SEATTLE — Seeking to cushion against lost income from mergers, the Washington Credit Union League is pursuing an 18% boost in its dues for next year. The move comes as many state leagues absorb a squeeze on their budgets grappling with both a shrinking membership base hit by consolidations in addition to dealing with a lackluster economy in some areas.
At its annual meeting here last week, the Washington League membership was prepared to adopt a new dues structure scaled to take into account the rising number of both big and small CU mergers by relying strictly on an asset-based formula.
At the same time, the league leadership stressed the urgent need for the dues increase to keep programs and services running without interruption. It would be the first dues hike for the league in five years. The league said it would be using a new so-called "square root" formula used successfully by leagues in Colorado and Kentucky. It would impact the largest CUs with the biggest increases, in some cases surpassing the 18% average. There also would be a cap on increases for small CUs. The dues package was recommended by a special Dues Adjustment Task Force last spring and was described as a "fair" plan that would prevent any further cutback in programming or services. The dues boost is needed "to provide stable funding in a consolidating credit union environment," explained John Annaloro, president/CEO. The current formula of assets and members, he said, is "dated because it did not take into consideration the number of mergers experienced by the entire credit union system." Chuck Cockburn, chairman of the Task Force and president/CEO of Watermark Credit Union of Seattle, said in recent months "departments have been cut and the league has been running at bare bones" making it vital that the league "do a catch-up now with a large increase." Cockburn referred questions on purported cutbacks to league staff, but at press time it was uncertain what league functions had been vulnerable or eliminated. But Cockburn praised the league administration for "forward thinking programs" and doing an outstanding job despite the consolidation trend that under the old dues formula reduced income.
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Budget considerations were a factor in a move a year ago to merge the Washington League and Credit Union Association of Oregon along the lines of a consolidation effected this year by the North and South Dakota Credit Union Leagues.
The boards of both groups decided, however, to reject the plan for now though "the idea is never really off the table," said Annaloro.
Shirley Cate, chairman of the CUAO and president/CEO of Cutting Edge Credit Union in Portland, agreed that a merger "is always a possibility" considering so many CUs "are going away." Still, for now Oregon CUs plan to retain their own trade group.
At the Washington League, Annaloro said unlike their CU members, trade groups lack the luxury of "repricing" through the dues vehicle on a frequent basis making it more difficult to outguess economic conditions.
The league's statement on the planned dues increase stressed the "critical need" for the increase "to maintain core services."
"Washington previously had one of the lowest dues rates in the nation," said the league. "The proposed dues formula change would put Washington dues in line with the dues paid by credit unions in other Western states."
The Washington league said the dues increase would help beef up league reserves "and provide financial flexibility to respond" to banker attacks "or a public relations crisis involving member credit unions."
In sum, the increase would help prevent "staff cuts and program eliminations."
League members were slated to vote on the dues package at a Sept. 15 business session during the annual meeting. –[email protected]
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