Central Rural Electric Cooperative Inc

“During the year, the cooperative's bylaws were amended. The following is a summary of the changes: article iv - trustees: section 2. Tenure of office, changed term limits to three years. Article vi - officers: section 6. Secretary/treasurer, combined secretary and treasurer officer positions. Changed duties to the following: subsection (a) - seeing that all notices are duly given in accordance with these bylaws or as required by law. Subsection (b) - in general performing all duties incident to the office of secretary/treasurer and such other duties as from time to time may be assigned to him/her by the board of trustees. A complete copy of the bylaws can be found on the cooperative's website: https://mycentral.coop/bylaws.”

“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 by district.”

“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 provided a copy of the form 990 to the board for discussion and review prior to filing.”

“The board of trustees and officers are required to review and be familiar with the policies outlined in the cooperative's conflict of interest policy, and are required to disclose any action or situation that might violate the policy to the full board as soon as possible. The conflict of interest policy is periodically reviewed with employees and trustees.”

“The board of trustees utilize internal and/or external resources when determining the compensation of the ceo. The board and the ceo utilize internal and/or external resources when determining the compensation of the cooperative's other employees meeting the definition of officer and key employees, if any.”

“Once the form 990 for the year is electronically filed, the cooperative will upload a pdf copy to guidestar at www.guidestar.org. This will ensure that the public has timely access to the form 990. The cooperative also provides a link to guidestar from its own website. Ensuring a copy of the form 990 is uploaded started with the 2020 form 990. However, upon implementation, the cooperative also uploaded the 2019 form 990 to guidestar so that all years subject to public inspection are available.”

“The cooperative provides a summarized copy of the audited financial statements to the members of the cooperative at the annual meeting. The cooperative's bylaws and annual report are available on its website as well as a summary of the current year regular board meetings at www.mycentral.coop.”

“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 employees through a qualified plan. The amounts reported on part vii, column (f) for the officers and highly compensated employees are comprised of actuarial increase in the defined benefit plan, the total amount contributed by the cooperative to the defined contribution plan and the insurance premiums paid for their benefit. In addition to the above pension plans, the cooperative also provides post-retirement health insurance benefits through an unfunded welfare benefit plan. The value of these benefits has not been estimated.”

“Patronage dividends 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 provides broadband internet services within its service area on a non-patronage basis. Such services are provided through a wholly-owned subsidiary that is treated as a disregarded entity under federal tax law. Because the losses from these operations are used to offset future net margins derived from the subsidiary and are not allocated to the members, part i, line 19 is reflective of net income (loss) from the broadband operations.”

“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 $ 7,303,850 less: trustee fees reported on forms 1099-nec (128,750) less: employee officer benefits included in line 5 (380,744) less: key employee benefits included in line 5 (75,830) plus: salaries & wages allocated to nonoperating margins 3,994 plus: salaries & wages capitalized directly to plant 1,140,772 plus: salaries & wages capitalized/expensed indirectly through clearing & other accounts 1,475,370 total wages accrued and/or paid $ 9,338,662”

“Administrative and general expense is comprised of the following: administrative & general salaries, benefits & other $ 3,872,782 office supplies 174,796 outside services employed 287,814 injuries and damages 353,458 duplicate charges - credit (79,931) advertising 135,847 miscellaneous general 192,071 district & annual meetings 206,472 dues to associated organizations 175,031 trustees 231,426 maintenance of general plant 861,515 total admin & general exp per financial statements $ 6,411,281 less: reclass of trustee fees to part ix, line 5 (128,750) less: reclass of labor to part ix, lines 5 & 7 (1,847,384) less: reclass of benefits to part ix, lines 8-10 (972,898) total admin & general expense per form 990, part ix $ 3,462,249”

“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.”

“All grants, donations, and/or sponsorships 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, donation, and/or sponsorship made during the year was below the reporting threshold of schedule i, part ii.”

“The accounting records of the cooperative are maintained in accordance with the 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 its 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.”

“Other expenses is comprised of the following: broadband expenses $ 7,288 sales 1,038,578 taxes 48,922 consumer 574,895 other deductions 29,133 subsidiary provision for federal & state income taxes (3,243,818) total other expenses per form 990, line 24e $(1,545,002)”

“Patronage capital allocated or to be allocated 9,012,995. Patronage capital retired - total -562,072. Unclaimed patronage capital retained per state law 267,693. Donated capital 126,618. Net change in memberships 26,865. Oci - pensions & benefits -14,283.”

“The board of trustees 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.”