In combination with a proposed change to NCUA Regulation 12 CFR 701.6 in 1979, the Board proposed an initial fee schedule in the Federal Register, including rates for 12 asset tiers.\12\ It later published a final rule in the Federal Register, which also included a finalized fee schedule for 1979.\13\ --------------------------------------------------------------------------- \10\ 44 FR 11786 (Mar. 2, 1979). \11\ Id. \12\ Id. at 11787. \13\ 44 FR 27379 (May 10, 1979). --------------------------------------------------------------------------- On three additional occasions, the Board has requested comments on potential changes to the Operating Fee schedule through a Federal Register notice, independent of any changes to 12 CFR 701.6. First, in 1990, the Board [[Page 4676]] provided notice to the public that it was considering consolidating the Operating Fee schedule from 14 asset tiers to two asset tiers, retaining an exemption for FCUs under $50,000 in assets and implementing a $100 minimum fee.\14\ The Board provided a 60-day comment period.\15\ --------------------------------------------------------------------------- \14\ 55 FR 29857 (July 23, 1990). \15\ Id. --------------------------------------------------------------------------- In 1990, the Board determined that current 14 asset tier Operating Fee scale was sharply regressive. In looking at the issue of fairness, the Board concluded the previous scale was no longer based fairly on the ability to pay, as evidenced by the rate for the smallest credit unions being $2.41 per $1,000 in assets, compared to $0.07 per $1,000 in assets for the largest credit unions, so that the burden on smaller credit unions had become significantly greater than on larger credit unions. In 1989, the Operating Fee was an average of 3.96 percent of expenses for credit unions in the lowest asset bracket, compared to 0.23 percent of expenses for the largest credit union. While a single rate was initially considered to be potentially more equitable, the fees from a single rate would have more than tripled for the largest credit unions. In 1990, the Board instead adopted a final two-bracket, two-rate structure proposal as the most feasible solution. In general, larger federal credit unions pay a higher dollar Operating Fee, but based on a lower (regressive) rate. The Board considered this regressive rate approach to be the fairest method of balancing the competing concepts and views of larger federal credit unions' higher dollar fees paid as subsidizing smaller federal credit unions, and larger federal credit unions not receiving proportionally more service from NCUA for the fees they pay. The Board-adopted proposal in 1990 exempted credit unions with assets under $50,000, set a minimum fee of $100, established two brackets with $250 million in assets as the dividing line between the two, and allowed the dividing points to be changed based on projected asset growth. The proposed fee structure did even out the effect on credit unions. For credit unions between $250,000 and $1 million in assets, the fee was 0.58 percent of expenses, down from 3.00 percent, and for credit unions over $1 billion in assets, the fee was 0.33 percent of expenses, up from 0.25 percent. In restructuring the scale in 1990, the Board also established a policy that the asset level dividing points between the brackets be adjusted annually or ``indexed'' in accordance with the projected asset growth of federal credit unions. This indexing was made in order to preserve the same relative relationship of the scale to the asset base to which it is applied. Two years later, the Board adopted a new third bracket at its open Board meeting in late 1992 that applied to assets exceeding $1 billion. The Board made this change in the interest of fairness to all credit unions. At that time, there were four federal credit unions with assets over $1 billion. The current approach to the fee schedule for natural- person FCUs continues to use three asset tiers. Second, also in 1992, the Board requested comments on a plan to limit Operating Fees to the first $1 million of each FCU's assets.\16\ The Board provided a 30-day comment period.\17\ It later extended the comment period by an additional 20 days.\18\ --------------------------------------------------------------------------- \16\ 57 FR 34152 (Aug. 3, 1992). \17\ Id. \18\ 57 FR 38329 (Aug. 24, 1992). --------------------------------------------------------------------------- Third, in 1995, the Board requested comments on a plan to restructure the Operating Fee schedule for natural-person FCUs, to exempt FCUs with assets of $500,000 or less.\19\ It also requested comments on imposing a minimum fee of $100 on all natural-person FCUs with assets over $500,000 but less than or equal to $750,000.\20\ The Board provided a 30-day comment period.\21\ --------------------------------------------------------------------------- \19\ 60 FR 32925 (June 26, 1995). \20\ Id. \21\ Id. --------------------------------------------------------------------------- The Board did not publish a response to the comments in the Federal Register in any of the cases referenced above. Instead, it adopted changes at open Board meetings. At its open meeting on November 12, 1992, for example, rather than eliminating fees for FCUs with assets under $1 million as proposed in the Federal Register, the Board adopted a third rate of 0.0003 for that asset tier.\22\ At its open meeting on November 16, 1995, after a discussion of the comments received, the Board adopted changes as proposed in the Federal Register, exempting FCUs under $500,000 in assets and imposing a $100 fee on FCUs with between $500,000 and $750,000 in assets.\23\ --------------------------------------------------------------------------- \22\ Board Action Memorandum on Operating Fee Assessment for Fiscal Year 1993 (Nov. 12, 1992). \23\ Minutes of Board Meeting, National Credit Union Administration, p. 2 (Nov. 16, 1995); Board Action Memorandum on Fiscal Years 1995 and 1996 Budget (Nov. 16, 1995). --------------------------------------------------------------------------- In general, since 1995, the Board has not used Federal Register notices in connection with the annual adjustments to the asset tiers and rates of the Operating Fee schedule. In the past, the Board has opted to adopt such changes at open meetings. As recently as 2012, for example, the Board increased the asset threshold used to exempt FCUs from Operating Fees from $500,000 to $1 million at an open meeting without requesting advance comment in the Federal Register.\24\ While the Board has varied its practice with respect to fee schedule changes, it has done so within the FCU Act's broad directive that the fee schedule should be as ``determined by the Board to be appropriate,'' subject to its consideration of its expenses and the ability of FCUs to pay.\25\ In addition, NCUA's existing regulation on Operating Fee processes includes a standing invitation for written comments from FCUs on existing fee schedules.\26\ --------------------------------------------------------------------------- \24\ Board Action Memorandum on 2013 Operating Fee (Nov. 15, 2012). \25\ 12 U.S.C. 1755(b). \26\ 12 CFR 701.6(c). --------------------------------------------------------------------------- III. Methodology for Determining the Aggregate Operating Fee Amount The Board adopts an Operating Budget in the fall of each year. The Operating Budget provides the resources required to execute the goals and objectives as outlined in NCUA's strategic plan. NCUA develops its Operating Budget using zero-based budgeting techniques, which ensure each activity is properly justified before the Board considers it for funding.\27\ As discussed above, two primary sources fund the Operating Budget: (1) The Overhead Transfer Rate (OTR); and (2) FCU Operating Fees. The following summarizes the various adjustments to arrive at the FCU Operating Fee and is illustrated below in Table 1. --------------------------------------------------------------------------- \27\ Additional information on the NCUA budget may be found at the following Web address: http://www.ncua.gov/About/Pages/budget-strategic-planning/supplementary-materials.aspx. --------------------------------------------------------------------------- Adjustments to the Budget. When calculating the aggregate annual Operating Fee requirements, the Board first subtracts amounts transferred for operational expenses from the Share Insurance Fund through the Overhead Transfer Rate and other expected income amounts from the operating budget for that year. Overhead Transfer Rate: The FCU Act authorizes NCUA to expend funds from the Share Insurance Fund for administrative and other expenses related to federal share insurance.\28\ An Overhead Transfer from the Share Insurance Fund covers the expenses associated with insurance- related functions of NCUA's operations. The Overhead Transfer is one of the funding sources for the budget, but the Overhead Transfer Rate does not affect the amount [[Page 4677]] of the budget. The Board approves the budget separately and without regard to the Overhead Transfer Rate. The Overhead Transfer Rate is applied to actual expenses incurred each month.\29\ --------------------------------------------------------------------------- \28\ 12 U.S.C. 1783(a). \29\ In November 2015, the Board delegated authority to the Director of the Office of Examination and Insurance to administer the methodology approved by the Board for calculating the Overhead Transfer Rate, and set the rate as calculated per the approved methodology and validated by the Chief Financial Officer each budget cycle, beginning with the rate for 2016. Board Action Memorandum on Overhead Transfer Rate Delegation (Nov. 19, 2015), https://www.ncua.gov/About/Documents/Agenda%20Items/AG20151119Item5a.pdf. --------------------------------------------------------------------------- Other Income: Other income reduces the required Operating Fees by providing an additional source of funds to cover regulatory (i.e., non- insurance) related aspects of operating NCUA. Other income is projected based on the latest financial statements and includes interest income and miscellaneous revenues. Interest income includes interest on investments of annual Operating Fees not needed for current operations. Such investments may be made only in interest-bearing securities of the United States, with maturities requested by the Board, bearing interest at rates determined by the Secretary of the Treasury.\30\ Other income includes miscellaneous revenues, such as proceeds from publication sales, parking fee income, and rental income. Publication sales include proceeds from the sale of printed publications and brochures. NCUA leases office space to commercial tenants in its Central Office building and recognizes rental income in accordance with generally accepted accounting principles (GAAP). NCUA's Central Office has a parking garage and NCUA collects income on parking fees, which are divided among the complex owners according to the percentage of parking garage space owned by each. --------------------------------------------------------------------------- \30\ 12 U.S.C. 1755(e)(2). --------------------------------------------------------------------------- Adjustments for cash and non-cash needs. The balance remaining after removing the Overhead Transfer amount and other expected income is then adjusted for cash and non-cash needs. Cash needs include additions for capital acquisitions and the payment of the note payable for the NCUA Central Office building on King Street. Non-cash needs include deductions for accrued annual leave and depreciation. Additional deductions or additions to cash needs are necessary to maintain a sufficient cash reserve to continue NCUA's operations. Operating Fund Mid-Session adjustments may also result in changes to cash needs, normally in the form of a reduction. Sufficient Cash Reserves: NCUA's policy for the Operating Fund is to maintain cash reserves of at least one month for contingencies.\31\ Cash requirements are projected to last approximately 15 months from the end of the current budget year, until the subsequent Operating Fee collections are received from FCUs. NCUA sends an annual Letter to FCUs that establishes the Operating Fees for the coming year.\32\ It then provides invoices that require payment by April 15. --------------------------------------------------------------------------- \31\ 2016 Operating Fee BAM. \32\ https://www.ncua.gov/Resources/Documents/LFCU2015-01.pdf. --------------------------------------------------------------------------- Accrued Annual Leave: Accrued annual leave is the change in the economic value of earned, but unpaid annual leave for current NCUA employees. It is a non-cash expense under GAAP and therefore is excluded when determining the required Operating Fees. NCUA uses historical data to determine the annual amount of accrued annual leave. Depreciation: Capital acquisitions are investments in assets including information technology software and building improvement projects. Depreciation is a reduction in the value of an asset with the passage of time. For NCUA's Operating Budget, depreciation expenses are included for assets such as NCUA's Central Office building, furniture and equipment, and leasehold improvements. The Share Insurance Fund covers a percentage of the depreciation expenses based on the OTR. The cash needs of all budgeted capital acquisitions are added to the FCU Operating Fee requirements. Repayment of NCUA Central Office on King Street, Note Payable. In 1992, the Operating Fund entered into a commitment to borrow up to $42.0 million in a 30-year secured term note with the Share Insurance Fund to fund the costs of constructing NCUA's Central Office in 1993. Since the Operating Fund borrowed monies from the Share Insurance Fund, the annual scheduled principal payments are excluded from the OTR and Overhead Transfer amount. The annual scheduled principal payments are treated as a cash need and applied as an increase to Operating Fee requirements. Operating Fee Requirements. The amount remaining after adjustments for all cash and non-cash needs is the total budgeted Operating Fee requirements. The total budgeted Operating Fee requirements (i.e., line 11 below) represents Operating Fees for both natural-person and corporate FCUs. The natural-person FCU Operating Fees required (i.e. line 13 below) is determined by deducting the corporate FCU Operating Fees (i.e. line 12 below) from the total budgeted Operating Fee requirements (i.e., line 11 below). Table 1--Operating Fee Calculation Factors and Explanation ------------------------------------------------------------------------ Natural-person Federal Credit Union operating fee calculation Calculation factors and explanation formula ----------------------------------------------------- 1............................... Proposed Annual .................. Operating Fund Budget amount determines the baseline fee requirement. 2............................... Overhead Transfer OTR% x - 1. Rate calculated from the examiner time survey results, determines the amount of the budget to be reimbursed by the Share Insurance Fund. This amount is subtracted from the proposed budget amount. 3............................... Interest Income .................. projected for the year is estimated based on the latest financial statements, and is subtracted from the budget. 4............................... Miscellaneous .................. (rents, publication fees, FOIA fees) is estimated based on the latest financial statements, and is subtracted from the budget. ------------------------------------------------------------------------ 5............................... Net Adjustment to Sum lines 1-4. Budget. 6............................... Reduction of any reduce cash Operating Fund collections. Mid-Session return adjustment. [[Page 4678]] 7............................... Reduction of reduce cash Accrued Annual collections. Leave (based on historical annual amounts). 8............................... Depreciation (e.g. reduce cash building, collections. leasehold, and equipment estimate). 9............................... New investment increase cash projects collections. requested in capital budget. 10.............................. Annual payment of increase cash King Street Note collections. Payable (scheduled principal payments). ------------------------------------------------------------------------ 11.............................. Budgeted Operating Sum lines 5-10. Fee/Capital Requirements. 12.............................. Corporate federal .................. credit union fees are collected and subtracted from natural-person credit union fee requirement (based on corporate credit union scale). ------------------------------------------------------------------------ 13.............................. Natural-Person Sum lines 11-12. Federal Credit Union Operating Fees Required. 14.............................. Estimated Fee collections for end of year (December 31). This projection uses the current Operating Fee scale with estimated asset growth from an internal NCUA economic forecasting models. Based on the June 30 assets, the year- end assets are projected using the estimated asset growth to calculate fee collection estimates for the following year. The Operating Fee assessment is applied against the year-end credit union asset value. ------------------------------------------------------------------------ 15.............................. Difference between Difference between estimated lines 13 and 14. Operating Fee collections and projected collections based on estimated asset growth. ======================================================================== 16.............................. Average Rate Line 15 divided by Adjustment 14. Indicated. ------------------------------------------------------------------------ IV. Methodology for Determining the Operating Fee Schedule The corporate credit union fee schedule was established in 1979 and has changed little over the years. In fact, for many years, the Operating Fee scale remained virtually unchanged. The main driver for no change is the concept that corporate FCUs hold assets of natural- person credit unions, which are already assessed under the natural- person Operating Fees. Assessing corporate FCUs at the same rate would, effectively, assess the same assets twice. Corporate FCUs return a large portion of their earnings to natural-person FCUs in the form of lower fees and higher dividends. Raising Operating Fee assessments for corporate FCUs would result in higher expenses for corporate FCUs. Corporate FCUs would need to pass the higher expenses to natural-person FCUs in the form of higher fees and lower investment yields. The corporate credit union fee schedule is a method of charging corporate FCUs a supervisory fee to defray costs. Table 2 below outlines the 2016 corporate FCU Operating Fee schedule: Table 2--Corporate Federal Credit Union Operating Fee Schedule ------------------------------------------------------------------------ The Operating Fee If total assets are over But not over assessment is: ------------------------------------------------------------------------ $50,000,000................... $100,000,000..... $10,593.90 plus 0.0001987 of the total assets over $50,000,000. $100,000,000.................. No limit......... $20,528.90 plus 0.0000123 of the total assets over $100,000,000. ------------------------------------------------------------------------ As stated above, the Board delegated authority to the Chief Financial Officer to administer the methodology approved by the Board for calculating the Operating Fees and to set the fee schedule as calculated per the approved methodology beginning in 2016. After determining the Operating Fee requirements for natural-person FCUs (i.e., line 13 above), the Chief Financial Officer creates the natural- person FCU Operating Fee schedule for the upcoming year. Table 3 below outlines the 2016 Operating Fee schedule for natural-person FCUs. Table 3--Natural-Person Federal Credit Union Operating Fee Schedule ---------------------------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------------------------- If total assets are more than $1,000,000, the Operating Fee assessment is: ---------------------------------------------------------------------------------------------------------------- Assessment rates..................... Asset tiers............ ---------------------------------------------------------------------------------------------------------------- 0.00018198........................... on the first........... $1,275,170,573......... of assets, plus. 0.00005304........................... on the next............ 2,583,476,422.......... of assets, plus. [[Page 4679]] 0.00001771........................... on assets over......... 3,858,646,995.......... ---------------------------------------------------------------------------------------------------------------- A different assessment rate is applied to each tier. FCUs with $1 million or less in assets pay no Operating Fee. There are two primary steps used to determine the adjustments to the Operating Fee schedule for the upcoming year. They are: (1) Updating the prior year asset tiers using the projected asset growth rate; and (2) updating the prior year assessment rates for each asset tier by determining the average assessment rate adjustment. Updating prior year asset levels. The first step in determining the new Operating Fee schedule is to increase each asset tier from the prior year by the projected asset growth rate. Assets are indexed annually to preserve the same relative relationship of the scale to the applicable asset base. The projected asset growth rate is a forecast of FCU asset growth rates for a year. NCUA's Office of Chief Economist (OCE) uses three different methods to forecast asset growth and combines them to generate an overall asset growth rate forecast. Forecasting Method #1: Uses Call Report data for the first half of the year to predict full-year asset growth. This is done by first calculating the ratio of first-half asset growth to full-year asset growth. The percentage of full-year growth accounted for by first-half asset growth varies from year to year but, on average, nearly 80 percent of the asset growth for FCUs occurs in the first half of the year. Using the growth rate in the first half of the year, OCE projects the full-year growth rate. Forecasting Method #2: Uses Call Report data to determine the most recent four-quarter growth rate and sets this rate to the full-year asset growth rate. This approach is based on the idea that an FCU is likely to establish and maintain a relatively constant growth rate over a short period, after accounting for variations in the growth rate that is attributable to seasonal fluctuations. This implies that a good forecast of full-year asset growth is the most recently available four- quarter asset growth. Forecasting Method #3: Uses a time series statistical model. Using quarterly Call Report data, OCE predicts future four-quarter asset growth using the four-quarter growth in assets for the period ending two quarters earlier (that is, four-quarter asset growth lagged two quarters). Combined Forecast: In general, forecasting literature shows that combining forecasts from different approaches can improve forecast accuracy and decrease the likelihood of forecast errors. Using the root mean squared error statistic to calculate the accuracy of the individual approaches and combined forecast approaches, OCE has found that the combined forecast approach is better at predicting the final asset growth rate than any of the individual approaches. OCE therefore averages the forecasts from the three approaches to maximize accuracy. Updating the prior year's assessment rates. After updating the prior year asset tiers, the next step is to project Operating Fees using the updated asset tiers and the prior year assessment rates charged to each tier. The percentage difference between the projected Operating Fees (i.e., line 14 above) and the required Operating Fees (i.e., line 13 above) is the average rate adjustment (i.e., line 16 above). The average rate adjustment (i.e., line 16 above) is used to amend the prior year's assessment rates for each asset tier either upwards or downwards. If the projected amount of Operating Fees is less than the required amount, then the assessment rates for each asset tier are adjusted upwards. If the projected amount is more than the required amount, then the assessment rates for each asset tier are adjusted downwards. The resulting new Operating Fee schedule and due date are communicated via a Letter to Federal Credit Unions and posted to www.NCUA.gov at least 30 days in advance of the due date. No later than March of each year, natural-person FCUs with assets greater than $1 million will receive an invoice for their Operating Fee. Operating Fees are based on actual assets reported as of December 31 of the previous year. NCUA combines the annual Operating Fee and capitalization deposit adjustment into a single invoice normally due in April. As required by the FCU Act, NCUA will deposit the collected fees in the United States Treasury. By the National Credit Union Administration Board on January 21, 2016. Gerard Poliquin, Secretary of the Board. [FR Doc. 2016-01623 Filed 1-26-16; 8:45 am] BILLING CODE 7535-01-P
![4674 Federal Register / Vol. 81, No. 17 / Wednesday, January 27, 2016 / Notices
account several issues, including the —Access to NASA science mission data SUMMARY: The NCUA Operating Budget
Administration’s current work in Open repositories has two primary funding mechanisms:
Government, developments in —Big data best practices in government, (1) An Overhead Transfer, which is
regulatory policy and international academia and industry funded by federal credit unions (FCUs)
trade, and changes in technology. —Federal big data initiatives and federally insured state-chartered
Attendees will be required to sign a credit unions (FISCUs); and (2) annual
Howard Shelanski,
register and comply with NASA Operating Fees, which are charged only
Administrator, Office of Information and Headquarters security requirements, to FCUs. In a voluntary effort to invite
Regulatory Affairs.
including the presentation of a valid input from stakeholders representing
[FR Doc. 2016–01606 Filed 1–26–16; 8:45 am] picture ID before receiving access to federal and state-chartered credit
BILLING CODE P NASA Headquarters. Due to the Real ID unions, the NCUA Board (Board) is
Act, any attendees with drivers licenses simultaneously requesting comments on
issued from non-compliant states must the methodologies for both funding
NATIONAL AERONAUTICS AND present a second form of ID. [Federal mechanisms in separate notices in the
SPACE ADMINISTRATION employee badge; passport; active Federal Register.
military identification card; enhanced This request for comments focuses on
[Notice: (16–003)] driver’s license; U.S. Coast Guard the methodology NCUA uses to
Merchant Mariner card; Native determine the aggregate amount of
NASA Advisory Council; Science American tribal document; school Operating Fees charged to federal credit
Committee; Ad Hoc Task Force on Big identification accompanied by an item unions, including the fee schedule that
Data; Meeting from LIST C (documents that establish allocates the Operating Fees at different
employment authorization) from the rates among FCUs according to various
AGENCY: National Aeronautics and asset thresholds. While the NCUA Board
‘‘List of the Acceptable Documents’’ on
Space Administration. is interested in all comments from the
Form I–9]. Non-compliant states are:
ACTION: Notice of meeting. American Samoa, Arizona, Louisiana, public and stakeholders, commenters
Maine, Minnesota, New York, are also asked to consider the following
SUMMARY: In accordance with the
Oklahoma and Washington. Foreign questions when responding: (1) Are the
Federal Advisory Committee Act, Public
nationals attending this meeting will be asset determination thresholds
Law 92–463, as amended, the National
required to provide a copy of their reasonable; and (2) is the method for
Aeronautics and Space Administration forecasting projected asset growth for
passport and visa in addition to
(NASA) announces a meeting of the Ad the credit union system reasonable?
providing the following information no
Hoc Task Force on Big Data. This task Responding to these questions will
less than 10 days prior to the meeting:
force reports to the NASA Advisory provide valuable insight to the NCUA
Full name; gender; date/place of birth;
Council’s Science Committee. The Board with respect to how the Operating
citizenship; visa information (number,
meeting will be held for the purpose of Fee is administered. To be most
type, expiration date); passport
soliciting and discussing, from the instructive to the Board, commenters are
information (number, expiration date,
scientific community and other persons, encouraged to provide the specific basis
country); employer/affiliation
scientific and technical information for their comments and
information (name of institution,
relevant to big data. recommendations, as well as
address, country, telephone); title/
DATES Tuesday, February 16, 2016, 8:00 position of attendee; and home address documentation to support their
a.m. to 5:00 p.m., Local Time. to Ann Delo via email at ann.b.delo@ proposed adjustments or alternatives.
ADDRESS: NASA Headquarters, Glennan nasa.gov or by fax at (202) 358–2779. DATES: Comments must be received on
Conference Center, Room 1Q39, 300 E U.S. citizens and Permanent Residents or before April 26, 2016 to be assured
Street SW., Washington, DC 20546. (green card holders) are requested to of consideration.
FOR FURTHER INFORMATION CONTACT: Ms. submit their name and affiliation no less ADDRESSES: You may submit comments
Ann Delo, Science Mission Directorate, than 3 working days prior to the by any of the following methods (Please
NASA Headquarters, Washington, DC meeting to Ann Delo. It is imperative send comments by one method only):
20546, (202) 358–0750, fax (202) 358– that the meeting be held on this date to • NCUA Web site: http://
2779, or ann.b.delo@nasa.gov. accommodate the scheduling priorities www.ncua.gov. Please follow the
SUPPLEMENTARY INFORMATION: The of the key participants. instructions for submitting comments
meeting will be open to the public up under the ‘‘Board Comments’’ section of
Patricia D. Rausch,
to the capacity of the room. The meeting the NCUA Web site.
Advisory Committee Management Officer, • Email: Address to boardcomments@
will also be available telephonically and National Aeronautics and Space ncua.gov. Include ‘‘[Your name]—
by WebEx. You must use a touch tone Administration.
Comments on Operating Fee Schedule
phone to participate in this meeting. [FR Doc. 2016–01514 Filed 1–26–16; 8:45 am]
Methodology’’ in the email subject line.
Any interested person may call the USA BILLING CODE 7510–13–P • Fax: (703) 518–6319. Include your
toll free conference call number 1–800– name and the following subject line:
988–9663, passcode 4718658, to ‘‘Comments on Operating Fee
participate in this meeting by telephone. NATIONAL CREDIT UNION Schedule.’’
A toll number also is available, 1–517– • Mail: Address to Gerard Poliquin,
asabaliauskas on DSK5VPTVN1PROD with NOTICES
ADMINISTRATION
308–9427 passcode 4718658. The Secretary of the Board, National Credit
WebEx link is https://nasa.webex.com/; Request for Comment Regarding Union Administration, 1775 Duke
the meeting number is 999 765 122 and National Credit Union Administration Street, Alexandria, Virginia 22314–
the password is BigD@T@16. The Operating Fee Schedule Methodology 3428.
agenda for the meeting includes the • Hand Delivery/Courier: Same as
following topics: AGENCY: National Credit Union
Administration (NCUA). mail address.
—NASA’s science data cyber- Public Inspection: You can view all
ACTION: Request for comment.
infrastructure public comments on NCUA’s Web site
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![Federal Register / Vol. 81, No. 17 / Wednesday, January 27, 2016 / Notices 4675
at http://www.ncua.gov/about/pages/ Board, . . . pay to the [NCUA] an charging Operating Fees (i.e., total
board-comments.aspx as submitted, annual operating fee which may be assets), (ii) a notice process, (iii) rules
except for those we cannot post for composed of one or more charges for new charters, conversions, mergers,
technical reasons. NCUA will not edit or identified as to the function or functions and liquidations, and (iv) administrative
remove any identifying or contact for which assessed.’’ 4 The fee must ‘‘be fees and interest for late payment,
information from the public comments determined according to a schedule, or among other principles and processes.8
submitted. You may inspect paper schedules, or other method determined Certain aspects of and adjustments to
copies of comments at NCUA’s by the Board to be appropriate, which the Operating Fee process, such as the
headquarters at 1775 Duke Street, gives due consideration to the expenses asset tier of FCUs that are exempt from
Alexandria, Virginia 22314, by of the [NCUA] in carrying out its Operating Fees and the multipliers that
appointment weekdays between 9 a.m. responsibilities under the [FCU Act] and are used to determine fees applicable to
and 3 p.m. To make an appointment, to the ability of [FCUs] to pay the fee.’’ 5 higher asset tiers, are usually not
call (703) 518–6570 or send an email to The statute requires the Board to, among published in the Federal Register.
OCFOComments@ncua.gov. other things, ‘‘determine the periods for Instead, the Board traditionally set the
FOR FURTHER INFORMATION CONTACT: which the fee shall be assessed and the Operating Fee during an open meeting
Rendell Jones, Chief Financial Officer, date or dates for the payment of the fee each November, after determining the
National Credit Union Administration, or increments thereof.’’ 6 Operating Budget and Overhead
1775 Duke Street, Alexandria, Virginia Accordingly, the FCU Act imposes Transfer at the same open meeting. At
22314–3428 or telephone: (703) 518– three requirements on the Board in an open meeting in November 2015, the
6570. connection with assessing an Operating Board delegated authority to the Chief
Fee on FCUs: (1) The fee must be Financial Officer to administer the
Authority: 12 U.S.C. 1755.
assessed according to a schedule or Board-approved Operating Fee
SUPPLEMENTARY INFORMATION: schedules, or other method that the methodology, and to set the Operating
I. Legal Background Board determines to be appropriate, Fees as calculated per the approved
II. Historical Practice in Assessing the which gives due consideration to methodology each annual budget cycle
Operating Fee NCUA’s responsibilities in carrying out beginning with 2016.9
III. Methodology for Determining the the FCU Act and the ability of FCUs to Although it is not required to do so
Aggregate Operating Fee Amount pay the fee; (2) the Board must under the Administrative Procedure
IV. Methodology for Determining the determine the period for which the fee Act, the Board now chooses to
Operating Fee Schedule
will be assessed and the due date for specifically solicit public comments on
I. Legal Background payment; and (3) the Board must the methodology and process NCUA
NCUA charters, regulates and insures deposit collected fees into the Treasury uses for the fee schedule through this
deposits in federal credit unions (FCUs) to defray the Board’s expenses in Federal Register publication, as it has
and insures deposits in state-chartered carrying out the FCU Act. done on occasion in the past.
credit unions that have their shares The Operating Fee methodology that The Board adopted the current
insured through the National Credit this document describes meets all three Operating Fee methodology in 1979,
Union Share Insurance Fund (Share legal requirements. First, the Board is after Congress passed the Financial
Insurance Fund). To cover expenses assessing the Operating Fee under a Institutions Regulatory and Interest Rate
related to its statutory mission, the schedule presented later in this Control Act of 1978.10 This legislation
Board adopts an Operating Budget in document. The schedule sets forth permitted the Board to consolidate
the fall of each year (Operating Budget). assessment rates for FCUs based on previously separate chartering,
The Federal Credit Union Act (FCU Act) asset size and takes account of NCUA’s supervision, and examination fees into
authorizes two primary sources to fund responsibilities in carrying out the FCU a single Operating Fee, charged ‘‘in
the Operating Budget: (1) Requisitions Act as well as the ability of FCUs to pay. accordance with schedules, and for time
from the Share Insurance Fund ‘‘for Specifically, the schedule reflects periods, as determined by the Board, in
such administrative and other expenses consideration of NCUA’s expenses in an amount necessary to offset the
incurred in carrying out the purposes of various areas of responsibility under the expenses of the Administration at a rate
[Title II of the FCU Act] as [the Board] FCU Act and is scaled by asset size to consistent with a credit union’s ability
may determine to be proper’’; 1 and (2) account for the ability to pay. Second, to pay.’’ 11 In combination with a
‘‘fees and assessments (including this document specifies the applicable proposed change to NCUA Regulation
income earned on insurance deposits) time period for the assessment, 2016, 12 CFR 701.6 in 1979, the Board
levied on insured credit unions under and notes that a later publication will proposed an initial fee schedule in the
[the FCU Act].’’ 2 The latter of fees are update the due date. Third, NCUA will Federal Register, including rates for 12
referred to herein as annual Operating deposit collected fees in the United asset tiers.12 It later published a final
Fees, which ‘‘may be expended by the States Treasury, and the collected fees rule in the Federal Register, which also
Board to defray the expenses incurred in will fund some of NCUA’s expenses in included a finalized fee schedule for
carrying out the provisions of [the FCU carrying out its responsibilities under 1979.13
the FCU Act. On three additional occasions, the
Act,] including the examination and
Board has requested comments on
supervision of [FCUs].’’ 3 II. Historical Practice in Assessing the
With regard to the Operating Fee, the potential changes to the Operating Fee
Operating Fee
asabaliauskas on DSK5VPTVN1PROD with NOTICES
FCU Act requires each FCU to, ‘‘in schedule through a Federal Register
NCUA has a regulation that governs notice, independent of any changes to
accordance with rules prescribed by the
Operating Fee processes.7 The 12 CFR 701.6. First, in 1990, the Board
1 12 U.S.C. 1783(a).
regulation establishes (i) the basis for
8 Id.
2 12 U.S.C. 1766(j)(3). Other sources of income for
4 12 U.S.C. 1755(a). 10 44 FR 11786 (Mar. 2, 1979).
the Operating Budget include interest income,
5 12 U.S.C. 1755(b). 11 Id.
funds from publication sales, parking fee income,
and rental income. 6 Id. 12 Id. at 11787.
3 12 U.S.C. 1755(d). 7 12 CFR 701.6. 13 44 FR 27379 (May 10, 1979).
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![Federal Register / Vol. 81, No. 17 / Wednesday, January 27, 2016 / Notices 4679
TABLE 3—NATURAL-PERSON FEDERAL CREDIT UNION OPERATING FEE SCHEDULE—Continued
0.00001771 .................................................................................................... on assets over ..... 3,858,646,995.
A different assessment rate is applied approaches can improve forecast NATIONAL CREDIT UNION
to each tier. FCUs with $1 million or accuracy and decrease the likelihood of ADMINISTRATION
less in assets pay no Operating Fee. forecast errors. Using the root mean
There are two primary steps used to squared error statistic to calculate the Request for Comment Regarding
determine the adjustments to the accuracy of the individual approaches National Credit Union Administration
Operating Fee schedule for the and combined forecast approaches, OCE Draft 2017–2021 Strategic Plan
upcoming year. They are: (1) Updating has found that the combined forecast
the prior year asset tiers using the AGENCY: National Credit Union
approach is better at predicting the final Administration (NCUA).
projected asset growth rate; and (2)
asset growth rate than any of the ACTION: Notice and request for comment.
updating the prior year assessment rates
individual approaches. OCE therefore
for each asset tier by determining the SUMMARY: The NCUA Board (Board) is
average assessment rate adjustment. averages the forecasts from the three
approaches to maximize accuracy. requesting comment on its 2017–2021
Updating prior year asset levels. The
Draft Strategic Plan. The NCUA Draft
first step in determining the new Updating the prior year’s assessment Strategic Plan 2017–2021 summarizes
Operating Fee schedule is to increase rates. After updating the prior year asset our analysis of the internal and external
each asset tier from the prior year by the tiers, the next step is to project environment impacting NCUA;
projected asset growth rate. Assets are Operating Fees using the updated asset evaluates NCUA programs and risks;
indexed annually to preserve the same tiers and the prior year assessment rates and provides goals and objectives for
relative relationship of the scale to the charged to each tier. The percentage the next five years. While the Board
applicable asset base. difference between the projected
The projected asset growth rate is a welcomes all comments from the public
Operating Fees (i.e., line 14 above) and and stakeholders, it specifically invites
forecast of FCU asset growth rates for a
the required Operating Fees (i.e., line 13 comments and input on the proposed
year. NCUA’s Office of Chief Economist
(OCE) uses three different methods to above) is the average rate adjustment goals and objectives of the strategic
forecast asset growth and combines (i.e., line 16 above). plan.
them to generate an overall asset growth The average rate adjustment (i.e., line DATES: Comments must be received on
rate forecast. 16 above) is used to amend the prior or before March 28, 2016 to be assured
Forecasting Method #1: Uses Call year’s assessment rates for each asset of consideration.
Report data for the first half of the year tier either upwards or downwards. If the ADDRESSES: You may submit comments
to predict full-year asset growth. This is projected amount of Operating Fees is by any of the following methods (Please
done by first calculating the ratio of less than the required amount, then the send comments by one method only):
first-half asset growth to full-year asset assessment rates for each asset tier are • NCUA Web site: https://
growth. The percentage of full-year adjusted upwards. If the projected www.ncua.gov/about/pages/board-
growth accounted for by first-half asset amount is more than the required comments.aspx. Follow the instructions
growth varies from year to year but, on amount, then the assessment rates for for submitting comments.
average, nearly 80 percent of the asset each asset tier are adjusted downwards. • Email: Address to boardcomments@
growth for FCUs occurs in the first half ncua.gov. Include ‘‘[Your name]—
of the year. Using the growth rate in the The resulting new Operating Fee Comments on NCUA 2017–2021 Draft
first half of the year, OCE projects the schedule and due date are Strategic Plan’’ in the email subject line.
full-year growth rate. communicated via a Letter to Federal • Fax: (703) 518–6319. Include your
Forecasting Method #2: Uses Call Credit Unions and posted to name and the following subject line:
Report data to determine the most www.NCUA.gov at least 30 days in ‘‘Comments on NCUA 2017–2021 Draft
recent four-quarter growth rate and sets advance of the due date. No later than Strategic Plan.’’
this rate to the full-year asset growth March of each year, natural-person • Mail: Address to Gerard Poliquin,
rate. This approach is based on the idea FCUs with assets greater than $1 million Secretary of the Board, National Credit
that an FCU is likely to establish and will receive an invoice for their Union Administration, 1775 Duke
maintain a relatively constant growth Operating Fee. Operating Fees are based Street, Alexandria, Virginia 22314–
rate over a short period, after accounting on actual assets reported as of December 3428.
for variations in the growth rate that is 31 of the previous year. NCUA • Hand Delivery/Courier: Same as
attributable to seasonal fluctuations. combines the annual Operating Fee and mail address.
This implies that a good forecast of full- Public Inspection: You can view all
capitalization deposit adjustment into a
year asset growth is the most recently public comments on NCUA’s Web site
single invoice normally due in April. As at https://www.ncua.gov/about/pages/
available four-quarter asset growth.
required by the FCU Act, NCUA will board-comments.aspx as submitted,
Forecasting Method #3: Uses a time
series statistical model. Using quarterly deposit the collected fees in the United except for those we cannot post for
Call Report data, OCE predicts future States Treasury. technical reasons. NCUA will not edit or
asabaliauskas on DSK5VPTVN1PROD with NOTICES
four-quarter asset growth using the four- By the National Credit Union remove any identifying or contact
quarter growth in assets for the period Administration Board on January 21, 2016. information from the public comments
ending two quarters earlier (that is, four- Gerard Poliquin, submitted. You may inspect paper
quarter asset growth lagged two Secretary of the Board.
copies of comments at NCUA’s
quarters). headquarters at 1775 Duke Street,
[FR Doc. 2016–01623 Filed 1–26–16; 8:45 am]
Combined Forecast: In general, Alexandria, Virginia 22314, by
BILLING CODE 7535–01–P
forecasting literature shows that appointment weekdays between 9 a.m.
combining forecasts from different and 3 p.m. To make an appointment,
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Document Created: 2018-02-02 12:39:44
Document Modified: 2018-02-02 12:39:44
| Category | Regulatory Information | |
| Collection | Federal Register | |
| sudoc Class | AE 2.7: GS 4.107: AE 2.106: | |
| Publisher | Office of the Federal Register, National Archives and Records Administration | |
| Section | Notices | |
| Action | Request for comment. | |
| Dates | Comments must be received on or before April 26, 2016 to be assured of consideration. | |
| Contact | Rendell Jones, Chief Financial Officer, National Credit Union Administration, 1775 Duke Street, Alexandria, Virginia 22314-3428 or telephone: (703) 518-6570. | |
| FR Citation | 81 FR 4674 |
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