NAPERVILLE, Ill. (12/22/11)--Illinois state-chartered credit unions will receive a credit of nearly $1.257 million toward state regulatory fees for the fourth quarter of 2011.
The credit is expected to be slightly less than the total 2011 fourth-quarter billing for credit union regulatory fees, said the Illinois Credit Union League (ICUL).
Credit unions will receive the credit as a result of legislation to implement the court-approved settlement of a regulatory fee case filed by the league against then-Gov. Rod Blagojevich in 2004.
The settlement was signed into law by Gov. Patrick Quinn in 2009.
Under the terms of the settlement, Illinois state-chartered credit unions received a $6.2 million cash payment from the state in June 2009. The payment represented a credit for the overpayment in regulatory fees made under the Blagojevich administration's fee escalation and transfer ("sweep") budgetary arrangement adopted by the state in its fiscal years 2004 through 2006.
The 2009 legislation that implemented 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. Second, the 2009 legislation reduced the Credit Union Fund margin that triggers a credit back to Illinois state-chartered credit unions.
Regulatory fees are deposited into the Credit Union Fund to offset the ordinary administrative and operational expenses of the Department of Financial Institutions' Credit Union Section in supervising state-chartered credit unions.
The fund is structured as an operating account, not a savings account, Olson said. To ensure that objective is met, 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 credit unions that paid the fees.
"As we stated in connection with last year's regulatory fee credit, we believe the prosecution and favorable settlement of the regulatory fee case is an excellent example of the value of league affiliation," said Dan Plauda, ICUL president/CEO. "We are particularly pleased the settlement terms we negotiated with the State in 2008 now provide Illinois state-chartered credit unions with an additional financial benefit. We know it comes at a good time, given the continuing difficult economic and regulatory environment in which our credit unions are operating."