State-chartered credit unions in Illinois will receive a smaller regulatory fee bill for the fourth quarter, thanks to a credit for overpayment made during former Gov. Rod Blagojevich’s administration.
The credit stems from a court-approved settlement over fees paid as a result of Blagojevich’s fee escalation and transfer budgetary arrangement during fiscal years 2004 through 2006, the disgraced governor’s attempt to siphon examiner fees to pay the state’s budget deficit.
The Illinois Credit Union League initiated legislation to implement the settlement, resulting in a 2009 aggregate cash payment of approximately $6.2 million. The 2012 credit is more than $1 million, slightly less than fourth-quarter regulatory fees.
The 2009 legislation also accomplished two other goals, said Stephen Olson, ICUL executive vice president and general counsel. First, it codified a rate reduction in regulatory fees on a going forward basis commencing Jan. 1, 2009. Second, the 2009 legislation reduced the Credit Union Fund margin that triggers a credit back to Illinois state-chartered credit unions.
The legislation reduced the fund margin level from 50% to 25%; when the fiscal year-end fund balance exceeds 25% of the expenses incurred by the state, the excess must be credited to credit unions.
Previously, Illinois state-chartered credit unions received an aggregate margin credit of $1,256,893, which equaled a full fourth quarter fee holiday for 2011, as well as a partial holiday on their 2012 first quarter fees paid to the regulatory agency in April 2012. Illinois state-chartered credit unions also received an aggregate credit of $1,452,256, which provided a total holiday on the fourth quarter regulatory fee in 2010 as well as a partial holiday for the first quarter of 2011.
Olson said the amount of the credit is determined on a proportionate basis, by taking into account the regulatory fee a credit union paid versus the aggregate amount of all fees collected by DFI from credit unions.
Dan Plauda, ICUL president/CEO, said, “We are particularly pleased the settlement terms we negotiated with the state in 2008 continues to provide Illinois state-chartered credit unions with an additional financial benefit. This is especially significant given the sluggish economic recovery and extreme regulatory burden our credit unions are facing.”