Starting Jan. 1, 2016, Oregon's 19 state-chartered credit unionswill have the option to pay their board and supervisory committeemembers.

Gov. Kate Brown signed Senate Bill 582 into law last week thatwill make Oregon the 16th state that permits credit unions tocompensate board members.

The bill, supported by the Northwest Credit Union Association,was introduced in February and moved through both the state'sSenate and House with very little public opposition.

During a hearing of Oregon's Senate Committee on Business andTransportation in March, however, Kevin Christiansen of theIndependent Community Banks of Oregon, called the directorcompensation provision of SB 582 troublesome.

“Given their income tax immunity and desire to be viewed thesame as other not-for-profit organizations, it is troublesome thatcredit unions are seeking compensation for their directors andcommittee members, a practice much more common in tax paying, forprofit businesses,” he said. “As credit unions seek to look and actlike banks, the legislature at a minimum should be asking creditunions to demonstrate the public benefit that they are providing inexchange for their state income tax exemption.”

Harold B. Scroggins III, a lawyer who represents the NorthwestCredit Union Association, argued that compensation would helpcredit unions attract and retain “qualified, interested andengaged” board members and supervisory committee members tooversee the credit union's operations, which has become anincreasingly time-consuming, complex and difficult task.

“Permitting compensation for directors does not alter thecooperative nature or characteristics of the credit union,” hesaid. “Directors will still be elected by members who each have anequal vote. Directors will have the same ongoing duty to overseemanagement of the credit union for the benefit of all members, asis currently the case.”

Unlike the Northwest Credit Union Association, however, theMichigan Credit Union League in May dropped its support of acontroversial amendment under consideration by its statelegislature that would have given state-chartered cooperativesan optionto pay board members.

Credit union leaders said the league's board of directorsrejected the amendment because it wasn't the right time.Nonetheless, they also acknowledged it might be only a matter oftime – perhaps over the next five to 10 years – beforestate-chartered credit unions will have the option to compensatedirectors.

Although Michigan's decision shows that director compensationremains a highly controversial issue, 15 states allow some form ofdirector compensation. They include Indiana, Pennsylvania, RhodeIsland, Maryland, Wisconsin, Georgia, Minnesota, Kentucky, Alabama,New Jersey, Nevada, North Dakota, Texas, Tennessee andWashington.

In 2013, CUTimes took an in-depth look at credit unions that do payboard members, which revealed that most cooperatives pay smallstipends that range from a few hundred dollars to $7,000 a year.And even in states where compensation is permitted, credit unionsdo not pay directors.

However, some state-chartered credit unions in Pennsylvania,Rhode Island, Indiana, Maryland and Wisconsin tended to pay theirdirectors higher levels of annual compensation.

In Pennsylvania, for example, board compensation ranged from$4,000 to $65,000; in Rhode Island, from $300 to $39,000; inIndiana, from $750 to $93,000; in Maryland, from $1,000 to $29,000;and in Wisconsin, from $2,000 to $21,000.

Nevertheless, directors at some state-chartered credit unions in North Dakota,Texas, Georgia and Minnesota paid their directors lower levelsof annual compensation.

For example, in North Dakota, director pay ranged from $2,000 to$5,300; in Texas, from $90 to $12,000; in Georgia, from $100 to$9,800; and in Minnesota, from $1,000 to $12,000.