Jefferson Davis Electric 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 on a one member one vote basis.”

“Management reviewed the form 990 prior to e-filing. The form 990 was discussed and reviewed by the board at the first board meeting occurring subsequent to the date the form 990 was filed.”

“The board of directors determine the compensation for the general manager on a yearly basis. The board of directors and the general manager determine the compensation for the cooperative's other employees meeting the definition of officer and key employees, if any, on a yearly basis.”

“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 audited balance sheet and income statement to the members of the cooperative with the annual report. The bylaws can also 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 the 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.”

“During 2024, the cooperative began the rental of non-utility property.”

“Although the cooperative is no longer an rus borrower, the accounting records are maintained in accordance with the rural utilities service (rus) uniform system of accounts (usoa). The usoa does not record expenses in the general expense categories provided on part ix lines 1-23. The cooperative separetly states 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 $ 3,904,834 less: director fees reported on forms 1099-nec (222,641) less: employee officer benefits reported on line 5 (272,760) plus: salaries and wages capitalized directly to plant 929,332 plus: salaries and wages capitalized/expensed indirectly through clearing and other accounts 178,172 total wages accrued and/or paid $ 4,516,937”

“Other expenses is comprised of the following: selling expenses $ 8,540 taxes 339,333 transmission 828 other deductions 106,222 total other expenses per part ix $ 454,923”

“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 990reporting. 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.”

“Administrative & general expense is comprised of the following: administrative & general salaries, benefits, & other $ 1,446,048 office supplies 575,504 outside services 452,302 insurances 97,516 miscellaneous general 520,348 maintenance of general plant 99,510 total admin & general exp per financial statements $ 3,191,228 less: reclass of director fees to part ix, line 5 (222,641) less: reclass of labor to part ix, lines 5 & 7 (749,074) less: reclass of benefits to part ix, lines 8-10 (417,068) total admin & general expense per form 990, part ix $ 1,802,445”

“Net change in memberships -225. Estate retirements -60,959. Other adjustments -408.”

“The board of directors have assigned members to an audit committee to oversee the financial statement audit and select the independent financial statement auditor. Procedural changes did not occur during the year.”