Hello, this is Samantha Shares. This episode covers America’s Credit Union’s Letter to the National Credit Union Administration’s Board on Permitting Childcare Expenses as Reimbursable
The following is an audio version of that letter and the press release. This podcast is educational and is not legal advice. We are sponsored by Credit Union Exam Solutions Incorporated, whose team has over two hundred and Forty years of National Credit Union Administration experience. We assist our clients with N C U A so they save time and money. If you are worried about a recent, upcoming or in process N C U A examination, reach out to learn how they can assist at Mark Treichel DOT COM. Also check out our other podcast called With Flying Colors where we provide tips on how to achieve success with N C U A.
And now the letter.
RE: Permitting Childcare Expenses as Reimbursable Under 12 CFR 701 point 33
Dear Chairman Harper, Vice Chairman Hauptman, and Board Member Oatska:
On behalf of America’s Credit Unions, I am writing to request the National Credit Union Administration (the agency) explicitly permit reimbursement of childcare related costs incurred by a federal credit union (F C U) board member. While the term “childcare” is used throughout this letter, our ask is that child and other non-child dependent care expenses be reimbursable America’s Credit Unions is the voice of consumers’ best option for financial services: credit unions. We advocate for policies that allow the industry to effectively meet the needs of their nearly on hundred forty million members nationwide.
Credit unions stand out from banks in a variety of ways, including our emphasis on diversity, equity, and inclusion. This is, in part, evident in the prevalence of and increasing percentage of women, not only in senior level positions, but also at the board level. Based on data from the THE AGENCY and analyzed by America’s Credit Unions, the percentage of women board members has increased by roughly five percentage points among all asset ranges since at least twenty twelve.
This is a testament to the work of our industry to achieve greater gender equity in leadership.
Further, we are proud to have a regulator in the THE AGENCY that similarly emphasizes the importance of equality in the credit union industry. We applaud the focus of the THE AGENCY Board, as well as staff, including those in the agency’s Office of Minority and Women Inclusion. We appreciate the Board’s recent willingness to pursue actionable items to address ongoing challenges among credit unions, such as those related to the agency’s records preservation program. Our request below is another great opportunity for the Board to take action to achieve a sensical change to the agency’s regulations.
We ask the THE AGENCY to update its existing regulation pertaining to reimbursement of F C U officials. Specifically, we ask the Board to amend section 701 point 33 to allow F C U board members to be reimbursed for the cost of childcare when it is necessary in order to attend an official board meeting of the F C U. Family structures and childcare responsibilities are significantly different now than when this provision was last amended. To attract new talent, people with young children should be afforded the opportunity to more easily participate on a credit union board with appropriate reimbursement for their childcare expenses.
| | |
The Federal Credit Union Act (F C U Act) provides sufficient latitude for the Board to pursue such an amendment. While section 1761(c) of the Act generally limits compensation to a single board member, it explicitly states that “the reimbursement of reasonable expenses incurred in the execution of the duties of the position shall not be considered compensation.”3 This provision of the Act is implemented by section 701 point 33(b) of the agency’s regulations, which, consistent with the Act, states that compensation specifically excludes:
Payment (by reimbursement to an official . . . ) for reasonable and proper costs incurred by an official in carrying out the responsibilities of the position to which that person has been elected or appointed, if the payment is determined by the board of directors to be necessary or appropriate in order to carry out the official business of the credit union, and is in accordance with written policies and procedures, including documentation requirements, established by the board of directors. Such payments may include the payment of travel costs for officials and one guest per official[.]4
In particular, we ask the Board to update the existing limitation in section 701 point 33(b)(2)(i). This could be achieved by simply inserting “childcare” into the last sentence of section 701 point 33(b)(2)(i) as follows: “Such payments may include the payment of childcare or travel costs for officials and one guest per official[.]”
The AGENCY last updated the provision regarding the definition of “compensation” over twenty-two years ago. In that update, the agency used its expansive statutory authority to add the travel expenses of a guest as reimbursable under section 701 point 33(b). Previously, reimbursement was limited to the travel expenses of the board member’s “immediate family member.” In so doing, the Board stated its belief that amending this provision would “allow F C Us greater flexibility to accommodate the needs of officials whose duties include business-related travel.” While we are fortunate to now live in a world where virtual meetings are ubiquitous, there continue to be instances where in-person meetings are necessary, including in the context of certain F C U board meetings. Such meetings cause attendees to incur not only direct travel-related expenses, such as fuel, but also indirect expenses, such as costs associated with securing childcare for a board member’s family.
Section 701 point 33(b)(2)(i) offers just a single example of what might be considered a reasonable and proper reimbursable cost. The example is clearly not intended as an exhaustive list of permissible expenses, given the regulation’s use of “may.” We believe the cost associated with childcare is more similar to travel than other expenses the agency has indicated are not reimbursable under this section. Assuming a virtual meeting is not an option, the only way for a board member to attend a meeting is to physically travel to the meeting location. The only option for a board member to attend a board meeting is to ensure his or her child or dependent has proper care, which in many situations, absent the presence of another family member or trusted
caregiver, requires utilizing a paid caregiver. This concern and expense is amplified for any single parent or head of household with a dependent.
Again, the category of childcare expense is more like travel expense than it is other categories for which the agency has opined are impermissible under 701 point 33(b)(2)(i). For example, the agency’s Office of General Counsel (O G C) stated in a 1992 legal opinion letter that lost wages incurred while attending an F C U board meeting are not reimbursable. As noted above, in many instances childcare is necessary to allow a board member to attend a meeting. The cost of childcare is much different from that of lost wages. Childcare is an additional mandatory expense that would not be required but for the travel necessary to attend an F C U board meeting. Lost wages, while also technically an expense, are not a tangible expense in many instances, including where board members have available paid time off through their employer. While reimbursement of lost wages would certainly be helpful, it is not absolutely necessary—and a board member’s loss of wages to attend a meeting is clearly not akin to a board member’s failure to secure childcare. Additionally, the 1992 legal opinion letter explains that it is the agency's understanding that “many credit unions accommodate volunteer officials by scheduling meetings at times that are the least disruptive to work or childcare schedules.” This is somewhat accurate—many credit unions schedule board meetings in the evenings, after the workday, or on weekends; however, this does not resolve childcare concerns. In fact, that is precisely when childcare would be needed for most volunteers as this falls outside of the standard hours for daycares or other paid caregiver services. Thus, this expense is inextricably tied to the travel required to attend a board meeting and should be reimbursable.
To our knowledge, the AGENCY last addressed the specific issue of childcare as a reimbursable expense in a legal opinion letter more than 25 years ago. In that opinion, the OGC affirmed the 1992 opinion, stating that reimbursement of childcare expenses incurred by a board member when attending a board meeting is impermissible. In the event the Board disagrees with the importance of this issue, including the need to update section 701 point 33(b)(2)(i) regarding compensation, we urge the agency to revisit the 1999 legal opinion to include childcare as a reimbursable expense. Things are much different now, including with regard to family structure, than they were in 1999 when there was a greater percentage of men on F C U boards, and women were generally more likely to be responsible for childcare.
We agree with the AGENCY—as it stressed in the pending succession planning proposal11—that succession planning is an important component of a credit union’s overall strategic plan, helping ensure the appropriate personnel are available to execute the credit union’s strategic plan and mission. This of course includes a credit union’s board of directors. We must remember these are volunteers. Any and all sensical, permissible updates to the agency’s regulations should be considered. In order to attract and retain the next generation of board members, it is critical that
| | |
the AGENCY embrace modernization of its rules and regulations, particularly when such changes
are clearly within the Board’s authority under the F C U Act.
America’s Credit Unions appreciates your consideration of our request. For the reasons addressed above, it is critical that the AGENCY modernize its rules to permit childcare as a reimbursable expense.
This concludes the America’s Credit Union’s Letter to the National Credit Union Administration’s Board on Permitting Childcare Expenses as Reimbursable
If your Credit union could use assistance with your exam, reach out to Mark Treichel on LinkedIn, or at mark Treichel dot com. This is Samantha Shares and we Thank you for listening.
Are you worried about an NCUA exam in process or looming on the horizon? Don't face it alone!
We're ex-NCUA insiders with decades of experience, ready to guide you to success. Our team understands the intricacies of NCUA examinations from the inside out.
Hire us and gain:
• Peace of mind during your exam process
• Insider knowledge of NCUA procedures and expectations
• Strategies to address potential issues before they become problems
• Continuous access to our extensive subject matter expertise
With our access retainer, you'll have on-demand support from former NCUA experts. We're here to ensure your credit union achieves flying colors in its next examination.
Contact Credit Union Exam Solutions today to learn more about our services and how we can help your credit union succeed.
What is Credit Union Regulatory Guidance Including: NCUA, CFPB, FDIC, OCC, FFIEC?
This podcast provides you the ability to listen to new regulatory guidance issued by the National Credit Union Administration, and occasionally the F D I C, the O C C, the F F I E C, or the C F P B. We will focus on new and material agency guidance, and historically important and still active guidance from past years that NCUA cites in examinations or conversations. This podcast is educational only and is not legal advice. We are sponsored by Credit Union Exam Solutions Incorporated. We also have another podcast called With Flying Colors where we provide tips for achieving success with the N C U A examination process and discuss hot topics that impact your credit union.
Samantha: Hello, this is Samantha Shares.
This episode covers Americaâs Credit
Unionâs Letter to the National Credit
Union Administrationâs Board on Permitting
Childcare Expenses as Reimbursable
The following is an audio version of
that letter and the press release.
This podcast is educational
and is not legal advice.
We are sponsored by Credit Union
Exam Solutions Incorporated, whose
team has over two hundred and
Forty years of National Credit
Union Administration experience.
We assist our clients with N C
U A so they save time and money.
If you are worried about a recent,
upcoming or in process N C U A
examination, reach out to learn how they
can assist at Mark Treichel DOT COM.
Also check out our other podcast called
With Flying Colors where we provide tips
on how to achieve success with N C U A.
And now the letter.
RE: Permitting Childcare Expenses as
Reimbursable Under 12 CFR 701 point 33
Dear Chairman Harper, Vice Chairman
Hauptman, and Board Member Oatska:
On behalf of Americaâs Credit Unions,
I am writing to request the National
Credit Union Administration (the agency)
explicitly permit reimbursement of
childcare related costs incurred by a
federal credit union (F C U) board member.
While the term âchildcareâ is used
throughout this letter, our ask
is that child and other non-child
dependent care expenses be reimbursable
Americaâs Credit Unions is the
voice of consumersâ best option for
financial services: credit unions.
We advocate for policies that allow
the industry to effectively meet
the needs of their nearly on hundred
forty million members nationwide.
Credit unions stand out from banks in a
variety of ways, including our emphasis
on diversity, equity, and inclusion.
This is, in part, evident in the
prevalence of and increasing percentage
of women, not only in senior level
positions, but also at the board level.
Based on data from the THE AGENCY
and analyzed by Americaâs Credit
Unions, the percentage of women board
members has increased by roughly five
percentage points among all asset
ranges since at least twenty twelve.
This is a testament to the work
of our industry to achieve greater
gender equity in leadership.
Further, we are proud to have a
regulator in the THE AGENCY that
similarly emphasizes the importance of
equality in the credit union industry.
We applaud the focus of the THE
AGENCY Board, as well as staff,
including those in the agencyâs Office
of Minority and Women Inclusion.
We appreciate the Boardâs recent
willingness to pursue actionable items to
address ongoing challenges among credit
unions, such as those related to the
agencyâs records preservation program.
Our request below is another
great opportunity for the Board to
take action to achieve a sensical
change to the agencyâs regulations.
We ask the THE AGENCY to update its
existing regulation pertaining to
reimbursement of F C U officials.
Specifically, we ask the Board to
amend section 701 point 33 to allow
F C U board members to be reimbursed
for the cost of childcare when it
is necessary in order to attend an
official board meeting of the F C U.
Family structures and childcare
responsibilities are significantly
different now than when this
provision was last amended.
To attract new talent, people with
young children should be afforded
the opportunity to more easily
participate on a credit union board
with appropriate reimbursement
for their childcare expenses.
The Federal Credit Union Act (F C U
Act) provides sufficient latitude for
the Board to pursue such an amendment.
While section 1761(c) of the Act generally
limits compensation to a single board
member, it explicitly states that âthe
reimbursement of reasonable expenses
incurred in the execution of the duties
of the position shall not be considered
compensation.â3 This provision of the
Act is implemented by section 701 point
33(b) of the agencyâs regulations,
which, consistent with the Act, states
that compensation specifically excludes:
Payment (by reimbursement to an
official . . . ) for reasonable and
proper costs incurred by an official in
carrying out the responsibilities of the
position to which that person has been
elected or appointed, if the payment
is determined by the board of directors
to be necessary or appropriate in order
to carry out the official business of
the credit union, and is in accordance
with written policies and procedures,
including documentation requirements,
established by the board of directors.
Such payments may include the
payment of travel costs for officials
and one guest per official[.]4
In particular, we ask the Board
to update the existing limitation
in section 701 point 33(b)(2)(i).
This could be achieved by simply inserting
âchildcareâ into the last sentence
of section 701 point 33(b)(2)(i) as
follows: âSuch payments may include the
payment of childcare or travel costs for
officials and one guest per official[.]â
The AGENCY last updated the
provision regarding the definition of
âcompensationâ over twenty-two years ago.
In that update, the agency used its
expansive statutory authority to add the
travel expenses of a guest as reimbursable
under section 701 point 33(b).
Previously, reimbursement was limited
to the travel expenses of the board
memberâs âimmediate family member.â In so
doing, the Board stated its belief that
amending this provision would âallow F C
Us greater flexibility to accommodate the
needs of officials whose duties include
business-related travel.â While we are
fortunate to now live in a world where
virtual meetings are ubiquitous, there
continue to be instances where in-person
meetings are necessary, including in the
context of certain F C U board meetings.
Such meetings cause attendees to incur
not only direct travel-related expenses,
such as fuel, but also indirect expenses,
such as costs associated with securing
childcare for a board memberâs family.
Section 701 point 33(b)(2)(i)
offers just a single example of what
might be considered a reasonable
and proper reimbursable cost.
The example is clearly not intended as an
exhaustive list of permissible expenses,
given the regulationâs use of âmay.â
We believe the cost associated with
childcare is more similar to travel than
other expenses the agency has indicated
are not reimbursable under this section.
Assuming a virtual meeting is not an
option, the only way for a board member
to attend a meeting is to physically
travel to the meeting location.
The only option for a board member
to attend a board meeting is to
ensure his or her child or dependent
has proper care, which in many
situations, absent the presence of
another family member or trusted
caregiver, requires
utilizing a paid caregiver.
This concern and expense is
amplified for any single parent or
head of household with a dependent.
Again, the category of childcare
expense is more like travel expense
than it is other categories for which
the agency has opined are impermissible
under 701 point 33(b)(2)(i).
For example, the agencyâs Office of
General Counsel (O G C) stated in a
1992 legal opinion letter that lost
wages incurred while attending an F C
U board meeting are not reimbursable.
As noted above, in many instances
childcare is necessary to allow a
board member to attend a meeting.
The cost of childcare is much
different from that of lost wages.
Childcare is an additional mandatory
expense that would not be required
but for the travel necessary to
attend an F C U board meeting.
Lost wages, while also technically an
expense, are not a tangible expense
in many instances, including where
board members have available paid
time off through their employer.
While reimbursement of lost wages
would certainly be helpful, it is
not absolutely necessaryâand a board
memberâs loss of wages to attend a
meeting is clearly not akin to a board
memberâs failure to secure childcare.
Additionally, the 1992 legal opinion
letter explains that it is the agency's
understanding that âmany credit unions
accommodate volunteer officials by
scheduling meetings at times that
are the least disruptive to work or
childcare schedules.â This is somewhat
accurateâmany credit unions schedule
board meetings in the evenings, after
the workday, or on weekends; however,
this does not resolve childcare concerns.
In fact, that is precisely when
childcare would be needed for most
volunteers as this falls outside
of the standard hours for daycares
or other paid caregiver services.
Thus, this expense is inextricably tied
to the travel required to attend a board
meeting and should be reimbursable.
To our knowledge, the AGENCY last
addressed the specific issue of childcare
as a reimbursable expense in a legal
opinion letter more than 25 years ago.
In that opinion, the OGC affirmed the
1992 opinion, stating that reimbursement
of childcare expenses incurred by
a board member when attending a
board meeting is impermissible.
In the event the Board disagrees with
the importance of this issue, including
the need to update section 701 point
33(b)(2)(i) regarding compensation,
we urge the agency to revisit
the 1999 legal opinion to include
childcare as a reimbursable expense.
Things are much different now, including
with regard to family structure, than
they were in 1999 when there was a
greater percentage of men on F C U
boards, and women were generally more
likely to be responsible for childcare.
We agree with the AGENCYâas it stressed
in the pending succession planning
proposal11âthat succession planning
is an important component of a credit
unionâs overall strategic plan, helping
ensure the appropriate personnel
are available to execute the credit
unionâs strategic plan and mission.
This of course includes a credit
unionâs board of directors.
We must remember these are volunteers.
Any and all sensical, permissible
updates to the agencyâs
regulations should be considered.
In order to attract and retain
the next generation of board
members, it is critical that
the AGENCY embrace modernization
of its rules and regulations,
particularly when such changes
are clearly within the Boardâs
authority under the F C U Act.
Americaâs Credit Unions appreciates
your consideration of our request.
For the reasons addressed above,
it is critical that the AGENCY
modernize its rules to permit
childcare as a reimbursable expense.
This concludes the Americaâs Credit
Unionâs Letter to the National Credit
Union Administrationâs Board on Permitting
Childcare Expenses as Reimbursable
If your Credit union could use assistance
with your exam, reach out to Mark Treichel
on LinkedIn, or at mark Treichel dot com.
This is Samantha Shares and
we Thank you for listening.
