budget review 2010 - federal reserve board

Board of Governors of the Federal Reserve System

2010

May 2010

This publication is available from Publications Fulfillment, MS N-127, Board of Governors

of the Federal Reserve System, Washington, DC 20551. It is also available on the Board’s

website (www.federalreserve.gov).

Contents

1 INTRODUCTION1 Summary of 2009 Income and Expenditures2 Operational Areas

The Budgets

Chapter 19 FEDERAL RESERVE SYSTEM

10 2010 System Budget Initiatives10 Trends in Expenses and Employment11 2010 Capital Budgets

Chapter 213 BOARD OF GOVERNORS13 2010 Budget14 2008−09 Budget Performance

Chapter 317 FEDERAL RESERVE BANKS18 2009 Budget Performance19 Initiatives Affecting the 2010 Budget20 Five-Year Trend in Reserve Bank Expenses21 2010 Personnel Expenses21 Risks in the 2010 Budget22 2010 Capital Plan

Chapter 423 CURRENCY BUDGET23 Printing of Federal Reserve Notes24 Currency Transportation25 Counterfeit-Deterrence Research25 Bureau of Engraving and Printing Finance Directorate

Appendixes

Appendix A29 FEDERAL RESERVE BUDGET PROCESSES29 Board of Governors29 Federal Reserve Banks30 Currency

Appendix B31 PRICED SERVICES31 Annual Pricing Process

Appendix C33 EXPENSES AND EMPLOYMENT AT THE BOARD OF GOVERNORS

Appendix D37 EXPENSES AND EMPLOYMENT AT THE FEDERAL RESERVE BANKS

Maps

42 MAPS OF THE FEDERAL RESERVE SYSTEM

Introduction

The Federal Reserve System—the na-tion’s central bank—consists of theBoard of Governors in Washington,D.C., the 12 Federal Reserve Bankswith their 24 branches distributedthroughout the nation, the Federal OpenMarket Committee (FOMC), and threeadvisory councils—the Federal Advi-sory Council, the Consumer AdvisoryCouncil, and the Thrift Institutions Ad-visory Council. The System was cre-ated in 1913 by the Congress to estab-lish a safe and flexible monetary andbanking system. Over the years, theCongress has given the Federal Reservemore authority and responsibility forachieving broad national economic andfinancial objectives.

As the nation’s central bank, the Fed-eral Reserve System has numerous, var-ied responsibilities, including:

• conducting the nation’s monetarypolicy by influencing the monetaryand credit conditions in the economyin the pursuit of maximum employ-ment, stable prices, and moderatelong-term interest rates;

• supervising and regulating bankinginstitutions to ensure the safety andsoundness of the nation’s bankingand financial system and to protectthe credit rights of consumers;

• maintaining the stability of the finan-cial system and containing systemicrisk that may arise in financial mar-kets; and

• providing financial services to de-pository institutions, the U.S. govern-ment, and foreign official institutions.

The Federal Reserve System plays amajor role in the nation’s payment sys-tem. The Federal Reserve Board issuescurrency to the Reserve Banks. The Re-

serve Banks distribute currency andcoin; process Fedwire, automated clear-inghouse, and securities transfers; andcollect checks. In addition, the ReserveBanks serve as the fiscal agents of theUnited States and provide a variety offinancial services for the Treasury, othergovernment agencies, and other fiscalprincipals. For a fuller discussion of theFederal Reserve’s responsibilities, seeThe Federal Reserve System: Purposes& Functions (available at www.federalreserve.gov/pf/pf.htm).

Summary of 2009Income and Expenditures

In carrying out its responsibilities in2009, the Federal Reserve System in-curred $2.9 billion in net expenses. To-tal spending of $4.0 billion was offsetby $1.1 billion in revenue from pricedservices, claims for reimbursement, andother income. Total 2009 expenseswere $43.0 million, or 1.1 percent, lessthan the amount budgeted for 2009(table I.1).

Total Reserve Bank income in 2009was $54.5 billion. The major sources ofincome were interest earnings from theportfolio of U.S. government securities($24.9 billion) and federal agencymortgage-backed securities ($20.4 bil-lion) in the System Open Market Ac-count. Earnings in excess of expenses,dividends, and surplus are transferred tothe U.S. Treasury—in 2009, a total of$47.4 billion.1 (These net earnings are

1. For more detailed information on the in-come and the distribution of income, refer to theFederal Reserve Banks Combined Financial

Statements for 2009 (available at www.federalreserve.gov/monetarypolicy/bst_fedfinancials.htm).

1

treated as receipts in the U.S. budgetaccounting system when received andas anticipated earnings projected by theOffice of Management and Budget inthe U.S. budget.)

Operational Areas

In 2009, the Federal Reserve Systemaccounted for costs using the followingcategories: monetary and economicpolicy, supervision and regulation of fi-nancial institutions, services to financialinstitutions and the public, services tothe U.S. Treasury and other governmentagencies, and System policy directionand oversight.

Monetary and Economic Policy

The monetary and economic policy op-erational area encompasses Federal Re-serve actions to influence the availabil-ity and cost of money and credit in thepursuit of the nation’s objectives ofmaximum employment, stable prices,and moderate long-term interest rates.In 2009, very difficult economic and fi-nancial conditions continued to poseunusual challenges for the conduct ofmonetary policy. To help Federal Re-serve policymakers address these chal-lenges, four of the regularly scheduledmeetings of the Federal Open MarketCommittee (FOMC) that were held in

2009 were expanded so that all eightscheduled meetings lasted two days,and the FOMC held three additionalmeetings by conference call.

To help stabilize financial marketsand support the economy, the Boardand the FOMC continued to operate anumber of unusual credit and liquidityfacilities in 2009. These facilities in-cluded the Term Auction Facility, li-quidity swap arrangements with foreigncentral banks, the Primary DealerCredit Facility, the Term SecuritiesLending Facility, the Asset-BackedCommercial Paper Money Market Mu-tual Fund Liquidity Facility, the MoneyMarket Investor Funding Facility, theCommercial Paper Funding Facility,and the Term Asset-Backed SecuritiesLoan Facility.

To promote economic recovery, theFOMC maintained a target range forthe federal funds rate at the extraordi-narily low level of 0 to 1⁄4 percentthroughout the year. With the federalfunds rate virtually at its lowest pos-sible level, the FOMC engaged inlarge-scale purchases of Treasury secu-rities, federal agency debt, and agencymortgage-backed securities in order toimprove market functioning and pro-vide additional stimulus to the econ-omy. The various facilities and pro-grams put in place by the Board andthe FOMC resulted in a sizable expan-sion of the Federal Reserve’s balancesheet and the supply of bank reserves

Table I.1 Total Expenses of the Federal Reserve System, 2009

Millions of dollars, except as noted

Budgeted ActualVariance

Amount Percent

Reserve Banks . . . . . . . . . . . . . . . . . 3,086.2 3,142.5 56.4 1.8Board. . . . . . . . . . . . . . . . . . . . . . . . . . 366.7 396.8 30.1 8.2Currency. . . . . . . . . . . . . . . . . . . . . . . 631.5 502.1 −129.4 −20.5

Total System expenses . . . . . . . . . 4,084.4 4,041.4 −43.0 −1.1

NOTE: Components may not sum to totals and may not yield percentages shown because of rounding.

2 Annual Report: Budget Review, 2010

in 2009. The management and opera-tions of these facilities and programsrequired substantial resources both atthe Board and at the Federal ReserveBanks. Over 2009, the System workedto enhance the efficiency of the assetpurchase programs. Initially, purchasesof mortgage-backed securities (MBS)were conducted through four invest-ment managers. The System moved toa single investment manager in late2009, and staff at the the Trading Deskat the Federal Reserve Bank of NewYork assumed the investment manage-ment function for MBS near thecompletion of the purchase program inMarch 2010. To increase transparencyregarding the credit and liquidity facili-ties and asset purchase programs, theFederal Reserve developed a publicwebsite with detailed information on allits programs and also implemented amonthly report to the Congress thatprovides regular updates on all the pro-grams and quarterly updates of the Fed-eral Reserve’s financial statements.

As financial market conditions im-proved beginning in spring 2009 andcontinuing into 2010, the Federal Re-serve gradually scaled back most formsof unusual liquidity provision. By April2010, nearly all of the special liquidityfacilities had been closed. The gradualreduction in liquidity facilities tendedto shrink the size of the Federal Re-serve’s balance sheet, but that tendencywas offset by the large-scale asset pur-chases and the associated increase inbanking system reserves. Although theFOMC continued to anticipate that eco-nomic conditions were likely to warrantexceptionally low levels of the federalfunds rate for an extended period, theBoard and the FOMC carefully devel-oped tools, including reverse repur-chase agreements and term deposits,that the Federal Reserve will be able touse to reduce the supply of reserve de-posits when it eventually becomes ap-

propriate to begin withdrawing excep-tional monetary policy accommodation.Initial tests of reverse repurchase agree-ment capabilities were conducted inlate 2009, and planning for further testsof these transactions with an expandedset of counterparties is under way.

The Board and the FOMC base theirmonetary policy decisions on high-quality research and thorough analysisof economic and financial data. A vastamount of banking and financial dataflows through the Reserve Banks to theBoard, where the data are compiled andmade available to the public. The re-search staffs at the Board and at theBanks use the data, along with informa-tion collected by other public and pri-vate institutions, to assess the state ofthe economy and the relationships be-tween the financial markets and eco-nomic activity. Staff members providebackground information to the Board ofGovernors and the FOMC by preparingdetailed economic and financial analy-ses and projections for the domesticeconomy and international markets.The Board and the FOMC use theseanalyses and projections in setting re-serve requirements, setting the discountrate (which affects the cost of borrow-ing), and conducting open marketoperations. Staff members also con-duct longer-run economic studies onregional, national, and internationalissues.

Supervision and Regulation ofFinancial Institutions

The Federal Reserve plays a major rolein the supervision and regulation ofbanks and bank holding companies.The Board of Governors adopts regula-tions to carry out statutory directives,and establishes System supervisory andregulatory policies. The Reserve Banksconduct on-site examinations and in-

Introduction 3

spections of state member banks andbank holding companies; review appli-cations for mergers, acquisitions, andchanges in control from banks and bankholding companies; and take formal su-pervisory actions. In 2009, the FederalReserve conducted 655 examinations ofstate member banks (some of themjointly with state agencies), 640 exami-nations of large bank holding compa-nies, and 3,109 inspections of small,noncomplex bank holding companies; itacted on 633 proposals, representing2,143 individual applications involvingbank holding company formations andacquisitions, bank mergers, and othertransactions.

The Board also enforces complianceby state member banks and certain for-eign banking organizations with federallaws protecting consumers who usecredit and deposit accounts. During thereporting period from July 1, 2008, toJune 30, 2009, the System conducted282 consumer compliance examinationsof its 782 state member banks and oneforeign banking organization.2 Duringthis period, the System also conducted229 examinations of banks for theircompliance with the Community Rein-vestment Act.

The Board’s supervisory responsibili-ties also extend to the foreign opera-tions of U.S. banks and, under the In-ternational Banking Act, to the U.S.operations of foreign banks. Beyondthese activities, the Federal ReserveSystem maintains continuous oversightof the banking industry to ensure the

overall safety and soundness of the fi-nancial system. This broader responsi-bility is reflected in the System’s pres-ence in financial markets, through openmarket operations, and in its role aslender of last resort.

Services to Financial Institutionsand the Public

The Federal Reserve System plays acentral role in the nation’s paymentsystems by ensuring that enough cur-rency and coin are in circulation tomeet the public’s demand. The FederalReserve Board orders new currencyfrom the Bureau of Engraving andPrinting, and the Reserve Banks ordernew coin from the U.S. Mint. The Fed-eral Reserve Board pays for the print-ing and transportation of currency. TheFederal Reserve Board issues currencyto the Reserve Banks, and the ReserveBanks distribute currency and cointhrough depository institutions to meetpublic demand. The Reserve Banks alsoreceive deposits of currency and coinfrom depository institutions; identifysuspect counterfeit currency, whichthey forward to the U.S. Secret Service;and destroy currency that is unfit forcirculation. In 2009, the Reserve Banksdistributed approximately $664.4 billionin currency and $6.4 billion in coin todepository institutions. The ReserveBanks also received approximately$629.9 billion in currency and $6.3 bil-lion in coin from depository institu-tions, and they destroyed $92.7 billionin unfit currency. In 2009, the cost ofprinting and transporting currency was$502.1 million.

The Reserve Banks also play a cen-tral role in the nation’s payment sys-tems by collecting checks and provid-ing a variety of electronic services fordepository institutions. In 2009, theBanks collected approximately 8.6 bil-

2. The foreign banking organizations examinedby the Federal Reserve are organizations that op-erate under section 25 or 25A of the Federal Re-serve Act (Edge Act and agreement corporations)and state-chartered commercial lending compa-nies owned or controlled by foreign banks. Theseinstitutions are typically not subject to the Com-munity Reinvestment Act, and they typically en-gage in relatively few activities covered by con-sumer protection laws.


lion commercial checks, with a totalvalue of about $13.8 trillion. TheBanks’ automated clearinghouse (ACH)service allows depository institutions tosend or receive credit transfers, such asdirect payroll payments and corporatepayments to vendors, and debit pay-ment transactions authorized by con-sumers, such as payments of insurancepremiums, mortgages, loans, and otherbills from their accounts. In 2009, theReserve Banks processed approxi-mately 11.2 billion ACH transactions,valued at about $19.7 trillion. Approxi-mately 11 percent of the transactionswere for the federal government; the restwere for commercial establishments.

The Reserve Banks’ Fedwire FundsService allows participants to use theiraccounts at the Reserve Banks to trans-fer funds to other participants. In 2009,the Reserve Banks processed approxi-mately 125 million Fedwire fundstransfers, valued at approximately $631trillion.

The Reserve Banks’ National Settle-ment Service allows participants in pri-vate clearing arrangements to settletransactions through their Federal Re-serve accounts. In 2009, approximately41 local and national private arrange-ments, primarily check clearinghouseassociations, used the National Settle-ment Service. The Reserve Banks pro-cessed more than 463,000 settlemententries for these arrangements, with adebit value of more than $16.5 trillionin 2009.

The Reserve Banks’ Fedwire Securi-ties Service provides securities servicesto participants, including the settlementof book-entry transfers of securities is-sued by the U.S. Treasury, federalgovernment agencies, government-sponsored enterprises, and certain inter-national organizations. In 2009, partici-pants originated approximately 22million transfers, valued at more than$301 trillion.

Services to the U.S. Treasury andOther Government Agencies

As fiscal agents and depositories for thefederal government, the Federal Re-serve Banks auction Treasury securities,process electronic and check paymentsfor Treasury, collect funds owed to thefederal government, maintain Trea-sury’s bank account, and invest Trea-sury balances. The Reserve Banks alsoprovide certain fiscal agency and de-pository services to other entities; theseservices are primarily related to book-entry securities. Treasury and other en-tities fully reimbursed the ReserveBanks for the costs of providing fiscalagency and depository services. In2009, reimbursable expenses amountedto $450.3 million.

The Reserve Banks auction, issue,maintain, and redeem securities, as wellas operate the automated systems sup-porting paper U.S. savings bonds andbook-entry marketable Treasury securi-ties. In 2009, the Reserve Banks con-ducted 283 Treasury securities auctionsand processed nearly 10 million Trea-sury securities transfers. The ReserveBanks also printed and mailed morethan 20 million savings bonds. The Re-serve Banks continued to support Trea-sury’s efforts to improve the qualityand efficiency of its securities services.

The Reserve Banks collect and dis-burse funds on behalf of the federalgovernment. In 2009, the ReserveBanks processed 1.2 billion governmentACH payments and 202.2 million Trea-sury check payments. The ReserveBanks continued to support Treasury’songoing effort to convert paper checksto electronic payments through the GoDirect initiative. In 2009, more than692,000 check payments were con-verted to direct deposit through thisprogram. The Reserve Banks also oper-ate Pay.gov, a Treasury program that al-lows the public to use the Internet to

Introduction 5

authorize and initiate payments to fed-eral agencies. In 2009, Pay.gov pro-cessed transactions worth $64.9 billion.

The Reserve Banks provide cash-management services to the Treasuryand maintain the Treasury’s operatingcash account. In 2009, the ReserveBanks continued to support Treasury’seffort to modernize its financial man-agement processes, with a focus oncentralized government accounting andreporting. The Reserve Banks alsomanaged several new and ongoing soft-ware development efforts in support ofTreasury’s objectives.

When permitted by federal statute orwhen required by the Secretary of theTreasury, the Reserve Banks provide

fiscal agency and depository services toother domestic and international enti-ties. Book-entry securities issuance andmaintenance activities account for asignificant amount of the work per-formed for these entities.

System Policy Direction andOversight

This operational area encompasses ac-tivities by the Board of Governors insupervising Board and Reserve Bankprograms. At the Reserve Bank level,the expenses for these activities areconsidered support and are therefore al-located across the other operationalareas. Á


The Budgets

Chapter 1

Federal Reserve System

Total expenses for the Federal ReserveSystem for 2010 are budgeted at$4,368.4 million, an increase of 8.1percent from 2009 actual expenses. Ofthis total, $3,221.3 million is for theReserve Banks, $444.2 million is forthe Board of Governors, and $702.9million is for the cost of new currency(tables 1.1 and 1.2). Revenue frompriced services provided to depositoryinstitutions is expected to total $565.9million, or 13 percent of total budgetedexpenses. This revenue, combined withclaims for reimbursement and other in-come, results in the recovery of ap-proximately 24 percent of the System’sbudgeted 2010 expenses.1 When these

items are deducted from budgeted 2010expenses, net expenses for the Systemare 14.5 percent higher than 2009 netexpenses (table 1.1), primarily becauseof a decline in priced services revenueand an increase in currency expenses.

The distribution of budgeted ex-penses is similar to that in previousyears, with the Reserve Banks’ ex-penses accounting for 74 percent of thetotal, new currency expenses account-ing for 16 percent, and Board expensesaccounting for the remainder (chart1.1).

System employment is budgeted at19,768 for 2010, a decrease of 281from the 2009 level, largely because ofplanned staff reductions by the ReserveBanks.

1. Claims for reimbursement refers to costs offiscal agency and depository services provided tothe U.S. Treasury, other government agencies,and other fiscal principals that are billed to theseagencies. Other income comes from services pro-vided on behalf of the U.S. Treasury that are paid

for by the depository institutions using the ser-vices, which include the transfer of funds be-tween depository institutions and the Treasury.

Table 1.1 Total Expenses of the Federal Reserve System, Net of Receipts and Claims forReimbursement, 2008−2010


Item2008

(actual)2009

(actual)2010

(budgeted)

Percent change

2008−2009 2009−2010

Total System expenses1 . . . . . . . . . . . . . 3,872.4 4,041.4 4,368.4 4.4 8.1

LESS

Revenue from priced services. . . . . 873.8 675.4 565.9 −22.7 −16.2Claims for reimbursement2 . . . . . . . 461.1 450.3 463.2 −2.3 2.9Other income . . . . . . . . . . . . . . . . . . . . 1.3 1.3 1.2 2.0 −7.1

EQUALS

Net System expenses . . . . . . . . . . . . 2,536.2 2,914.4 3,338.1 14.9 14.5

NOTE: Components may not sum to totals and may not yield percentages shown because of rounding. Totalexpenses reflect all redistributions for support and overhead and exclude capital outlays.

1. With the 2009 Annual Report: Budget Review, a change was made in the way expenses were presented: Thecosts of printing and transporting currency, and related expenses, were included in total System expenses, to alignwith the presentation in the Board’s Annual Report. Relevant figures for 2008 also include currency expenses,which, in reports prior to 2009, were shown as a memo item.

2. Costs of fiscal agency and depository services provided to the U.S. Treasury, other government agencies, andother fiscal principals that are billed to these agencies.

9

2010 System Budget Initiatives

The Reserve Bank budgets are fundingincreases in the central bank functions,specifically supervision and regulation,loans to depository institutions and oth-ers, and cash operations, offset by re-ductions in check operations. The majorfactors affecting the 2010 Reserve Bankbudgets are outlined in more detail inchapter 3.

Trends in Expenses andEmployment

From the actual 2001 level to the bud-geted 2010 amount, the total expensesof the Federal Reserve System have in-creased an average of 4.3 percent peryear (1.9 percent per year when ad-justed for inflation) (chart 1.2). Overthe same period, nondefense discretion-ary spending by the federal government

Table 1.2 Expenses of the Federal Reserve System for Operations and Currency,2008−2010


Item2008

(actual)2009

(actual)2010

(budgeted)

Percent change

2008 to 2009 2009 to 2010

Reserve Banks1 . . . . . . . . . . . . . . . . 3,020.8 3,142.5 3,221.3 4.0 2.5Personnel. . . . . . . . . . . . . . . . . . . . 2,021.3 2,155.7 2,201.4 6.6 2.1Nonpersonnel . . . . . . . . . . . . . . . . 999.5 986.9 1,019.9 –1.3 3.4

Board of Governors2 . . . . . . . . . . . 351.2 396.8 444.2 13.0 11.9Personnel. . . . . . . . . . . . . . . . . . . . 268.2 294.1 319.0 9.7 8.5Nonpersonnel . . . . . . . . . . . . . . . . 83.0 102.7 125.2 23.7 21.9

Currency3. . . . . . . . . . . . . . . . . . . . . . 500.4 502.1 702.9 0.3 40.0

Total System expenses . . . . . . . . . 3,872.4 4,041.4 4,368.4 4.4 8.1

NOTE: Expenses exclude capital outlays. Components may not sum to totals and may not yield percentages shownbecause of rounding.

1. For detailed information on Reserve Bank expenses, see chapter 3.2. Includes extraordinary items and expenses of the Office of Inspector General. See also chapter 2.3. For more information on currency expenses, see chapter 4.

Chart 1.1 Distribution of BudgetedExpenses of the Federal Reserve System,2010

Chart 1.2 Total Expenses of the FederalReserve System, 2001−2010

NOTE: Includes extraordinary items and expenses ofthe Office of Inspector General.

1. Calculated with GDP price deflator.


has increased an average of 8.3 percentper year (chart 1.3). Over the 2001-2010 period, Federal Reserve Systememployment has decreased by 5,140(chart 1.4).

The primary factors influencing bothReserve Bank spending restraint andthe substantial staffing decreases overthe past 10 years have been restructur-ing efforts in the check-processingfunction and efficiency measures in thesupport and overhead functions. Overthe same 10-year period, check costsdecreased an average of 9.5 percent andcheck staff declined an average of 17.8percent annually. Local support andoverhead costs increased an average of1.7 percent annually and the associated

staffing level declined an average of 3.1percent annually over the same 10-yearperiod.

2010 Capital Budgets

The capital budgets for the ReserveBanks and the Board total $458.0 mil-lion, with $434.4 million budgeted forthe Reserve Banks and Federal ReserveInformation Technology and $23.6 mil-lion budgeted for the Board. As in pre-vious years, the 2010 capital budgetsinclude funding for projects that sup-port the strategic direction outlined bythe individual Reserve Banks, Systembusiness leaders, and the Board. Thesestrategic goals focus on investmentsthat continue to improve operational ef-ficiencies, enhance services to bankcustomers, and ensure a safe, high-quality work environment. More-de-tailed discussions of the Board and Re-serve Bank capital budgets are includedin chapters 2 and 3, respectively. Á

Chart 1.3 Cumulative Change in FederalReserve System Expenses and FederalGovernment Expenses, 2001−2010

NOTE: For 2010, budgeted.1. Discretionary spending less expenditures on de-

fense. Source: Budget of the United States Government,

Fiscal Year 2010: Historical Tables, Table 8.1 Outlaysby Budget Enforcement Act Category, 1962−2014.

2. Includes extraordinary items and expenses of theOffice of Inspector General.

Chart 1.4 Employment in the FederalReserve System, 2001−2010

NOTE: For 2010, budgeted.

Federal Reserve System 11

Chapter 2

Board of Governors

For the past 12 years, the Boardprepared two-year budgets. However,to better respond to the significantchanges in demands placed on theBoard during the financial crisis and thepotential impact of regulatory restruc-turing proposals, the Board approved aone-year budget for 2010.

2010 Budget

Board of Governors

The Board approved a $425.0 millionoperating budget and a $23.6 millioncapital budget for 2010. The budget re-flects growth in personnel service ex-penses as well as increased costs forgoods and services. For personnel ser-vices, the primary driver underlying theincrease is the full-year effect of posi-tions added during the 2008−09 budgetperiod in response to increased work-load demands, driven in large part bythe financial crisis and Board compli-

ance with mandates such as the FederalInformation Security Management Act,requirements under Section 508 of theRehabilitation Act for the Board’s web-sites, and the Sarbanes-Oxley Act. In-creases in the category of goods andservices include higher costs for theSurvey of Consumer Finances (in re-sponse to the financial crisis and theneed to increase the survey’s samplesize), additional rental expenses relatedto leased office space, and increasedcosts of the Reserve Banks’ externalaudit.

Office of Inspector General

In keeping with its statutory indepen-dence, the Office of Inspector General(OIG) prepares its proposed budgetapart from the Board’s budget. TheBoard approved an operating budget of$19.2 million and a $50,000 capitalbudget for 2010 for the OIG. Thegrowth in the budget is mostly to fund

Table 2.1 Operating Expenses and Capital Expenditures of the Board of Governors,2006−2010


Operational area orOffice of Inspector General

2006−07(budgeted)

2006−07(actual)

2008−091

(budgeted)2008−09(actual)

2010(budgeted)

Monetary and economic policy. . . . . . . . . . . . . . 143.1 137.9 169.8 166.1 95.8Supervisory, regulatory, and legal services . . . 206.4 200.5 250.2 247.9 138.8Federal Reserve System policy direction. . . . . 55.6 55.9 65.4 63.8 36.8Support and security services . . . . . . . . . . . . . . . 195.4 198.8 243.7 252.4 143.5Extraordinary items . . . . . . . . . . . . . . . . . . . . . . . . 9.0 8.3 7.3 5.5 10.2

Total, Board operations . . . . . . . . . . . . . . . . . . . 609.5 601.4 736.4 735.6 425.0

Total, capital2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31.4 24.7 47.9 33.3 23.6

Office of Inspector General . . . . . . . . . . . . . . . . . 10.2 9.5 14.0 12.4 19.2

NOTE: Components may not sum to totals and may not yield percentages shown because of rounding.1. 2008−09 budgeted figures include $30.1 million and $1.3 million added to the Board’s and the Office of

Inspector General’s respective operating budgets during 2009.2. Includes the Office of Inspector General.

13

personnel services and contractual pro-fessional services to conduct legisla-tively mandated material loss reviewsof failed banks.

Authorized Positions

The Board’s 2010 budget includes2,190 authorized positions. This figurereflects an increase in the number ofpositions to address increased workloaddemands, integrate analysis for finan-cial stability, enhance policy analysis,address new legislative and regulatoryinitiatives, address consumer compli-ance, and improve consumer protection.The OIG’s 2010 budget includes an in-crease of 16 positions to conduct mate-rial loss reviews of failed banks, men-tioned above.

Areas of Risk

Risks to the budget stem from the con-tinued pressure on staff to meet the de-mands generated by the financial crisisand to complete the backlog of workbecause of the shift in focus to meetthose demands. Passage of proposedlegislation related to regulatory restruc-

turing could result in significantchanges to the Board’s responsibilitiesfor, and processes related to, bank su-pervision and regulation as well as con-sumer protection. These changes could,in turn, necessitate a revision to thestrategic plan and to budgetary require-ments. The Board’s continued commit-ment to maintaining the transparency ofits operations and the potential increasein both the number and the complexityof requests for information not dis-closed under the transparency initiativemay require additional investments ininformation systems to enhance theBoard’s communication and documentmanagement capabilities. Finally, an in-crease in staffing levels (including newpositions in the OIG) may require addi-tional funding to secure additionalleased space.

2008−09 Budget Performance

Board of Governors

The Board’s actual operating expensesfor 2008−09 were $735.6 million, or$0.8 million less than the operatingplan. Increased spending for travel and

Table 2.2 Positions Authorized at the Board of Governors, 2006−2010

Operational area orOffice of Inspector General

Position count1

2006−07(initial)

2006−07(ending)

2008−09(initial)

2008−09(ending)

2010(budgeted)

Monetary and economic policy. . . . . . . . . . . . . . 466 467 481 493 506Supervisory, regulatory, and legal services . . . 567 577 576 615 627Federal Reserve System policy direction. . . . . 173 176 179 185 187Support and security services2 . . . . . . . . . . . . . . 770 805 805 873 870Extraordinary items . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Total, Board operations . . . . . . . . . . . . . . . . . . . 1,976 2,025 2,041 2,166 2,190

Office of Inspector General . . . . . . . . . . . . . . . . . 36 36 37 45 61

NOTE: Includes only those divisions, offices, and special accounts that have authorized position counts.1. Excludes summer interns.2. Includes positions that support the Federal Financial Institutions Examination Council for processing data

collected under the Home Mortgage Disclosure Act and the Community Reinvestment Act, as well as cooperativeeducation, worker trainee, and student aide programs that assist offices and divisions Boardwide.

. . . Not applicable.


rentals was offset by lower-than-expected expenses for contractual pro-fessional services for the ReserveBanks’ financial audit, the Survey ofConsumer Finances, and depreciationfor capital projects that was deferred tofuture periods. Capital purchases to-taled less than the operating plan by$14.5 million because constructioncosts were less than budgeted and be-cause projects were delayed, primarilybecause of staff focus on the financialcrisis.

Office of Inspector General

The OIG’s actual expenses totaled$12.4 million for 2008−09, or $1.6 mil-lion less than the operating plan. Thedecrease was mainly due to lower-than-expected personnel services expensesand contractual professional service ex-penses related to the material loss re-views of failed banks. Á

Board of Governors 15

Chapter 3

Federal Reserve Banks

The 2010 operating budgets of the 12Reserve Banks total $3,221.3 million.1

The 2010 total is $78.8 million, or 2.5percent, above 2009 actual expenses.This growth is driven by increases incentral bank functions, specificallythose related to supervision and regula-tion, loans to depository institutions andothers, as well as cash operations.These increases are significantly offsetby decreases in priced services as a re-sult of the decline in paper-check vol-ume, reductions in the check-processinginfrastructure, and the substantial re-ductions in check transportation costs.In addition, the increase in expenses isfurther offset by a reduction in vendorfees incurred by the New York FederalReserve Bank.

Budgeted net expenses for 2010, af-ter revenue and reimbursements, are ex-

pected to increase by $175.5 million, or8.7 percent, over 2009 actual net ex-penses (table 3.1). Approximately 32percent of Reserve Bank expenses inthe 2010 budget are offset by pricedservice revenues (18 percent) and reim-bursable claims for services provided tothe Treasury and other agencies (14percent).2 Budgeted 2010 priced ser-vices revenue is lower than the 2009actual level, primarily because of de-clining paper-check volume. Reimburs-able claims are expected to increaseonly slightly in 2010, a reflection of anongoing effort by the Treasury and theReserve Banks to contain costs whilemaintaining support for key programsand advancing new initiatives.

Total 2010 projected employment forthe Reserve Banks, Federal Reserve In-

1. These expenses include those budgeted bythe Federal Reserve Information Technology andthe Office of Employee Benefits that are charge-able to the Reserve Banks.

2. Reimbursable claims include costs of fiscalagency and depository services provided to theU.S. Treasury, other government agencies, andother fiscal principals that are billed to and reim-bursed by these agencies.

Table 3.1 Operating Expenses of the Federal Reserve Banks, Net of Receipts and Claimsfor Reimbursement, 2009 and 2010


Item2009

(actual)2010

(budgeted)

Change

Amount Percent

Total operating expenses. . . . . . . . . . . . . . . . 3,142.5 3,221.3 78.8 2.5

LESS

Revenue from priced services. . . . . . . . . 675.4 565.9 −109.5 −16.2Claims for reimbursement1 . . . . . . . . . . . 450.3 463.2 12.9 2.9Other income . . . . . . . . . . . . . . . . . . . . . . . . 1.3 1.2 −0.1 −7.1

EQUALS

Net expenses . . . . . . . . . . . . . . . . . . . . . . . . 2,015.5 2,191.0 175.5 8.7

NOTE: Excludes capital outlays. Includes expenses budgeted by the Federal Reserve Information Technology andthe Office of Employee Benefits. Expenses from these entities have been charged to the Reserve Banks, asappropriate, and included in their budgets. Components may not sum to totals and may not yield percentages shownbecause of rounding. Operating expenses reflect redistributions for support and allocation of overhead.

1. Costs of fiscal agency and depository services provided to the U.S. Treasury, other government agencies, andother fiscal principals that are billed to these agencies.

17

formation Technology (FRIT), and theOffice of Employee Benefits (OEB) is17,578 “average number of personnel(ANP),” a decrease of 302 ANP, or 1.7percent, from the 2009 actual staff level(table 3.2).3 The 2010 staffing decreaseis the result of a continuing trend ofworkforce reductions that began in thelate 1990s; staffing levels are at theirlowest point in more than 30 years. The2010 budgeted staff reductions arelargely due to the effect of infrastruc-ture changes and paper-check volumedeclines; these decreases are slightlyoffset by staffing increases in centralbank functions. Given the current finan-cial market and banking conditions, theReserve Banks have increased re-sources dedicated to fulfilling their cen-tral bank responsibilities, which includeresearch, supervision and regulation,loans and credit, and public infor-mation.

2009 Budget Performance

Total 2009 actual expenses are $3,142.5million, an increase of $56.4 million, or1.8 percent, from the approved 2009

budget of $3,086.2 million. Total 2009actual staffing is 17,880 ANP, a de-crease of 140 ANP from the 2009 bud-geted level of 18,020 ANP.

The expense increase compared withbudget was driven in part by the ex-panded responsibilities in response tothe economic crisis ($107.0 million, or110 percent). Reflected in the increaseare additional staffing and data needsand unforeseen fees related to the Fed-eral Agency Mortgage-Backed Securi-ties Purchase and Term Asset-BackedSecurities Loan Facility programs. Alsocontributing to the increase over budgetis the growth in supervision and regula-tion staffing in response to the financialconditions of the banking industry($11.0 million and 78 ANP).

Partially offsetting the overrun aredecreased expenses in the check func-tion ($47.1 million, or 10 percent). TheReserve Banks significantly acceleratedthe closing of the check-processingsites in 2009, substantially reducedcheck transportation, and reduced staffin the check adjustments function be-cause of paper-check volume declines.By the end of 2010, only one full-service paper-check processing site willremain.

Also offsetting the overrun is lowerexpenses for Treasury services ($13.3million, or 3.0 percent). Treasury ser-vices were under budget largely be-cause of a reduction in Treasury Web

3. ANP is the average number of employees interms of full-time positions for the period. For in-stance, a full-time employee who works one-halfof the year counts as 0.5 ANP for that calendaryear; two half-time employees who work the fullyear count as 1 ANP.

Table 3.2 Employment at the Federal Reserve Banks, FRIT, and OEB, 2009 and 2010

Average number of personnel, except as noted

Item2009

(actual)2010

(budgeted)

Change

Amount Percent

Reserve Banks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16,910 16,628 −282 −1.7Federal Reserve Information Technology (FRIT) . . 925 904 −21 −2.3Office of Employee Benefits (OEB) . . . . . . . . . . . . . . 45 47 2 4.4

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17,880 17,578 −302 −1.7

NOTE: Components may not sum to totals and may not yield percentages shown because of rounding. See textnote 3 for definition of average number of personnel (ANP).


Application Infrastructure (TWAI) ex-penses, resulting from the TWAI opti-mization program, an effort begun in2007 to identify efficiencies and costsavings, and delays in the Treasury’sCollections and Cash ManagementModernization (CCMM) initiative.4

The underrun in total staffing of 140ANP, as compared with the approvedbudget, reflects lower staffing in severalareas, partially offset by crisis-relatedoverruns (99 ANP). Check operationsare 253 ANP under budget because theSystem’s legacy infrastructure wasdownsized beyond the budgeted projec-tion and because inter-District checktransportation was eliminated. Treasuryservices are 28 ANP below budget, re-flecting CCMM project delays and vol-ume. Cash operations are 23 ANP un-der budget, primarily because ofvolume declines and productivity gains.In addition, the Reserve Banks continueto reduce staffing in internal supportfunctions in response to the declines inoperation areas. Overall support func-tions are 49 ANP under budget. The fa-cilities management function is 22 ANPunder budget because of outsourcedhousekeeping in one District. Also con-tributing to the underrun in supportfunctions are lower staffing levels inlaw enforcement (25 ANP) and foodservices (10 ANP) resulting from pro-cess improvements.

Initiatives Affecting the2010 Budget

For 2010, the Reserve Banks’ budgetsreflect several initiatives that will con-

tinue to address financial stability anddeteriorating banking conditions, aswell as enhance resiliency.

Central Bank Services

In the central bank area, which includesmonetary policy, public programs, su-pervision and regulation, and cash op-erations, expenses are increasing $162.8million, or 7.7 percent, in the 2010budget. The staffing level is increasing233 ANP, in part because of the full-year effect of staff additions in 2009,including 118 ANP to support loans todepository institutions and others. Totalcosts for monetary policy are budgetedto remain relatively flat, reflectinghigher salary-related costs, offset bynonrecurring crisis-related expenses.

The budget for the supervision andregulation function is increasing $59.0million, or 8.1 percent, as the functionplans for additional staffing resources(133 ANP) to address the deteriorationin the banking industry’s performanceand condition, sharply higher numbersof 3/4/5-rated state member banks andbank holding companies, and acceler-ated frequency of mandated examina-tions and inspections.

Expenses in cash operations are in-creasing $36.2 million, or 7.6 percent.The Currency and Coin Handling Envi-ronment (CACHE) project and up-grades to the currency processing sort-ers and related sensors are driving theincrease.5 These expenses are partiallyoffset by staffing reductions (42 ANP)resulting from lower-than-expectedvolumes.

4. CCMM is a comprehensive multiyear enter-prise architecture initiative to streamline, modern-ize, and improve the services, systems, and pro-cesses supporting the Treasury’s collections andcash-management programs. The goal is to im-prove efficiency and reduce costs to the Treasury,which provides a savings to the taxpayers.

5. The CACHE project is being re-evaluated,and the effect on the budget is unknown at thistime.

Federal Reserve Banks 19

Treasury-Related Functions

The budget for services to the Treasury,which are fully reimbursable, is in-creasing $14.7 million, or 3.4 percent.Expenses related to the TWAI are in-creasing as the number of applicationshosted in the infrastructure expands inconnection with the CCMM initiative.In addition, several projects under theCCMM umbrella are expected to gainmomentum in 2010; one portion of theproject is being delayed from 2009 un-til 2010. These increases are partiallyoffset by lower staffing needs (21 ANP)and lower costs associated with thecontinued volume declines in Treasuryretail securities, government checks,and postal money orders, as well as thecompletion of the Treasury Debt Man-agement System application develop-ment effort.

Priced Services

Total check expenses are decreasing$111.6 million, or 26.5 percent, reflect-ing the check restructuring costs andcontinued paper-check volume declines.In response to the continuing decline inpaper-check volumes, the Federal Re-serve announced that the Federal Re-serve Bank of Cleveland will serve asthe System’s single paper-check pro-cessing and adjustments site and thatthe Federal Reserve Bank of Atlantawill serve as the System’s singleelectronic-check processing site. Thistransition to a single paper-check pro-cessing site was completed in February2010. As a result, the check staffinglevel is decreasing 502 ANP. Even withthese cost reduction efforts, the ReserveBanks have budgeted a recovery rate of94.5 percent in 2010. The ReserveBanks continue to identify additionalopportunities to meet long-term cost-recovery objectives.

Support Services

Support costs are increasing $30.8 mil-lion, or 3.1 percent. The expense in-creases are driven primarily by in-creases in facilities management ($14.6million) and information technology($8.0 million). Facilities costs are in-creasing because of the completion oflarger building projects and the expan-sion of leased space in New York. ITcosts are increasing in support of cashand Treasury projects at several Re-serve Banks. The staffing level is de-creasing 21 ANP, primarily because ofefficiency gains.

Five-Year Trend in Reserve BankExpenses

Total expenses for the Reserve Bankshave grown an average of 4.4 percentannually over the past five years.

Central Bank Services

Central bank services have grown anaverage of 9.2 percent annually overthe past five years. The increase is pri-marily in the areas of monetary policy,public programs, and loans to deposi-tory institutions and others, where ex-penses have grown, on average, 12.5percent annually; the Banks have in-creased resources dedicated to commu-nity outreach, financial literacy, re-gional economic research efforts, andlending activities. Expenses in the su-pervision and regulation function havegrown an average of 9.0 percent annu-ally over the past five years, reflectingthe need for additional resources neces-sary to recruit and retain staff with spe-cialized skills, and more recently, to ad-dress financial market turmoil anddeteriorating banking and economicconditions. There have been ongoing


efficiency improvements in the casharea over the past five years; however,expenses in cash operations haveincreased an average of 5.2 percent an-nually, reflecting increased costs tomodernize the cash-processing andinventory-tracking infrastructure, alongwith higher support costs, particularlyprotection costs.

Treasury Services

Treasury services expenses have grownon average 3.4 percent annually since2005. Efforts by the Treasury to limitexpense growth and delays in someCCMM projects have resulted in mod-est growth in recent years. Growthfrom 2005 to 2007 was driven prima-rily by the expansion of the TWAI tohost a growing number of Treasuryapplications.

Priced Services

Priced services expenses have declinedan average of 7.8 percent annually overthe past five years, driven by the checkservice. Efforts to reduce the size of theSystem’s check operations, consistentwith declining volumes, have resultedin an average annual decline of 12.9percent in check-service costs since2005. The downward trend in check ex-penses reflects staff reductions of 3,130ANP since 2005.

2010 Personnel Expenses

Budgeted officer and employee salariesand other personnel expenses for 2010total $1,678.0 million, an increase of$61.8 million, or 3.8 percent, comparedwith 2009 actual expenses. Theincrease reflects budgeted salary admin-istration programs, including meritincreases, market adjustments, promo-

tions, and variable pay. Funding for of-ficer and employee base salary adminis-tration programs is $47.1 million; meritpools for officers and employees total$33.2 million, and funding for marketincreases and promotions totals $13.8million. The merit budget reflects anaverage increase of 2.5 percent for bothofficers and employees. Variable payprograms are increasing $9.5 million in2010, with variable pay pools averaging12.7 percent for officers and seniorprofessionals and 4.8 percent for em-ployees.

Although funding for merit increasesdecreased in 2010, merit continues tobe the largest component of the total in-crease in salary administration costs.Growth in salary administration ex-penses continues to be driven by thecost of a more highly skilled work-force. Although ANP is budgeted to de-crease 301 in 2010 when compared to2009 actual staffing levels, the reducedpositions are largely nonexempt, lower-salaried positions. The trend in staff ad-ditions have been toward more highlyskilled, higher-salaried exempt and of-ficer positions.

Risks in the 2010 Budget

There are a number of risks in the 2010budget. Primary among these is the po-tential for legislative changes that couldalter the Federal Reserve’s authority.Additional staff may also be needed tomanage the ongoing challenges facingbanking supervision and regulation inthe current economic climate. Treasuryproject changes and delays could alsoincrease budgeted expenses. In connec-tion with the CCMM initiative, theTreasury continues to refine its visionfor collections and cash-managementsystems. If the Treasury changes itscurrent direction, additional costs andresources may be required.

Federal Reserve Banks 21

2010 Capital Plan

The 2010 capital budgets submitted bythe Reserve Banks, FRIT, and OEB to-tal $434.4 million, a $65.3 million, or17.7 percent, increase from the 2009actual level. The 2010 capital budgetsinclude funding for projects to supportstrategies that improve operational effi-ciencies, enhance services to ReserveBank customers, and ensure a safe andhigh-quality work environment. In sup-port of these strategies, the 2010 bud-gets include seven categories of capitaloutlays: (1) building projects and facil-ity improvements, (2) payment systemimprovements, (3) cash-services initia-tives, (4) Treasury initiatives, (5) infor-mation technology infrastructure initia-tives, (6) security enhancements, and(7) miscellaneous acquisitions.

The proposed capital budgets include$178.3 million for building-relatedprojects and facility improvements. Ofthis total, $48.8 million is for majorprojects begun in previous years at theFederal Reserve Banks of Boston, NewYork, and St. Louis. The total also in-cludes a major project for the FederalReserve Bank of New York to accom-modate increased staffing related to fi-nancial stability efforts. The remainingoutlays in this category will fund vari-ous building renovation and refurbish-ment projects, as well as miscellaneousfacility improvement projects.

Initiatives related to cash, paymentsystems, and Treasury initiatives repre-sent $111.9 million of the capital bud-gets. Of this total, $54.6 million is forcash-services initiatives, including theCACHE development effort ($21.4 mil-lion) and the Systemwide upgrade ofcash-processing machines ($25.1 mil-lion). The budgets also include $35.4million for reimbursable Treasury ini-tiatives, including support of theTWAI, Government-Wide Accounting,CCMM-related efforts, and variousother initiatives, as well as $21.8 mil-lion for multiyear efforts to migrateSystem applications, includingFedACH and Fedwire, off the main-frame to a distributed environment. TheReserve Banks and FRIT included$98.8 million in funding for major in-formation technology initiatives. Theseinitiatives do not include the automa-tion components of building or pay-ment systems initiatives discussed sepa-rately. Of the total automation-relatedoutlays, FRIT projects and acquisitionsaccount for $32.0 million and NewYork Reserve Bank projects account for$32.8 million. In addition, the budgetsinclude $6.5 million in initial outlaysfor Systemwide server consolidation.

The proposed capital budgets include$40.9 million for security enhance-ments and $4.6 million for equipmentand software not falling into the definedcategories above. Á


Chapter 4

Currency Budget

Each year, under authority delegated bythe Board, the director of the Divisionof Reserve Bank Operations and Pay-ment Systems orders new currencyfrom the U.S. Department of the Trea-sury’s Bureau of Engraving and Print-ing (BEP). Upon reviewing the order,the BEP establishes billing rates fornew currency, which the Board staffuses to prepare the annual budget fornew currency. Each month, the Boardassesses the costs of new currency toeach Federal Reserve Bank through anaccounting procedure similar to thatused in assessing the costs of theBoard’s operating expenses to theBanks. Total new currency expenses for2009 were under budget by $129.3 mil-lion, or 20.5 percent, primarily becauseof delays associated with the new-design $100 note. In addition, the BEPrequested that the Board move nearly630 million notes from the fiscal year

2009 print order into the fiscal year2010 print order.

The approved 2010 new currencybudget of $702.9 million is 40.0 per-cent higher than 2009 costs (chart 4.1).Printing costs for Federal Reservenotes represent 96 percent of the newcurrency budget, and expenses forcurrency transportation, counterfeit-deterrence research, and the BEP’sFinance Directorate operations ac-count for the remaining 4 percent(table 4.1).

Printing ofFederal Reserve Notes

The calendar-year 2010 currency orderwill cost $676.9 million to print, a 41.2percent increase from the cost for the2009 order. This 41.2 percent increaseis attributable to the larger number of

Chart 4.1 Federal Reserve Costs for New Currency, 1997−2010

NOTE: For 2010, budgeted.

23

more-expensive notes ordered, as wellas the BEP producing fewer notes in2009 than budgeted. The volume-weighted average billing rate per thou-sand notes increased 2.9 percent, from$86.36 in 2009 to $88.87 in 2010 (table4.2); it increased largely because of theestimated cost for the Series 2004 $100note, which accounts for approximately36.1 percent of the 2010 order, andchanges in both print-order volume anddenomination mix. In addition, the2010 new currency budget is alsohigher than 2009 costs because it con-tains a larger share of more-expensiveSeries 2004 notes than did the 2009budget. Series 2004 notes account for79.3 percent of the 2010 calendar-yearbudget, compared with 23.3 percent ofthe 2009 calendar-year budget. Specifi-cally, the 2010 calendar-year budget in-cludes nearly 2.8 billion Series 2004$100 notes at the billing rate of

$117.98 per thousand notes, amountingto $324.6 million, or 48.0 percent, ofthe total printing costs for the new cur-rency budget.

Currency Transportation

The 2010 currency transportation bud-get is $17.4 million, which includes thecosts of shipping new currency fromthe BEP to Reserve Banks ($8.5 mil-lion), of shipping fit and unprocessedcurrency between Reserve Banks ($8.9million), and of returning currency pal-lets to the BEP ($45,000).

The 2010 budget for currency trans-portation increased 11.2 percent from2009 costs. The overall increase reflectsonly a slight change in intra-Systemshipment costs, but a 17.9 percent in-crease in new currency shipment costs.This increase in the new currency ship-

Table 4.1 Federal Reserve Budget for New Currency, 2009 and 2010

Thousands of dollars, except as noted

Item2009

(actual)2010

(budgeted)Percentchange

Printing of new Federal Reserve Notes1 . . . . . . . . . . . . . . . . . . . . . . 479,255 677,613 41.4Currency transportation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15,368 17,446 13.5Counterfeit-deterrence research. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,913 4,208 7.5Reimbursement to the BEP’s Finance Directorate . . . . . . . . . . . . . 3,609 3,650 1.1

Total cost of currency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 502,145 702,918 40.0

1. Includes expenses for other currency-related initiatives.

Table 4.2 Projected Federal Reserve Costs of Printing New Notes,by Type of Note, 2010

Type of currencyNumber of notes

(millions)Percentage of

total notesCost per thousand

notes (dollars)

Total cost(thousands of

dollars)

Unthreaded ($1, $2) . . . . . . . . . . . . . . . . 1,469.8 19.3 48.07 70,651Series 1996 ($100) . . . . . . . . . . . . . . . . . 108.8 1.4 85.35 9,286Series 2004

$5. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 805.3 10.6 77.57 62,466$10 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 214.6 2.8 78.85 16,924$20, $50. . . . . . . . . . . . . . . . . . . . . . . . . 2,267.0 29.8 85.11 192,948$100e . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,751.2 36.1 117.98 324,588

Volume-weighted average cost . . . . . . . . . . . . 88.87 . . .

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,616.7 100.0 . . . 676,863

e Estimate.. . . Not applicable.


ment budget reflects projected costs toship Series 2004 $100 notes from theBEP to every Reserve Bank in order tobuild sufficient inventories before issu-ance.

Counterfeit-Deterrence Research

The 2010 budget for counterfeit-deterrence research is $4.2 million,which includes the costs associatedwith the Central Bank Counterfeit De-terrence Group (CBCDG) and the Re-prographic Research Center (RRC).The CBCDG, which includes 31 centralbanks, operates under the auspices ofthe G-10 central bank governors tocombat digital counterfeiting. TheBoard’s $4.2 million share of the 2010CBCDG budget, which accounts for 99percent of the Federal Reserve’scounterfeit-deterrence budget, is 7.5percent higher than the Board’s shareof the 2009 CBCDG costs.1

Bureau of Engravingand PrintingFinance Directorate

The 2010 budget includes $3.6 millionto reimburse the BEP for expenses in-curred by its Destruction Standards andCompliance Division (DSCD) and Mu-tilated Currency Division (MCD). TheDSCD develops Reserve Bank stan-dards for cancellation and destructionof unfit currency and for note account-ability; it also reviews Reserve Banks’cash operations for compliance with itsstandards. As a public service, theMCD processes claims for the redemp-tion of damaged or mutilated paper cur-rency. Á

1. The estimated RRC payment of $36,000represents the remaining 1 percent of thecounterfeit-deterrence research budget. The RRC

is a state-of-the-art facility, hosted by the Na-tional Bank of Denmark, that is used for adver-sarial testing of banknote designs and counterfeitdeterrent features for its 13 member countries.

Currency Budget 25

Appendixes

Appendix A

Federal Reserve Budget Processes

The budgets for the Board of Gover-nors, the Federal Reserve Banks, andcurrency are separate, and each has itsown budget process.

Board of Governors

For the past 12 years, the Board pre-pared two-year budgets. However, tobetter respond to the significantchanges in demands placed on theBoard during the financial crisis and thepotential impact of regulatory restruc-turing proposals, the Board approved aone-year budget for 2010.

• The Board’s budget is structured bydivision, office, or special account(see appendix C, table C.1).

• The Board establishes a base budgetto support current operations.

• Each division identifies new initia-tives and savings required to achieveits objectives for the next budgetcycle.

• The Board’s Staff Planning Group(SPG), a committee of senior officersrepresenting major lines of business,evaluates each new initiative andproposed savings in the context ofthe Board’s as well as the division’smission.

• The proposed budget is submitted tothe Committee on Board Affairs(CBA). The CBA submits the budgetto the Board for review and final ac-tion.

• Monthly expenses are compared withbudgets by division and accountingclassification. Variances are analyzedand reported.

The Board’s Office of Inspector Gen-eral (OIG), in keeping with its statutory

independence, prepares its proposedbudget apart from the Board’s budget.The OIG presents its budget directly tothe Chairman for action by the Board.

Federal Reserve Banks

The Reserve Banks’ budgets cover oneyear. Annually, each Reserve Bank es-tablishes major operating goals for thecoming year, devises strategies for at-taining those goals, estimates requiredresources, and monitors results. TheReserve Banks’ budgets are structuredby operational area, with support andoverhead attributable to each areacharged to that area.

The operations and financial perfor-mance of the Reserve Banks are moni-tored throughout the year by way of acost-accounting system, the Planningand Control System (PACS). UnderPACS, the costs of all Reserve Bankfunctions are grouped by operationalarea, and the associated costs of sup-port and overhead are charged to theseareas accordingly. PACS makes it pos-sible to compare budgets with actualexpenses, and it facilitates comparisonof the financial and operating perfor-mances of the Reserve Banks. Duringthe budget year, the Reserve Banksmust submit proposals for major pur-chases of assets to the Board for furtherreview and approval.

Following is a summary of the Re-serve Bank budget process:

• The business leaders in each func-tional area provide guidance to theReserve Banks for the upcoming bud-get year.

• The Reserve Banks develop earlybudget projections that incorporate

29

the business leader guidance. Thebudgets are reviewed by the ReserveBanks for consistency with the Sys-tem direction and further refined toreflect business direction.

• The Reserve Banks submit prelimi-nary budget information to the Boardfor staff review, including documen-tation to support the budget request.

• Board staff analyzes the Bank’s bud-gets, both individually and in thecontext of Systemwide initiatives andother Banks’ plans.

• The Committee on Federal ReserveBank Affairs reviews the Bank bud-gets.

• The Reserve Banks make any re-quested or needed changes to thebudgets, and the revised projectionsare submitted to the Board.

• The budgets are provided to themembers of the Board for finalaction.

• Throughout the year, Reserve Bankand Board staff compare actual per-formance to budgeted projections.

Currency

The currency budget covers one (calen-dar) year. On a monthly basis, Boardstaff monitors payments of currency toand receipts of currency from circula-tion and the number of unfit notes de-stroyed at the Reserve Banks. Boardstaff estimates the number of notes theBoard will order from the BEP to meetdemand based on monthly monitoring,

forecasts of growth rates for paymentsof currency to circulation and receiptsof currency from circulation, opera-tional factors, and other policy consid-erations. Historically, over 90 percentof the notes that the Board orders eachyear replace unfit currency that ReserveBanks receive from circulation.

The currency budget process is asfollows:

• Each July, based on Board staff’s as-sessment of currency demand, the di-rector of the Division of ReserveBank Operations and Payment Sys-tems submits a fiscal year print orderfor currency to the director of theBureau of Engraving and Printing(BEP).

• Each November, Board staff esti-mates expenses for the currency bud-get, including printing expenses(based on billing rates provided bythe BEP), currency transportationexpenses, counterfeit-deterrence re-search expenses, BEP’s Finance Di-rectorate operations expenses, and es-timated expenses for other currency-related initiatives.

• The Committee on Federal ReserveBank Affairs reviews the proposedcurrency budget.

• Staff submits the proposed currencybudget to the Board for its consider-ation and approval.

• On a monthly basis, Board staffmonitors expenses and comparesthese expenses to the budget. Á


Appendix B

Priced Services

The Monetary Control Act of 1980 re-quires the Federal Reserve to chargedepository institutions for certain ser-vices. The fees charged for providingthese priced services are set to recover,over the long run, all direct and indirectcosts of providing the services plus im-puted costs, including the interest onitems credited before actual collection(float) and the private-sector adjustmentfactor (PSAF). To calculate the PSAF,the Federal Reserve Banks impute thecosts that would have been incurred,such as taxes that would have beenpaid, and the profits that would havebeen earned (return on equity) had thepriced services been provided by a pri-vate business firm.

Annual Pricing Process

To meet the requirement for the full re-covery of costs over the long run, theFederal Reserve has developed an an-nual pricing process that involves pro-jecting Reserve Bank expenses, vol-umes, and revenues, as well as thePSAF and net income on clearing bal-ances, for each service category.

Fees for Federal Reserve servicesmust be approved by the product direc-tor for the respective service, by theReserve Banks’ Financial ServicesPolicy Committee (FSPC), and, ulti-mately, by the Board of Governors.1

The cost of float is projected by ap-plying the federal funds rate to an esti-

mate of the level of float to be gener-ated in the coming year. The PSAFtargeted return-on-equity (ROE) capitalis based on a capital-asset pricingmodel using data from the equity mar-ket as a whole. The ROE is applied tothe level of priced services equity thatis imputed to finance the assets theFederal Reserve expects to use in pro-viding priced services in the comingyear. Estimates of income taxes arebased on the tax rates derived from thefinancial data of the 50 largest U.S.bank holding companies, based on de-posit balances.

The other components of the PSAFare derived from the budgets of the Re-serve Banks and the Board: the imputedsales tax (based on budgeted outlays formaterials, supplies, and capital); the im-puted assessment for insurance by theFederal Deposit Insurance Corporation(based on expected clearing balancesand amounts deferred to depository in-stitutions for items deposited for collec-tion with the Reserve Banks); and theportion of the expenses of the Board ofGovernors related to priced services.2

To estimate net income on clearingbalances, the priced services investmentincome is imputed and netted with re-lated direct costs associated with clear-ing balances. The pro forma financialstatements for the priced services are

1. The product directors are those first vicepresidents at selected Reserve Banks with respon-sibility for management of specific services. TheFSPC is responsible for the overall direction offinancial services for the Federal Reserve Banks.

2. On March 31, 2009, the Board of Gover-nors requested public comment on a proposal toreplace the current correspondent bank model un-derlying the PSAF calculation with a modelbased on elements derived from publicly tradedfirms more broadly. The Board is currently ana-lyzing further the proposed publicly traded firmmodel and an alternate model based on a peergroup of publicly traded payments processors thatwas suggested by several commenters.

31

presented in the 2009 Annual Report ofthe Board of Governors of the FederalReserve System. (available at www.federalreserve.gov/boarddocs/rptcongress/default.htm). Á


Appendix C

Expenses and Employment

at the Board of Governors

Table C.1 Operating Expenses of the Board of Governors, by Division, Office, or SpecialAccount, 2006−2010

Millions of dollars

Division, office, or special account2006−07


2008−091


2010(budgeted)

Board Members . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26.4 24.7 29.4 28.5 17.3Secretary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.4 12.3 14.6 14.4 8.1Staff Director for Management . . . . . . . . . . . . . . . . . . . . . . . 16.8 18.9 21.4 20.9 11.4Research and Statistics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82.7 81.2 98.3 97.3 52.7International Finance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32.0 29.1 37.2 34.6 19.9Monetary Affairs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28.4 27.6 34.3 34.2 23.2Banking Supervision and Regulation . . . . . . . . . . . . . . . . . 99.4 96.8 113.7 116.8 62.0Consumer and Community Affairs . . . . . . . . . . . . . . . . . . . 29.5 30.8 41.8 41.8 26.1Legal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26.1 23.1 30.5 30.3 17.5Reserve Bank Operations and Payment Systems . . . . . . 51.4 49.8 64.2 59.1 33.2Information Technology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91.2 89.5 105.1 104.4 61.7Management Division . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 122.2 127.4 155.8 157.0 90.0Information Resources Management income account . . −39.8 −39.5 −44.8 −45.1 −28.9Residual retirement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.8 13.5 13.3 19.8 9.9Special projects . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.0 7.9 14.3 16.2 10.7Extraordinary items . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.0 8.3 7.3 5.5 10.2

Total, Board operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . 609.5 601.4 736.4 735.6 425.0

Office of Inspector General (OIG) . . . . . . . . . . . . . . . . . . . . 10.2 9.5 14.0 12.4 19.2

NOTE: Components may not sum to totals and may not yield percentages shown because of rounding.1. 2008−09 budgeted figures include $30.1 million and $1.3 million added to the Board’s and the OIG’s

respective operating budgets during 2009.

33

Table C.2 Operating Expenses of the Board of Governors, by Account Classification,2006−2010

Millions of dollars

Account classification2006−07


2008−091


2010(budgeted)

Personnel servicesSalaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 380.2 372.7 453.5 454.4 252.5Retirement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35.7 38.8 50.3 53.1 34.2Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31.4 35.3 38.5 44.1 22.6

Subtotal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 447.3 446.8 542.3 551.6 309.3

Goods and servicesTravel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15.7 17.2 18.9 20.4 9.7Postage and shipping . . . . . . . . . . . . . . . . . . . . . 1.0 1.0 1.2 1.0 0.5Telecommunications . . . . . . . . . . . . . . . . . . . . . . 10.8 9.8 10.2 10.2 4.4Printing and binding. . . . . . . . . . . . . . . . . . . . . . 2.7 2.6 3.0 3.3 1.5Publications. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.2 0.9 1.1 1.1 0.5Stationery and supplies . . . . . . . . . . . . . . . . . . . 2.3 2.5 2.9 3.1 1.5Software . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.6 13.3 15.6 15.9 8.6Furniture and equipment . . . . . . . . . . . . . . . . . . 7.5 8.1 8.5 8.0 5.5Rentals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.2 1.1 5.9 6.7 7.4Books and subscriptions . . . . . . . . . . . . . . . . . . 2.0 1.7 1.9 1.7 1.0Utilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.8 8.3 8.4 8.5 4.0Building repairs and alterations . . . . . . . . . . . 4.6 4.0 4.8 5.1 2.0Furniture repairs and maintenance. . . . . . . . . 2.5 2.6 3.0 3.2 1.6Contingency processing center expenses . . . 1.7 2.2 2.4 2.4 1.3Contractual professional services . . . . . . . . . . 62.8 59.8 81.0 69.1 49.5Tuition/registration and membership fees . . 4.8 5.2 6.6 5.9 3.9Subsidies and contributions . . . . . . . . . . . . . . . 1.3 1.4 2.6 2.7 1.1Depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28.8 26.6 28.9 27.5 15.8All other2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (11.4) (13.7) (12.8) (11.7) (4.1)

Subtotal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 162.2 154.6 194.1 184.0 115.7

Total, Board operations3 . . . . . . . . . . . . . . . . 609.5 601.4 736.4 735.6 425.0

Office of Inspector General (OIG) . . . . . . . . . 10.2 9.5 14.0 12.4 19.2

NOTE: Components may not sum to totals and may not yield percentages shown because of rounding.1. 2008−09 budgeted figures include $30.1 million and $1.3 million added to the Board’s and the OIG’s

respective operating budgets during 2009.2. All other includes, among other items, income from outside agencies for data processing services, rental

income, and transportation subsidy benefits for employees.3. Includes extraordinary items.


Table C.3 Positions Authorized at the Board of Governors, by Division, Office, or SpecialAccount, 2006−2010

Division, office, or special account

Position count1

2006−07(initial)

2006−07(ending)

2008−09(initial)

2008−09(ending)

2010(budgeted)

Board Members . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78 80 81 86 88Secretary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50 50 50 51 51Staff Director for Management. . . . . . . . . . . . . . . . . . . . 45 46 48 48 48Research and Statistics . . . . . . . . . . . . . . . . . . . . . . . . . . . 275 275 285 290 296International Finance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 116 114 115 115 115Monetary Affairs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75 78 81 88 95Banking Supervision and Regulation . . . . . . . . . . . . . . 254 258 253 283 283Consumer and Community Affairs . . . . . . . . . . . . . . . . 94 101 105 114 120Legal. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80 80 80 80 86Reserve Bank Operations and Payment Systems . . . 139 138 138 138 138Information Technology2 . . . . . . . . . . . . . . . . . . . . . . . . . 301 318 318 353 353Management Division3 . . . . . . . . . . . . . . . . . . . . . . . . . . . 469 487 487 520 517

Total, Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,976 2,025 2,041 2,166 2,190

Office of Inspector General . . . . . . . . . . . . . . . . . . . . . . . 36 36 37 45 61

NOTE: Includes only those divisions, offices, and special accounts that have authorized position counts.1. Excludes summer interns.2. Includes positions that support the Federal Financial Institutions Examination Council for processing data

collected under the Home Mortgage Disclosure Act and the Community Reinvestment Act.3. Includes cooperative education, worker trainee, and student aide programs that assist offices and divisions

Boardwide.

Expenses and Employment at the Board of Governors 35

Appendix D

Expenses and Employment

at the Federal Reserve Banks

Table D.1 Operating Expenses of the Federal Reserve Banks, by District, 2009 and 2010


District2009

(budgeted)2009

(actual)2010

(budgeted)

Percent change

2009 actualcompared with2009 budgeted

2010 budgetedcompared with

2009 actual

Boston . . . . . . . . . . . . . . . . 153,479 154,088 160,841 0.4 4.4New York. . . . . . . . . . . . . . 646,993 750,240 791,329 16.0 5.5Philadelphia. . . . . . . . . . . . 152,724 153,070 148,493 0.2 −3.0Cleveland . . . . . . . . . . . . . . 171,007 176,012 168,410 2.9 −4.3Richmond. . . . . . . . . . . . . . 283,005 276,860 294,937 −2.2 6.5Atlanta . . . . . . . . . . . . . . . . 387,155 353,214 354,324 −8.8 0.3Chicago . . . . . . . . . . . . . . . 274,078 264,640 275,191 −3.4 4.0St. Louis. . . . . . . . . . . . . . . 222,717 210,690 222,488 −5.4 5.6Minneapolis. . . . . . . . . . . . 154,652 150,757 150,245 −2.5 −0.3Kansas City. . . . . . . . . . . . 169,232 172,726 173,306 2.1 0.3Dallas . . . . . . . . . . . . . . . . . 182,399 186,564 185,729 2.3 −0.4San Francisco . . . . . . . . . . 288,730 293,675 296,001 1.7 0.8

Total . . . . . . . . . . . . . . . . . . 3,086,172 3,142,535 3,221,295 1.8 2.5

NOTE: Excludes capital outlays. Includes expenses budgeted by Federal Reserve Information Technology and theSystem’s Office of Employee Benefits. Reflects all redistributions for support and allocations for overhead.Components may not sum to totals and may not yield percentages shown because of rounding.

37

Table D.2 Employment at the Federal Reserve Banks, by District, and at FRIT and OEB,2009 and 2010

Average number of personnel

District2009

(budgeted)2009

(actual)2010

(budgeted)

Amount change



2009 actual

Boston. . . . . . . . . . . . . . . . . . . . . . . . . 899 884 876 −15 −8New York. . . . . . . . . . . . . . . . . . . . . . 2,877 2,978 3,066 101 88Philadelphia. . . . . . . . . . . . . . . . . . . . 1,009 932 868 −77 −64Cleveland . . . . . . . . . . . . . . . . . . . . . . 1,367 1,359 1,312 −8 −47Richmond. . . . . . . . . . . . . . . . . . . . . . 1,638 1,584 1,509 −54 −75Atlanta . . . . . . . . . . . . . . . . . . . . . . . . 1,776 1,755 1,717 −21 −38Chicago . . . . . . . . . . . . . . . . . . . . . . . 1,339 1,314 1,297 −25 −17St. Louis. . . . . . . . . . . . . . . . . . . . . . . 964 943 962 −21 19Minneapolis. . . . . . . . . . . . . . . . . . . . 1,082 1,070 1,018 −12 −52Kansas City. . . . . . . . . . . . . . . . . . . . 1,213 1,233 1,189 20 −44Dallas . . . . . . . . . . . . . . . . . . . . . . . . . 1,235 1,207 1,204 −28 −3San Francisco . . . . . . . . . . . . . . . . . . 1,686 1,650 1,610 −36 −40

Total, all Districts . . . . . . . . . . . . . 17,086 16,910 16,628 −176 −282

Federal Reserve InformationTechnology (FRIT). . . . . . . . . . . 889 925 904 36 −21

Office of Employee Benefits(OEB). . . . . . . . . . . . . . . . . . . . . . . 45 45 47 0 2

Total . . . . . . . . . . . . . . . . . . . . . . . . . . 18,020 17,880 17,578 −140 −302

NOTE: The term average number of personnel (ANP) describes levels and changes in employment. ANP is theaverage number of employees in terms of full-time positions for the period. For instance, a full-time employee whostarts work on July 1 counts as 0.5 ANP for that calendar year; two half-time employees who start on January 1count as 1 ANP. Components may not sum to totals and may not yield variances shown because of rounding.

Table D.3 Operating Expenses of the Federal Reserve Banks, FRIT, and OEB,by Operational Area, 2009 and 2010


Operational area2009

(budgeted)2009

(actual)2010

(budgeted)

Percent change



2009 actual

Monetary and economic policy. . . . 433,013 501,297 505,085 15.8 0.8Services to the U.S. Treasury and

other government agencies . . . . . 442,978 429,658 444,370 −3.0 3.4Services to financial institutions

and the public . . . . . . . . . . . . . . . . . 837,378 880,714 980,753 5.2 11.4Supervision and regulation. . . . . . . . 714,224 725,253 784,209 1.5 8.1Fee-based services to financial

institutions. . . . . . . . . . . . . . . . . . . . . 658,578 605,613 506,877 −8.0 −16.3

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,086,172 3,142,535 3,221,294 1.8 2.5

NOTE: Excludes capital outlays. Includes expenses budgeted by Federal Reserve Information Technology (FRIT)and the Office of Employee Benefits (OEB). Reflects all redistributions for support and allocations for overhead.Components may not sum to totals and may not yield percentages shown because of rounding.


Table D.4 Employment at the Federal Reserve Banks, and of FRIT and OEB,by Operational Area, 2009 and 2010

Average number of personnel

Operational area2009

(budgeted)2009

(actual)2010

(budgeted)

Amount change



2009 actual

Monetary and economic policy. . . . 1,067 1,081 1,125 15 44Services to U.S. Treasury and

other government agencies . . . . . 1,140 1,112 1,091 −28 −21Services to financial institutions

and the public . . . . . . . . . . . . . . . . . 2,517 2,578 2,634 61 56Supervision and regulation. . . . . . . . 2,785 2,863 2,996 78 133Fee-based services to financial

institutions . . . . . . . . . . . . . . . . . . . . 1,033 837 386 −197 −451Local support and overhead. . . . . . . 6,507 6,461 6,446 −46 −15National consolidated support . . . . . 2,140 2,088 2,059 −52 −29Centralized service providers. . . . . . 831 861 841 30 −20

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18,020 17,880 17,578 −140 −302

NOTE: Components may not sum to totals and may not yield variances shown because of rounding.FRIT, Federal Reserve Information Technology; OEB, Office of Employee Benefits.

Table D.5 Expenses of the Federal Reserve Banks for Salaries of Officers and Employees,by District, 2009 and 2010


District2009

(budgeted)2009

(actual)2010

(budgeted)

Percent change



2009 actual

Boston. . . . . . . . . . . . . . . . . . . . . . . . . 78,925 78,620 80,956 −0.4 3.0New York. . . . . . . . . . . . . . . . . . . . . . 325,011 334,674 361,761 3.0 8.1Philadelphia. . . . . . . . . . . . . . . . . . . . 71,544 68,294 68,108 −4.5 −0.3Cleveland . . . . . . . . . . . . . . . . . . . . . . 85,802 85,701 86,624 −0.1 1.1Richmond. . . . . . . . . . . . . . . . . . . . . . 119,514 117,220 118,995 −1.9 1.5Atlanta . . . . . . . . . . . . . . . . . . . . . . . . 130,786 131,216 135,339 0.3 3.1Chicago . . . . . . . . . . . . . . . . . . . . . . . 111,039 109,587 115,311 −1.3 5.2St. Louis. . . . . . . . . . . . . . . . . . . . . . . 73,757 72,508 76,875 −1.7 6.0Minneapolis. . . . . . . . . . . . . . . . . . . . 73,570 72,314 72,260 −1.7 −0.1Kansas City. . . . . . . . . . . . . . . . . . . . 87,848 87,277 88,613 −0.6 1.5Dallas . . . . . . . . . . . . . . . . . . . . . . . . . 83,535 82,423 85,086 −1.3 3.2San Francisco . . . . . . . . . . . . . . . . . . 146,594 145,259 147,823 −0.9 1.8

Total, all Districts . . . . . . . . . . . . . 1,387,925 1,385,094 1,437,751 −0.2 3.8

Federal Reserve InformationTechnology . . . . . . . . . . . . . . . . . . 83,826 87,353 89,025 4.2 1.9

Office of Employee Benefits . . . . 5,558 5,545 5,902 −0.2 6.4

Total . . . . . . . . . . . . . . . . . . . . . . . . . . 1,477,309 1,477,992 1,532,677 0.0 3.7


Expenses and Employment at the Federal Reserve Banks 39

Table D.6 Capital Outlays of the Federal Reserve Banks, by District, and of FRIT andOEB, 2009 and 2010


District2009

(budgeted)2009

(actual)2010

(budgeted)

Percent change



2009 actual

Boston. . . . . . . . . . . . . . . . . . . . . . . . . 27,241 18,114 21,191 −33.5 17.0New York. . . . . . . . . . . . . . . . . . . . . . 154,713 131,037 112,627 −15.3 −14.0Philadelphia. . . . . . . . . . . . . . . . . . . . 21,648 20,947 16,055 −3.2 −23.4Cleveland . . . . . . . . . . . . . . . . . . . . . . 11,669 11,870 12,014 1.7 1.2Richmond. . . . . . . . . . . . . . . . . . . . . . 32,224 29,163 27,806 −9.5 −4.7Atlanta . . . . . . . . . . . . . . . . . . . . . . . . 36,735 18,708 27,974 −49.1 49.5Chicago . . . . . . . . . . . . . . . . . . . . . . . 23,259 17,377 36,081 −25.3 107.6St. Louis. . . . . . . . . . . . . . . . . . . . . . . 21,507 16,621 20,082 −22.7 20.8Minneapolis. . . . . . . . . . . . . . . . . . . . 10,444 11,552 13,547 10.6 17.3Kansas City. . . . . . . . . . . . . . . . . . . . 7,152 4,433 8,636 −38.0 94.8Dallas . . . . . . . . . . . . . . . . . . . . . . . . . 29,729 17,238 25,324 −42.0 46.9San Francisco . . . . . . . . . . . . . . . . . . 62,239 38,292 44,771 −38.5 16.9

Total, all Districts . . . . . . . . . . . . . 438,560 335,351 366,106 −23.5 9.2

Federal Reserve InformationTechnology (FRIT). . . . . . . . . . . 79,758 31,637 64,093 −60.3 102.6

Office of Employee Benefits(OEB). . . . . . . . . . . . . . . . . . . . . . . 1,050 2,094 4,228 99.4 101.9

Total . . . . . . . . . . . . . . . . . . . . . . . . . . 519,368 369,082 434,428 −28.9 17.7


Table D.7 Capital Outlays of the Federal Reserve Banks, FRIT, and OEB, by AssetClassification, 2009 and 2010


Asset classification2009

(budgeted)2009

(actual)2010

(budgeted)

Percent change



2009 actual

Equipment . . . . . . . . . . . . . . . . . . . . . 150,235 93,159 124,046 −38.0 33.2Furniture, furnishings, and

fixtures . . . . . . . . . . . . . . . . . . . . . . 24,789 17,421 31,876 −29.7 83.0Land and other real estate . . . . . . 4,415 5,244 2,808 18.8 −46.5Building . . . . . . . . . . . . . . . . . . . . . . . 147,069 131,005 124,399 −10.9 −5.0Building machinery and

equipment . . . . . . . . . . . . . . . . . . . 45,002 21,788 44,960 −51.6 106.4Leasehold improvements. . . . . . . . 3,065 3,674 2,228 19.9 −39.4Software . . . . . . . . . . . . . . . . . . . . . . . 143,988 96,274 103,242 −33.1 7.2Art . . . . . . . . . . . . . . . . . . . . . . . . . . . . 805 517 868 −35.7 67.7

Total . . . . . . . . . . . . . . . . . . . . . . . . . . 519,368 369,082 434,428 −28.9 17.7

NOTE: Components may not sum to totals and may not yield percentages shown because of rounding.FRIT, Federal Reserve Information Technology; OEB, Office of Employee Benefits.


Maps of the

Federal Reserve System

Maps of the Federal Reserve System

LEGEND

Both pagesn Federal Reserve Bank city> Board of Governors of the Federal

Reserve System, Washington, D.C.

Facing Page+ Federal Reserve Branch city— Branch boundary

NOTE

The Federal Reserve officially identifiesDistricts by number and Reserve Bankcity (shown on both pages) and by let-ter (shown on the facing page).

In the 12th District, the SeattleBranch serves Alaska and the San Fran-cisco Bank serves Hawaii.

The System serves commonwealthsand territories as follows: the New York

Bank serves the Commonwealth ofPuerto Rico and the U.S. Virgin Is-lands; the San Francisco Bank servesAmerican Samoa, Guam, and the Com-monwealth of the Northern Mariana Is-lands. The maps show the boundarieswithin the System as of year-end 2009.

CHICAGO

K CANSAS ITY

HAWAII

ALASKA

MINNEAPOLIS

DALLAS

S FAN RANCISCO

S LT. OUIS

CLEVELAND

RICHMOND

ATLANTA

PHILADELPHIA

N YEW ORK

BOSTON

10

12

11

9

86

7

1

2

3

5

4


Maps of the Federal Reserve System 43

budget review 2010 - federal reserve board

Documents