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

“Management provided a copy of the form 990 to the board for discussion and review prior to filing. The discussion and review took place at the board meeting immediately before filing the return.”

“On an annual basis, the cooperative will require the board of directors and officers to complete and sign a conflict of interest certification and disclosure form. Directors and officers are required to disclose any action or situation that might violate the policy to the full board of directors as soon as possible.”

“The compensation committee of the board of directors uses the expertise of a compensation survey when determining the compensation of the general manager. The survey shows comparative salaries for general managers from similarly situated cooperatives located in texas and the nation. Internal and/or external resources are also used to compare annual compensation within the industry. The entire board of directors approves the general manager's compensation. The board and the general manager use the expertise of a compensation survey 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 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 bylaws can also be found under member resources 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. 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, key employees, and highly compensated employees, meeting the eligibility requirements of such plans. The cooperative also provides health and life insurance to all eligible employees through a qualified plan. The amounts reported on part vii, column (f) for the officers, key employees, and highly compensated employees 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.”

“Patronage dividends result from the purchase of wholesale power from generation & transmission cooperatives. 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.”

“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 $153,404, which consists of the following: broadband division net loss $ (317,961) nonoperating margins 127,793 non-member infinium ciac 36,764 net loss on page 1, part i, line 19 $ (153,404) pursuant to the bylaws, the broadband division losses will be accumulated until cumulative net income exceeds cumulative losses. At that time, net income of the division will be allocated to the members. Nonoperating margins are retained by the cooperative as an unallocated reserve.”

“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 $ 5,311,779 less: director fees reported on forms 1099-nec (173,772) less: employee officer benefits reported on line 5 (151,105) plus: salaries and wages capitalized directly to plant 1,488,637 plus: salaries and wages capitalized/expensed indirectly through clearing and other accounts 275,016 total wages accrued and/or paid $ 6,750,555”

“Administrative and general expense is comprised of the following: administrative & general salaries, benefits, & other $ 1,428,386 office supplies 373,605 outside services 137,896 regulatory commission 108,238 directors 205,432 miscellaneous general 414,302 maintenance of general plant 815,380 total admin & general exp per financial statements $ 3,483,238 less: reclass of director fees to part ix, line 5 (173,772) less: reclass of labor to part ix, lines 5 & 7 (1,592,960) less: reclass of benefits to part ix, lines 8-10 (667,241) total admin & general expense per form 990, part ix $ 1,049,265”

“Other expenses is comprised of the following: customer accounts $ 1,047,740 other deductions 339 taxes 495,074 total other expenses reported on financial statements $ 1,543,153 less: reclass of labor and overhead (661,417) total other expenses per form 990, part ix $ 881,736”

“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 and broadband internet related goods and services 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. 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 and broadband internet related goods and services 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.”

“The accounting records of the cooperative are maintained in accordance with the rus uniform system of accounts (usoa) prescribed by rus for 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 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.”

“Patronage capital allocated or to be allocated 6,131,632. Patronage capital retired -757,802. Net change in memberships 1,035. Non-member infinium ciac -36,764. Other changes in equity 801.”

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