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For Release on Delivery Expected at 10 a.m. EST 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%
