Comanche County Electric Cooperative Association

“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 and review prior to filing.”

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

“The board of directors take in to consideration internal and/or external resources when determining the compensation of the general manager. The general manager utilizes internal and/or external resources when determining the compensation of the cooperative's other employees meeting the definition of officer and key employees, if any.”

“The cooperative provides all new members with a membership packet, which includes the cooperative's 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 bylaws 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 employee officers are 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 (usoa) prescribed for rus 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.”

“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 $ 2,190,466 less: director fees reported on forms 1099-misc (89,820) less: officer benefits reported on line 5 (111,123) plus: salaries and wages capitalized directly to plant 794,118 plus: salaries and wages capitalized/expensed indirectly through clearing & other accounts 133,484 total wages accrued and/or paid $ 2,917,125”

“Administrative & general expense is comprised of the following: administrative & general $ 771,753 office supplies 230,028 outside services 165,666 directors 103,135 miscellaneous general 113,278 advertising and public relations 51,598 dues to associated organizations 48,169 annual meeting 57,372 regulatory commission 46,323 maintenance of general plant 94,548 total admin & general exp per financial statements $ 1,681,870 less: reclass of tower expenses to part viii, line 6 (8,163) less: reclass of director fees to part ix, line 5 (89,820) less: reclass of labor to part ix, lines 5 & 7 (860,540) less: reclass of benefits to part ix, lines 8-10 (362,252) total admin & general expense per form 990, part ix $ 361,095”

“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 calendar 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 2018 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 $ 266,496 customer service and information 525,634 air evac 58,470 other deductions 15,010 total other expenses per form 990, line 24e $ 865,610”

“Patronage capital allocated or to be allocated 1,599,248. Patronage capital retired - total -856,884. Patronage capital retired - discount 40,898. Net change in memberships 2,440. Net change in other equities 107,222.”

“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.”