eDues Enrollment & Processing Overview

1. eDues Enrollment & ProcessingOverview Alternatives for Payroll Deduction March 23rd 2013 Presented by NEA

2. Agenda • What is eDues and Enrollment Options available? • Work Flow for new Paymethod Implementation • eDuesEnrollment Processing Overview • NEA PAC Transfer Overview for eDues States • Contact Tracking in IMS • EFT PRENOTE Processing • Status Sheets • PCI Compliance • Which paymethod to use? • Cost of EFT Vs Credit Card • NEA’s Recommendation • Fundamental difference in Dues collection between EFT/RCC Vs Payroll Deduction • eDuesTransition Processes • eDuesEnrollment Preparations • Elements of Successful Enrollment Campaigns • Best Practices Learned • Securing the enrollment paperwork • eDuesCampaigns: Current Status • eDuesTechnology: Current Status

3. Definitions • EFT – Electronic Funds Transfer is a system of transferring funds from one bank account directly to another by electronic means rather than conventional paper-based payment methods and uses ACH transfers • RCC – Recurring Credit Card • ACH – Automated Clearing House • MRA – Membership Reporting & Analytics • IMS – Interactive Membership System • FRS – Funds Receivable System • FYMP – Future Year Membership Processing

4. What is eDues? • eDues option is part of the Associations’ response to legislative attacks on multiple fronts through providing “alternative” methods for dues payment to replace Payroll Deduction. • The goals of NEA’s eDues program are: • Retain membership • Collect revenue effectively • Enhance the relationship between the members and the associations • Support and facilitate Affiliates’ transition from Payroll Deduction to Alternative Dues Payments

5. eDues -Alternative Payment Methods • Currently available dues payment options that can be offered for members as alternative to Payroll Deduction are: • Electronic Funds Transfer (EFT)– Bank Draft (Single and Recurring deduction options) • Credit Card Payment (Single and Recurring deduction options) • Single or Recurring payment through Cash/Check

6. eDues Enrollment Methods for EFT & Credit Card • Note: • MRA reports can be run for monitoring the progress of EFT enrollments processed via both EFT Express Entry in IMS and eDues Member Self Enrollment Website. • Credit Card info should not be collected on paper due to PCI compliance requirements.

7. High level flow of activities a state needs to do to offer a new payment method

10. Entry of EFT data into Membership Database from the eDues paper based forms

13. eDues Member Self Enrollment Site • The eDues Member Self Enrollment site is a tool to assist Affiliates in the replacement of Payroll Deduction dues collection or any other dues collection payment method with the collection of dues and voluntary funds using EFT or Credit Card. • NEA requires Affiliates to post the site url behind a secured “Member Login” area in their website. • Members access eDues website via Affiliate's website using their member login and are required to enter their Member ID (Indv ID) and Home Zip code to start the enrollment process. • Allows members to enroll in one of the payment options below: • EFT - Recurring • EFT – One Time Payment • Credit Card - Recurring • Credit Card – One Time Payment NOTE: State Affiliates have the flexibility of controlling the display of the above payment options on the eDues website.

14. eDues Member Self Enrollment Site Functionalities Following are the main features: • Used for existing members only. It cannot be used for adding new members. • Used by members (and can be used by State Affiliate users) to enroll for dues (and PAC) payment using EFT or Credit Card. • EFT information collected is entered and saved by real-time update to the membership database. NOTE: Credit Card information is NOT collected and stored in the Membership database via this website. • Provides an option for Affiliates to display and collect optional or non-required funds. • Provides an option to display on this page, a “state specific” custom message based on their situation to inform their members about any disclaimer message regarding enrollment process or deduction amount and start dates. • Members who enroll for EFT payment option receive a confirmation email. • Affiliates will receive a “cc” email of the same confirmation email which members receive.

15. Check Enrollment Methods • Members can enroll for Check payment option by contacting the State. • State users will use IMS application to setup the check payment option.

16. NEA PAC Transfer Overview for eDues States

17. Contact Tracking Basic “Contact Tracking” feature is available in IMS for recording responses from members regarding the eDues enrollment campaigns (currently available for EFT only. Feature for RCC will be released in near future). Additionally, following features are available: • record members’ interest in grass root activities. • assign individuals and track sub sequent follow up with members. • MRA reports are available for monitoring the progress of Contact Tracking activities

18. EFT PRENOTE Processing • An EFT pre-note transaction is a $0 (zero dollars) transaction sent to the banks to test the validity of the account information. • If a state affiliate has enrolled a significant number of members for EFT for the first time, it is recommended that the state affiliate work with the NEA to coordinate sending pre-note transactions before the actual EFT draws begin due to following advantages: • opportunity to correct erroneous account information before the actual draw • requisite cleanups as a result of Pre-Note failures can reduce future EFT returns rate and can help cut costs incurred due to return fees

19. Status Sheets The Status Sheet letter is a summary and reminder for the member of the amount to be deducted from the bank and when the deductions will occur. Available for both EFT and RCC payment options. • At least ten days before the first deduction for a given membership year, States Affiliates should run, print and mail an EFT Status Sheet letter to each member. This is a LEGAL requirement for EFT. • MRA report is available to generate the Status Sheets Note:INDP1000 – Individual Payments Status Sheet by Paymethod report under MRA>STANDARD>INDIVIDUAL PAYMENTS. • Certain key information must to be populated in the membership database for it to be pulled in the status sheet.

20. PCI Compliance • Credit card processing requires Payment Card Industry Data Security Standard (PCI) Compliance • Following stringent security and audit measures will need to be employed: • Protect Cardholder Data • Implement Strong Access Control – Need to Know Only • Maintain Vulnerability Management Program (anti-virus) • Build and Maintain a Secure Network (firewall) • Regularly Monitor and Test Networks • Maintain an Information Security Policy

21. Which payment method should you use – EFT, credit cards, or both? • Costs and Resources are the key factors to be considered before making any decisions. • Credit Cards • Harder to Enroll Members – due to third party application involved • Very Labor Intensive • Cards Expire Every 2-3 Years – Member must re-enroll with the new card • $.35-$.30 Base Transaction Cost • Fees and Points Cost 2%-4% Per Transaction • Reject Rate 17%-18% (11% Initially) • EFT • Easy to enroll since there is no third party application involved • Easy to update and maintain Bank Account info in the Membership database • $.05 Per Transaction Paid by NEA • $2.00 Return/Error Fee Paid by State Affiliate • Return Transactions are less compared to Credit Card returns

22. EFT Processing Costs - NEA negotiated Rates • The New Rates - Transactions per month • 1-99,999 $.05 • 100,000-500,000 $.03 • 500,001+ $.018 • NEA Pays Transaction Cost • $2.00 Return • State Pays Returns • Industry Average 2% Return Rate

23. Credit Card Processing Costs-NEA Negotiated Rates • Credit Cards – Transactions Per Month • 1-5,000 $.35 • 5,001-20,000 $.30 • 20,001-75,000 $.25 • 75,001 – 100,000 $.20 • 100,001 – 200,000 $.10 • 200,001 – 300,000 $.09 • Percent of Each Transaction • State Affiliates Pay Costs of Transactions • Industry Average Return Rate 5-7%

24. Comparing the Cost of EFT and Credit Cards: An Example Consider 1,000 Members: • Member Annual Obligation = $460 • Total Annual Obligation for 1000 Members = $460,000 • No of Deductions = 12 • Deducted Each Month = $38.33

25. Cost of EFT based on the example • Transaction Costs • $.05 Per Transaction Paid by NEA • 1-99,999 Transactions Per Month • $.03 100,000+ Transactions Per Month • $2.00 Return Fee Paid by State • Returns • Return Rate 1.5% (National Average) • 15 Returns Per Month (1,000 members) • $30.00 in Total Monthly Return Fees • $575 Dues Not Collected • $605 Uncollected Dues and Returns • Net • $38,300 Monthly Revenue • 98.42% Collected of Total Obligation • $452,740 Annual Revenue

26. Cost of Credit Card based on the example • Transaction Costs • All Fees Paid by State • $.35 Per Transaction (1-5,000 Transactions Per Month $.30 5,001+ Transactions Per Month) • $.69 1.8% Visa Interchanged Rate • $.10 Visa Interchange Fee • $.15 Visa/MC Authorization Fee • $.04 Mastercard Assessment .11% • $.03 NABU Additional Costs for Credit Card Points • $1.36 Cost Per Transaction 3.55% of Deduction Amount • Returns • Return Rate 8.69% • 87 Returns Per Month • $3,347 Dues Not Collected • $1,360 Fees • $4,707 Uncollected Dues and Fees • Net • $33,627 Monthly Revenue • 87.72% Collected of Total Obligation • $403,552 Annual Revenue

27. Comparing the Cost of EFT and Credit Cards based on the example 1,000 Members $460 Member Annual $460,000 Total Annual Obligation EFT Credit Cards 98.42% $452,740 87.72% $403,552 • Annual Revenue • Total Obligation Collected EFT Collects $49,218 More in Annual Revenue

28. NEA’s RECOMMENDATION NEA recommends EFT over CREDIT CARD for EDUES ENROLLMENT AND PROCESSING Current Status 2012-2013 (As of 3/20/13)

29. How does dues payment through EFT and Credit Card differ from Payroll Deduction?

30. eDues Transition Processes Involves the following: • Business Process Changes • Membership and Dues Data Requirements • Leadership, Member and Staff Preparation • Member Communications Strategy • Member Communications Execution • Membership and Dues Data Transformation • Member Recruitment and Retention • Implementation and Support

31. eDues Enrollment preparations(For FY) • FYMPSET Processing should be complete. • FYMPMULT Processing should be complete. • Keep the following member information up-to-date: • Non-work or Home Email – not “Personal” • Work Location • Primary Phone – Home or Cell • Primary Address • Ensure all Local data and Work Location data is updated • Ensure membership types and obligation amounts are correct for member on each level (NEA, SEA, LEA)

32. eDues Enrollment preparations (For FY) – contd. • Ensure that the State is set up as Payment Category Breakdown in FRS. • Ensure Billable Parties have been set up. • Ensure EFT/RCC has been added as a “paymethod” option. • Setup required eDuesparameters under EDUES CONFIGURATION tab in IMS • Setup Deduction Schedule EFT/RCC. • Setup critical eDues Contact Info to received enrollment notifications and to generate Status Sheets. • Run and print required eDues forms or eDues Rosters for collecting EFT enrollment info. • Setup eDues Member Self Enrollment website through NEA.

33. Elements of Successful Enrollment Campaigns Any enrollment option selected by Affiliate requires a successful eDues campaign with the goal to motivate and encourage members to enroll in the alternative dues payment option. Below are the NEA recommendations for a successful eDues campaign: • Personally contact each member • Inform Members • Objectives of Campaign • When and Where they will be contacted • What the member will need to bring • What are their enrollment options • What the Recruiters will need • Where the members Are • Who the members Are • How to enroll the members • Effective contact tracking • Keep in mind that members’ time is “Valuable”.

34. Best Practices/Lessons Learned from other Association's Campaigns • Home/School Visit Campaigns • Phone Campaigns • E-mail Campaigns • Flyers and Mailers

35. Securing the eDues Forms Having proper guidelines to ensure the security of the eDues forms for their handling and transportation, and to destroy them appropriately after their usage is a very CRITICAL step for an eDues Campaign since these forms contains members’ very sensitive information such as banking info and personal contact info.

36. Affiliates Participating in eDues using EFT or Credit Card for Dues Collection NEBRASKA STATE EDUCATION ASSOCIATION NORTH CAROLINA ASSN OF EDUCATORS * OHIO EDUCATION ASSOCIATION OKLAHOMA EDUCATION ASSOCIATION SOUTH DAKOTA EDUCATION ASSOCIATION TENNESSEE EDUCATION ASSOCIATION TEXAS STATE TEACHERS ASSOCIATION THE SOUTH CAROLINA EDUCATION ASSN * UTAH EDUCATION ASSOCIATION VIRGINIA EDUCATION ASSOCIATION WISCONSIN EDUCATION ASSN COUNCIL * WYOMING EDUCATION ASSOCIATION ARIZONA EDUCATION ASSOCIATION * ARKANSAS EDUCATION ASSOCIATION COLORADO EDUCATION ASSOCIATION GEORGIA ASSOCIATION OF EDUCATORS IDAHO EDUCATION ASSOCIATION INDIANA STATE TEACHERS ASSOCIATION IOWA STATE EDUCATION ASSOCIATION LOUISIANA ASSOCIATION OF EDUCATORS MISSISSIPPI ASSOCIATION OF EDUCATORS * MISSOURI NEA NEA-NEW HAMPSHIRE NEA-NEW MEXICO * Primary Method for Collecting Dues

37. Current Campaigns INDIANA STATE TEACHERS ASSOCIATION KANSAS NEA MISSOURI NEA NEBRASKA STATE EDUCATION ASSOCIATION NORTH CAROLINA ASSN OF EDUCATORS OKLAHOMA EDUCATION ASSOCIATION

38. eDuesEnhacements – Completed Recently! Mid-Year Conversion Project – (to support loss of Payroll Deduction during the middle of the membership year):Completed in March 2013 Release • Create Calculations, Extracts, Imports to convert from Payroll Deduction to Individual Payments • Conversion Forms/Reports • Enhance Member Self-Enroll, EFT Express in IMS • Enhance Membership System to Display Individual Payments • Enhance Obligation Transactions for Multi-Paymethods • Creates Foundation for Lockbox – Electronic Payments

39. eDues Features – Coming Soon! • Enhancements to Individual Payments upload from Payroll Deduction (File Mapping/Lockbox Processing): Expected Release - April, 2013 • Multiple Deduction Schedules : Expected Release - April, 2013 • Based on Local and Type of Member • Evaluation and possible implementation of a New Credit Card Processor/Gateway: Expected Release - TBD • Recurring Credit Card Email Notifications: Expected Release - April, 2013 • Enrollment Confirmation • Returns • Expiring Card Notifications

40. eDues Documentation available on InsideNEA

41. Questions? Stan Binder – Sbinder@nea.org 202-822-7670 Chaitra Hirenallur – CHirenallur@nea.org202-822-7639 PremUdayan – UPrem@nea.org 202-822-7869