Bartlett Electric Cooperative Inc

“During 2016, the board of directors amended the cooperative's bylaws as follows: section 1.04 joint membership: in application(s) for residential electric service, spouses will be accepted into joint membership ("joint membership") or, if one spouse is already a member, will automatically convert such membership into a joint membership. Except for circumstances in which spouse(s) have a separate membership for an entity or unless otherwise clearly distinguished in the text, any and all provisions relating to the rights, powers, terms, conditions, obligations, responsibilities and liabilities of membership shall apply equally, severally and jointly to joint membership, including the following: (a) the presence at a meeting of either or both joint members shall constitute the presence of one member and joint waiver of notice of the meeting; (b) the vote of either or both joint members shall constitute, respectively, one vote; provided, however, that if both joint members are present but in disagreement on such vote, each joint member shall cast only one-half (1/2) vote; (c) notice to, or waiver of notice signed by, either or both joint members shall constitute, respectively, a joint notice of waiver of notice; (d) joint member(s) shall notify cooperative in writing of a cessation of marriage or cessation of the legally recognized relationship; (e) suspension or termination in any manner of either of the joint members shall constitute, respectively, suspension or termination of the joint membership, except as provided in section 2.06; (f) either, but not both joint members concurrently, shall be eligible to serve as a director of the cooperative, but only if both of the joint members meet the qualifications required thereof; and (g) neither of the joint members will be permitted to have any additional service connections except through their one joint membership or as otherwise determined by the board of directors. Section 4.06 nominations, section 2, subsection c - notice of nominations: the secretary shall mail to the members with the notice of the meeting of the members at which directors are to be elected, or separately, but at least ten (10) days prior to the date of such meeting, a statement of the names of all nominee(s) for each directorate district from or with respect to which one or more directors must be elected, showing clearly those nominated by the committee and those nominated by petition, if any. Section 6.12 compensation; indemnification, subsection a: (a) officer compensation - except as otherwise provided by the board of directors or in the bylaws addressing director compensation, reimbursement, salaries, or benefits, the cooperative may reasonably compensate, reimburse, pay a salary to, or provide insurance or other benefits to, an officer, including the manager.”

“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, and 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, review and approval prior to filing. The discussion and review was performed at the board meeting immediately before filing the form 990.”

“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 general manager/ceo. The survey shows comparative salaries for general managers/ceos from cooperatives located in texas and the nation.”

“The cooperative provides a summarized copy of the audited balance sheet and income statement to the members of the cooperative at the annual meeting, and are also available in the office lobby. When new members join the cooperative they are provided a membership packet that includes a copy of the cooperative's by-laws. 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 officer and highly compensated employee 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.”

“The board of directors considers the general manager/ceo to be both the top management official and the top financial official. Therefore, only the general manager/ceo is listed as an employee officer.”

“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 accounting records of the cooperative are maintained in accordance with the rus uniform system of accounts as prescribed for electric borrowers of the rural utilities service (rus). The uniform system of accounting 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 uniform system of accounts.”

“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 $1,837,024 less directors fees reported on 1099-misc (119,981) less employee officer benefits included in line 5 (83,429) plus salaries and wages capitalized directly through plant 617,372 plus salaries and wages capitalized/expensed indirectly through clearing & other accounts 172,073 total wages accrued and/or paid $2,423,059”

“Administrative and general expense is comprised of the following: office supplies and expense $210,830 outside services employed 86,473 maintenance of general plant 168,390 regulatory commission expense 32,017 dues to associated organizations 2,075 general advertising expense 45,876 miscellaneous general expense 181,453 total administrative and general expense per form 990 $727,114”

“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. Excess of operating costs and expenses properly chargeable against such services (i.e. Margins from the provision of electric energy). 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 2016 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 donations are made to non-profit and civic organizations that are located in the cooperative's service area. All donations are intended to improve the communities in which our members reside. Each grant, scholarship and/or donation made during the year was below the reporting threshold of schedule i, part ii.”

“Patronage capital assignable 1,047,908. Patronage capital retired -684,680. Net unclaimed patronage capital retained 44,847. Net change in memberships 4,582.”

“The board as a whole is responsible for overseeing the financial statement audit and selecting the independent financial statement auditor. Procedures remained unchanged for the current year.”