Fayette 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”

“The cooperative has no committees with authority to act on behalf of the governing body.”

“Management and paid preparer review drafts of form 990 prior to e-filing. Board reviews annual filings at monthly meetings.”

“The board must annually disclose, sign and attest to any conflict of interests between such board member and the cooperative. The cooperative's bylaws address how a board member would be in conflict if such board member holds a public office for which a salary is paid or is employed by or financially interested in a competing business or enterprise from which the cooperative buys from or sells to.”

“The board of directors use a compensation survey when determining the compensation of the general manager. The survey shows comparative salaries of such positions from texas and the nation. The board of directors and general manager use a compensation survey when determining the compensation of other employees meeting the definition of officer. The survey shows comparative salaries of such positions from texas 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. The cooperative provides annually a copy of the audited balance sheet and income statement to the members of the cooperative in the notice of annual meeting mailed to all members and at the annual meeting. Finally, the bylaws are available on the cooperative's website.”

“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 the plan is available to participating employees, including officers and highly compensated employees, meeting the eligibility requirements of such plans. The amounts reported on part vii, column (f) for the officer and highly compensated employee is comprised of actuarial increase in the defined benefit plan, the total amount contributed by the cooperative to the defined contribution plan and insurance paid on behalf of and for their benefit. The cooperative also provides health, dental, vision and life insurance to all eligible employees through a qualified plan.”

“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 electric service provided by the organization to its members.”

“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 loss of $1,542,772, which is the income statement effect of accrued unbilled revenue. The gaap basis financial statements include an accrual for unbilled revenue because the cooperative's billing cycle does not end on the last day of the month. Therefore, it has revenue in december of each year that it has earned but will not bill until the first billing cycle of the following year. The cooperative estimates this revenue and records it as accrued unbilled revenue in order to match the revenue with the year earned. However, the cooperative allocates the revenue to members in the year it is billed rather than when accrued. This timing difference is fair and equitable because it matches the patronage dividend allocated with the billing records used to allocate the margins. Due to the timing of when the cooperative allocates accrued unbilled revenue, page 1, part i, line 19 annually reports net income equal to the net increase in accrued unbilled revenue or a net loss equal to the net decrease in unbilled revenue. The following schedule is provided to further explain the impact of this transaction: add: unbilled revenue 12/31/24 $ 852,614 less: unbilled revenue 12/31/23 (994,157) (a) - net decrease in unbilled revenue $ (141,543) (b) - unallocated loss $(1,401,229) total 2024 net loss per financial statements (a + b) $(1,542,772)”

“The accounting records of the cooperative are maintained in accordance with the uniform system of accounts (usoa) as prescribed by the federal energy regulatory commission for class a and b utilities modified for electric borrowers of the national rural utilities cooperative finance corporation (cfc). 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 $ 2,917,864 less: director fees reported on forms 1099-misc (126,469) less: employee officer benefits included in line 5 (136,103) plus: salaries and wages allocated to nonoperating margin 4,707 plus: salaries and wages capitalized directly to plant 762,055 plus: salaries and wages capitalized/expensed indirectly through clearing and other accounts 214,611 total wages accrued and/or paid $ 3,636,665”

“Administrative and general expense is comprised of the following: administrative & general salaries, benefits, & other $ 882,435 office supplies 480,772 outside services employed 248,097 worker's comp, general liab. & other insurance 29,501 regulatory commission 65,661 director fees 187,187 capital credits 105,998 miscellaneous general 359,149 dues to associated organizations 68,668 maintenance of general plant 206,917 total admin & general exp per financial statements $ 2,634,385 less: reclass of director fees to part ix, line 1 (565) less: reclass of director fees to part ix, line 5 (126,469) less: reclass of labor to part ix, lines 5 & 7 (834,049) less: reclass of benefits to part ix, lines 8-10 (402,878) total admin & general expense per form 990, part ix $ 1,270,424”

“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.”

“Patronage capital retired -480,141. Net change in membership equities 8,765.”

“The board of directors have assigned members to an audit committee to oversee the annual financial statement audit and to help select the independent auditor who will perform the audit. Procedural changes did not occur during the year.”