TOPEKA, Kan. (3/26/08)--A Kansas House committee Tuesday approved a substitute for a banker-backed Senate bill that would limit the geographic area served by credit unions, and create new standards for branching, mergers and field-of-membership (FOM) changes. The Substitute for Senate Bill 535 now goes to the full state House of Representatives, which has until April 5 to debate and decide on the legislation. “Philosophically, it is my belief and the belief of our industry that credit unions in Kansas have not done anything wrong and that clarification of terms was all that was called for by the Interim Committee," Kansas Credit Union Association (KCUA) President Marla Marsh told the House Insurance and Financial Institutions Committee yesterday. "That being said, we have agreed to the language in Substitute for SB 535.” Marsh appeared at the hearing as a neutral conferee. The Kansas Bankers Association introduced the legislation, and the bill was heavily amended to reflect language agreed up on by KCUA before it passed the Kansas Senate, 35 to 2. Though the substitute is a compromise, strategic grassroots efforts by the Kansas credit union movement allowed KCUA to negotiate from a position of strength to secure in the statute FOM options that reflect Kansas’ unique situation, said KCUA. State- and federally chartered credit unions collected and distributed more than 21,000 petitions; held a rally attended by more than 300 members supporting the cause, and conducted an extensive legislator contact campaign. Though KCUA does not stand in support of or opposition to the legislation, it should remove any further legislative or legal threats and will provide a long-term standard for interpreting the Kansas FOM statute, KCUA said. The substitute bill would:
* Grandfather all existing credit union members and their immediate family members, all existing occupational and associational groups, current geographic fields of membership up to one million in population, and all current branch counties; * Outline geographic FOM limitations of up to 500,000 in population using multiple contiguous political jurisdictions for credit unions not headquartered in a metropolitan statistical area (MSA); * Limit credit unions headquartered in an MSA to that MSA plus the counties that share an immediate border until they hit one million in population; * Provide an escalator formula to allow for population growth in MSA areas; and * Continue to allow for multiple common bonds, given that the occupational and associational groups are located within the geographic field of membership.
Sub for SB 535 would immediately impact nine state-chartered credit unions, which must restrict their current geographic fields of membership because they currently extend beyond the one million in population limit. They are:.
* Boeing Wichita CU, Wichita; * Credit Union 1 of Kansas, Topeka; * Credit Unions United, Topeka; * Education CU, Topeka; * Golden Plains CU, Garden City; * Hutchinson CU, Hutchinson; * Kansas Super Chief CU, Topeka; * Medical Community CU, Wichita: and * Mid-American CU, Wichita.
“Moving forward, the credit union industry in Kansas will not be able to grow and expand as freely as they have in the past to serve their members and Kansas consumers,” Marsh said. If passed, the portions of the legislation addressing future FOM changes would go into effect July 1. The grandfathering portion of the legislation would go into effect on Jan. 1, 2009, to give Kansas state-chartered credit unions and the Kansas Department of Credit Unions time to comply with the changes. “With this legislative battle put behind us, Kansas credit unions can get back to doing what they do best--serving their members and Kansas consumers," Marsh said. "Our industry can now wholly focus on their mission of “people helping people,” a mission that is more important than ever as the economy continues to struggle.”