Cumberland Electric Membership Corporation

“Every person receiving service is required to be a member of the cooperative.”

“Members vote to elect the board of directors annually as well as other business that may come before them. Members can also vote for dissolution of the cooperative. Voting is held within the service area of the cooperative at an annual meeting.”

“Nomination of directors, changes to bylaws, and dissolution of the cooperative are subject to approval by the members.”

“The 990 is reviewed by the supervisor of financial services and controller.”

“The conflict of interest policy is reviewed with the board of directors annually at a monthly board meeting.”

“Cumberland EMC contracted with Cooperative Benefits & Financial Services in the fall of 2005 to update its thirty year old compensation program. The new plan was designed to focus on Internal Equity and External Competitiveness.Internal equity focuses on fair and impartial rankings of positions based on work done within the department ("equal pay for equal work"), which addresses legal equity. Employees who perform similar work with similar requirements are provided with similar wage and salary opportunities.External competitiveness assures that positions within the cooperative are priced at a rate competitive with comparable work done under similar conditions in the utility industry.The compensation plan uses a point factor system to evaluate the non-bargaining unit positions within the organization to establish the internal equity of the organization. These factors consider the areas of Job Knowledge, Leadership, Organizational Impact, Complexity, and Communication required for each position. The internal values are then merged with external salary-survey information to build the compensation model unique to the organization. The model is then used to calculate salary range midpoints, which are both internally equitable and externally competitive. Working with the compensation consultant, an evaluation committee comprised of senior staff evaluated the positions. Each position was allocated points based on the level of each factor described in the job description. The sum of the points for all five factors determined a total point value for each position and provided a systematic and equitable method of ranking positions according to their relative value to the company.The consultant used a polynomial regression model to merge point values of selected benchmark positions with external salary survey data to construct an external market model and reference point. "Benchmark positions" (market identifiers) were selected by comparing job responsibilities performed at Cumberland EMC with those described in the salary survey data. When there was an appropriate "match" in duties, the position was selected as a benchmark position and included into the compensation model. The external data was taken from the National Rural Electric Cooperative Association's National Compensation Survey (NCS). NCS provides information for approximately 80 positions from cooperative distribution systems located throughout the United States. Over 700 systems contribute to this non-voluntary annual survey (values are used for calculating group benefit premiums), which report actual salaries. Employees are normally brought into the plan at the minimum value for the grade of the position and receive an annual "performance/merit" increase, in addition to an annual cost-of-living increase, until the market value (mid-point) of the grade is reached. The plan is updated annually by the consultant using the most recent data from the NCS. On average, it takes approximately five to seven years for a senior staff employee to reach the market value (mid-point).The NCS is also used to determine the annual salary for the Cooperative's General Manager. The Manager, Administrative Division reviews the National, Regional, and State data from the survey with the Board of Directors. The Board of Directors establishes the salary based on the data from the survey, in addition to the annual performance of the General Manager.”

“The bylaws are available on-line and the conflict of interest policy and financial statements are available by request.”

“Client Note 1 - CEMC REVIEWED THE CALCULATION ON THE 990-T FOR INCLUDING THE DISALLOWED TAXABLE FRINGE BENEFIT FOR PARKING FOR THE PERIOD 1/1/2018-6/30/2018 AND DETERMINED THE AMOUNT TO BE $428. SINCE CEMC HAS A NET OPERATING LOSS SUFFICIENT TO COVER THAT AMOUNT, RATHER THAN AMENDING THE FY18 RETURN, CEMC ELECTED TO INCLUDE THE $428 IN THIS RETURN SO THAT THE NET OPERATING LOSS AT 6/30/2019 IS PROPERLY CALCULATED.”

“Increase in memberships = $20400”

“Sfas 158 actuarial gain on postretirement benefits = $80800”