In this week’s NY Credit Union News, we spotlight Reliant Credit Union’s impactful sneaker donation program, delve into the implications of the governor’s 2025 budget for credit unions, introduce the 2024 Recognition Awards for outstanding individuals, and feature expert insights into the economic outlook for 2024 and its potential impact on credit unions. Read this roundup for the latest in credit union news!
Submit Your Nominations for the 2024 Recognition Awards
It’s that time of the year again! We are excited to announce that submissions for the 2024 Recognition Awards are now open. This prestigious program annually honors individuals who have made exceptional contributions to the credit union movement and the communities they serve.
Winners will be celebrated at EXCEL 24, The Association’s annual meeting and convention, on June 15 at the Saratoga Hilton, Saratoga Springs, NY.
Award categories include:
- Outstanding Young Professional: Recognizing young leaders (39 and younger) who embody the credit union philosophy through dedication and hard work.
- Outstanding Professional: Honoring professionals who demonstrate a deep passion for credit unions through their dedication and success.
- Outstanding Volunteer: Celebrating volunteers who have consistently upheld the “people helping people” philosophy, contributing significantly to their credit unions.
- Hall of Fame: Acknowledging individuals who have dedicated their lives to the success and promotion of credit unions on local, state, or national levels.
All nominations are due by March 18, 2024.
For submission guidelines and more information visit the event page.
Governor Hochul Releases the Executive Budget Proposal for Fiscal Year 2025
By Amy Kramer, Chief Advocacy Officer
Governor Hochul has released her Executive Budget Proposal for Fiscal Year 2025, with several proposals of interest to credit unions and to businesses. The Plan projects a State Operating Funds budget of $136.2 billion, or growth of 4.5 percent over the prior State Fiscal Year (SFY), with approximately half of that amount dedicated to support the State’s two largest program areas, namely health care and education.
In the coming weeks, the Legislature will host a series of public hearings to solicit feedback from stakeholders, including the commissioners of the state’s agencies, regarding these fiscal and policy proposals. The Assembly and Senate will then propose their One-House budgets in mid-March, outlining each House’s budget priorities.
Budget negotiations between the Executive office and the Legislature will continue until a tentative budget framework is completed. The New York State Budget is due on April 1st; however, Governor Hochul has stated a willingness to exceed the deadline if negotiations are ongoing.
Below are key proposals of interest to credit unions:
Extend Certain Sales Tax Exemption Related to the Dodd-Frank Protection Act for Three Years: Extend for three years the exemption from sales and use tax on certain sales or services transacted between certain financial institutions and their subsidiaries.
Return Tax Foreclosure Surplus to Property Owner: Reform the State’s property tax enforcement laws to bring them into compliance with a recent decision of the United States Supreme Court, Tyler v. Hennepin County, Minnesota, 598 U.S. 631 (2023), by providing that when tax-delinquent property is sold, any excess proceeds be returned to the former owner or owners, and where appropriate, to lienors.
Ensure Paid Breaks for Breast Milk Expression in the Workplace: Require paid breaks for up to 20 minutes, for breast milk expression. Nursing employees who take in excess of 20 minutes to express breast milk would be permitted to be covered using existing paid break time or meal time.
Sunset the State’s COVID-19 Sick Leave Law: The State’s COVID-19 Sick Leave Law, which required employers to provide sick leave benefits, paid family leave, and benefits due to disability for employees subject to a mandatory or precautionary order of quarantine or isolation due to COVID-19. The Governor’s proposal would sunset the State’s COVID-19 Sick Leave Law as of July 31, 2024.
Authorize Mortgage Insurance Fund (MIF) Utilization: Would allow for the utilization of $94.95 million from the Mortgage Insurance Fund’s (MIF’s) excess reserves to support vital community development and housing programs.
These funds would be used to support the following programs:
- Neighborhood and Rural Preservation Programs ($18.19 million), which support community-based housing corporations across the State that provide various housing-related services for low- and moderate-income populations;
- The Rural Rental Assistance Program ($23.18 million), which supports rental subsidies for low-income and elderly and family tenants residing in federally funded multifamily projects in rural areas of the State; and
- Homeless housing programs ($53.58 million), including the Solutions to End Homelessness Program, the New York State Supportive Housing Program, and the Operational Support for AIDS Housing Program.
Enhance Protections Against Deed Theft: Establish the crime of deed theft to protect heirs’ property and prevent deed theft in New York State. This would strengthen protections against predatory investors initiating partition action of heirs’ property, and allow homeowners without a will to indicate who should receive their property on death in the deed itself.
Establish First-in-Nation Paid Prenatal Leave: Provide eligible pregnant employees the ability to take up to 40 additional hours of leave for prenatal medical appointments in addition to New York’s current 12 weeks of Paid Family Leave. The leave for prenatal care would not reduce the 12 weeks of Paid Family Leave or 26 weeks of disability leave for eligible employees. Benefits would be paid hourly and written notice or proof to the employer for leave would be due within 30 days following the appointment.
Increase Short-Term Disability Leave Benefits: Increase the maximum weekly payment for eligible employees on short-term disability from $170 to two-thirds of an employee’s average weekly wage, capped at two-thirds of the Statewide Average Weekly Wage (SAWW) by 2029 for the first twelve weeks of disability. Thereafter the benefit would be capped at $280 weekly for weeks thirteen through twenty-six. The increase to the weekly benefit would roll out in annual increments, starting at half of an employee’s average weekly wage in 2025, capped at $400, and ending at two-thirds of the SAWW by 2029.
Regulate “Buy Now, Pay Later” loans: Authorize DFS to regulate the industry with a focus on building stronger consumer protections around disclosure requirements, dispute resolution, credit reporting standards, late fee limits, and consumer data privacy. DFS would also review guidelines to curtail dark patterns, debt accumulation, and overextension.
Financial Exploitation Prevention: Establish procedures for financial institutions to impose holds on transactions that appear to be related to the financial exploitation of an eligible adult.
- Eligible adults are especially at risk of financial exploitation through theft and scams. To curb such harmful activity, the bill would establish that financial institutions can impose holds on suspicious transactions, support the ability of relevant government agencies to investigate potential cases of financial exploitation, and place time limits on the holds that are long enough to permit investigation but also allow legitimate transactions to be completed timely.
- Under the terms of this bill, a financial institution could place a hold on a transaction if the financial institution reasonably believes it is the subject of or related to financial exploitation of an eligible adult, and the financial institution would be required to place a hold on a transaction if adult protective services or a law enforcement agency notifies the financial institution that it reasonably believes that the transaction is the subject of or related to financial exploitation of an eligible adult.
Enhancing Consumer Protection: Authorize the Attorney General to investigate and bring actions against persons who engage in unfair or abusive practices, in addition to deceptive practices, and allow a private right of action for consumers to recover damages if they have been harmed by unfair or abusive practices.
Strengthen Storm Resiliency: Blue Buffers Buyout Program: The Budget dedicates $40 million for the Resilient and Ready Fund to anticipate and respond to emergencies through rapid home repairs and permanent retrofits. This will allow the State to respond more quickly in the wake of disasters and to help a wider spectrum of homeowners and victims. The Budget also advances the Blue Buffers Buyout Program to encourage voluntary home buyouts in areas most prone to flooding.
The Association will continue to monitor negotiations between the Governor’s office and the Legislature, and we will keep our members informed of any developments with an impact to credit unions. We will utilize opportunities throughout the budget process to grow support for our 2024 Legislative Priorities. We invite all New York credit unions to engage with us in these efforts, particularly when we hike the hill in Albany for our State GAC, March 25-26.
The full Executive Budget can be found below.
Stepping Up For the Community: Reliant Credit Union Donates Sneakers to Empower and Uplift Local Youth
Reliant Credit Union has made a significant impact in the Finger Lakes region by donating 310 pairs of sneakers to children in need at local schools and organizations throughout 2023 as part of their Feet Forward program, an initiative now in its seventh year. In partnership with Jonathan Griffiths of Rochester Running Company, Reliant has been able to provide these high-quality sneakers, ensuring children have the right footwear to run, play, and grow.
Since its start in 2016, Feet Forward has proudly donated over 2,134 pairs of sneakers, marking an investment of over $61,000 in supporting the youth of the community. The beneficiaries include Brockport Central School District, Newark’s Future Run the Streets club, Ibero American Action League, and more. These sneakers are more than just footwear; they are symbols of hope, pride, and care for the children who wear them.
Reliant’s generosity is especially meaningful for organizations like the Ibero American Action League, aiding migrant families, and schools like Marion Elementary, where these “cool” sneakers make a big difference in the lives of students.
With a strong foundation since 1970 and serving over 45,000 members, Reliant Credit Union continues to be a pillar in the community. Their commitment goes beyond financial services; it extends to nurturing the well-being and happiness of the communities they are a part of. This act of generosity truly exemplifies their dedication to making a positive and lasting impact.
Learn more about the program by clicking below!
2024 U.S. Economic Outlook And Its Impact On Credit Unions
By Steve Rick, Chief Economist for TruStageTM
Recent economic and market data tells us 2024 will bring slow but steady economic growth and possible interest rate reductions. The Fed will continue to battle inflation with a balanced approach to interest rates in hopes of staving off a recession and bringing inflation rates to an acceptable standard.
2024 Inflation And Interest Rate Predictions
Presently, the effective federal funds rate stands at 5.35%, with projections suggesting a marginal drop in the summer of 2024. Despite this modest decrease, caution is advised regarding the Federal Reserve’s approach to lowering the inflation rate, given its persistent nature, particularly the core inflation rate, slightly above 4%.
Both government and private sector spending remains strong, with high foreign spending and residential investment due to homeowners holding onto low mortgage rates and ongoing inventory rebuilding to meet consumer demand.
During the Federal Open Market Committee’s latest meeting on December 13, 2023, a unanimous decision was made to maintain the key federal funds rate in a target range between 5.25% and 5.50%.
2024 Consumer Price Index (CPI) and Real Gross Domestic Product (GDP) Predictions
The CPI has risen by 3.2% over the past 12 months. Projections indicate a decrease to 3% in 2024, approaching the Federal Reserve’s target of a 2% CPI rate. This is a positive trend, considering the previous year’s peak of 9% year-over-year (YoY) inflation rate.
On the real GDP front, growth is expected to be 1.5% in the upcoming year, a slight decline from the current year’s 2.5% growth. Relatively high interest rates throughout 2024 are anticipated to keep real GDP growth at a lower but reasonable level.
2024 Mortgage Rate Prediction
Current U.S. 30-year fixed mortgage rates range from 6.75% – 7.25%, depending on the state. The expectation for 2024 is a one-percentage-point decrease, influenced by the recent drop in the 10-year treasury from 4.7% in November to 3.9% in December.
Looming Liquidity Crisis In 2024
The primary concern is the liquidity risk of deposit runoff at banks and credit unions. Credit unions may face challenges in retaining deposits, with a significant decrease in assets allocated to cash and investments over the past year. The decline in the surplus funds to asset ratio, from 36% one year ago to 24%, signals a potential liquidity squeeze.
Credit unions need to be prepared for a liquidity crisis that could hit in 2024 by performing routine assessments while monitoring the economic landscape. Practicing these preventative behaviors could help you respond proactively to market changes.
Credit unions are particularly vulnerable to a liquidity shortage, attributed to weak deposit growth and stronger loan growth. Forecasts suggest a 3% deposit growth in 2024 due to a decrease in the money supply by nearly 5% YoY. The competition for a reduced pool of deposits has led to an increase in deposit interest rates.
Supporting Credit Union Members In 2024
Despite the challenges, credit unions maintain a bright spot for members. Credit unions continue to offer competitive loan rates, outperforming traditional banks. Last year’s market share surge was attributed to the strategic advantage gained during the Federal Reserve’s interest rate hikes, where credit unions implemented gradual rate adjustments. This approach will persist in 2024, with credit unions maintaining lower rates to stay competitive.
The U.S. economy is expected to continue its slow but steady expansion, supported by incremental growth in key areas. However, credit unions should prepare for a potential liquidity crunch in 2024 with historically low deposit growth in the industry. Also, expect the Federal Reserve to be cautious with interest rate adjustments but anticipate drops in the latter half of the year.
The views expressed here are those of the author(s) and do not necessarily represent the views of TruStage.
TruStageTM is the marketing name for TruStage Financial Group, Inc. its subsidiaries and affiliates. Corporate headquarters are located in Madison, Wis.
© TruStage 2023
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