Comanche County Electric Cooperative Association

“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 copy of the form 990 to the board for discussion, review and approval prior to fililng. The discussion and review was performed at the board meeting immediatly before the filing of the form 990.”

“All directors and the general manager of the cooperative are required to annually review the cooperatives conflict of interest policy and complete and sign the cooperative's "conflict of interest certification and disclosure form."”

“The board of directors use 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. The general manager uses 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 provides all new members with a membership packet, which includes the cooperatives governing documents. 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 summarized copy of the audited balance sheet and income statement to the members of the cooperative with the annual report. Finally, a summarized copy of the cooperatives financial statements are published in coop power magazine and the cooperative's by-laws can be found on their 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, 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 officer is comprised of the actuarial increase in the defined benefit, 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 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 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 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 $ 2,116,739 less directors fees reported on 1099-misc (77,778) less officer benefits reported on line 5 (87,279) plus salaries and wages capitalized directly to plant 651,383 plus salaries and wages capitalized/expensed indirectly through clearing & other accounts 193,716 total wages accrued and/or paid $ 2,796,781”

“Administrative and general expense is comprised of the following: regulatory commission expense $ 38,103 dues to associated organizations 47,295 public relations 51,163 annual meeting expenses 32,068 director expense 8,542 miscellaneous general expense 66.777 total administrative and general expense per 990 $ 243,948”

“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. 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.”

“Other expenses is comprised of the following: customer accounts $ 243,108 customer service and information 117,171 air evac expenses 57,507 total other expenses per form 990, line 24e $ 417,786”

“Patronage capital assignable 1,558,494. Patronage capital retired - total -122,795. Patronage capital retired - discount 41,617. Net change in memberships 130.”

“Audited financial statements were prepared by an independent accountant for the cooperative's fiscal year end of june 30th. The tax return has been and continues to be prepared based on a calendar year end of december 31. The board as a whole is responsible for overseeing the financial statement audit and selecting the independent financial statement auditor.”