Clarke-Washington Electric Membership

“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 directors. 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”

“Management reviewed a copy of the form 990 before presenting to the board discussion and review. The discussion and review took place at a board meeting prior to filing the return.”

“The board of trustees review comparable salary data from area and/or nreca compensation studies. The trustees also use the expertise of an independent compensation consultant and a compensation survey when determining the compensation of the general manager. The board and the general manager 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 officer.”

“The cooperative's governing documents and financial statements are available to the public upon request at the main office in jackson, alabama. Additionally, a 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 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. In addition to the above pension plans, the cooperative also provides postemployment health insurance benefits to all employees who meet age and service requirements. The value of these benefits has not been estimated.”

“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 accounting records of the cooperative are maintained in accordance with the uniform system of accounts (usoa) prescribed by the rural utilities service (rus). 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.”

“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.”

“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 $ 3,326,873 less: director fees reported on forms 1099-nec (138,275) less: employee officer benefits included in line 5 (268,463) plus: salaries and wages capitalized directly to plant 1,053,247 plus: salaries and wages capitalized/expensed indirectly through clearing and other accounts 265,140 total wages accrued and/or paid $ 4,238,522”

“Administrative & general expense is comprised of the following: administrative & general salaries, benefits & other $ 680,624 office supplies 1,061,478 outside services 276,266 miscellaneous general 280,999 directors 156,628 dues and subscriptions 172,750 maintenance of general plant 229,034 advertising 69,456 annual meeting 112,983 rents 4,295 total admin & general exp per financial statements $ 3,044,513 less: reclass of donations to part ix, line 1 (15,000) less: reclass of director fees to part ix, line 5 (138,275) less: reclass of labor to part ix, lines 5 & 7 (677,035) less: reclass of benefits to part ix, lines 8-10 (381,345) total admin & general expense per form 990, part ix $ 1,832,858”

“Patronage capital assignable 3,170,684. Patronage capital retired - total -481,480. Patronage capital retired - discount 515,500. Oci post-retirement benefits -302,955. Net change in memberships -80.”