August 25, 1998
Ben Roth, President
Dayton Area School Employees
Federal Credit Union
1030 N. Main Street
P.O. Box 407
Dayton, Ohio 45405
Dear Mr. Roth:
Dayton Area School Employees FCU has recently adopted a policy
to reimburse a director up to $600 per year for expenses incurred
to bring a "companion," such as a spouse, child, or
friend to credit union conferences. You wrote to ask whether
the reimbursement policy constitutes compensation under the Federal
Credit Union Act (the Act). The policy is impermissible because
reimbursement of expenses for persons other than immediate family
members constitutes prohibited compensation.
The Act and NCUA regulations provide that only one board officer
of a federal credit union (FCU) may be compensated as such and
that no other official may receive compensation for serving as
a board or committee member. 12 U.S.C. §§1761(c), 1761a;
12 C.F.R. §701.33. However, NCUA has defined compensation
to exclude reimbursement of a board official and one immediate
family member for travel expenses incurred in performing board
duties. The reimbursement of travel expenses is permissible if
the payment is necessary and appropriate as determined by the
board and is made in accordance with written board policies and
procedures, including any requirement for documentation. 12 C.F.R.
§701.33(b)(2)(i).
NCUA used "immediate family member" rather than "spouse"
in this regulation, to provide greater flexibility to FCUs to
determine the relationships that qualify for reimbursement. However,
the phrase was intended to limit the scope of reimbursement policies
to those persons who have a "familial" relationship
to the board member. The similar phrase "member of their
immediate families" is frequently used in connection with
field of membership and chartering policies and has been interpreted
to require a familial relationship. For your
Mr. Roth
Page Two
reference, I am enclosing a copy of a recent opinion letter which
includes a full discussion of the factors to be considered when
determining whether a familial relationship exists. Letter from
Sheila A. Albin to Mary Beth Wong, dated December 9, 1997.
In summary, the use of the term "friends" in the Dayton
Area School Employees FCU policy is impermissible because it could
include persons other than immediate family members or persons
who have a familial relationship with the board member.
Sincerely
Sheila A. Albin
Associate General Counsel
OGC/DMS:bhs
SSIC 6010
98-0619
Enclosure