Colorado League adopts big dues hike, risks disaffiliation of some credit unions

<p>COLORADO SPRINGS, Colo. – After a sometimes emotional and heated debate-plus three roll call votes-during its annual meeting held May 2-4, the Colorado Credit Union League membership adopted a 40% increase in dues for 2003. Leadership of the League had pushed hard for the big dues increase to pay for added legislative and PR lobbying expenses next year, but opponents complained the dues increase was extravagant and ill-timed in light of negative economic conditions impacting the bottomline of many CUs. On a key procedural vote, members by better than a 2 to 1 margin adopted the increase put forward in January by a Dues Study Task Force headed by C. Alan Peppers, president/CEO of Denver Public Schools Credit Union. The League leadership had anticipated the opposition, but nonetheless during a debate that lasted more than an hour there were a few dark hints from some of the nearly 15 CU executives speaking from the floor that they or others might quit the League to underscore their objections. “With the economy going down hill and NASDAQ and the stock market going down again last week, this kind of increase makes me want to cry,” declared John Delohery, president of Colorado State Employees Credit Union of Denver. “I am flabbergasted,” he said that the League leadership would put forward this kind of increase now. Still other opponents suggested that while they understood the need for the increase it might be better to delay a portion of the dues tab-say 20%-for a year, and there were others who challenged what they called “extra fluff” in the budget, including League contributions to Gov. Bill Owens Inaugural Ball. But backers of the dues increase, amounting to $460,000 on an existing budget of $1.4 million and the first significant jump in 20 years, argued such expenses including those for the Inaugural Ball were vital if the League was to continue an effective lobbying campaign in the state legislature, with the public and the media. “Let’s not look at NASDAQ, but let’s stand up and be counted where it comes to fighting the bankers,” countered William Sterner, president of U of C Federal Credit Union in Boulder, who suggested that the state’s powerful banking lobby is more than willing to invest its dues war chest to clamp down on CU growth. The bankers “would pay whatever it takes” to put CUs out of business, he said, which is why the extra dues expense should pass. Making reference to Sept. 11, David Maus, president of Public Service Credit Union of Denver and immediate past chairman of CUNA, said CUs are “going to be attacked” by banking interests at the state and national levels, and “there is a high cost” to wage this kind of battle. Appearing in a neck collar after a serious car accident in March, Maus said Colorado CUs “have to be involved” and paying the price requires an effective PR/legislative program. He said his institution was willing to fork over $250,000 of its own funds for the 1998 fight over H.R. 1151, and it was high time those kind of expenses were shared by other Colorado CUs who have not contributed at either the national or state level. A key part of the dues package adopted by the membership in a floor vote calls for incorporating the “Special Legislative Fund” in League dues. Since 1998 the balance in the fund has been on a downward slide as CUs have seen less pressing need in making contributions as the political atmosphere in Colorado has cooled. In 1997, said the Dues Task Force, 126 Colorado CUs contributed nearly $500,000 to the Legislative Fund, but last year just 50 CUs paid in $187,000. So far this year only 41 have contributed $78,000. While agreeing to the 40% increase for next year, the League membership did adopt a separate bylaw change, backed by the leadership, which would limit future dues increases to 10% unless they were approved by the full membership. The vote on that proposal was 41-12. An earlier plan to reduce the dues increase by about 20% and limit its use to legislative expenses, submitted by Martin Tressell, CEO of Pueblo City Employees Federal Credit Union, was defeated 39-16. There are 168 CUs in the Colorado League. A third vote to adopt the Dues Study Task Force was passed 37-17. One of the most outspoken opponents to the dues hike at the membership meeting, Bart Nyberg, president of the $19 million member Denver Media Credit Union, said his CU would be paying this year’s dues, but next year might be doubtful considering his CU had to pay $8,000 in dues, or a 38% increase. “I most object to the formula they are using which puts a very large burden on the small credit unions which would are unable to pay,” said Nyberg. He cited, by example, Denver Bar Association Credit Union with $3 million in assets. Its formula “would be 11 basis points as their percentage of assets.” The new dues formula abandoned one based strictly on assets and membership and used a “square root x common multiplier” system. Also the new dues rules removed the cap on large CUs and added a limit for small CUs. In a letter explaining the dues formula, the Task Force wrote “it is becoming common practice in progressive trade associations to utilize a square root formula to calculate dues, negating the difference of a `Mom and Pop’ hardware store and the giant Home Depot as members of the association. “Using a square root basis provides `number scaling’ allowing a single formula for each credit union,” said the report. The square root of each CU’s assets times a common multiplier for all CUs equals total dues. “The multiplier is determined by calculating the number needed to multiply by the total square root of each credit union’s assets, to arrive at the appropriate total dues level for the year,” said the report. Nyberg argued that the dues formula “was not reasonable or equitable” since a $1 billion institution in Colorado would pay .005% of assets while a smaller CU like Denver Bar Association would pay 21-22 times more. While some floor comments focused on the formula, there were others who cautioned against the League losing focus in the battle over dues to engage in the larger battle with banks. “I fought the bankers for three years,” said Tom Gressman, president of New Horizons Community CU in Denver to get a community charter but without lobbying muscle from the Colorado League he said he would have unsuccessful. “We cannot be divided,” he warned. Carla Hedrick, the chairman of the League and president of Denver Community Federal Credit Union, appealed to delegates to avoid “hurt feelings” in making their remarks. She also defended the League Board’s adoption of the dues formula as an “equitable solution.” [email protected]</p>