Why the NCUA’s OTR Calculation Methodology is Incomplete
Earlier this year, Debbie Matz invited comment on the methodologies for calculating the overhead transfer rate (OTR) and the federal credit union operating fee. In thinking about the detail I would expect to see in the NCUA release of the OTR calculation I am drawn to the very basics on which much of the data and calculation depend (time spent acting in its duties as an insurer), and find a lack of detail and information to justify the amount spent.
First, some background on the overhead transfer rate. The OTR is the percentage of NCUA’s operating budget which comes from the Share Insurance Fund for the “administration and other expenses” related to federal share insurance. It essentially helps to determine what portion of the NCUA is operating as an “insurer” vs. a “regulator” in order to determine how funds should be allocated to the agency. This is determined by an analysis of: 1) an Examination Time Survey (determination of the hours examiners spend on insurance and non-insurance related activities), 2) the workload budget (hours), 3) the operating budget (dollars), and 4) the imputed value of the state supervisory authority work.Continue Reading