As discussed by Arielle Bikard over at The Filing Cabinet, the Senate Committee on Appropriations' budget bill for FY 2011 provides a budget of $1.185 billion for the SEC, a $74 million increase (7%) over FY 2010. What does this mean for the agency? Is this good, bad, ugly?

Let's first try to put the $1.185 billion in context. The chart below from Time's Swampland blog shows where this figure fits with the other options that were on the table:

Moving from top to bottom on the chart you see:

1. 2012 (GOP): The GOP's threatened FY 2011 rollback to 2008 levels

2. 2012 (Obama): Obama's goal based on what the SEC has stated it needs to meet its responsibilities, including Dodd-Frank.

3. 2011 (pending): The amount in the pending Appropriations bill.

4. 2010 (current): The SEC's current FY 2010 budget.

5. 2008 (pre-crisis): The SEC's FY 2008 budget.

From my perspective, the SEC's FY 2011 budget situation can now be summed up as follows:
 
Good:
  • The threatened rollback to 2008 budget levels, however unlikely that was to actually occur, has been avoided.
  • Unlike many agencies that have seen their budgets cut, the SEC will receive a modest budget increase of 7%.
Bad:
  • The SEC is on record as stating that it cannot invest in the necessary personnel and technology required to do its job without significant additional resources--it says it needs nearly $300 million more than it will receive under the bill ($1.4 billion versus $1.185 billion).
  • The FY 2011 budget is for the year ending September 30, 2011. No budget has been set for 2012. That means that in just five and a half months, this whole dance will likely begin again.
Ugly:
  • As I discussed at length in a column in Compliance Week this month, a recent Congressionally-mandated report from Boston Consulting Group concluded that Congress needed to make one of two hard choices: (1) Choice 1: “Relax funding constraints” to allow the SEC to fulfill all of the responsibilities included in its current role; or (2) Choice 2: Change the SEC's current role to fit the available funding.

    It looks to me like Congress has instead gone for Door Number 3--a FY 2011 budget that is insufficient to cover the SEC's critical needs, and no accompanying reduction or change in the SEC's current role. Failing to make either of the hard choices above may well lead to an ugly situation down the road, and Congress should be prepared to share the blame.