Big Country 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 asset 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. The discussion and reveiw was performed at the board meeting immediately before filing the form 990.”

“The cooperative's attorney reviews the cooperative's policies, specifically the cooperative's conflict of interest policy, with the board annually. 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. At the board's discretion, a director with a possible conflict of interest will abstain from voting on related transactions. Board minutes note any possible confict of interest inquiries.”

“Annually, the board of directors perform a review and utilize internal resources when determining the compensation of the ceo. The ceo utilizes an indpendent consultant and compensation survey to determine the compensation of the cooperative's other employees meeting the definition of officer and key employee, if any.”

“The cooperative provides a summarized copy of the audited financial statements to the members of the cooperative at the annual meeting. A complete copy of the audited financial statements, conflict of interest policy, or governing documents is provided to any member who requests a copy. The cooperative's bylaws are also available on its 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 and higly 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 are the total contributions made by the cooperative to the pension plans 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.”

“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 $81,320 which is the income statement effect of accrued unbilled revenue. The gaap basis financial statements include an accrual for unbilled revenue because the cooperative's billing cycle does not end on the last day of the month. Therefore, it has revenue in december of each year that it has earned but will not bill until the first billing cycle of the following year. The cooperative estimates this revenue and records it as accrued unbilled revenue in order to match the revenue with the year earned. However, the cooperative allocates the revenue to members in the year it is billed rather than when accrued. This timing difference is fair and equitable because it matches the patronage dividend allocated with the billing records used to allocate the margins. Due to the timing of when the cooperative allocates accrued unbilled revenue, page 1, part i, line 19 annually reports net income equal to the net increase in accrued unbilled revenue or a net loss equal to the net decrease in unbilled revenue. The following schedule is provided to further explain the impact of this transaction: add: unbilled revenue 12/31/24 $ 229,802 less: unbilled revenue 12/31/23 (148,482) net decrease in unbilled revenue equal to net income on page 1, part i, line 19 $ 81,320 (b) - benefits paid to members (i.e. Patronage dividends), part i, line 14 $ 5,148,316 total 2024 net margin per financial statements (a + b) $ 5,229,636”

“Although the cooperative is no longer a rural utility services (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 $ 5,528,908 less: director fees reported on forms 1099-nec (78,750) less: employee officer benefits included in line 5 (432,214) plus: salaries and wages allocated to nonoperating margin 14,614 plus: salaries and wages capitalized directly to plant 1,411,420 plus: salaries and wages capitalized/expensed indirectly through clearing and other accounts 300,854 total wages accrued and/or paid $ 6,744,832”

“Administrative & general expense is comprised of the following: administrative & general salaries, benefits, & other $ 2,590,840 office supplies 62,940 outside services 77,738 directors 109,222 association dues 63,696 advertising 136,483 public relations 183,915 miscellaneous general 117,284 annual meeting 62,621 regulatory commission 61,144 property insurance 58,919 scholarships 10,000 injuries and damages 61,638 maintenance of general plant 540,354 total admin & general exp per financial statements $ 4,136,794 less: reclass of donations to part ix, line 1 (74,936) less: reclass of director fees to part ix, line 5 (78,750) less: reclass of labor to part ix, lines 5 & 7 (1,915,925) less: reclass of benefits to part ix, lines 8-10 (939,494) total admin & general expense per form 990, part ix $ 1,127,689”

“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 for form 990 reporting. Patronage dividends are not an expense for financial statements prepared in accordance with generally accepted accounting principles, however.”

“Other expenses are comprised of the following: consumer expenses $ 439,200 taxes 25,395 other deductions 28,010 total other expenses per form 990, line 24e $ 492,605”

“The cooperative previously included unlaimed capital credits as components of accounts payable and accrued expenses on line 17 of part x. However, for the 2024 calendar year, the cooperative began reporting these amounts on line 25 as other liabilities since these balances are non-current in nature. To increase consistency, unclaimed capital credits in the amount of $689,781 for the 2023 calendar year have been reclassed from line 17 to line 25.”

“Patronage capital allocated or to be allocated 5,148,316. Patronage capital retired - total -1,912,235. Patronage capital retired - discount 52,289. Net change in memberships 1,765. Other comprehensive income (loss) 20,773.”

“The board has an audit subcommittee responsible for overseeing the financial statement audit and selecting the independent financial statement auditor.”