Contingency plans, including loan relief products and skip a payment plans, were put in place last week by Minnesota credit unions girding for a state government shutdown July 1.
The prospect of missed paychecks had CUs rolling out a series of products and scheduling counseling sessions for strapped employees though Jeff Schwalen, president/CEO of the $833 million Hiway CU of St. Paul, suggested timing of the pay schedules in the first week of July may bar major problems.
Schwalen’s CU serves 8,100 state employees accounting for 14% of the CU’s membership, but some groups like state troopers look to be exempt, and “we also understand employees will receive their July paychecks for the first week and there are also severance packages” mitigating any severe impact in the short term.
State officials said it was still a 50-50 proposition whether a budget standoff between Democratic Gov. Mark Dayton and a Republican-controlled legislature might break prior to the July 1 deadline.
The two sides have been at loggerheads since May 23 when the legislature failed to pass a budget in the face of a June 30 fiscal deadline as required by law to close a $5 billion deficit.
Also preparing contingency products, the $810 million US FCU of Burnsville said it would be making use of its “Borrower Resources” program, which includes loan restructuring and financial education packages.
“We did have to go through something similar to this years ago during layoffs at the old Republic Airlines, which eventually merged into Northwest Airlines,” recalled Jeff Olson, assistant vice president who heads up Borrower Resources.
US FCU noted that “loan restructuring, consolidation, credit repayment assistance, and financial counseling are services all available through this program,” in addition to the “Summer Bucks” loan promotion on short-term signature loans “that may help fill temporary financial need caused by the shutdown.”
US Federal was scheduled to host two financial counseling seminars June 27 and July 7 and is offering the unsecured “Survival Shutdown Loans.”
“The Shutdown programs are just another way credit unions demonstrate their service philosophy,” said USFCU President/CEO Bill Raker. “In 1925 US Federal was born out of a need in our community. Times have changed, but the demand for financial education and credit union services has not.”