During its monthly meeting, the Federal Retirement Thrift Investment Board voted 2-1 in favor of a $143.1 million budget for next year, a 9 percent increase over fiscal 2011. Members in May considered an initial estimate of $147.2 million, later dropping the figure to $145.6 million. TSP Executive Director Greg Long called the final budget "prudent," noting that agency officials were responsive to the board's request to minimize proposed increases.
Significant costs for 2012 include the introduction of a Roth 401(k) plan, scheduled to launch early next year; a $3.5 million boost to update data and call centers; a $2.1 million jump in personnel costs with a planned staff restructuring; and a $3.4 million one-time expense associated with the agency's move to a new office. TSP also plans to hire seven additional employees, including acquisition, information technology and strategic planning staff.
Board members in recent months have expressed concern that TSP is not keeping costs under control. Former Board Chairman Andrew Saul, who abstained from the vote Friday, in past meetings has called such increases "unfair" to participants given the current fiscal climate.
"We're getting bigger and more complex in what we're doing," Long said, adding that despite the budget hike, participant costs will remain flat.
"That's the goal -- to provide more services to more people and keep the price per person the same," said board member Dana Bilyeu. "Quite frankly, it's ridiculously inexpensive compared to private sector-defined contribution plans."
Michael Kennedy, who last month was appointed board chairman, said that more strategic thinking will help the agency rein in spending and better plan for upcoming expenses. In addition to reviewing participation and performance statistics, future meetings will incorporate five-year strategic planning around communications, human capital needs and risk management, he said.
Long also presented a fiscal 2013 budget estimate of $145.8 million, which includes a slight increase in record-keeping and staffing costs. Board members won't consider the proposal until next year.