Lea County 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 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 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 and review prior to filing. The discussion and review was performed at the board meeting immediately before filing the form 990.”

“The board of trustees use a compensation survey 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. 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 complete copy of its governing documents and audited financial statements to any member who requests a copy of any such document. Annually, the cooperative mails a copy of the audited balance sheet and income statement to the members of the cooperative with the annual 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 officers and highly compensated employees are comprised of the actuarial increase in the defined benefit plan, the employer contributions to the 401(k) pension plan and the 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 a funded welfare benefit plan. The value of these benefits has not been estimated.”

“The board of trustees considers 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.”

“The accounting records of the cooperative are maintained in accordance with the rus uniform system of accounts (usoa) as prescribed rus electric borrowers. The usoa does not record expenses in the general expense categories provided on part ix lines 1-23. The cooperative separately states 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 $ 5,451,868 less: trustee fees reported on forms 1099-nec (238,000) less: employee officer benefits included in line 5 (147,296) plus: salaries and wages allocated to nonoperating margins plus: salaries and wages capitalized directly to plant 1,031,099 plus: salaries and wages capitalized/expensed indirectly through clearing & other accounts 1,460,553 total wages accrued and/or paid $ 7,558,224”

“Administrative and general expense is comprised of the following: administrative & general salaries, benefits, & other $ 2,650,025 office supplies 395,635 outside services employed 169,349 injury & damages 54,477 regulatory comission 281,823 trustees 285,552 association dues 234,590 miscellaneous general 45,754 public relations 295,009 annual meeting 68,671 capital credit 8,280 maintenance of general plant 1,290,721 total admin & general exp per financial statements $ 5,779,886 less: reclass of donations to part ix, line 1 (40,173) less: reclass of director fees to part ix, line 5 (238,000) less: reclass of labor to part ix, lines 5 & 7 (1,736,156) less: reclass of benefits to part ix, lines 8-10 (610,486) total admin & general expense per form 990, part ix $ 3,155,071”

“Other expenses are comprised of the following: transmission $ 714,560 customer accounts & service 504,731 taxes - property & other 162,311 sales (1,498) total other expenses per form 990 line 24e $ 1,380,104”

“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 tax 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.”

“Patronage capital allocated or to be allocated 9,962,220. Patronage capital retired -1,988,159. Net change in memberships 460. Other comprehensive income provision for pensions and beneifts 230,354.”

“The board as a whole is responsible for overseeing the audit and soliciting the cpa who will perform the audit. Procedural changes did not occur during the year.”