NAPERVILLE, Ill. (2/10/14)--A settlement negotiated with the state by the Illinois Credit Union League (ICUL) nine years ago has reached $14 million in regulatory fee credits for Illinois state-chartered credit unions.
This year state-chartered credit unions will receive a credit of $394,830 on their first-quarter regulatory fee invoices as part of the settlement.
Between an initial cash settlement of $6.2 million, the regulatory fee holidays or credits realized in six of the past 19 quarters totaling $2.7 million, and a rate reduction of $3.5 million in regulatory fees paid to the state's Department of Financial Institutions (DFI) since the settlement was reached, Illinois state-chartered credit unions to date have realized a cumulative benefit of roughly $14 million.
These regulatory fee credits continue because of legislation initiated by ICUL to implement the court-approved settlement of the regulatory fee case it filed against then-Gov. Rod Blagojevich in 2004. The settlement was signed into law by Gov. Patrick Quinn effective April 6, 2009.
The 2009 legislation implementing the settlement also accomplished two other goals, according to 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. On a going- forward basis, the rate reduction has resulted in $700,000-plus per year during the past three years, or $2.1 million back to Illinois state-chartered credit unions since the legislation became law.
Second, the 2009 legislation reduced the Credit Union Fund margin that triggers a credit back to Illinois state-chartered credit unions. Olson noted the Credit Union Fund is the dedicated fund into which regulatory fees are deposited to offset the ordinary administrative and operational expenses of the DFI Credit Union Section in supervising state-chartered credit unions. It is structured as an operating account, not a savings account.
To meet that objective, the legislation reduced the margin level to 25% from 50%. When the balance in the Credit Union Fund at the end of a state fiscal year exceeds 25% of the expenses incurred by the state in administering the Illinois Credit Union Act and related laws, the excess must be credited to the credit unions that paid the fees in the first instance.
As a result of the legislation, Illinois state-chartered credit unions previously received an aggregate margin credit of $1.051 million, which was slightly less than the total 2012 fourth-quarter billing for regulatory fees, and an aggregate credit of $1,256,893, which equaled a full fourth-quarter fee holiday for 2011, and 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.