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.