“Regulators fare well under U.S. President Bush’s 2005 budget plan, as they are asked to do more to protect the nation’s health and food supply, track down securities fraud and fight white-collar crime,” writes Deborah Solomon in today’s Wall Street Journal.

“The Securities and Exchange Commission, swamped with fraud cases, got so much funding for the current fiscal year that it couldn’t spend it all. It is set for another big budget increase for fiscal 2005 — money to hire more staff, beef up inspections of mutual funds and, possibly, to regulate hedge funds.”

“The budget request of $893 million is up 10% from the $811 million Congress authorized for the current fiscal year. When $20 million of unspent money is included from 2004, the agency’s budget request totals $913 million.”

“The Office of Management and Budget, however, estimates the SEC will be able to spend even more: $986 million, or 49% more than the current fiscal year. The SEC got a hefty increase in 2004, but wasn’t able to spend it all, returning $30 million. It was hampered by civil-service rules in its effort to hire staff, but Congress passed a law last year streamlining that process.”

“Agency officials said the money will help them keep up with the growing pace of scandals and problems plaguing Wall Street. In addition to hiring new staff, the money will go to more frequent inspections of mutual funds as well as the creation of a $2 million Office of Risk Assessment, to anticipate problems before they become widespread.”

“The SEC said it will spend $19 million to add 106 positions in fiscal 2005, which starts Oct. 1. The Investment Management division, which oversees mutual funds, will get 44 of those jobs while 30 more will go to the enforcement division to combat fraud.”

“Much of the new money is earmarked to help retain employees. The budget request includes $16.9 million for merit pay raises and $6 million for a 1.5% pay raise, effective January 2005. James McConnell, SEC executive director, said that the budget ‘funds everything we need to have in place to continue what we need to get done.’ “