Bartlett 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. The disposal of a substantial portion of the cooperative's assets 4. Amendments 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 presented a copy of the form 990 to the board for discussion and review prior to filing.”

“The cooperative's conflict of interest policy is monitored and enforced through annual reviews of the policy by legal counsel with the board of directors and management, the recordings in the minutes of all disclosures, votes, authorizations, and other actions taken under the policy, and through each officer's annual completion of the conflict of interest certification and disclosure form. If it is received or discovered that a director is not in compliance with the policy, the board must give the director an opportunity to comment on the information. If it is determined that the director is still not in compliance, the board must give the director 30 days to comply before sanctions, disqualifications, and/or removal.”

“The board of directors use a compensation survey and independent compensation consultant when determining the compensation of the ceo. The survey shows comparative salaries for ceos from cooperatives located in texas and the nation. The board of directors and the ceo use a compensation survey and independent compensation consultant 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 located in texas and the nation.”

“Pursuant to the bylaws, a full and accurate summary of the independent auditor's report shall be submitted to the members of the cooperative at the annual meeting, and is also available in the office lobby upon request. When new members join the cooperative they are provided a membership packet that includes a copy of the cooperative's bylaws. The cooperative will provide a complete copy of its conflict of interest policy, and audited financial statements to any member who requests a copy of any such document. Additionally, the cooperative's bylaws are posted on its 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, dental, vision 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 to the 401(k) pension plan and the insurance premiums 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.”

“The net loss reported on part i, line 19 includes an expense for patronage dividends allocated to the patrons based on net operating income(loss). In general, when an electric cooperative bases the patronage dividend calculation on its net operating income(loss), page 1, part i, line 19 - revenue less expenses - will reflect the amount of non-operating income(loss) not allocated. For the current year, page 1, part i, line 19, however, reports net loss of $765,536, which includes the income statement effect of retained non-operating margins and adjustments required for calculating unrelated business income. The following schedule is provided to further explain the impact of this transaction: less: non-operating margins (769,507) add: bec communications ubi aid to construction 4,971 (a) - net loss on page 1, part i, line 19 $ (764,536) (b) - benefits paid to members (i.e. Patronage dividends), part i, line 14 $1,679,047 (c) - bec communications ubi adjustments (4,971) total 2024 net margin per financial statements (a + b + c) $ 909,540”

“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 will be 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 $ 4,286,886 less: director fees reported on forms 1099-nec (121,548) less: employee officer benefits included in line 5 (416,288) plus: salaries and wages allocated to purchased power 14,852 plus: salaries and wages capitalized directly to plant 1,465,315 plus: salaries and wages capitalized/expensed indirectly 336,152 total wages accrued and/or paid $ 5,565,369”

“Administrative & general expense is comprised of the following: administrative & general salaries, benefits, & other $ 1,751,360 office supplies 407,160 outside services 115,689 regulatory commission 67,615 injuries and damages 15,543 dues to associated organizations 2,000 miscellaneous general 404,872 maintenance of general plant 304,452 general advertising 87,979 communications administrative expenses 596,947 total admin & general exp per financial statements $ 3,753,617 less: reclass of director fees to part ix, line 5 (121,968) less: reclass of labor to part ix, lines 5 & 7 (1,630,117) less: reclass of benefits to part ix, lines 8-10 (681,753) total admin & general expense per form 990, part ix $ 1,319,779”

“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 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, 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.”

“Other expenses is comprised of the following: other deductions $ 17,710 purchased internet services 167,808 provision for deferred income taxes (164,349) total other expenses per form 990, part ix $ 21,169”

“Patronage capital allocated or to be allocated 1,679,047. Patronage capital retired - total -1,116,141. Net change in memberships 22,810. Patronage capital retired - discount 633,929. Bec comm. - book to tax adjustments -5,291.”

“The board as a whole assumes responsibility for the selection of an independent auditor and oversees and approves the annual audit as provided for in the "director" article of the cooperative's bylaws.”