In addition, the association has suspended its contributions to employee 401(k) plans and also intends to make additional program cuts.
"The last year has been very hard on the economy, credit unions and CUNA, and the first four months of this year have been the toughest of any I've seen,'' CUNA President/CEO Dan Mica told Credit Union Times. "Starting last summer when we saw the projections [for the rest of 2008], we began to take steps to reduce costs and have had to do more of that every time we have evaluated the situation again."
Previously, the association eliminated bonuses, froze salaries and instituted a selective hiring freeze. Mica said he is contractually entitled to a bonus, but he voluntarily gave that up this year.
He earned $938,769 in salary in 2007, according to CUNA's most recent IRS Form 990. He also received employee retirement benefits of $27,447 and expense reimbursements of $42,470.
Mica said CUNA hasn't decided how many people will be laid off, what departments will be affected and when the cuts will take effect. CUNA has a $56 million annual budget and 260 full-time-equivalent employees.
CUNA's financial problems have been caused by a variety of factors, including severe losses in its defined benefit plan. Because of market losses, the association had to put $9 million into the plan last year to meet regulatory requirements. This year, it expects to add additional funds because of market losses earlier this year. Also, CUNA will have to write off part of the value of its $940,486 share in U.S. Central Corporate Federal Credit Union as a result of U.S. Central's conservatorship by the NCUA.
Mica said the group's income has been hurt by a decline in attendance at conferences and training programs because many member credit unions are cutting or eliminating travel and training. The association has had increased participation in online training programs. So far, registration for its upcoming America's Credit Union Conference & Expo in Boston is 15% below what it was at this time last year.
Colorado/Wyoming Credit Union League President/CEO John Dill said CUNA's problems are not surprising in light of the recession and said the association's leaders are making the best of a terrible situation.
"Reductions and cost cutting are a painful thing to do, but we are all handling it the best way we can and doing it as humanely as possible," Dill said. "CUNA has worked hard to ensure that the cuts haven't hurt their ability to be effective advocates for the credit union movement." Dill said his association has frozen some positions and cut expenses. He won't, for example, be going to the CUNA conference in Boston.
Last year, CUNA's restricted net assets declined $7.9 million. It had $2.6 million in unrestricted assets at the end of 2008, compared with $10.6 million at the end of 2007. Its pretax income last year was $887,173, compared with $3.2 million in 2007.
NAFCU President/CEO Fred Becker said that while his association has cut expenses and budgeted conservatively, it has not laid off or furloughed any staff members and is continuing to make contributions to employee 401(k) plans.
"We've done some belt tightening, and there are still hurdles in front of us because many of our members have reduced or eliminated training as well as the impact of the Corporate Credit Union Stabilization Fund on the balance sheets of our members,'' he said. "Even if the economy starts to pick up, we are still looking at a rough couple of years."
Becker added that registration for the group's upcoming annual meeting in Maryland is "not bad compared to last year but still below what we were at this time last year.'' He said attendance at his association's recent conference for volunteers was "OK'' and attendance at its conference for CEOs was "not what we hoped for."
NAFCU had $12.9 million in unrestricted assets at the end of 2008, compared with $12.5 million at the end of 2007. The association was hurt by the declining return on its investments, which was $247,964 last year, compared with $395,130 in 2007.
NAFCU has 67 full-time-equivalent employees and an annual budget of $11.5 million. Becker's salary for 2007, the last year data was available, was $347,635, and the association contributed $48,820 to his retirement fund.