Graham 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 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”

“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 and paid preparer review drafts of form 990 prior to e-filing.”

“Gcec has a conflict of interest policy that is applicable to all board members. Directors are to make written disclosures of any substantial outside interest in any entity doing business with gcec, including but not limited to any ownership interest or voting privilege as a director, in order to permit consideration by the board of directors of such continuing relationship. Such disclosure shall be made at the time a director acquires such an interest. Additionally, all directors shall annually make a written disclosure of any to gcec. Gcec's general counsel shall annually review with the board of directors this policy and matters relating to their collective and individual duties and obligations as directors. Such review shall take place during the quarter after gcec's annual meeting. Implementation of the policy shall be the responsibility of the board of directors, except as otherwise provided herein by the general manager or the gcec general counsel.”

“The board of directors evaluates the performance of the ceo/general manager and then votes on the annual salary. The decision is partially based on a compensation survey, which includes salaries from similar cooperatives throughout arizona and the nation. Ceo/general manager evaluates the performance of the organization's other employees meeting the definition of officer and key employees, if any. A compensation survey, which includes salaries from similar cooperatives throughout arizona and the nation, is then used to set compensation.”

“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. Annually, the cooperative provides a copy of the audited balance sheet and income statement to the members of the cooperative with the annual report. The annual report, audited financial statements and bylaws can also be found on the cooperative's website.”

“A family relationship exists between director jim bryce and employee joshua bryce; therefore, for form 990 reporting purposes, jim bryce is not considered independent.”

“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 group term life insurance to all employees, including officers, through a qualified plan. The amounts reported on part vii, column (f) for the officers and highly compensated employees is comprised of the actuarial increase in the defined benefit plan, the total amount contributed to the 401(k) pension plan and employer paid insurance premiums.”

“Patronage dividends result from the purchase of wholesale power from a generation & transmission cooperative. Patronage dividends also result from the payment of interest to 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 $55,313, which is the effect of unallocated electric and water divisions' income/losses in order to offset prior years losses. The following schedule is provided to further explain the impact of these transactions: add: water division loss $ (4,555) add: electric divison income 59,868 (a) - net income (loss) on page 1, part i, line 19 $ 55,313 (b) - benefits paid to members (i.e. Patronage dividends), part i, line 14 $ (0) total 2024 net income per financial statements (a + b) $ 55,313”

“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 $ 2,692,899 less: director fees reported on forms 1099-nec (64,161) less: employee officer benefits reported on line 5 (104,178) plus: salaries and wages capitalized directly to plant 962,805 plus: salaries and wages capitalized/expensed indirectly through clearing and other accounts 627,844 total wages accrued and/or paid $ 4,115,209”

“Administrative and general expense is comprised of the following: administrative & general salaries, benefits, & other $ 950,916 office supplies 784,977 outside services employed 116,568 property insurance 17,091 injuries & damages 107,648 education & training 400,642 directors 94,437 regulatory commission expense 62,490 miscellaneous general 145,977 rents 48,500 maintenance of general plant 193,712 total admin & general exp per financial statements $ 2,922,958 less: reclass of director fees to part ix, line 5 (64,161) less: reclass of labor to part ix, lines 5 & 7 (891,053) less: reclass of benefits to part ix, lines 8-10 (475,170) total admin & general expense per form 990, part ix $ 1,472,574”

“The cooperative's tax exempt purpose is to provide electricity and water distribution services on a divisional basis to its patrons and to do so on a cooperative basis for each division. 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 electric and water divisions incurred losses for 2023, but had a small net income for 2024. Pursuant to cooperative tax law and the operation at cost principle, the margins are offsetting prior year margins from the divisions before patronage capital is allocated to the patrons.”

“Although no longer a borrower of the rural utilities service (rus), the accounting records of the cooperative are maintained in accordance with the 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 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.”

“Patronage capital retired - total -5,856. Patronage capital retired - discount 3,833. Net change in memberships 170. Other comprehensive income -51,610. Unclaimed capital credits”

“Audited financial statements were prepared by an independent accountant for the cooperative's financial statement audit year-end of september 30th. The tax return has been and continues to be prepared based on a calendar tax year-end of december 31. The board as a whole is responsible for overseeing the financial statement audit and selecting the independent financial statement auditor.”