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Samantha: Hello, this is Samantha Shares.

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This episode covers America’s Credit
Union’s  Letter to the National Credit

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Union Administration’s Board on Permitting
Childcare Expenses as Reimbursable

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The following is an audio version of
that letter and the press release.

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This podcast is educational
and is not legal advice.

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We are sponsored by Credit Union
Exam Solutions Incorporated, whose

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team has over two hundred and
Forty years of National Credit

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Union  Administration experience.

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We assist our clients with N C
U A so they save time and money.

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If you are worried about a recent,
upcoming or in process N C U A

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examination, reach out to learn how they
can assist at Mark Treichel DOT COM.

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Also check out our other podcast called
With Flying Colors where we provide tips

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on how to achieve success with N C U A.

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And now the letter.

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RE: Permitting Childcare Expenses as
Reimbursable Under 12 CFR 701 point 33

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Dear Chairman Harper, Vice Chairman
Hauptman, and Board Member Oatska:

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On behalf of America’s Credit Unions,
I am writing to request the National

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Credit Union Administration (the agency)
explicitly permit reimbursement of

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childcare related costs incurred by a
federal credit union (F C U) board member.

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While the term “childcare” is used
throughout this letter, our ask

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is that child and other non-child
dependent care expenses be reimbursable

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America’s Credit Unions is the
voice of consumers’ best option for

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financial services: credit unions.

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We advocate for policies that allow
the industry to effectively meet

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the needs of their nearly on hundred
forty million members nationwide.

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Credit unions stand out from banks in a
variety of ways, including our emphasis

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on diversity, equity, and inclusion.

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This is, in part, evident in the
prevalence of and increasing percentage

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of women, not only in senior level
positions, but also at the board level.

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Based on data from the THE AGENCY
and analyzed by America’s Credit

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Unions, the percentage of women board
members has increased by roughly five

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percentage points among all asset
ranges since at least twenty twelve.

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This is a testament to the work
of our industry to achieve greater

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gender equity in leadership.

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Further, we are proud to have a
regulator in the THE AGENCY that

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similarly emphasizes the importance of
equality in the credit union industry.

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We applaud the focus of the THE
AGENCY Board, as well as staff,

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including those in the agency’s Office
of Minority and Women Inclusion.

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We appreciate the Board’s recent
willingness to pursue actionable items to

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address ongoing challenges among credit
unions, such as those related to the

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agency’s records preservation program.

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Our request below is another
great opportunity for the Board to

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take action to achieve a sensical
change to the agency’s regulations.

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We ask the THE AGENCY to update its
existing regulation pertaining to

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reimbursement of F C U officials.

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Specifically, we ask the Board to
amend section 701 point 33 to allow

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F C U board members to be reimbursed
for the cost of childcare when it

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is necessary in order to attend an
official board meeting of the F C U.

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Family structures and childcare
responsibilities are significantly

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different now than when this
provision was last amended.

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To attract new talent, people with
young children should be afforded

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the opportunity to more easily
participate on a credit union board

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with appropriate reimbursement
for their childcare expenses.

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The Federal Credit Union Act (F C U
Act) provides sufficient latitude for

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the Board to pursue such an amendment.

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While section 1761(c) of the Act generally
limits compensation to a single board

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member, it explicitly states that “the
reimbursement of reasonable expenses

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incurred in the execution of the duties
of the position shall not be considered

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compensation.”3 This provision of the
Act is implemented by section 701 point

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33(b) of the agency’s regulations,
which, consistent with the Act, states

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that compensation specifically excludes:

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Payment (by reimbursement to an
official . . . ) for reasonable and

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proper costs incurred by an official in
carrying out the responsibilities of the

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position to which that person has been
elected or appointed, if the payment

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is determined by the board of directors
to be necessary or appropriate in order

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to carry out the official business of
the credit union, and is in accordance

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with written policies and procedures,
including documentation requirements,

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established by the board of directors.

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Such payments may include the
payment of travel costs for officials

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and one guest per official[.]4

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In particular, we ask the Board
to update the existing limitation

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in section 701 point 33(b)(2)(i).

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This could be achieved by simply inserting
“childcare” into the last sentence

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of section 701 point 33(b)(2)(i) as
follows: “Such payments may include the

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payment of childcare or travel costs for
officials and one guest per official[.]”

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The AGENCY last updated the
provision regarding the definition of

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“compensation” over twenty-two years ago.

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In that update, the agency used its
expansive statutory authority to add the

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travel expenses of a guest as reimbursable
under section 701 point 33(b).

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Previously, reimbursement was limited
to the travel expenses of the board

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member’s “immediate family member.” In so
doing, the Board stated its belief that

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amending this provision would “allow F C
Us greater flexibility to accommodate the

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needs of officials whose duties include
business-related travel.” While we are

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fortunate to now live in a world where
virtual meetings are ubiquitous, there

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continue to be instances where in-person
meetings are necessary, including in the

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context of certain F C U board meetings.

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Such meetings cause attendees to incur
not only direct travel-related expenses,

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such as fuel, but also indirect expenses,
such as costs associated with securing

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childcare for a board member’s family.

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Section 701 point 33(b)(2)(i)
offers just a single example of what

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might be considered a reasonable
and proper reimbursable cost.

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The example is clearly not intended as an
exhaustive list of permissible expenses,

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given the regulation’s use of “may.”
We believe the cost associated with

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childcare is more similar to travel than
other expenses the agency has indicated

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are not reimbursable under this section.

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Assuming a virtual meeting is not an
option, the only way for a board member

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to attend a meeting is to physically
travel to the meeting location.

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The only option for a board member
to attend a board meeting is to

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ensure his or her child or dependent
has proper care, which in many

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situations, absent the presence of
another family member or trusted

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caregiver, requires
utilizing a paid caregiver.

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This concern and expense is
amplified for any single parent or

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head of household with a dependent.

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Again, the category of childcare
expense is more like travel expense

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than it is other categories for which
the agency has opined are impermissible

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under 701 point 33(b)(2)(i).

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For example, the agency’s Office of
General Counsel (O G C) stated in a

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1992 legal opinion letter that lost
wages incurred while attending an F C

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U board meeting are not reimbursable.

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As noted above, in many instances
childcare is necessary to allow a

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board member to attend a meeting.

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The cost of childcare is much
different from that of lost wages.

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Childcare is an additional mandatory
expense that would not be required

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but for the travel necessary to
attend an F C U board meeting.

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Lost wages, while also technically an
expense, are not a tangible expense

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in many instances, including where
board members have available paid

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time off through their employer.

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While reimbursement of lost wages
would certainly be helpful, it is

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not absolutely necessary—and a board
member’s loss of wages to attend a

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meeting is clearly not akin to a board
member’s failure to secure childcare.

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Additionally, the 1992 legal opinion
letter explains that it is the agency's

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understanding that “many credit unions
accommodate volunteer officials by

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scheduling meetings at times that
are the least disruptive to work or

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childcare schedules.” This is somewhat
accurate—many credit unions schedule

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board meetings in the evenings, after
the workday, or on weekends; however,

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this does not resolve childcare concerns.

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In fact, that is precisely when
childcare would be needed for most

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volunteers as this falls outside
of the standard hours for daycares

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or other paid caregiver services.

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Thus, this expense is inextricably tied
to the travel required to attend a board

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meeting and should be reimbursable.

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To our knowledge, the  AGENCY last
addressed the specific issue of childcare

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as a reimbursable expense in a legal
opinion letter more than 25 years ago.

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In that opinion, the OGC affirmed the
1992 opinion, stating that reimbursement

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of childcare expenses incurred by
a board member when attending a

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board meeting is impermissible.

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In the event the Board disagrees with
the importance of this issue, including

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the need to update section 701 point
33(b)(2)(i) regarding compensation,

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we urge the agency to revisit
the 1999 legal opinion to include

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childcare as a reimbursable expense.

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Things are much different now, including
with regard to family structure, than

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they were in 1999 when there was a
greater percentage of men on F C U

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boards, and women were generally more
likely to be responsible for childcare.

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We agree with the AGENCY—as it stressed
in the pending succession planning

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proposal11—that succession planning
is an important component of a credit

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union’s overall strategic plan, helping
ensure the appropriate personnel

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are available to execute the credit
union’s strategic plan and mission.

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This of course includes a credit
union’s board of directors.

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We must remember these are volunteers.

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Any and all sensical, permissible
updates to the agency’s

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regulations should be considered.

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In order to attract and retain
the next generation of board

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members, it is critical that

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the  AGENCY embrace modernization
of its rules and regulations,

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particularly when such changes

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are clearly within the Board’s
authority under the F C U Act.

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America’s Credit Unions appreciates
your consideration of our request.

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For the reasons addressed above,
it is critical that the AGENCY

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modernize its rules to permit
childcare as a reimbursable expense.

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This concludes the  America’s Credit
Union’s  Letter to the National Credit

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Union Administration’s Board on Permitting
Childcare Expenses as Reimbursable

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If your Credit union could use assistance
with your exam, reach out to Mark Treichel

00:10:31.558 --> 00:10:34.288
on LinkedIn, or at mark Treichel dot com.

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This is Samantha Shares and
we Thank you for listening.