ALEXANDRIA, Va. – A few years ago during a board of directors elections, officials at State Department Federal Credit Union wondered out loud how convenient it would be if members could vote by telephone or through the Internet. An NCUA statute didn't allow for such alternative voting until 1999. After the regulator lifted the restriction, the credit union began researching different companies to compare setup expenses, implementation and potential return rates. State Department FCU, which serves 55,000 members worldwide, considered itself prime territory for those who aren't in a position to attend an annual meeting to cast their vote for crucial board member seats, said Gaye DeCesare, the credit union's manager of compliance. "We wanted a hybrid election so that members overseas could vote," DeCesare recalled. Going on the recommendation of another "large" Pennsylvania credit union client, State Department sought out Election.com, a New York-based global elections company that provides online balloting services including voter registration and database management, polling site and remote electronic voting, security solutions, tabulation and custom demographic reporting. "We handle all the modes without compromising the integrity," said Earl Hurd, election.com's vice president of operations. In 2002, State Department launched its first online board of director's election alongside its traditional paper ballots. Eligible voters were mailed ballots containing a password that allowed members to log on the credit union's Web site should they prefer that method, DeCesare said. The returns were hampered by the past 9/11 anthrax attacks, prompting many to be cautious about opening their mail, DeCesare said, and some members didn't know they could vote online. As a result, only 1% of eligible voters logged on to vote. This year's elections is seeing a marked improvement with more than 25% voting online so far, but DeCesare said the credit union won't phase out paper ballots in the foreseeable future simply because not everyone has access to the Internet. "The great majority still use paper," DeCesare said. Including online voting as an option "didn't really take a lot of time to set up," and the expenses this time around come mostly on the "back end," she said. DeCesare added that one of the advantages of online votes is that the system is set up to reject invalid votes. And, after talking to other credit union clients about security breach concerns, State Department was confident about moving forward. Atlanta, Ga.-based Delta Employees Credit Union opted to stick to its mail ballots because while a large percentage of its membership use home banking, not enough have email addresses in its database to warrant online voting, said June Albright, vice president of audit and loss prevention. Georgia state law also requires that an electronic signature accompany an online vote. In 2002, Delta Employees sent out 138,000 ballots and 10.9% were returned compared to this year's board elections of which 142,000 were mailed and 13.32% were returned. "We were surprised to see that much of an increase," Albright said. "Mail ballots just allow more members to vote, and it betters services the membership." Albright said the initial set-up took nine months because of the logistics involved in creating a report for the member database, the ballot and quality report. This year's election process was "significantly smoother," she said and the costs are "comparable" to traditional voting methods. While Hurd of election.com would not provide the number of credit unions the company works with, he said those clients are a "broad mix of large, state and federally-chartered" ones. The majority are adding online voting to established paper ballots, he said because bylaws typically require the latter. Credit unions have used election.com to conduct bylaw and charter changes and surveys in addition to board member elections, Hurd said. There currently aren't any laws on the books that allow for the validity of Internet voting on a widespread scale, Hurd said, so many of the company's clients are from the private sector. "Ultimately, it comes down to a matter of comfort for that voter," Hurd said, but the company will welcome the day when clients are "weaned from paper." [email protected]