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Statement by

Philip E. Col dwell

Member, Board of Governors of the Federal Reserve System

before the

Committee on Banking, Housing and Urban Affairs

United States Senate

January 25, 1980

Mr.

Chairman,

I welcome the opportunity to appear before your

Committee today to discuss the Federal Reserve System's budget performance for
1979 and budget outlook for 1980.

This marks the fourth consecutive year I

have testified before your distinguished Committee, and as before, I am pleased
to report continuing success in holding the line on expense growth while
achieving unit cost reductions and productivity increases
increased responsibilities, inflation and volume expansion.

in the face of
This success is a

tribute to the exceptional Reserve Bank and Board senior and line management,
to the planning and budget control processes, and to the painstaking efforts of
all involved in preparing and adjusting to the District and Board budgets.
1979 Budget Performance
Before commenting on the System's 1980 budget, I would like to review
our budget experience in 1979.
1979

As indicated in my testimony last year, the

Reserve Bank budgets were adjusted upward for implementation of the

Community Reinvestment Act and improved Civil Rights examination procedures,
bringing the approved 1979 budget to a level of $754.4 million, $39.9 million
or 5.6 percent above 1978 actual expenses.

Total expenses for 1979 are now

estimated to be $762.1 million, $47.4 million or 6.6 percent above the year
earlier.

The biggest contributing factor to the one percent budget overrun was

the largely uncontrollable expense for the cost of Federal Reserve currency.
Despite mounting work pressures in 1979, the Reserve Banks were able
to reduce staff by 1.3 percent from the 1978 level, as compared to a budgeted
decline of 1.1 percent.

Our estimates for 1979 further reveal that Reserve

Bank unit costs continued to decline in 1979 and productivity gains continued
to exceed the private sector's experience.




- 2 -

Operating expenses for the Board of Governors for 1979 are estimated
at $51,454,000 or about 3 percent over the initially authorized budget of
$49,862,000 reflecting both new demands placed on the Board during the year and
the additional costs for the semi-annual cost of living allowance for retirees.
Expenses for the renovation of the old building and completion of the podium
enclosure of the new building were other added factors.
1980 Budget for the Federal Reserve Banks
The Board of Governors has approved 1980 Reserve Bank operating
expense budgets totaling $832.1 million, an increase of $70.0 million or 9.2
percent over estimated 1979 expenses.

This increase compares with an average

annual expense growth of 13.6 percent from 1970 through 1974 and a 6.8 percent
average increase from 1974 through 1979.
Approved Reserve Bank capital

schedules project 1980 outlays of

$134.7 million, an increase of $66.1 million over estimated 1979 capital
outlays.
The 1980 staffing level was established at 23,095, a decline of 73 or
0.3 percent from the 1979 estimated level.

This staffing level would bring the

net reduction in staff to 3,624 or 13.6 percent since 1974.

From 1974 through

1979 the System's productivity improvements have been averaging 9 percent per
annum.

The budget year estimate of productivity gain is 8 percent.
The budgeted expense increase for 1980 results from the upward

pressure on costs due to exogenous factors, such as inflation, volume levels,
labor market conditions, and legislative mandates as well as endogenous factors
such

as




upgrading

and

improving

System

services,

facilities,

internal

- 3 management systems and procedures, and our investment in the people who work
for the System.
Of the $70.0 million increase, salaries and benefits account for
$40.2 million or 57 percent of the increase.

Officers' and employees' salary

expenses are increasing 7.8 percent or $26.6 million.

Expenses for retirement

and other benefits are increasing $13.6 million primarily due to increased
benefits to current staff and retirees, the Social Security base increase, and
hospital/medical insurance increases.

The 1980 budget review process focused

on assuring that the Reserve Banks' personnel compensation programs remain
within the wage guidelines of the Council on Wage and Price Stability.
Total equipment expense for 1980 is expected to increase $9.1 million
accounting for 13 percent of the total budget rise.

Higher maintenance fees on

equipment, particularly the new high-speed currency equipment, and higher
depreciation costs for capital purchases in 1979 and planned for 1980 are
partially offset by a decline in rentals.
Shipping expenses are expected to advance $6.0 million and account
for 9 percent of the total budget increase.

The sharp rise in shipping costs is

a result of courier rate increases due to higher fuel and labor costs, and
System-directed efforts to decrease float and improve service.

In addition,

the System's compliance with the Service Contract Act affects our contracts for
the transportation of cash and checks by requiring vendors to pay "prevailing
wages" set by the Department of Labor.

Obtaining full compliance with the

Service Contract Act adds $500,000 to our 1980 budget increase.
Six percent of the total budget increase reflects the $4.0 million
rise in the cost of Federal Reserve currency following the 13.3 percent




- 4 increase in 1979.

There continues to be a marked increase in the rate of

currency payments in some Districts both because of the proliferation of
automated teller machines which require new or high-quality used currency in
order to function reliably, and because of our attempts to improve the quality
of currency in circulation.

A System effort to establish an overall currency

quality standard and new technological advances in ATM technology allowing
equipment to handle better mixed grade currency quality should provide some
cost relief in future years.
The five

objects

of expense

—

salaries,

benefits,

equipment,

shipping and Federal Reserve currency -- account for 85 percent of the total
budgeted increase for 1980.

Other sizeable increases are expected in costs for

materials, forms and supplies, utilities, travel

and rent, which together

account for 9 percent of the total budget advance.
On a Service Line basis, the largest percentage expense increase in
1980 is expected in Supervision and Regulation where the 1980 budget totals
$77.1 million, a 12.3 percent or $8.4 million increase.

These activities are

highly labor intensive and the increase in fact reflects a net staff addition
of

53

in

1980 primarily for:

(1) full

implementation

Reinvestment and Electronic Funds Transfer Acts;
reviews

related to consumer protection

implementation
program;
Regulatory

(4)

of

the

expanded

and

Board's
scope

Interest

Rate

expanded

and civil
bank

Act

expanded compliance

rights

holding

examinations for
Control

(2)

of the Community

laws;

company

the Financial

(FIRA),

and

(3) full
inspection

Institutions

interagency

EDP

examination procedures; (5) intensified efforts to detect problem situations
in bank holding companies and member banks; and (6) assistance as required by




- 5 the States

in the examination of uninsured state-chartered branches and

agencies of foreign banks under the International Banking Act.

The 1980 budget

provides for an increase of $1.0 million for the impact of IBA.
The

System

has

experienced

relatively

high

turnover

in

the

examination staffs in several Districts in 1979 due to the competitive demand
for qualified people for bank management and other industry jobs. This problem
will continue to add to expenditures in order to maintain and recruit qualified
staff and enhance training and education programs.
Expenses

for Services to Financial

Institutions

constitute the largest portion of the System's total
expected to increase by 9.2 percent or $52.6 million.

and the Public

1980 budget and are

Expenses for Services to

the U.S. Treasury and Government Agencies are projected to increase 6.9 percent
or $5.6 million partly as a result of a projected volume increase of 7.9
percent.

Even without adjusting for inflation, unit costs are expected to

decline at an average annual rate of about 3.3 percent from 1977 through 1980.
Staff reductions totaling 165 are budgeted for these Service Lines.
Major System initiatives are underway in the payments mechanism area
which affect the expense increase in Services to Financial Institutions and the
Public.

During 1979 and continuing into 1980 considerable energy has been

expended on encouraging the use of automated clearing house services in place
of the current check clearing system, in order to serve better the needs of the
financial
delays.

and business

communities

and reduce

float

from

transportation

Two obstacles to ACH expansion have been overcome by linking regional

ACH's into a nationwide network and by improving the ACH funds availability and
deposit deadline schedules.




The expanded ACH schedules went into effect in the

- 6 latter half of 1979 along with efforts to improve the commercial sector's
understanding and participation in ACH payments services.

We estimate an

incremental $1.2 million will be expended in 1980 to improve ACH services.
System efforts are also being mobilized to achieve a level of float
that is acceptable and appropriate to maintaining an efficient check collection
system

without

incurring

membership problem.

excessive

costs

and

without

exacerbating

our

Because the level of float experienced over the last

several years is of particular concern to me, and to you also, let me digress
for a moment to inform you of our varied efforts to reduce the level of float
without jeopardizing the achievement of other System goals.
There are several ways a reduction in float can be accomplished.
Actions taken during the past year and those endorsed for 1980 fall into the
categories of managerial techniques to improve the efficiency of check clearing
operations, resource expenditures to speed up Federal Reserve processing, and
policy changes regarding operations.

These actions include (1) discouraging

the use of remote disbursement, (2) developing and improving systems to monitor
System float to reduce direct shipment float, (3) establishing annual float
targets for each Reserve Bank, (4) reducing holdover float by increasing staff
and

equipment,

improving

the

transportation.

and

(5)

design,

reducing
flexibility

interterritory
and

transportation

timeliness

of

our

float

by

interoffice

These efforts have reduced the level of float from a high of

$9.6 billion in January to $6.4 billion in June to $5.9 billion in December
1979.

Attachment No. 1 shows actual System float levels by quarter since 1975.

Given historical experience, we could have expected a fourth quarter float
level around $9 to $11 billion without System intervention in the form of the




- 7 above actions.

The effect of these programs on the 1980 budget increase is

$1.8 million, exclusive of transportation improvements currently under study.
To achieve further substantial reductions in float requires a change
in System policy which may increase operating costs for member banks and could
affect our membership problem.

Nevertheless, the Board has endorsed changing

the methods for handling large dollar value checks by requiring outsort of all
checks of $250,000 and above, and has asked staff for prompt preparation of a
plan for electronic check presentment.

In addition, the Board has instructed

staff to review other means of reducing float such as increasing the on-time
performance

requirements

for

direct

sending

banks.

Lengthening

the

availability schedules to reflect more closely actual collection experience
was rejected as a regressive step in the improvement of the payments mechanism
and as a reduction in Federal Reserve services.
The steps we are taking to reduce float may be perceived by banks as
increasing the burden of membership which adds to the urgent need for Congress
to act on membership legislation.

Just as float is seen as reducing Federal

Reserve earnings returned to the Treasury, the withdrawal of more member banks
from the System, because of efforts to reduce float, would also diminish System
earnings returned to the Treasury.

It should be noted that Federal Reserve

payments to the Treasury rose $2.3 billion or 32.4 percent to $9,279 billion in
1979.
Returning to our 1980 budget, there are several automation efforts
being undertaken which have a significant effect on the direct and support
expense increases for Services to Financial Institutions and the Public and
Services to the U.S.




Treasury and Government Agencies.

The System has

- 8 -

formulated a Long-Range Automation Plan designed to standardize operating
environments to allow standardized application software.

Implementation of

the plan, which has as its goal to increase the commonality of data processing
operations in the twelve Districts and the Board, is to begin in 1980. The 1980
budget increase includes $4.5 million in operating expenses for salaries,
benefits, software, travel, education and equipment expenses to support the
standardization program.

The benefits of such a plan focus on the increased

responsiveness of the System to policy changes and technological innovations,
faster response to changing service needs of the national market,

and a

lessened growth of data processing personnel.
During 1979 the network design and implementation planning phase for
a new Federal Reserve Communications System were completed.

In 1980 we will

turn toward software development, equipment acquisition, and pilot operations.
The project, referred to as FRCS-80, involves the implementation of a successor
to the present data communications network.

Such a successor would satisfy the

internal communications requirements of the System,

including contingency

backup, standardization, resource sharing and flexibility, and would provide a
communications
Treasury,

capability for

services

and other Government agencies.

to

the

financial

community,

the

The impact on the 1980 budget

increase is $1.1 million.
Another key automation effort

impacting the 1980 budget is the

implementation of high-speed currency equipment to achieve improvements in
operating efficiency and productivity.
1978 and will continue through 1982.

Installation of these machines began in
Several different vendors were involved

in developing prototypes, for competitive purposes, but only two appear to




- 9 offer a cost effective potential.
capital

expenditure,

the benefits

Although the machines require a heavy
are substantial

in terms

of

increased

efficiency, security, and long-run staff reductions.
The projected staff declines

in 1980 for Services to Financial

Institutions and the Public (-135) and Services to the U.S. Treasury and
Government Agencies (-30) are the result of completed automation programs and
operational improvements.

The new currency processing equipment is already

yielding savings in the New York, Cleveland, Atlanta, Chicago and Minneapolis
Districts.
savings

Automation efforts in the areas of return items, cash functions,

bond

operations

and

Government

reductions in several Districts.

securities

have

yielded

staff

Boston, Cleveland and Richmond have found

staff savings through consolidating fiscal departments and centralizing the
savings bond activity. The completion of revised custody control standards has
allowed New York to reduce staff and the Minneapolis program to reduce coin
wrapping has allowed this District to cut staff.

Chicago anticipates the

reduction of 80 people in 1980 through the expansion of the RCPC clearing
territory in late 1979.
The fourth

Service Line

is Monetary and Economic Policy which

includes the Open Market function at New York and the research and statistical
function in all Banks.

Expenses are expected to increase 8.7 percent or $3.4

million, while employment is expected to increase by 13 or 2.2 percent.

The

increases in expenses and employment are primarily attributable to new and
revised Board-mandated data reporting requirements for more effective monetary
control.
Capital outlays for 1980 are significantly higher than estimates for
1979 and are primarily for automation requirements,




and construction and

- 10 -

renovation programs for our facilities.

Outlays for Data Processing/Data

Communications equipment total $45.6 million and include computer systems at
Richmond, St. Louis, Minneapolis, Kansas City and Dallas; telecommunications
equipment at New York; and acquisition of check processing equipment in the New
York, Philadelphia, Chicago, Dallas and San Francisco Districts.
Other

Equipment

processing

total

$16.8

equipment.

The

million
budgeted

primarily
outlays

for

for

Outlays for

high-speed

currency

Building Machinery and

equipment ($8.3 million), Furniture, Furnishings and Fixtures ($7.4 million);
and Buildings ($49.6 million) are primarily for new buildings at Baltimore,
Miami and San Francisco, and renovation projects at New York, Omaha, Kansas
City and offices in the Dallas District.
The 1980 budget planning process began in early 1979 and culminated
in the approval of a 1980 Reserve Bank Budget Objective setting an upper limit
of 8.0 percent on expense growth for known factors and adding 1.0 percent to
cover the uncertain impact of legislation and System-directed programs in the
areas of communication, automation,

and payments mechanism.

resources budgeted for these developments,
increase is 7.9 percent —

the

Exclusive of

1980 Reserve

Bank budget

within the established budget target.

Our success

in meeting budget targets for the last several years is attributable to the
detailed planning efforts which go into coordinating the adoption of System
policies in line with resource objectives.
1980 Budget for the Board of Governors
The 1980 Board of Governors' budget is $56.1 million, an increase of
9 percent over 1979 estimated operating expenses and 6 percent over the total




- 11 -

of operating and capital expenditures for 1979.

This increase compares with

our estimate of the Federal Government's fiscal year 1980 increase over 1979 of
something like 13 percent and fiscal year 1981 increase over fiscal year 1980
of about 9.5 percent.

There are no capital funds for 1980 for the Board.

The Board authorized staffing level for 1980 is 1,561 which compares
with 1,537 and 1,578 for 1979 and 1978 respectively.

The increase from 1979 to

1980 is largely a result of new legislative requirements, and the System's
automation standardization plans.

It should be pointed out that there was a

2.6 percent drop in authorized positions from 1978 to 1979.

Actual employment

is, of course, somewhat less than authorized and we accommodate the difference
by funding our staff at a level lower than full authorization.
The Board's budget continues the trend of increases in the regulatory
areas consistent with new legislative responsibilities,

particularly with

respect to the Community Reinvestment Act, the International Banking Act and
the Financial

Institutions Interest Rate Control Act,

other new consumer

legislation and Equal Employment Opportunity requirements.

Increased expenses

also reflect support to the new Federal Financial Institutions Examinations
Council and a continuing effort to improve our regulations.
Since personal

services accounts for 82 percent of the Board's

budget, the Federal Government's pay policies which we largely follow have a
significant effect and, indeed, the 11 percent increase in personal services
costs had to be offset by a much lower increase in non-personal services to
meet the final 9 percent budget.

The lower non-personal services increase of 5

percent is a result of savings in space rentals now that we are contained in our
two owned buildings, and continued economy measures.




In addition we have

- 12 -

imposed a $400,000 savings target which we expect to meet through managerial
actions to be taken during the year.

The multi-year construction projects to

renovate the Board building and provide new space in our Annex building have
been completed.
The Board's 1980 budget formulation process was built upon the
extensive 1979 zero base reviews.

By concentrating on increments couched

within the zero base format, providing early budget guidance, and instituting
additional automated budget presentation aids, the Board was able to reduce
paperwork by 35 percent while increasing productivity of budget preparation and
review.

The Board's 1980 budget continues the constraints of the past few

years with internal reallocations and minimal increases in staff to meet high
priority initiatives.
Summary
We are proud of our record of keeping

expense increases well below

the inflation rate, of reducing cost per unit of output, and of improving
output per manhour while maintaining the integrity, security, reliability and
quality of Federal Reserve services.
This year will be a year of challenge for the Federal Reserve System
as changes in the financial industry and the economic and financial environment
demand intensive regulatory, supervisory, and monetary analysis.
control

and

employment

reductions

of

the

past

provide

a

The cost
streamlined

organization to which in 1980 will be added emphasis on the quality and levels
of System services, improvements in the operating work environments in the
Districts, and a spirit of increased cooperative sharing of ideas, talents and
resources.




TABLE OF ATTACHMENTS
Attachment No. 1

—

Net Statement Float

Attachment No. 2

--

Summary of Employment and Operating Expenses By District
and Board of Governors - 1978 to 1980 Budget

Attachment No. 3

--

Summary of Operating Expenses By Object of Expense for
Districts - 1978 to 1980 Budget and Explanation of
Significant Variances

Attachment No. 4

--

Objects of Expense for Each District - 1978 to 1980
Budget

Attachment No. 5 —

Summary of Operating Expenses By Service Line and Service
for Districts - 1978 to 1980 Budget

Attachment No. 6

--

Summary of Average Number of Personnel By Service Line
and Service for Districts - 1978 to 1980 Budget

Attachment No. 7

--

Summary of Capital Outlays By Class for Districts and
Board - 1978 to 1980 Budget

Attachment No. 8

—

Summary Tables of Board of Governors Expenses and
Employment - 1978 to 1980 Budget







Attachm ent No. 1

Net Statement Float

____________ i

1975

i____________________ i

i____________________ i

1976

19/7

Billions of dollars

i
__________________________ I




1979

No.

1978

Attachment

----------------1

THE FEDERAL RESERVE SYSTEM
SUMMARY OF EMPLOYMENT AND OPERATING EXPENSES BY DISTRICT AND BOARD OF GOVERNORS
1978 ACTUAL - 1980 BUDGET
(dollars 1n thousands)
Federal
Reserve
Districts

1978
Actual
Amount
ANP*

1979
Estimate
Amount
ANP*

1980
Budget
ANP*
Amount

Increase or Decreas«
1980 over 1979
ANP*
Amount

1,512

$ 51,087

1,487

$ 51,970

1,493

$ 56,734

6

$ 4,764

New York

4,699

149,912

4,499

159,879

4,391

175,089

-108

15,210

Philadelphia

1,156

36,831

1,155

38,948

1,166

42,480

11

3,532

Cleveland

1,546

47,069

1,495

49,505

1,495

52,278

0

2,773

Richmond

2,064

59,995

2,065

64,821

2,030

69,931

-35

5,110

Atlanta

2,368

65,836

2,332

69,553

2,314

74,722

-18

5,169

Chicago

3,021

90,091

2,983

95,582

2,892

100,886

-91

5,304

St. Louis

1,297

37,040

1,255

38,583

1,293

42,887

38

4,304

Minneapolis

956

28,139

955

29,691

982

33,287

27

3,596

Kansas City

1,665

45,752

1,670

49,831

1,640

54,109

-30

4,278

Dallas

1,246

36,481

1,287

40,958

1,342

46,223

55

5,265

San Francisco

1,950

66,460

1,985

72,773

2,057

83,515

72

10,742

23,479

$714,692

23,168

$762,094

23,095

$832,141

-73

$70,046

56,100

29

4,646

$888,241

-44

$74,692

TOTAL DISTRICTS
Board of Govs.
TOTAL SYSTEM

1,469**
24,948

46,944
$761,636

*Average Number of Personnel
**End-of-Year Employment




1,457**
24,625

51,454
$813,548

1,486**
24,581

Attachment No.

Boston

PO

THE FEDERAL RESERVE DISTRICTS
SUMMARY OF OPERATING EXPENSES BY OBJECT OF EXPENSE
1978 ACTUAL - 1980 BUDGET

Attachment fio. 3
Page 1 of 4

(dollars in thousands)
Increase or Decrease (-)
1980 over 1979
Amount
Percent

1978
Ac tua I

1979
Estimate

1980
Budget

$ 25,374

$ 26,602

$ 29,448

$ 2,846

10.7%

299,587

313,940

337,676

23,736

7.6

3,026

4,931

3,416

-1,515

-30.7

Retirement and Other Benefits

89,828

98,596

112,175

13,579

13.8

Materials, Forms and Supplies

26,024

28,701

30,777

2,076

7.2

Equipment Rentals

41,633

40,323

38,600

-1,723

-4.3

Equipment Depreciation

7,787

11,073

17,306

6,233

56.3

Equipment Repairs and Maintenance

5,037

7,150

11,747

4,597

64.3

Postage

12,270

13,170

13,467

297

2.3

Other Shipping Expenses

61,311

62,987

69,025

6,039

9.6

Travel

8,421

9,865

11,177

1,312

13.3

Communications

9,632

12,587

13,135

548

4.4

226

240

282

43

17.8

Taxes on Real Estate

13,905

13,287

14,405

1,118

8.4

Property Depreciation

8,567

10,531

11,608

1,077

10.2

11,981

13,105

14,719

1,614

12.3

Rent

8,749

8,269

9,592

1,323

16.0

Other Building Expenses

6,135

6,859

7,242

383

5.6

Federal Reserve Currency

60,101

68,116

72,145

4,030

5.9

Fees

4,553

4,138

4,712

574

1? .9
■

Other

10,545

12,103

14,294

2,191

38.1

FRCS Distributions

—

-1,676

-2,017

-341

.3

Contra Expense

—

-2,800

-2,791

9

-0.3

$714,692

$762,094

$832,141

$70,046

62,104

67,453

71,844

4,391

$652,589

$694,641

$760,297

$65,656

Object of Expense
Salaries -- Officers
Salaries —

Employees

Other Personnel Expenses

Building Insurance

Utilities

TOTAL EXPENSES
Reimbursements and Recoveries
NET EXPENSES


http://fraser.stlouisfed.org/
Note: Details may
Federal Reserve Bank of St. Louis

not add to totals due to rounding.

9.2%
6.5
9.5%

Attachment No. 3
Page 2 of 4
THE FEDERAL RESERVE DISTRICTS
EXPLANATION OF SIGNIFICANT INCREASES
1980 BUDGET OVER 1979 ESTIMATE BY OBJECT OF EXPENSE
(dollars in thousands)
Increase or Decrease (-)
1980 Budget over 1979 Estimate
Amount
Percent
Salaries -- Officers

$ 2,846

10.7*

23,736

7.6

13,579

13.8

6,233

56.3

4,597

64.3

The increase provides for the net addition of four
officers for all Districts in 1980 and merit increases
for existing officers in line with wage guidelines
of the Council on Wage and Price Stability
Salaries -- Employees
The increase provides for merit, promotion and
structure adjustments in accordance with the wage
guidelines of the Council on Wage and Price Stability
offset by a projected decline of 68 average number
of employees in 1980.
Retirement and Other Benefits
Benefit costs are higher in 1980 due to the higher
salary base, an increase in the social security
wage base, an increase in pension payments to
retirees, increases in contributions to hospital/
medical insurance in eleven Districts, an increase
in matching contributions to the Thrift Plan, and
provisions for dental insurance in six Districts.
Equipment Depreciation
Depreciation on computer equipment purchased in
1979 and planned for 1980 accounts for $4,430 of
the expense increase. Other Equipment depreciation,
mainly for high-speed currency processing equip­
ment and general office equipment, accounts for the
remaining increase of $1,803.
Equipment Repairs and Maintenance
Maintenance fees on computer and telecommunications
equipment purchased in 1979 and planned for 1980
account for $3,590 of the expense increase. Higher
maintenance charges on existing equipment and main­
tenance fees associated with the continuing imple­
mentation of high-speed currency processing equipment
account for the remaining increase of $1,007.




Attachment No. 3
Page 3 of 4

Increase or Decrease (-)
1980 Budget over 1979 Estimate
Amount
Percent
Other Shipping Expenses

$ 6,039

9.6%

Armored carrier service expenses account for $2,489
of the increase due to contract rate increases
associated with higher fuel and labor costs and
the effect of the Service Contract Act. Other
contract carrier service expenses account for
$3,663 of the increase due to rate increases for
check carrier service, service enhancements, and
provision for alternative shipping arrangements
in an effort to decrease float. Offsetting these
increrses :s a decreaso in other exprcr
>saae charcrn'-,.
Travel

1,312

13.3

1,077

10.2

Expanded responsibilities in the supervision and
regulation of bank holding companies, and imple­
mentation of the Community Reinvestment Act and
the International Banking Act are the principal
factors causing the expense increase. Higher costs
of transportation, lodging and food and increased
system-related projects also add to the expense
increase. Foreign travel expenses are expected
to decline in 1980.
Property Depreciation
Depreciation on buildings is increasing $448
primarily due to building renovations at Kansas
City, San Francisco and three offices in the
Cleveland District, preparations for tenant
occupancy in the new Richmond building, and
expenses related to the new Miami building.
Depreciation on building machinery and equip­
ment is increasing $307 primarily due to the new
Miami building, a water recirculation system at
Cleveland, an environmental control system at
Cincinnati, new security systems at Chicago, and
the automation of bank elevators and air condi­
tioning repairs at Kansas City. Depreciation
on furniture, furnishings and fixtures is
increasing $322 primarily due to refurbishment
expenditures during 1979 at Dallas, and a
furniture upgrade program at San Francisco.




Attachment No.
Page 4 of 4

Increase or Decrease (-)
1980 Budget over 1979 Estimate
Amount
Percent
Utilities

$ 1,614

12.3%

Higher costs in all Districts for fuel oil and
electrical service as well as the full year impact
of higher steam usage for a Major Power and
Refrigeration Project at New York are offset by
reductions in usage in several Districts due to
energy conservation measures.
Rent

1,323

16.0

4,030

5.9

2,191

18.1

A temporary rental expense increase at New York
associated with the District's building and space
improvement program accounts for most of the
expense increase. The leasing of additional
space at Helena and San Francisco and price
increases on current rental space in the San
Francisco District account for the remainder
of the expense increase.
Federal Reserve Currency
The higher volume of Federal Reserve notes
expected to be paid into circulation with an
improved overall quality of circulating currency
and rising costs of printing notes are the
factors causing the expense increase.
Other
The expense increase is due to computer software
costs associated with implementation of Systemwide initiatives, higher education and tuition
expenses also associated with System-wide
initiatives, higher cafeteria concessions and
fees at several Districts, increases in adver­
tising for employees, and the development of a
System film on electronic funds transfer.




Attachment No. 4
BOSTON

OBJECTS OF EXPENSE
Page 1 of 12
FEDERAL RESERVE DISTRICT
(dollars In thousands)

Object of Expense

1978
Actual

1979
Estimate

1980
Budget

Increase or Decrease (-)
1980 over 1979
Amount
Percent

$ 1,719

$ 1,816

$ 1,963

$ 147

Salaries — Employees

20,041

20,881

22,658

1,776

8.5

156

52

55

3

5.8

Retirement and Other Benefits

6,171

6,813

7,681

868

12.7

Materials, Forms and Supplies

1,846

2,014

2,104

90

4.5

Equipment Rentals

2,850

1,755

1,822

66

3.8

Equipment Depredation

532

854

1,158

304

35.5

Equipment Repairs and Maintenance

233

467

666

198

42.4

Postage

626

632

662

29

4.6

3,381

3,531

3,705

174

4.9

Travel

511

534

606

72

13.5

Comnunicatlons

764

788

788

28

19

19

Taxes on Real Estate

2,616

2,218

2,760

543

24.5

Property Depreciation

2,214

2,230

2,259

29

1.3

Utilities

1,813

1,440

1,594

154

10.7

Rent

415

447

451

&

1.0

Other Building Expenses

276

463

553

R9

19.3

3,402

3,600

3,800

200

5.6

362

287

325

37

13.0

1,134

1,318

1,353

35

2.6

245

- 55

- 30.0

Other Personnel Expenses

Other Shipping Expenses

Building Insurance

Federal Reserve Currency
Fees
Other

-

Contra-Expense
TOTAL EXPENSES
Reimbursements and Recoveries
NET EXPENSES
Note:

190

$51,087

$51,970

$56,734

$4,764

9.2%

4,277

5,885

6,677

793

13.5%

$46>810

$46,085

$50,056

$3,971

8.6%

Details may not add to totals due to rounding.




-

00

Salaries ~ Officers

Attachment No. 4
Page 2 of 12

OBJECTS OF EXPENSE
NEW YORK
FEDERAL RESERVE DISTRICT
(dollars In thousands)

Increase or Decrease (-)
1980 over 1979
Amount
Percent

1979
Estimate

1980
Budget

5,808

$ 6,240

$ 6,711

70,332

71,689

75,100

3,411

956

1,783

1,742

-41

Retirement and Other Benefits

19,745

21,859

24,633

2,774

12.7

Materials, Forms and Supplies

4,941

5,462

5,845

383

7.0

Equipment Rentals

5,885

6,519

7,213

694

10.6

Equipment Depreciation

1,906

2,388

3,681

293

54.1

Equipment Repairs and Maintenance

1,553

1,947

2,822

875

44.9

Postage

1,977

2,126

2,188

62

2.9

Other Shipping Expenses

8,054

8,411

9,276

865

10.3

Travel

1,373

1,550

1,682

132

8.5

Connunl cations

2,724

2,629

2,801

172

6.5

46

42

51

9

21.4

2,399

2,315

2,396

81

3.5

243

337

396

59

17.5

Utilities

2,077

2,779

3,183

404

14.5

Rent

5,248

4,669

6,083

1,414

30.3

760

755

564

-191

-25.3

10,887

13,146

14,461

1,315

10.0

Fees

1,350

1,050

1,662

612

58.3

Other

1,647

2,183

2,599

416

19.1

$149,912

$159,879

$175,089

$15,210

14,346

15,343

16,040

697

$135,566

$144,536

$159,049

$14,513

1978
Actual
Salaries — Officers
Salaries -- Employees

Building Insurance
Taxes on Real Estate
Property Depreciation

Other Building Expenses
Federal Reserve Currency

$

471

7.5«
4.8
CO
•
CM
1

Other Personnel Expenses

$

Contra-Expense
TOTAL EXPENSES
Reimbursements and Recoveries
NFT FXPrNSES

hote: Details


may not add to totals due to rounding.

9.5%

4.5
10.0%

Attachment No. 4
Page 3 of 12

OBJECTS OF EXPENSE
PHILADELPHIA FEDERAL RESERVE DISTRICT
(dollars 1n thousands)
1978
Actual

1979
Estimate

Increase or Decrease I
1980 over 1979
Amount
Percent

1,495

$ 1,717

14,249

15,369

16,632

1,263

8.2

161

228

211

-17

-7.4

Retirement and Other Benefits

4,676

5,206

6,079

873

16.8

Materials, Forms and Supplies

1,234

1,320

1,353

33

2.5

Equipment Réntals

1,762

1,746

1,111

-635

-36.4

Equipment Depreciation

760

858

1,352

494

57.5

Equipment Repairs and Maintenance

251

373

556

183

49.2

Postage

460

488

503

15

3.1

2,419

2,564

2,952

388

15 1

Travel

273

299

317

18

6.0

Communications

467

551

607

56

10.2

37

46

49

2

5.0

Taxes on Real Estate

1,226

1,226

1,287

61

5.0

Property Depreciation

1,432

1,452

1,472

20

1,4

Utilities

1,166

1,129

1,238

110

9.7

16

16

17

1

5.6

774

717

742

24

3.4

3,283

3,245

3,381

136

4.2

Fees

298

249

228

-21

-8.5

Other

453

416

677

262

62.9

45

100.0

Salaries — Officers
Salaries -- Employees
Other Personnel Expenses

Other Shipping Expenses

Building Insurance

Rent
Other Building Expenses
Federal Reserve Currency

Contra-Expense
TOTAL EXPENSES
Reimbursements and Recoveries
NET EXPENSES
Note:

$

1,434

« te

$

1980
Budget

-45

222

$ 36,831

$ 38,948

$ 42,480

$ 3,532

3,067

3,315

3,761

446

$ 33,764

$ 35,633

$ 38,7 19

$ 3,086

Details may not add to totals due to rounding.




—

$

14.8*

9.1%
13.5
s.ñ

CLEVELAND

Attachment No. 4
Page 4 of 12

OBJECTS OF EXPENSE
FEDERAL RESERVE DISTRICT

(dollars in thousands)

Object of Expense

1978
Actual

1979
Estimate

1980
Budget

Increase or Decrease (-)
1980 over 1979
Percei
Amount

$ 1,440

$ 1,467

$ 1,737

$ 270

18.4

18,578

18,959

20,327

1,368

7.2

108

1,079

135

- 944

-87.5

Retirement and Other Benefits

5,723

6,031

6,666

635

10.5

Materials, Forms and Supplies

1,477

1,693

1,835

142

8.4

Equipment Rentals

2,993

2,738

2,881

143

5.2

Equipment Depreciation

410

715

900

185

25.9

Equipment Repairs and Maintenance

262

451

530

78

17.4

Postage

727

769

751

19

- 2.5

6,141

5,395

5,527

131

2.4

Travel

717

823

911

88

10.6

Communications

721

827

844

17

2.1

18

30

31

1

3.4

Taxes on Real Estate

760

799

837

39

4.8

Property Depreciation

644

704

796

92

13.1

Utilities

983

1,017

1,048

32

3.1

71

135

135

-

1

- 0.4

312

346

331

-

15

- 4.3

3,871

4,414

4,874

460

10.4

216

273

183

90

-32.9

898

1,007

1,182

176

17.5

-

- 166

- 180

15

8.9

$47,069

$49,505

$52,278

$2,773

5,107

5,315

5,435

120

$41,962

$44,190

$46,844

$2,653

Salaries — Officers
Salaries —

Employees

Other Personnel Expenses

Other Shipping Expenses

Building Insurance

Rent
Other Building Expenses
Federal Reserve Currency
Fees
Other
Contra-Expense
TOTAL EXPENSES
Reimbursements and Recoveries
NET EXPENSES

Note: Details


may not add to totals due to rounding.

-

-

-

5.6%
2.3
6.0%

Page 5 of 12
D. .
.
Richmond

OBJECTS OF EXPENSE
FEDERAL RESERVE DISTRICT

(dollars in thousands)
Increase or Decrease (-)
1980 over 1979
Amount
Percent

1979
Estimate

1980
Budget

$ 2,261

$ 2,326

$ 2,533

$207

8.9*

23,196

24,282

26,215

1,933

8.0

157

192

156

- 36

-18.5

Retirement and Other Benefits

6,939

7,543

8,473

931

12.3

Materials, Forms and Supplies

2,332

2,563

2,744

181

7.1

Equipment Rentals

5,263

4,841

4,279

-562

-11.6

Equipment Depreciation

292

612

1,265

653

106.8

Equipment Repairs and Maintenance

431

555

885

330

59.5

Postage

1,006

1,148

1,186

38

3.3

Other Shipping Expenses

6,916

7,080

7,591

512

7.2

664

768

839

71

9.2

1,069

1,093

1,125

32

3.0

15

13

13

-

3.1

Taxes on Real Estate

1,234

1,289

1,295

6

.5

Property Depreciation

1,056

2,459

2,581

122

5.0

Utilities

910

1,339

1,465

126

9.4

Rent

839

804

802

- 3

- .3

Other Building Expenses

365

662

739

77

11.6

6,131

7,045

7,555

510

7.2

Fees

434

351

263

-88

-25.2

Other

838

888

919

31

3.5

-2,355

-2,800

-2,791

9

.3

-

- 229

- 199

30

13.0

$59,995

$64,821

$69,931

$5,110

4,058

4,421

4.963

542

12.3

$55,937

$60,400

$64,968

$4,568

7.6

Objects of Expense
Salaries -- Officers
Salaries — Employees
Other Personnel Expenses

Travel
Communications

1978
Actual

Building Insurance

Federal Reserve Currency

FRCS Distributions*
Contra-Expense
TOTAL EXPENSE
Reimbursements and Recoveries
NET EXPENSES
Note:

Details may not add to totals due to rounding.




7.9%

ATLANTA

Attachment No. 4
Page 6 of 12

OBJECTS OF EXPENSE
FEDERAL RESERVE DISTRICT
(dollars 1n thousands)
1979
Estimate

1980
Budget

Increase or Decrease (-)
1980 over 1979
Amount
Percei

Object of Expense

1978
Actual

Salaries — Officers

$ 2,245

$ 2,367

$ 2,661

$ 294

12.4

Salaries — Employees

28,144

29,196

30,728

1,532

5.2

132

173

72

- 101

-58.2

Retirement and Other Benefits

7,828

8,698

9,754

1,056

12.1

Materials, Forms and Supplies

2,846

3 ,-277

3,184

-

Equipment Rentals

4,044

3,734

Equipment Depreciation

541

Equipment Repairs and Maintenance
Postage

Other Personnel Expenses

93

- 2.8

4,008

274

7.3

911

1,121

211

23.0

453

751

929

178

23.8

910

1,027

1,016

11

- 1.0

7,288

7,356

7,782

426

5.8

882

932

1,164

232

24.9

1,058

1,135

1,235

99

8.8

4

7

10

3

40.2

Taxes on Real Estate

626

665

866

201

30.2

Property Depreciation

297

347

620

273

78.8

Utilities

888

924

1,184

260

28.2

Rent

622

578

319

-258

-44.8

Other Building Expenses

381

439

450

12

2.7

5,840

6,250

6,669

419

6.7

Fees

152

274

271

3

- 1.2

Other

655

751

939

188

25.1

Contra-Expense

-

- 237

- 260

- 23

9.5

$65,836

$69,553

$74,722

$5,169

7.4

6,545

6,631

6,826

195

2.9

$59,291

$62,923

$67,896

$4,973

Other Shipping Expenses
Travel
Communications
Building Insurance

Federal Reserve Currency

TOTAL EXPENSES
Reimbursements and Recoveries
NET EXPENSES

Note: Details


may not add to totals due to rounding.

-

-

7.9%

CHICAGO

Attachment No.. 4
Page 7 of 12

OBJECTS OF EXPENSE
FEDERAL RESERVE DISTRICT

(dollars

thousands)

Object of Expense

1978
Actual

1979
Estimate

1980
Budget

Salaries — Officers

$ 2,207

$ 2,185

$ 2,433

38,533

40,198

42,632

195

460

314

Retirement and Other Benefits

11,725

12,622

Materials, Forms and Supplies

3,586

Equipment Rentals

Increase or Decrease (-)
1980 over 1979
Perce
Amount
248

11.3

2,434

6.0

146

- 31.7

14,365

1,743

13.8

3,899

4,149

250

6.4

6,533

6,253

5,082

-1,171

- 18.7

Equipment Depreciation

320

701

1,286

585

83.3

Equipment Repairs and Maintenance

351

527

1,454

927

176.0

Postage

1,253

1,321

1,291

Other Shipping Expenses

7,997

8,403

9,089

686

8.2

928

1,085

1,194

109

10.1

1,525

1,516

1,528

12

.8

14

18

20

2

11.3

1,530

1,579

1,658

79

5.0

409

463

512

49

10.6

1,095

1,155

1,256

101

8.7

864

926

962

36

3.9

Other Building Expenses

1,512

1,484

1,636

152

10.2

Federal Reserve Currency

8,412

9,691

8,530

-1,162

-12.0

Fees

281

267

269

2

.8

Other

823

1,064

1,460

396

37.2

Contra-Expense

-

- 234

- 233

1

.6

$90,091

$95,582

$100,886

$5,304

5.5

7,307

7,622

8,051

430

5.6

$82,784

$87,960

$ 92,835

$4,874

5.5

Salaries —

Employees

Other Personnel Expenses

Travel
Communications
Building Insurance
Taxes on Real Estate
Property Depreciation
Utilities
Rent

TOTAL EXPENSES
Reimbursements and Recoveries
NET EXPENSES

Note:
http://fraser.stlouisfed.org/ Details
Federal Reserve Bank of St. Louis

may not add to totals due to

ing.

$

-

-

30

-

2.3

Attachment No. 4
Page 8 of 12

OBJECTS OF EXPENSE
ST. LOUIS
FEDERAL RESERVE DISTRICT
(dollars In thousands)
1978
Actual

1979
Estimate

$ 1,553

$ 1,549

15,040

15,662

293

254

158

Retirement and Other Benefits

4,928

5,276

rials, Forms and Supplies

1,355

Increase or Decrease <
1980 over 1979
Amount
Percent

17,209

Object of Expense
Salaries — Officers
Salaries -- Employees

1980
Budget
$

1,717

$

167
1,546

10.8 *

9.9

95

-37.5

5,937

661

12.5

1,450

1,572

122

8.4

1,874

2,001

2,440

440

22.0

Eqi-'^ent Depreciation

592

683

917

234

34.3

Equipment Repairs and Maintenance

264

280

448

168

60.0

Postage

887

953

971

18

1.9

4,172

3,971

4,371

400

10.1

Travel

375

502

576

74

14.7

Communications

473

529

552

23

4.3

11

8

27

20

265.3

Taxes on Real Estate

449

449

450

0

.1

Property Depreciation

378

399

459

61

15.3

Utilities

663

707

823

116

16.3

Rent

119

134

141

7

5.1

Other Building Expenses

394

302

420

118

38.9

2,668

2,867

2,968

101

3.5

Fees

200

203

233

30

14.5

Other

352

482

598

116

24.1

101

- 22

- 27.1

Otasr Personnel Expenses

Ec;; -.'¿sent Rentals

Other Shipping Expenses

Building Insurance

Federal Reserve Currency

Contra-Expense

-

TOTAL EXPENSES
Reimbursements and Recoveries
NET EXPENSES

Note:
http://fraser.stlouisfed.org/ Details
Federal Reserve Bank of St. Louis

-

7S

-

-

$37,040

$38,583

$42,887

$4,304

3,283

3,463

3,571

108

3.1

$33,757

$35,120

$39,316

$4,196

11.9

may not add to totals due to rounding.

11 .2%

Minneapolis

Attachment
Page 9 of 12

OBJECTS OF EXPENSE
FEDERAL RESERVE DISTRICT

4

(dollars in thousands)

Object of Expense

1978
Actual

Salaries ~ Officers

$ 1,206

$ 1,260

$ 1,358

11,714

12,448

13,835

117

78

36

Retirement and Other Benefits

3,242

3,560

Materials, Forms and Supplies

945

Salaries —

Employees

1979
Estimate

1980
Budget

Increase or Decrease (-)
1980 over 1979
Amount
Percent
97

7,7

1,387

11.1

$

42

-53,8

3,984

425

11.9

1,012

1,066

55

5.4

1,115

895

1,324

430

48.0

Equipment Depreciation

334

528

850

322

61.0

Equipment Repairs and Maintenance

179

305

460

155

50.9

Postage

881

917

935

18

2.0

2,254

2,321

2,647

326

14.0

Travel

420

542

581

39

7.3

Communications

585

570

645

75

13.2

11

10

11

1

11.0

1,521

1,323

1,192

- 131

- 9.9

Property Depreciation

880

891

910

19

2.1

Utilities

489

505

526

21

4.2

50

49

76

27

56.5

Other Building Expenses

301

447

424

24

- 5.3

Federal Reserve Currency

992

1,013

1,200

187

18.5

Fees

197

274

290

16

6.0

Other

708

790

981

191

24.2

43

- 42

1

2.6

$28,139

$29,691

$33,287

$3,596

12.1

1,942

2,408

2,390

$26,197

$27,283

$30,897

Other Personnel Expenses

Equipment Rentals

Other Shipping Expenses

Building Insurance
Taxes on Real Estate

Rent

-

Contra-Expense
TOTAL EXPENSES
Reimbursements and Recoveries
NET EXPENSES

Note: Details


-

may not add to totals due to rounding.

-

-

-

18

.7

$3,614

13.2

Attachment No.
Page 10 of 12

OBJECTS OF EXPENSE
KANSAS CITY FEDERAL RESERVE DISTRICT

a

(dollars in thousands)

Object of Expense

1978
Actual

1979
Estimate

1980
Budget

Increase or Decrease (-)
1980 over 1979
Amount
Percent

Salaries — Officers

$1,697

$1,837

$2,081

$ 244

13.3

Salaries —

19,192

20,575

22,110

1 ,535

7.5

143

128

85

43

- 33.9

Retirement and Other Benefits

5,815

6,494

7,484

990

15.3

Materials, Forms and Supplies

1,858

2,1-36

2,327

190

8.9

Equipment Rentals

3,473

3,531

2,805

727

-20.6

Equipment Depreciation

541

786

1,511

725

92.2

Equipment Repairs and Maintenance

-314

410

6*67

257

62.6

Postage

1,408

1,564

1,551

13

.8

Other Shipping Expenses

3,574

3,864

4,245

380

9.8

Travel

704

946

1,064

118

12.5

Conmunications

867

941

888

54

- 5.7

18

17

21

4

20.6

Taxes on Real Estate

496

487

476

11

- 2.2

Property Depreciation

478

523

624

101

19.3

Utilities

671

740

842

102

13.8

26

28

29

1

1.4

304

334

307

27

- 8.0

3,350

3,774

4,313

539

14.3

Fees

174

247

287

41

16.5

Other

650

808

834

26

3.3

- 340

- 440

100

-29.5

$45,752

$49,831

$54,109

$4 ,27«

8.6

3,964

4,044

4,264

220

5.4

$41,788

$45,787

$49,845

$4,,058

8.9

Employees

Other Personnel Expenses

Building Insurance

Rent
Other Building Expenses
Federal Reserve Currency

Contra-Expense
TOTAL EXPENSES
Reimbursements and Recoveries
NET EXPENSES
Digitized for Note:
FRASER Details


may not add to totals due to rounding.

-

-

-

-

-

-

-

n,ll(r OBJECTS OF EXPENSE
DALLAS
FEDERAL RESERVE DISTRICT

Attachment No. 4
Page 11 of 12

(dollars in thousands)

Object of Expense

1978
Actual

1979
Estimate

1980
Budget

$ 1,248

$ 1,334

$ 1,527

14,268

15,806

17,679

282

205

131

Retirement and Other Benefits

4,431

4,682

Materials, Forms and Supplies

1,262

Equipment Rentals

Salaries —

Officers

Salaries —

Employees

Increase or Decrease (
1980 over 1979
Amount
Percent
$

192
1,873

11.9

74

-36.2

5,461

779

16.6

1’
-589

1,741

152

9.6

2,422

2,501

2,015

- 486

-19.4

Equipment Depreciation

540

722

1,184

461

63.9

Equipment Repairs and Maintenance

212

356

980

625

175.6

Postage

605

642

669

26

4.1

3,193

3,418

4,100

682

20.0

Travel

510

687

767

80

11.6

Communications

685

812

776

- 36

- 4.4

9

10

10

0

4.2

Taxes on Real Estate

458

451

455

4

1.0

Property Depreciation

183

237

333

96

40.4

Utilities

593

659

730

71

10.8

9

10

11

0

3.9

426

584

755

171

29.2

4,085

4,903

5,451

548

11.2

125

281

260

- 20

- 7.2

933

1,183

1,309

126

10.7

-

- 114

- 121

7

- 6.2

$36,481

$40,958

$46,223

$5,265

12.9

2,150

2,473

2,598

125

5.0

34,331

38,485

43,625

5,141

13.4

Other Personnel Expenses

Other Shipping Expenses

Building Insurance

Rent
Other Building Expenses
Federal Reserve Currency
Fees
Other
Contra-Expense
TOTAL EXPENSES
Reimbursements and Recoveries
NET EXPENSES



Is due to rounding.

-

14.4 %

-

THE FEDERAL RESERVE DISTRICTS
SUMMARY OF AVERAGE NUMBER OF PERSONNEL
BY SERVICE LINE AND SERVICE
1978 ACTUAL - 1980 BUDGET

Service Line/Service
Monetary and Economic Policy

1978
Actual

1979
Estimate

1980
Budget

Increase or
Decrease (-)
1980 over 1979

602

615

13

Economic Policy Determination

491

489

499

Open Market Trading

118

113

116

10
3

1,919

1,855

Savings Bonds

708

708

1,825
696

Other Treasury Issues
Government Agency Issues

II.

609

448
96

430
90

420
85

-12
-10
-5

134

132

133

1

80

78

78

229
224

188

184

-4

233

229

-4

9,851

9,827

9,692

-135

1,604

1,532

1,466

-66

Coin

390

362

351

Electronic Funds Transfer

353

393

422

5,713

5,694

5,622

Other Checks

259

317

308

Securities

393

369

355

Loans to Members and Others

115

118

123

Reserve Accounts

252

244

240

-11
29
-72
-9
-14
5
-4

Services to the U.S. Treasury and
Government Agencies

Other Treasury and Government
Agency Services
Treasury and Government Agency
Coupons
Food Coupons
Government Accounts
III.

Services to Financial Institutions
and the Public
Currency




---

Attachment No.
Pape 1 o 3
f

Commercial Checks

-30

c>
r

THE FEDERAL RESERVE DISTRICTS
SUMMARY OF AVERAGE NUMBER OF PERSONNEL
BY SERVICE LINE AND SERVICE
1978 ACTUAL - 1980 BUDGET

Service Line/Service
III.

1978
Actual

1979
Estimate

1980
Budget

Increase or
Decrease
1980 over

Services to Financial Institutions
and the Public (cont'd)
179

171

Bank and Public Relations

180
381

401

416

Other

211

218

218

1,337

1,439

1,492

53

Supervision of District Financial
Institutions

905

1,024

1,068

44

Administration of Laws and Regulations
Related to Banking

365

352

361

9

67

64

64

4,239

4,074

4,154

80

Data Processing

2,081

2,C39

83

Occupancy

1,371

1,338

Printing and Supplies

288

281

2,122
1,346
277

Planning

245

Office Equipment Maintenance

144

District Projects

110

200
121
96

202
121
87

5,524

5,371

5,317

-54

Administration

460

492

480

System Projects

69

61

78

401

366

365

-12
17
-1

98

105

103

-2

Non-Cash Collection

IV.

Supervision and Regulations

Banking and Financial Market
Structure Studies
Support Services

Overhead Services

Mail
Legal



—

—

8
-4
2
—

-9
Attachment No.
Page 2 o 3
f

VI.

-8
15

THE FEDERAL RESERVE DISTRICTS
SUMMARY OF OPERATING EXPENSES BY
SERVICE LINE AND SERVICE
1978 ACTUAL - 1980 BUDGET
(dollars in thousands)

Service Lines/Services
III.

1978
Actual

1979
Estimate

1980
Budget

Increase or
Decrease (-)
1980 over 1979

Services to Financial Institutions
and the Public (cont’
d)
Loans to Members and Others
Reserve Accounts
Non-Cash Collection

5,059

5,564

6,499

935

14,383

15,516

16,998

1,403

7,884

8,716

357

28,609

2,422

Bank and Public Relations
Other
IV.

21,975

8,359
26,187

14,382

21,493

23,995

2,502

Supervision and Regulations

58,291

68,647

77,093

8,446

37,068

45,223

51,716

6,493

17,729

19,597

21,232

1*634

3,494
714,69?

3,826

4,146

320

762,094

832,141

70,045

183,947

203,648

232,052

28,404

Data Processing

93,015

104,918

122,020

17,101

Occupancy

71,489

79,226

86,426

7,201

Printing and Supplies

5,515

6,417

7,038

621

Planning

6,116

5,733

7,082

1,349

Office Equipment Maintenance

2,747

4,481

5,398

918

Supervision of District Financial
Institutions
e

Administration of Laws and Régula­
tions Related to Banking
Banking and Financial Market
Structure Studie*
TOTAL DISTRICT EXPENSES
MEMORANDUM:
V.

Support Services

Attachment No.
Page 2 o 3
f




U1

THE FEDERAL RESERVE DISTRICTS
SUMMARY OF OPERATING EXPENSES BY
SERVICE LINE AND SERVICE
1978 ACTUAL - 1980 BUDGET
(dollars in thousands)
1978
Actual

Increase or
Decrease
1980 over

1979
Estimate

1980
Budget

5,066

2,873

4,087

1,214

190,002
35,215

209,324

233,769

24,446

44,6?8

54,349

9,652

System Projects

5,006

5,911

11,885

5,974

Mail

8,270

8,415

8,937

523

Legal

4,4.45

4,61ü

4,708

98

23,279

26,916

27,409

492

8,389

7,758

8,255

497

47,304

50,477

3,172

Purchasing

44,182
9,950

10,693

11,431

737

Protection

28,534

28,686

30,338

1,652

Motor Vehicles

1,820

1,820

1,991

170

Library

2,714

2,965

3,191

226

Telephone and Telegraph Operations

5,255

5,628

5,980

352

12,893

13,919

14,819

901

Service Lines/Services
Support Services (cont'd)
District Projects
Overhead Services
Administration

General Books and Budget and Expense
Control
Files and Records Storage
Personnel

Audit

Expenses for the four Output Service Lines are on a fully costed basts,
i.e., support and overhead expenses are redistributed and reallocated
to these Service Lines. Support expenses are direct costs only; Overhead
expense include support expense redistributions.

Details may not add to totals due to roundinq,



Attachment No.
Page 3 o 3
f

NOTE:

THE FEDERAL RESERVE DISTRICTS
SUMMARY OF AVERAGE NUMBER OF PERSONNEL
BY SERVICE LINE AND SERVICE
1978 ACTUAL - 1980 BUDGET

Service Line/Service

1978
Actual

1979
Estimate

1980
Budget

Increase or
Decrease (-)
1980 over 1979
13

609

602

Economic Policy Determination

491

489

615
499

Open Market Trading

118

113

116

10
3

1,919

1,855

1,825

-30

Savings Bonds

708

708

696

Other Treasury Issues
Government Agency Issues

448
96

430
90

420
85

-12
-10
-5

Other Treasury and Government
Agency Services

134

132

133

1

Treasury and Government Agency
Coupons

80

78

78

229
224

188

184

-4

233

229

-4

9,851

9,827

9,692

-135

1,604

1,532

1,466

-66

Coin

390

362

351

Electronic Funds Transfer

353

393

422

5,713

5,694

5,622

Other Checks

259

317

308

Securities

393

369

355

-11
29
-72
-9
-14

Loans to Members and Others

115

118

123

5

Reserve Accounts

252

244

240

-4

Monetary and Economic Policy

II.

Services to the U.S. Treasury and
Government Agencies

Food Coupons
Government Accounts
III.

Services to Financial Institutions
and the Public
Currency

Commercial Checks




- -

THE FEDERAL RESERVE DISTRICTS
SUMMARY OF AVERAGE NUMBER OF PERSONNEL
BY SERVICE LINE AND SERVICE
1978 ACTUAL - 1980 BUDGET

Service Line/Service
III,

1978
Actual

1979
Estimate

1980
Budget

Increase or
Decrease
1980 over

Services to Financial Institutions
and the Public (cont'd)

-8
15

179

171

Bank and Public Relations

180
381

401

416

Other

211

218

218

1,337

1,439

1,492

53

Supervision of District Financial
Institutions

905

1,024

1,068

44

Administration of Laws and Regulations
Related to Banking

365

352

361

9

67

64

64

4,239

4,074

4,154

80

Data Processing

2,081

2,039

83

Occupancy

1,371

1,338

Printing and Supplies

288

281

Planning

245

Office Equipment Maintenance

144

District Projects

110

200
121
96

2,122
1,346
277
202
121
87

5,524

5,371

5,317

-54

Administration

460

492

480

System Projects

69

61

78

Mail

401

366

365

-12
17
-1

Legal

98

105

103

-2

Non-Cash Collection

IV.

Supervision and Regulations

Banking and Financial Market
Structure Studies
Support Services

Overhead Services




—

8
-4
2
—
-9
Attachment No.
Page 2 o 3
f

VI.

—

THE FEDERAL RESERVE DISTRICTS
SUMMARY OF AVERAGE NUMBER OF PERSONNEL
BY SERVICE LINE AND SERVICE
1978 ACTUAL - 1980 BUDGET

Service Line/Services
VI.

1978
Actual

1979
Estimate

1980
Budget

Increase or
Decrease (-)
1980 over 1979

Overhead Services (cont'd)
General Books and Budget and
Expense Control

649

659

654

-5

Files and Records Storage

191

184

181

-3

1,194

1,148

1,128

Purchasing

293

280

280

-20
—

Protection

1,428

1,344

1,320

-24

Motor Vehicles

51

49

48

Library

87

85

84

-1
-1

Telephone and Telegraph Operations

149

152

151

Audit

454

443

441

-1
-2

23,479

23,168

23,095

-73

Personnel

STRICTS -- Average Number of Personnel

NOTE:




Attachment No.
Page 3 o 3
f

In line with the accounting system requirements, no redistribution
of average number of personnel
made from the Support and Overhead
Services to the Output Services. Accordingly, expenses for the
Output Service Lines and Services do not correlate with the Average
Number of Personnel reported for the Output Service Lines and
Services.

Attachment No. 7
Page 1 of 3

THE FEDERAL RESERVE SYSTEM
SUMMARY OF CAPITAL OUTLAYS BY CLASS AND BOARD OF GOVERNORS
(dollars in thousands)

Total Districts By Class

1978
Actual

1979
Estimate

1980
Budget

Data Processing/Data Communications
Equipment

$14,193

$20,967

$ 45,586

Furniture, Furnishings and Fixtures

6,999

3,640

7,421

Other Equipment

8,516

13,158

16,809

Land and Other Real Estate

2j075

2,328

4,868

19,416

18,992

49,608

Building Machinery and Equipment

2,40G

S. 307

8,294

Building and Leasehold Improvements

?,614

1.27C

2,159

$5C,21C

$68,670

$134,744

6,917

998

0

1,252

426

0

$64,387

$70,094

$134,744

Buildings

TOTAL DISTRICTS
Board of Governors
Renovation —

Board Building

Construction —
TOTAL SYSTEM




Annex Building

Attachment No. 7
Page 2 of 3
Summary —

Major Data Processing/Data Communications
Equipment Purchases - 1980'

District
Boston

Burroughs Type 206 Disk Pack and 5N Disk; $.3 million.

New York

IBM 3032 switch computer and peripherals; $3.0
million. Ten IBM-3-115 check computers, one IBM
4331 check computer , eight check reader/sorters,
and other peripheral check equipment; $6.0 million.

Philadelphia

IBM 3890 Document Processors; $1.7 million. IBM
370/158 AP; $.5 million. NCR 7750 Check Reject
system; $.3 mill ion.

Cleveland

Three IBM-4331 communications processors; $.5
mil 1 ion.

Richmond

IBM 3032 Computer; $2.3 million. Burroughs 4890
Computer; $.4 million. Three Burroughs 3890
Processing Units; $.5 million. One Burroughs 4890
Processor; $.3 million.

Atlanta

One Burroughs 4890 CPU; $.4 million.

Chicago

Four Burroughs 4890 CPU's with peripherals; $1.5
mill ion.

St. Louis

One IBM 168 MP Complex Computer; $3.5 million.

Minneapolis

One IBM 370/158 Computer and peripherals; $1.4
mill ion.

Kansas City

One IBM 3033 Computer; $3.1 million. Twentythree 3330/3333/3350 Disk Drives; $.6 million.
Fourteen 3420 Tape Drives and two 3803 Control
Units; $.3 million. Two IBM 4341 computers;
$.5 mill ion.

Dallas

Two IBM 370/168 Computers; $3.5million. Eight
IBM 3890 document processors; $2.6 million.

San Francisco




—

Nine IBM 3890 Reader/Sorters; $2.8 million.
Six IBM 3350 Disk Drives; $.4 million.

Attachment No. 7
Page 3 of 3
Summary -- New Building Projects - 1980

Baltimore*

This project was approved by the Board of Governors in
March 1977 and is scheduled for completion in February
1982. Construction outlays anticipated for 1980 are
$12.8 million. Total cost of project is estimated to
be $40.6 million. The building site is located in
downtown Baltimore and is part of the Camden Renewal
Area adjacent to the Inner Harbour Renewal Area. At
move-in the building will house 475 employees.

Miami*

The Miami new building project will be completed in the
first half of 1980. Construction outlays in 1980 are
expected to be $1.7 million. Total cost of the»-project
is estimated to be $18.5 million. The building site is
located in metropolitan Dade County on North West 36th
Street approximately four miles from Miami International
Airport. At move-in the building will house 380 employees.

San Francisco*

Construction phase will begin during 1980 with completion
scheduled for 1982. Construction outlays in 1980 are
expected to be $20.6 million. A firm estimate of total
project cost is not currently available since analysis
and evaluation of many options are still in process. The
building site is located in downtown San Francisco on
Market Street. At move-in the building will house 1,100
employees.

*The Federal Reserve's Building Program is not large enough to influence
National economic conditions and no deliberate effort is made to relate
decisions on buildings to the business cycle. Space needs for each office
are projected for 5, 15 and 25 year periods. Banking offices with space
problems in the 5 year category are analyzed to determine the most cost
effective approach to solve the space problem.




Board of Governors of the Federal Reserve System
Summary of Employment & Expenditures by Division
1978-1980
(dollars in thousands)

1978
Act Exp

Emp.
O ffice of Board Members
OSD- Management
OSD-Monetary <c Financial Policy
5
OSD-FR Bank A ctivities
O ffice of the Secretary
Legal Division
Research <c S tatistics
5
International Finance
Banking Sup. <c R eg.
5
Consumer & Community Affairs
FR Bank Operations
Personnel
Equal Employment Opportunity
Support Services
O ffice of the Controller
Data Processing
Residual Retirem ent
Fed. Fin. Inst. Exams Council
Pay Increases
Savings Target
Total Operating Programs
Construction - Annex Bldg
Renovation - Board Bldg
Grand Total




37
7
14
11
59
52
296
93
126
41
91
43
12
286
30
271
-

$

1,500
308
505
156
1,180
1,682
8,267
2,768
3,379
1,199
3,703
1,381
149
9 ,416
730
8,414
2,207

1979
Est Emp
Est Exp
31
6
13
8
54
54
305
98
127
43
86
42
11
281
28
268
_

-

_

2

-

-

$

1,317
201
574
371
1,266
1,935
8 ,983
2 ,926
3 ,847
1,326
3,831
1,596
224
9,997
789
8,810
3,414
47

1980
Est Emp
Budget
31
5
13
7
55
56
307
98
135
48
87
42
15
283
29
273
_

_

-

1,469
-

4
1,473

-

$ 46,944
1,252
6,917
$ 55,113

-

1,457
_
-

1,457

-

$ 51,454
998
426
$ 52,878

2
-

1,486

_
-

1,486

$

1,415
198
601
284
1,451
2,094
9,831
3 ,208
4,353
1,533
4 ,093
1,572
346
10,499
845
9,744
3,563
59
810
(400)
$ 56,100
0
0
$ 56,100

Variation from 1979
Em£
Budget
0
(1)
0
(1)
1
2
2
0
8
5
1
0
4
2
1
5
0
0

$

_

29

$

-

29

98
(3)
27
(87)
1*5
159
848
282
506
207
262
(24)
123
502
56
934
149
12
810
(400)
4,646
-

$

4,646

Board of Governors of the
Federal Reserve System
Summary of Expenditures
by Object of Expense
1978-1980
(dollars in thousands)

Object
Salaries
R etirem ent Contribution
R etiree C ost of Living Allowance
Employee Insurance
Consulting Fees
Travel
Postage 3c Expressage
Telephone 3c Telegraph
Printing 3c Publications
Stationery 3c Supplies
Furniture 3c Equipment
Rentals
Books 3c Subscriptions
H eat, Light, 3c Power
Repairs 3c A lterations (Bldg/Grds)
Repairs 3c Maintenance (Furn/Equip)
C ontractual Prof. Services
Other
Savings Target




1978 Actual
$

31,213
3,556
2,070
687
281
1,175
416
683
1,328
406
516
1,688
130
877
155
247
776
740
-

1979 Est
$

33,562
4,113
3,270
685
262
1,321
580
731
1,435
428
403
1,192
145
995
227
269
905
931
-

1980 Budget
$

37,257
4 ,6 7 6
3 ,4 0 0
845
256
1,533
757
746
1,548
488
368
915
160
1,070
310
310
874
987
(400)

Variation from
1979 Est Exp
%
â
$ 3 ,6 9 5
563
130
160
(6 )
212
177
15
113
60
(35)
(277)
15
75
83
41
(31)
56
(400)

11.0%
13.7
4 .0
2 3 .4
( 2 .3 )
16.0
3 0 .5
2 .1
7 .9
14.0
( 8 .7 )
(2 3 .2 )
10.3
7 .5 '
3 6 .6
15.2
( 3 .4 )
6 .0
-

Attachment No.
Page 3 of 5
Board of Governors of the
Federal Reserve System
Explanation of Significant Variances
of 1980 Budget over 1979 Estimates
by Object of Expenditure
(dollars in thousands)

Object of Expenditure

Increase or Decrease
1980 Budget over 1979 Est Exp
Amount
Percent

Salaries & Fringe Benefits

$

4,548

10.9%

The increase in salaries is directly attributable to
the 1980 e ffe c t of 1979 General Pay Increases (GPI)
of 7% ($ 1.99 m il). The fall 1980 GPI ($ 5 2 5 ,0 0 0 ),
annualization of 1979 salary actions ($569,000) and
1980 salary actions ($ 7 8 0 ,0 0 0 ), anticipated 1980 new
positions ($ 3 9 3 ,0 0 0 ), the e ffe c t of the extra days pay
in 1980 ($ 1 4 4 ,0 0 0 ), an increase in health insurance
premium costs and in retirem ent plan contributions
($406,000) and the Board Plan retiree cost of living
adjustment ($130,000) which is tied to the consumer
price index, less planned management actions to delay
hiring, hiring planned lower grades and other savings
actions.
Travel

212

16.0

177

3 0 .5

60

14.0

The largest travel increase ($100,000) is for visits of
members of the Central Bank of the Peoples Republic
of China to our country and a reciprocal visit to their
country. The remainder is associated, m ostly, with
examination of Foreign Banks and Branches as directed
by the International Banking Act and FIR A , standardization
of automated system s, and the higher cost of travel.
Postage & Expressage
Higher postage rates plus increases in the number of
publications to be distributed in 1980 account for this
significant percentage increase. Examples are the planned
1980 distribution of 2 million copies of the consumer
handbook and distribution of truth-in-lending publications
and updates to regulations.
Stationery & Supplies
Inflationary costs are the determinant in this object class



Attachment No.
Page 4 of 5

Rentals

$

(277)

(23.2)%

The major reason for this decrease is the final
consolidation of the staff into two owned buildings.
Equipment rentals have actually increased slightly.
Repairs & Alterations (Buildings & Grounds)

83

The full tim e operation of two fully occupied
buildings entails an increase in maintenance
costs over that required during the renovation
projects.
Savings Target
An aggregate targets for cost reductions
throughout the year to be achieved by individual
division managerial actions.




(400)

36.6

Board of Governors of the
Federal Reserve System
Summary of Employment 3c Expenditures
by Board Program Structure
1978-1980
(dollars in thousands)
1979 Estimated
Empl
$

1978 Actual
Empl
â

1980 Estimated
Empl
â

Variation
%
£

Formulation o f Monetary Policy
D evelopm ent 3c dissemination
of Economic Intelligence
Program D irection 3c Support

382

$ 11,015

389

$ 11,820

392

$ 12,876

1,056

275
107

7,357
3 ,6 5 8

283
106

8,048
3,772

286
106

8,964
3,912

916
140

11.4
3 .7

Supervision 3c Regulation of
Financial Institutions
Federal R eserve Banks 3c
Branches
Com m ercial Bank Operations/
Banking Structure
Securities Credit Regulation
Regulation of Consumer Credit
Reviewing Regulations
Program Direction/Support
Examinations Council Assessmt

313

9,448

316

10,588

325

11,552

964

9 .1

77

3 ,0 3 0

75

2 ,9 8 5

72

3,154

169

5 ,7

152

3,978

153

4 ,419

158

5,046

627

14.2

12
30
3
39
0

340
704
41
1,355
0

12
29
3
44
0

352
866
115
1,803
47

12
35
3
45
0

413
1,002
120
1,758
59

61
136
5
(45)
12

17.3
15.7
4 .3
( 2 .5 )
2 5 .5

14

478

12

748

16

749

1

0 .1

760

26,003

740

28,298

753

31,323

3 ,0 2 5

10.7

52
698
9
1
-

2 ,038
21,728

47
681
11
1

1,768
22,800
227
3,503

44
695
13
1

1,910
24,709
329
3 ,5 6 5
810

142
1,909
102
62
810

8 .0
8 .4
4 4 .9
1 .8

Financial Services

Savings Target
Total



-

1,469

2 ,237
-

$ 46,944

-

-

-

-

-

-

1,457

$ 51,454

1,486

(400)
$ 56,100

-

(400)

-

646

9.0%

Attachment No. 8
Page 5 of 5

System Policy D irection 3c
Board Support
System Policy D irection
Board Support
EEO
Other
GPI

8.9%