2). Table 1 shows these regulators, along with the types of institutions that they regulate. FCA Administrative Expenses Fell Modestly From 1996 Through 2000, Remaining Within Congressionally Imposed Limits

Over the last 5 years, FCA has reduced expenditures for administrative expenses, reflecting the agency’s success in controlling operating costs. FCA Administrative Expenses Were Lower in 2000 Than in 1996

Significant dollar decreases in personnel costs were largely responsible for the decrease in administrative spending and the 5.8 percent decline compared with the 8.59 percent growth rate in federal government expenditures. Our analysis of FCA data shows that personnel costs accounted for over 80 percent of the FCA administrative expenses during the 5-year study period. Equipment purchases and other contractual services accounted for the largest increases in administrative expenditures in 1996 through 2000. Travel and transportation expenses declined (by about 10 percent) between 1996 and 2000. However, Congress did not set a spending limit for 1996. FCA Calculates Its Assessments in Much the Same Way as Other Federal Financial Regulators

FCA and the other federal financial regulators do not receive any federal money to fund their annual operating budgets, relying primarily on assessment revenue collected from the institutions they oversee. The FCA Formula for Assessing Primary Market Entities Considers Assets, Marginal Costs, and Financial Performance as Well as FCA’s Funding Needs

The law requires that the assessments be apportioned “on a basis that is determined to be equitable by the Farm Credit Administration.” FCA’s current assessment regulations for banks, associations, and “designated other System entities” were developed in 1993 through the negotiated rulemaking process. The few secondary market entities, which include Farmer Mac, are all assessed using less complex methodologies. He agreed with the information presented in the draft report regarding FCA’s administrative spending between 1996 and 2000. Appendix I: Comments From the Farm Credit Administration
Why GAO Did This Study

The Farm Credit Administration (FCA) regulates the farm credit system. Administrative expenses, which accounted for about 97 percent of FCA's total operating expenses of $34.5 million in fiscal year 2000, are funded primarily by assessments on the institutions that make up the system, including the Federal Agricultural Mortgage Corporation (Farmer Mac). This report (1) analyses trends in administrative expenses for fiscal years 1996 through 2000 and (2) compares ways that FCA and other federal financial regulators calculate the assessments they need to fund their operations.

What GAO Found

GAO found that although FCA's administrative expenditures varied each year between 1996 and 2000, they remained below 1996 levels and stayed within congressionally imposed annual spending limits for each year during 1997 through 2000. Between 1996 and 2000, the agency experienced a decline in administrative spending of around $2 million, or 5.8 percent. Personnel costs were the largest single expense, consistently accounting for more than 80 percent of administrative spending; thus, a 15 percent staff reduction also provided the greatest overall savings. Unlike many government agencies whose operations are funded by taxpayers' money, the federal financial regulators are self-funded agencies that rely primarily on assessments from the entities they regulate. In calculating these assessments, FCA and the other federal financial regulators use separate methodologies for primary and secondary market entities.