Cimarron Electric Cooperative Inc

“During the year, the bylaws of the cooperative were amended. Members of the cooperative who attended the annual meeting of members approved proposed bylaw amendments by a majority vote. A summary of the amendments is as follows: article iv - board members section 3 - election of trustees by districts, was amended to state that the notice of district meetings shall state that the election of a trustee is to be the primary purpose of the meeting. Additionally, a member may file a notice of candidacy at the cooperative office not less than thirty (30) days nor more than thirty-five (35) days prior to the meeting of members of said district. Section 4 - qualifications, was amended to expand upon and clarify the eligibility requirements to be eligible to become or remain a trustee or to hold any position of trust in the cooperative. Subsections a through g list in detail the qualifications. Article vi - officers section 8 - manager, was amended to state the manager shall be vested with responsibility and discretion in the selection and termination of employees of the cooperative, provided no person has previously or currently serves as a trustee, or any entity owned or controlled by the cooperative shall be eligible to become the manager or employee of the cooperative. A complete copy of the bylaws can be found on the cooperative's website at: https://www.cimarronelectric.com/content/cimarron-laws”

“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.”

“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 presented a copy of the form 990 to the board for discussion and review prior to filing. The discussion and review was performed at the board meeting immediately before filing the form 990.”

“On an annual basis, the the board of directors and employees review the conflict of interest policy. Directors and employee officers are required to disclose any action or situation that might violate the policy to the full board of directors as soon as possible.”

“The board of directors review a compensation survey when determining and setting the compensation of the ceo. The survey includes salaries from similarly situated cooperatives throughout oklahoma and the nation. The board and the ceo review a compensation survey 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 oklahoma and the nation.”

“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 summarized copy of the financial statements 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. Employer contributions for the plan are available to participating employees, including officers, key employees, and highly compensated employees, meeting the eligibility requirements of such plans. The cooperative also provides health, dental, vision and life insurance to all eligible employees through a qualified plan. The amounts reported on part vii, column (f) for the officers, key employees, and highly compensated employees is comprised of 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 expense 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.”

“Although the cooperative is no longer a rural utilities services (rus) borrower, its accounting records 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. On the 2019 form 990, part i, line 15, the cooperative separately stated salaries and wages, employee benefits, payroll taxes, and donations that are allocated in accordance with its accounting system. On the 2018 return the cooperative did not separately state these expenses. The 2018 return is complete and accurate, but the cooperative believes by separately stating these expenses on the 2019 return, a reader of the form 990 will be more informed. Future returns filed by the cooperative will separately state salaries and wages, employee benefits, payroll taxes, and donations, making the comparison on page 1 more meaningful.”

“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.”

“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 margin 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 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 2019 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 $ 3,603,019 less: director fees reported on forms 1099-misc (170,750) less: employee officer benefits included in line 5 (131,203) less: key employee benefits included in line 5 (52,786) plus: salaries and wages capitalized directly to plant 1,335,502 plus: salaries and wages capitalized/expensed indirectly through clearing and other accounts 183,863 total wages accrued and/or paid $ 4,767,645”

“Administrative & general expense is comprised of the following: administrative & general $ 581,513 office supplies 475,271 outside services 132,071 injuries & damages 25,735 employee benefits 364,876 directors 206,582 dues to associated orgs. 87,424 meetings 100,861 miscellaneous general 363,489 maintenance of general plant 44,264 total admin & general exp per financial statements $ 2,382,086 less: reclass of donations to part ix, line 1 (5,000) less: reclass of director fees to part ix, line 5 (170,750) less: reclass of labor to part ix, lines 5 & 7 (615,374) less: reclass of benefits to part ix, lines 8-10 (220,956) total admin & general expense per form 990, part ix $ 1,370,006”

“Other expenses is comprised of the following: other deductions $ 42,820 taxes 1,667 sales 278,376 consumer accounts 238,081 customer service & information 116,962 total other expenses per form 990, part ix $ 677,906”

“The cooperative previously included accrued unbilled revenue as a component of accounts receivable on line 7 of part x. However, for the 2019 calendar year, the cooperative began reporting these amounts on line 15. To increase consistency, accrued unbilled revenue in the amount of $1,212,368 for the 2018 calendar year has been reclassed from line 7 to line 15. Form 990, part x, lines 12 & 13: the cooperative previously included program related investments on line 12 of part x. However, for the 2019 calendar year, the cooperative began reporting these amounts on line 13. To increase consistency, program related investments in the amount of $14,318,905 for the 2018 calendar year has been reclassed from line 12 to line 13. Form 990, part x, lines 17 & 23: the cooperative previously included notes payable as a component of accounts payable on line 17 of part x. However, for the 2019 calendar year, the cooperative began reporting these amounts on line 23. To increase consistency, notes payable in the amount of $7,600,000 for the 2018 calendar year has been reclassed from line 17 to line 23.”

“Patronage capital allocated or to be allocated 8,578,624. Patronage capital retired - total -1,951,122. Unclaimed patronage retirements retained under state law 483,043. Net change in memberships 5,970.”

“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.”