San Patricio Electric Cooperative Inc

“The cooperative has 7 board members; all 7 are allowed to vote, however the board president votes only in the case of a tie.”

“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. Therefore, and pursuant to form 990 instructions, the question has been answered "no".”

“Management presented a complete copy of the form 990 to all board members for discussion and review prior to filing.”

“San patricio cooperative regularly and consistently monitors and enforces compliance with the conflict of interest policy with an annual statement of compliance.”

“The board and the general manager use the expertise of a compensation survey when determining the compensation of the cooperative's general manager/ceo's salary and other employees meeting the definition of officer. The survey includes salaries from similarly situated cooperatives throughout 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. Annually, the cooperative provides a copy of the audited balance sheet and income statement to the members of the cooperative with the annual report. The annual report and 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. 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 the electric service provided by the cooperative to its members.”

“The cooperative annually provides each director who served on the board during the year a questionnaire. The completed questionnaires are used to complete the applicable questions on the form 990 pertaining to business relationships among directors and officers, as well as to determine if there are any transactions which must be reported in detail on schedule l - "transactions with interested persons". If the cooperative was unable to obtain a completed questionnaire, the cooperative relied upon the completed information for the prior year.”

“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 $ 3,141,260 less: director fees reported on forms 1099-nec (62,900) less: officer benefits included in line 5 (235,446) plus: salaries and wages allocated to nonoperating margin 82,509 plus: salaries and wages capitalized directly to plant 493,755 plus: salaries and wages capitalized indirectly through clearing & other accounts 2,778 total wages accrued and/or paid $ 3,421,956”

“Administrative and general expense is comprised of the following: administrative & general salaries, benefits & other $ 558,947 office supplies 251,418 outside services 132,832 rate study 18,115 insurance expense 318,519 dues 131,858 directors 126,784 regulatory commission 360 annual meeting 60,182 miscellaneous general 22,454 wellness program 723 maintenance of general plant 252,507 total admin & general exp per financial statements $ 1,874,699 less: reclass of donations to part ix, line 1 (22,454) less: reclass of director fees to part ix, line 5 (62,900) less: reclass of labor to part ix, lines 5 & 7 (780,978) less: reclass of benefits to part ix, lines 8-10 (280,064) total admin & general expense per form 990, part ix $ 728,303”

“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, (3) in a fair and equitable manner on the basis of patronage (i.e. Purchases), and (4) the margins assigned to each rate class. 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. 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.”

“Patronage capital assignable 3,092,848. Patronage capital retired - total -1,809,155. Patronage capital retired - discount 3,107. Net change in memberships -890.”

“The board as a whole is responsible for overseeing the financial statement audit and selecting the independent financial statement auditor. Procedural changes did not occur during the year.”