To hear the lament of the Missouri Credit Union Association, it was a "bolt out of the blue" when the state highway agency last week notified 10 small credit unions that they must vacate their offices by Sept. 30. The agency also ordered that 27 state employees who double as CU staffers be cut from the payroll.
"We were absolutely blindsided by this action, which we maintain is unconscionable," said Rosie Holub, president/CEO of MCUA.
Negotiations to forestall the closings as ordered on March 10 by the six-member Missouri Highways and Transportation Commission continued last week with chances good that any actual shuttering would be delayed for two years.
However, for the 27 employees who would be "formally terminated" and lose their retirement benefits even though their salaries and expenses are reimbursed to the state, it was a time of anxiety even as MCUA leaders promised to pursue relief with lawmakers and Missouri Gov. Jay Nixon.
Officials of the Missouri Department of Transportation denied the closing to force the CUs out of state highway property was tied solely to budget cutbacks. Those reductions had been directed by the governor against state agencies to cut full-time staffers. Agency officials insisted that severing ties with the CUs, which range from $12 million to $19 million in asset size and are situated in statewide district offices, was linked to a change in department policy and that "these 27 employees have nothing to do with our mission of concentrating on transportation."
Roberta Broeker, Transportation Department chief financial officer, said the problem for the department has been that the CU employees "serve two masters"-the CU Boards and agency managers.
MCUA has countered that having a CU background is not essential for a supervisor since that is the role of regulators, including the Missouri Division of Credit Unions.
But Broeker maintained that "conditions in the banking industry have changed in recent years and have become more complicated" leading to the decision to end the relationship and reoccupy space.
MCUA officials dismissed that position as wrongheaded and misguided and said it threatened the safety and soundness of the CUs and impugned the reputation of the employees who have successfully served state employees with financial products and services.
The closings are even further out of line, said MCUA, considering that hard-pressed employees need financial guidance from a CU to deal with tough economic times.
During commission hearings on the proposed closing, Holub noted that the MCUA was "neither informed nor consulted prior to the agency taking a course of action that displaces 10 independent financial institutions, totaling $138 million in assets and 18,000 members."