Carroll Electric Cooperative Corporation

“The cooperative has 9 board members; all 9 are allowed to vote, however the board chairman votes only in the case of a tie.”

“Business relationship: alan hunnicutt (director) and kristy noble-tesch (director) share a business relationship. Robert boaz (president/ceo) and alan hunnicutt (director) both serve on the board of arkansas electric cooperative corporation at the request of and for the benefit of the cooperative. Robert boaz (president/ceo) and carla hathorn (director) both serve on the board of arkansas electric cooperative, inc. At the request of and for the benefit of the cooperative.”

“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 via united states mail on a one member one vote basis. Members complete and return written ballots in a sealed envelope addressed to the secretary of the cooperative.”

“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”

“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 and paid preparer review drafts of form 990 prior to e-filing. Board reviews annual filings at monthly meetings.”

“Officials must complete and sign a conflict of interest certification and disclosure form attached to the conflict of interest policy. Each official is responsible for ensuring that the form is kept current and must immediately submit an updated form to the appropriate ethics committee if there is any material change to any of the information contained in the form. Per the policy definition, official means a director, officer, an employee who is responsible for the procurement of goods and services including the selection, award, or administration of contracts during normal or emergency situations, or key employee as defined by the internal revenue service.”

“The board of directors use a compensation survey and compare compensation reported on other cooperatives' irs forms 990 when determining the compensation of the president/ceo. The survey shows comparative salaries for presidents/ceos from similarly situated cooperatives located in arkansas and the nation. The board and the president/ceo use a compensation survey and compare compensation reported on other cooperatives' irs forms 990 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 arkansas and the nation.”

“The articles of incorporation and the bylaws of the cooperative are provided in written or electronic form upon request. The bylaws are available on the cooperative's website. The annual financial report is distributed to all members immediately prior to the annual meeting of the members. Any member, upon request, is provided a complete copy of the cooperative's audit report.”

“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 rus uniform system of accounts (usoa) 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 $24,892,611 less: director fees reported on forms 1099-nec (345,051) plus: director retirement benefits included in line 5 (298) less: officer benefits reported on line 5 (765,899) plus: salaries and wages capitalized directly to plant 11,124,399 plus: salaries and wages capitalized/expensed indirectly through clearing and other accounts 2,731,950 total wages accrued and/or paid: $37,637,712”

“Administrative and general expense is comprised of the following: administrative & general salaries, benefits, & other $ 6,307,403 office supplies 1,610,431 outside services 183,000 pension & benefits 682,601 regulatory commision 361,567 duplicate charges (credit) (195,380) miscellaneous general 5,713,085 directors 396,289 maintenance of general plant 4,251,357 total admin & general exp per financial statements $19,310,353 less: reclass of donations to part ix, line 1 (25,985) less: reclass of director fees to part ix, line 5 (345,349) less: reclass of labor to part ix, lines 5 & 7 (7,291,003) less: reclass of benefits to part ix, lines 8-10 (3,395,219) total admin & general expense per form 990, part ix $ 8,252,797”

“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 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 are comprised of the following: customer accounts $ 2,024,155 customer service and information 1,166,448 other deductions (41,513) total other expenses per form 7 $ 3,149,090 less: customer accounts labor and benefits (1,855,946) less: customer service & information labor and benefits (864,263) total other expenses per form 990, part ix $ 428,881”

“Net change in memberships 90,160. Patronage capital allocated or to be allocated 27,947,475. Patronage capital retired - declared -4,026,844. Patronage capital retired - discount 33,867. Unclaimed patronage retirements retained per state law 2,653,833. Other comprehensive income(loss) 80,422.”

“Audited financial statements were prepared by an independent accountant for the cooperative's financial statement audit year end of february 28th. The tax return has been and continues to be prepared based on a calendar tax year end of december 31.”

“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.”