Spending will increase, but not by as much as requested -- for now.
The Federal Retirement Thrift Investment Board approved a $170.5 million fiscal 2013 budget Monday, a figure that exceeds last year’s budget by $27 million and could increase during the year.
Executive Director Gregory Long presented the board with a $175.5 million fiscal 2013 budget, which included $166.3 million for “steady state” services -- functions already the board performs that are necessary to maintain its current level of service to the TSP’s more than 4.6 million beneficiaries -- and an additional $9.1 million for new initiatives. He said a $175.5 million budget for fiscal 2013, about $32 million more than the $143.1 million budget for fiscal 2012, was the “most prudent” figure.
Several members expressed concerns that $175.5 million was too high; the number of assets the board will manage next fiscal year cannot be precisely estimated.
The board agreed to a $170.5 million budget, with the stipulation that it estimates a target budget-to-assets ratio of five budget points. This means the board can reevaluate throughout the year based on growth in its assets and increase the budget. FRTIB Director of External Affairs Kim Weaver said it is not likely the board would end up spending more than the $175.5 million that Long requested. FRTIB Board Chairman Michael Kennedy called the $170.5 million a “happy medium” that preserves the important aspects of Long’s budget request and accommodates the concerns of other board members.
The budget approved Monday includes all of Long’s $166.3 million in requested funding for steady state services such as record-keeping, data and call centers, accounting, communications and agency staff, plus $4 million for new initiatives. Two of the new efforts are labeled “mission critical:” $3.6 million for the implementation of an Enterprise Information Security and Risk Management directive to ensure the TSP complies with congressional information technology security requirements, and more than $150,000 to hire additional human resources staff.
The other new initiatives included in Long’s request that were not approved as part of the official $170.5 million Monday include acquisition and risk management strategies, benchmarking studies and new media communications. Long also provided the board with a budget estimate for fiscal 2014 of $202 million to $211 million, depending upon which new budget initiatives are adopted in fiscal 2013. The board did not vote to approve plans for fiscal 2014.
The board said this summer that it anticipates managing an additional 4.4 percent in TSP assets by fiscal 2017 and growing the size of its budget by 25 percent to accommodate an increasing number of federal retirees, more investment options -- such as the new Roth offering -- and more participants withdrawing partial amounts from their accounts in the next five years.
The board has spent about 99 percent of its $143.1 million fiscal 2012 budget.