Lane-Scott Electric Cooperative Inc

“Richard mcleon (gm/ceo) and richard jennison (board president) served on the board of sunflower electric power corporation at the request of and for the benefit of the cooperative. Katherine lewis (finance manager) is an alternate on the board. Craig ramsey (board vp), and harold hoss (board secretary) served on the board of kansas electric cooperatives at the request of and for the benefit of the cooperative. Richard mcleon (gm/ceo) is an alternate on the 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 utilize an annual performance appraisal when determining the compensation of the general manager. The board and the general manager utilize a compensation survey when determining the compensation of the cooperative's other employees meeting the definition of officer and key employees, if any. The survey includes salaries from similarly situated cooperatives throughout kansas and the nation.”

“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. Additionally, the cooperative provides a summarized copy of its balance sheet and income statement to the members of the cooperative with the annual report. Finally, a current copy of the 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 and highly compensated employees, meeting the eligibility requirements of such plans. The cooperative also provides health, dental, vision and life insurance to all eligible employees through a qualified plan. The amounts reported on part vii, column (f) for the officers 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 from 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 cooperative annually provides each trustee who served on the board during the year a questionnaire and time log. The completed questionnaires and time logs are used to complete the applicable questions on the form 990 pertaining to business relationships among directors, officers, and key employees, as well as to determine if there are any transactions which must be reported in detail on schedule l - "transactions with interested persons". If the cooperative was unable to obtain a completed questionnaire and/or time log, the cooperative relied upon the completed information for the prior year. The cooperative did not receive a questionnaire from employee officer katherine lewis and trustees eric doll and harold hoss, all who are no longer with the cooperative; therefore, the prior year questionnaires has been relied upon while preparing the return. There were no known changes from 2023 to 2024.”

“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.”

“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 $ 1,989,830 less: directors fees reported on form 1099-nec (53,600) less: employee officer benefits included in line 5 (243,230) plus: salaries and wages allocated to nonoperating margins 96,852 plus: salaries and wages capitalized directly to plant 487,702 plus: salaries and wages capitalized/expensed indirectly through clearing and other accounts 112,354 total wages accrued and/or paid $ 2,389,908”

“Administrative & general expense is comprised of the following: administrative & general salaries, benefits, & other $ 752,502 office supplies 82,126 outside services 120,410 employee education and training 390,531 directors 87,633 annual meeting 175,292 capital credits 20,203 dues to associated organizations 75,940 miscellaneous general 60,382 regulatory commission 2,135 maintenance of general plant 164,869 total admin & general exp per financial statements $ 1,932,023 less: reclass of scholarships to part ix, line 2 (9,000) less: reclass of director fees to part ix, line 5 (53,600) less: reclass of labor to part ix, lines 5 & 7 (712,290) less: reclass of benefits to part ix, lines 8-10 (374,435) total admin & general expense per form 990, part ix $ 782,698”

“Other expenses is comprised of the following: other deductions $ 108 sales 22,453 consumer accounts 146,297 customer service and information 42,970 total other expenses per form 990, part ix $ 211,828”

“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 (i.e. Purchases). Additionally, the allocation of patronage dividends should be made within a reasonable time period after the close of the cooperative's calendar tax 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.”

“All grants, sponsorships, and/or donations are made to non-profit and civic organizations that are located in the cooperative's service area, and are intended to improve the communities in which our members reside. Each grant, sponsorship, and/or donation made during the year was below the reporting threshold of schedule i, part ii.”

“Patronage capital allocated or to be allocated 1,002,633. Patronage capital retired - total -591,010. Patronage capital retired - discount 55,065. Donated capital 0.”

“The board as a whole is responsible for overseeing the financial statement audit and selecting the independent financial statement auditor. Procedural changes did not occur during the year.”