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