Continental Divide Electric Cooperative Inc

“Article i, section 5b was amended to allow the cooperative to provide broadband internet and telecommunications and other services to the members and non-members upon acquiring state and federal approvals.”

“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. 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; and 5. Amendment to the bylaws.”

“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 filing. The discussion and review was performed at the board meeting immediately before filing the form 990.”

“The board of trustees, officers, and employees are required to review and be familiar with the policies outlined in the cooperative's conflict of interest policy. The board of trustees and officers are required to disclose any action or situation that might violate the policy to the full board of trustees as soon as possible. The conflict of interest policy is reviewed on an annual basis.”

“The board of trustees use a compensation committee, a compensation survey, and look at other external written employment contracts for comparison when determining the compensation of the general manager. The survey shows comparative salaries for general managers from similarly situated cooperatives located in new mexico and the nation. The board and the general manager use a compensation committee 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 includes salaries from similar cooperatives throughout new mexico and the nation. The union contract wage increase provision is also used as a resource.”

“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 or governing documents to any member who requests a copy. The cooperative by-laws are also available on the cooperative's website.”

“The cooperative does not have a written document retention and destruction policy in place, but follows the rus recommendations regarding document retention and destruction.”

“The cooperative has 8 board members; all 8 are allowed to vote, however the board president votes only in the case of a tie.”

“In order to provide retirement benefits to its employees, the cooperative participates in a defined benefit plan. Contributions to this plan are based on the full funding limitation of such plan. Employer contributions to the plan are available to participating employees, including officers and highly compensated employees, meeting the eligibility requirements of the plan. The cooperative also provides health and life insurance to all eligible employees through a qualified plan. The amount reported on part vii column (f) for the officers and highly compensated employees is the actuarial increase of benefits accrued under the defined benefit pension plan and insurance paid 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 rural utilities service (rus) uniform system of accounts (usoa) as prescribed for rus 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 the total wages accrued and/or paid: total per lines 5-7 $ 4,440,698 less directors fees reported on 1099-misc (168,071) less officers benefits reported on line 5 (170,992) plus salaries and wages capitalized directly to plant 997,829 plus salaries and wages capitalized/expensed indirectly through clearing and other accounts 234,659 total wages accrued and/or paid: $ 5,334,123”

“Administrative and general expense is comprised of the following: office supplies & expenses $ 49,313 outside services employed 96,627 native american row 47,924 transportation 69,039 data processing expense 133,944 allocated it department expenses (535,766) dues & subscriptions 203,017 regulatory commission expense 288,596 trustee mileage expense 32,083 annual meeting expense 22,424 utilities & telephone 53,847 operating & maintenance supplies 195,333 miscellaneous general expense 44 757 total administrative & general expenses per 990 $ 701 138”

“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: other deductions $ 125,266 transmission 29 total other expenses per form 990 $ 125,295”

“All grants, sponsorships and donations are made to non-profit and civic organizations that are located in the cooperative's service area. All donations are intended to improve the communities in which our members reside. Each grant, scholarship and/or donation made during the year was below the reporting threshold of schedule i, part ii.”

“Other comprehensive income-provision for pension and benefits -1,218,014. Patronage capital assigned 2,624,604.”

“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.”