Cookson Hills Electric Cooperative Inc

“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”

“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 reviewed the form 990 prior to filing. The board was presented a copy of the form 990 at the board meeting subsequent to the return being filed.”

“Each employee is provided a personnel policy manual and each trustee is provided a board policy manual that includes the conflict of interest policy for all employees and trustees.”

“The board of directors uses a statewide survey when determining the compensation of the general manager. The board and the general manager use the expertise of an independent compensation consultant when determining the compensation of the cooperative's other employees meeting the definition of officer and key employees, if any.”

“The cooperative provides a summarized copy of the audited financial statements to the members of the cooperative at the annual meeting. The cooperative will provide a complete copy of the audited financial statements, conflict of interest policy, or governing documents to any member who requests a copy any such document.”

“In order to provide retirement benefits to its employees, the cooperative participates in a multi-employer defined benefit plan. Contributions are based on the full funding limitation of such plan and are available to participating employees, including officers, meeting the eligibility requirements of such plan. The cooperative also provides health and life insurance to all eligible employees, including officers, through a qualified plan. The amounts reported on part vii, column (f) for the officer is comprised of the actuarial increase in the defined benefit 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.”

“On the 2022 form 990, part i, line 15, the cooperative separately stated salaries and wages, employee benefits, and payroll taxes that are allocated in accordance with its accounting system. On the 2021 return, the cooperative did not separately state these expenses. The 2021 return is complete and accurate, but the cooperative believes by separately stating these expenses on the 2022 return a reader of the form 990 will be more informed. Future years returns filed by the cooperative will separately state salaries and wages, employee benefits, and payroll taxes, making the comparison on page 1 more meaningful.”

“In general, when an electric cooperative bases the patronage dividend calculation on its net book income/(loss), page 1, part i, line 19 - revenue less expenses - will be $0. For the current year, page 1, part i, line 19 reports net income of $400,553, which the non-operating margins that were retained as an offset to unallocated subsidiary losses for current and prior years.”

“The accounting records are maintained in accordance with the rus uniform system of accounts (usoa) as prescribed by the rural utilities service. 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 $ 4,074,151 less: director fees reported on forms 1099-nec (182,363) less: employee officer benefits included in line 5 (377,568) plus: salaries and wages capitalized directly to plant 1,158,749 plus: salaries and wages capitalized/expensed indirectly through clearing and other accounts 748,683 total wages accrued and/or paid $ 5,421,652”

“Administrative & general expense is comprised of the following: administrative & general salaries, benefits & other $ 1,399,250 office supplies 94,475 outside services 106,029 insurances 94,392 duplicate charges (32,950) miscellaneous general 249,892 annual meeting 99,432 directors 243,173 maintenance of general plant 55,812 total admin & general exp per financial statements $ 2,309,505 less: reclass of director fees to part ix, line 5 (182,363) less: reclass of labor to part ix, lines 5 & 7 (884,845) less: reclass of benefits to part ix, lines 8-10 (472,460) total admin & general expense per form 990, part ix $ 769,837”

“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 2022 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 is comprised of the following: customer accounts $ 1,129,322 customer service and information 187,831 other deductions 9,364 total other expenses per financial statements $ 1,326,517 less: reclass of labor to part ix, lines 5 & 7 (541,903) less: reclass of benefits to part ix, lines 8-10 (289,349) total other expenses per form 990, part ix $ 495,265”

“Net change in memberships -4,995. Net change in donated capital 759. Patronage capital allocated 4,105,965. Patronage capital retired - total -1,088,441. Patronage capital retired - unclaimed amounts retained per state law 239,147. Equity method income/loss from subsidiary -634,388. Book-tax adjustment: revenue deferred for regulatory purposes -700,000. Balance sheet reclassification of deferred revenue -930,000. Oci - pensions & benefits 42,214.”