NCUA OKs Covering Costs of Financial Literacy For Associate Board Members

MADISON, Wis.-Thanks to a letter Fred Johnson sent to NCUA, credit unions can now pay for financial literacy training for associate directors or director emeriti.

NCUA, in a response to the CUES president's correspondence with NCUA General Counsel Robert Fenner (Credit Union Journal, Feb. 7), has reversed its position regarding reimbursements for training expenses for non-voting board members. In a letter to Johnson from Associate General Counsel Hattie Ulan, NCUA stated that as long as associate directors or "similar FCU officials who occupy volunteer positions provide board designated services and act in more than an honorary capacity, they can be reimbursed for training and associated travel expenses."

Johnson believed that NCUA never intended to block training for associate directors, but "somewhere along the line" in taking a hard look at credit union expenses, NCUA decided that CUs could not reimburse anyone who is a non-voting official. "That's where the disconnect was. The decision did not fit with NCUA's intentions to improve the financial literacy of credit union boards," Johnson told Credit Union Journal.

Johnson's correspondence to NCUA addressed Letter 10-0913, that he felt limited credit unions' ability to provide financial education to associate directors. Johnson expressed concern that the letter dated Oct. 29, 2010, regarding health benefit reimbursement, delineates between voting and non-voting CU board members, stating that non-voting directors are not allowed expense reimbursement or insurance benefits. Johnson pointed out in his correspondence to Fenner that NCUA's letter states: "Given associate directors or director emeriti act in an honorary or advisory capacity, these officials are not entitled to the same benefits as those provided to regular voting committee members that are seated in accordance with the bylaws and charged with the full responsibility of their positions."

"I laud the decision by Bob Fenner and the Chairman to take a look at this and say you are right," Johnson said. "I am pleased with that because I think it is the right thing to do for credit unions and for directors."

Johnson said he was concerned that NCUA's previous position on reimbursement for associate directors was causing confusion and consternation among credit unions and could have prevented large numbers of associate directors from receiving much-needed financial literacy training.

Ulan's response to Johnson stated, "Upon reconsideration, we are of the opinion that if the individuals in question provide services that are established by the board and that go beyond merely serving in an honorary capacity, the normal exceptions to the statutory bar on compensation should apply. This would include reimbursement for training-related expenses that are appropriate to the service being provided."