Mora-San Miguel Electric Cooperative

“The cooperative has 5 board members; all 5 are allowed to vote, however, the board chairman 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 trustees through voting districts. Based on geographical location, the members are assigned to a district and represented by a trustee voted on and living in the respective district. At the end of the respective trustee's term, elections are done on a one member one vote basis within the assigned district. Pursuant to the requirements of article iv of the bylaws, members also have the ability to petition and vote for the removal of a trustee.”

“The following acts require approval of the members of the cooperative: 1. Amendment to the articles of incorporation 2. Amendment to the bylaws 3. Disposal of a substantial portion of the cooperative's assets 4. Dissolution/liquidation of the cooperative 5. Merger or consolidation of the cooperative with another organization”

“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 board of trustees and officer are responsible to review and be familiar with the policies outlined in the cooperative's conflict of interest policy. The board of trustees and officer are required to annually complete a disclosure of any action or situation that might violate the policy to the full board of trustees.”

“The board of trustees perform an annual review and utilize internal resources when determining the compensation for the general manager. Other than the general manager, the cooperative did not have any employees meeting the definition of officer or key employee. Therefore, and pursuant to form 990 instructions, line 15b has been answered "no".”

“The cooperative provides a summarized copy of the audited financial statements to the members of the cooperative at the annual meeting. The cooperative will provide a complete copy of the audited financial statements, to any member who requests a copy. Additionally, the cooperative posts a copy of the bylaws, board operating policies, and minutes of the board of trustees meetings on its website at www.morasanmiguel.coop/content/board-directors.”

“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 for the plan is available to participating employees, including officers, 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 officer, is comprised of the total amount contributed by the cooperative to the defined contribution plan and insurance paid on behalf of and for his benefit.”

“The board of trustees consider the general manager to be both the top management official and the top financial official. Therefore, only the general manager is listed as an employee officer.”

“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 $82,354, due to the retention of non-operating margins. The following schedule is provided to further explain the impact of this transaction: non-operating margins retained $ 82,354 (a) - net income on page 1, part i, line 19 $ 82,354 (b) - benefits paid to members (i.e. Patronage dividends), part i, line 14 $ 304,261 total 2024 net margins per financial statements (a + b) $ 386,615”

“The accounting records of the cooperative are maintained in accordance with the rural utilities service (rus) uniform system of accounts (usoa) as 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 $ 1,761,982 less: trustee fees reported on forms 1099-nec (29,800) less: employee officer benefits included in line 5 (36,953) plus: salaries and wages capitalized directly to plant 303,314 plus: salaries and wages capitalized/expensed indirectly through clearing and other accounts 254,505 total wages accrued and/or paid $ 2,253,048”

“Administrative and general expense is comprised of the following: administrative & general salaries, benefits, & other $ 624,654 office supplies and postage 179,145 outside services employed 104,685 injuries & damages 44,980 employee benefits 116,763 dues and subscriptions 123,723 trustees 83,179 annual and district meetings 43,835 maintenance of general plant 86,475 capital credit allocation 3,482 miscellaneous general 37,124 total admin & general exp per financial statements $ 1,448,045 less: reclass of trustees fees to part ix, line 5 (29,800) less: reclass of labor to part ix, lines 5 & 7 (524,008) less: reclass of benefits to part ix, lines 8-10 (188,934) total admin & general expense per form 990, part ix $ 705,303”

“Pursuant to the form 990 instructions, the amount of patronage dividends paid to the 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 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.”

“Patronage capital allocated or to be allocated 304,261. Net change in membership 1,755. Donated capital 446.”

“The board as a whole is responsible for overseeing the financial statement audit and selecting the independent financial statement auditor.”