The Victory Electric Cooperative

“The cooperative has 11 board members; all 11 are allowed to vote, however, the board president votes only in the case of a tie should all members of the board not be present at any given meeting.”

“A business relationship exists between kenny wehkamp (trustee) and shane laws (ceo). Both individuals serve on the board of sunflower electric power corporation at the request of and for the benefit of the cooperative. Angela unruh (cfo) and cedric drewes (trustee) serve as alternates for these positions on sunflower's board.”

“The cooperative was formed by the members to provide electric service at cost on a cooperative basis.”

“The members of the cooperative vote on the board of trustees. Elections are done on a one member one vote basis.”

“The following acts require approval of the members of the cooperative: 1. Dissolution/liquidation of the cooperative 2. Merger or consolidation of the cooperative with another organization 3. Disposal of a substantial portion of the cooperative's assets 4. Amendment to the articles of incorporation 5. Amendment to the bylaws”

“The cooperative has no committees with authority to act on behalf of the governing body. Therefore, and pursuant to form 990 instructions, the question has been answered "no".”

“Management presented a copy of the form 990 to the board for discussion and review prior to filing.”

“The board of trustees and officers are required to review and be familiar with the policies outlined in the cooperative's conflict of interest policy. The board of trustees and officers are required to disclose any action or situation that might violate the policy to the full board of trustees as soon as possible. The conflict of interest policy is reviewed on an annual basis.”

“The board of trustees use the expertise of an independent compensation consultant and a compensation survey when determining the compensation of the ceo. The board and the ceo use the expertise of an independent compensation consultant and a compensation survey when determining the compensation of the cooperative's other employees meeting the definition of officers and key employees, if any.”

“The cooperative will provide a complete copy of its governing documents, conflict of interest policy, and audited financial statements to any member who requests a copy of any such document. Annually, the cooperative provides a copy of the balance sheet and income statement to the members of the cooperative with the annual report. The annual report and bylaws can be found on the cooperative's website.”

“In order to provide retirement benefits to its employees, the cooperative has established a defined contribution plan under section 401(k) of the internal revenue code. Employer contributions to the plan are made pursuant to the plan document. Additionally, the cooperative participates in a multi-employer defined benefit plan. Contributions to this plan are based on the full funding limitation of such plan. Employer contributions for both plans are available to participating employees, including officers, key employees and highly compensated employees, meeting the eligibility requirements of such plans. The cooperative also provides health and life insurance to all eligible employees through a qualified plan. The amounts reported on part vii, column (f) for the officers, key employees, and highly compensated employees is comprised of actuarial increase in the defined benefit plan, the total amount contributed by the cooperative to the defined contribution plan, and insurance paid on behalf of and for their benefit.”

“Patronage dividends result from the purchase of wholesale power from a generation & transmission cooperative. Patronage dividends also result from the payment of interest to cooperative banks and the purchase of supplies and services from other cooperative organizations. The expenses associated with purchases from and payments to such cooperative organizations are a direct component of cost of the electric service provided by the cooperative to its members.”

“The accounting records of the cooperative are maintained in accordance with the rural utilities service (rus) uniform system of accounts (usoa) as prescribed for rus electric borrowers. The usoa does not record expenses in the general expense categories provided on part ix lines 1-23. The cooperative separately reports salaries and wages, employee benefits and payroll taxes that are allocated in accordance with their accounting system, but other expenses that are described in lines 1-23 are reported on line 24 under the expense categories required by the usoa.”

“Administrative & general expense is comprised of the following: administrative & general salaries, benefits, & other $ 3,055,144 training 100,873 office supplies 337,611 outside services 166,971 insurance 119,973 employee activities 22,980 trustees 371,271 miscellaneous general 519,288 maintenance of general plant 214,240 regulatory commission 1,324 member meeting 97,045 advertising 17,052 total admin & general exp per financial statements $ 5,023,772 less: reclass of scholarships to part ix, line 2 (10,000) less: reclass of trustee fees to part ix, line 5 (312,851) less: reclass of labor to part ix, lines 5 & 7 (1,947,414) less: reclass of benefits to part ix, lines 8-10 (1,053,264) total admin & general expense per form 990, part ix $ 1,700,243”

“Salaries and wages are allocated to asset, liability, and expense accounts based on the accounting system described above. The following schedule reconciles amounts reported on lines 5-7 to total wages accrued and/or paid: total per lines 5-7 $ 5,547,851 less: trustee fees reported on forms 1099-nec (312,851) less: employee officer benefits included in line 5 (543,153) plus: salaries and wages capitalized directly to plant 3,037,775 plus: salaries and wages capitalized/expensed indirectly through clearing and other accounts 353,777 total wages accrued and/or paid $ 8,083,399”

“Pursuant to the form 990 instructions, the amount of patronage dividends paid to the members (hereinafter referred to as "patrons") should be reported on part ix, line 4. The phrase "patronage dividends paid" refers to the process, subsequent to year-end, by which the cooperative allocates patronage capital to and, therefore, operates at cost with its patrons. The cooperative's tax exempt purpose is to provide electricity to its patrons and to do so on a cooperative basis. Tax law defines "operating on a cooperative basis" as subordination of capital, democratic control, and operation at cost. The cooperative operates at cost through the allocation of true patronage dividends (also referred to as allocations of patronage capital) to its patrons. Patronage dividends are considered paid if the allocation is made (1) pursuant to a pre-existing obligation, (2) from the margins produced from the transactions done with or for patrons, and (3) in a fair and equitable manner on the basis of patronage. Additionally, the allocation of patronage dividends should be made within a reasonable time period after the close of the cooperative's year-end of december 31. Each one of these requirements for a true patronage dividend is provided for in the non-profit operation article of the cooperative's bylaws. The amount reported on part ix, line 4 represents the amount of patronage capital that is either allocated or to be allocated to the patrons resulting from their purchase of electricity from the cooperative for the 2024 calendar year. Because patronage dividends are the process by which the cooperative operates at cost with its patrons and thereby a key component to accomplishing its exempt purpose, the cooperative has reported such amounts as an expense for form 990 reporting. Patronage dividends are not an expense for financial statements prepared in accordance with generally accepted accounting principles, however.”

“Other expenses is comprised of the following: customer accounts $ 472,982 customer service and information 215,883 generator expense 10,567 sales expense 78,709 other deductions 217 total other expenses per form 990, part ix $ 778,358”

“Patronage capital allocated or to be allocated 6,029,940. Patronage capital retired - total -1,321,254. Patronage capital retired - discount 185,077.”

“The board as a whole is responsible for reviewing, overseeing the financial statement audit and selecting the independent financial statement auditor.”