Trinity Valley 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”

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

“The board of directors and employees of the cooperative must disclose any situation which violates, or may appear to violate the intent of the conflict of interest policy.”

“A compensation committee comprised of members of the board use the expertise of an independent compensation consultant, a compensation survey, and compare compensation reported on other cooperative's irs forms 990 when determining the compensation of the ceo. The survey shows comparative salaries for ceos from similarly situated cooperatives located in texas and the nation. Other internal and/or external resources are also used to compare annual compensation within the industry. The compensation committee recommend the ceos salary to the board of directors for approval after reviewing performance and all relevant data. The ceo and compensation committee utilizes the expertise of an independent compensation consultant and 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 shows comparative salaries from similarly situated cooperatives located in texas and the nation. Other internal and/or external resources are also used to compare annual compensation within the industry.”

“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. Additionally, the cooperative distributes a summarized copy of the balance sheet and income statement to the members of the cooperative with the annual meeting report.”

“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 and highly compensated employees, meeting the eligibility requirements of such plans. The cooperative also provides health, dental, vision, and life insurance to all eligible employees through a qualified plan. The amounts reported on part vii, column (f) for the officers and highly compensated employees is comprised of actuarial increase in the defined benefit plan, total amount contributed by the cooperative to the defined contribution plan, and insurance paid on behalf of and for their benefit. In addition to the above pension plans, the cooperative also provides post-retirement health insurance benefits through an unfunded welfare benefit plan. The value of these benefits has not been estimated.”

“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.”

“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 income of $463,959, which is the effect of non-operating margins being retained to offset a prior year loss. The following schedule is provided to further explain the impact of this transaction: add: non-operating margins retained $ 463,959 (a) - net income on page 1, part i, line 19 $ 463,959 (b) - benefits paid to members (i.e. Patronage dividends) part i, line 14 $ 5,860,584 total 2024 net margin per financial statements (a + b) $ 6,324,543”

“Although the cooperative is no longer a rural utilities service (rus) borrower, its accounting records 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 its 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 $11,867,630 less: director fees reported on forms 1099-nec (97,633) less: employee officer benefits included in line 5 (1,003,109) plus: salaries and wages capitalized directly to plant 6,492,666 plus: salaries and wages capitalized/expensed indirectly through clearing and other accounts 2,118,595 total wages accrued and/or paid $19,378,149”

“Administrative and general expense is comprised of the following: administrative & general salaries, benefits, & other $ 4,221,619 office supplies 2,373,618 outside services employed 461,318 insurance 1,447,254 regulatory commission 417,266 directors 246,624 miscellaneous general 20,400 maintenance of general plant 505,470 total admin & general expense per financial statements $ 9,693,569 less: reclass of director fees to part ix, lines 5 (97,633) less: reclass of labor to part ix, lines 5 & 7 (3,062,499) less: reclass of benefits to part ix, lines 8-10 (1,696,362) total admin & general expense per form 990, part ix $ 4,837,075”

“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 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 on form 990. Patronage dividends are not an expense for financial statements prepared in accordance with gaap, 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.”

“Net change in memberships 13,910. Other comprehensive income - pension & benefits -1,579,459. Patronage capital allocated or to be allocated 5,860,584. Patronage capital retired -15,379. Discounted estate retirements 5,709.”

“The board of directors have assigned members 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.”