2024-11-13T11:53:24-06:00 2023-12-31 750882037 BOLINGER SEGARS GILBERT AND MOSS LLP 8215 NASHVILLE AVENUE LUBBOCK TX 79423 990 2023-01-01 750261611 FANNIN COUNTY ELECTRIC COOPERATIVE INC FANN 9035832117 PO BOX 250 BONHAM TX 75418 JOHN ED SHINPAUGH GENERAL MANAGER 9035832117 2024-10-29 1 0 WILLIAM M MILLER P00439459 8067473806 2024-10-29 X 2023 2024-10-15 13:58:12Z FANNIN ELECTRIC COOPERATIVE JOHN ED SHINPAUGH PO BOX 250 BONHAM TX 75418 32641620 0 X WWW.FANNINEC.COOP X 1939 TX TO PROVIDE QUALITY AND RELIABLE ELECTRIC SERVICE TO MEMBERS AT COST ON A COOPERATIVE BASIS. 7 7 43 0 0 0 0 0 32344486 31842776 271399 699979 172553 98865 32788438 32641620 4268 4979 1514762 1183625 3358391 4330586 0 0 0 27488182 26341222 32365603 31860412 422835 781208 82496559 87054901 54641792 57878085 27854767 29176816 NONE 0 0 PROVIDING ELECTRIC ENERGY TO OUR MEMBERS ON A COOPERATIVE BASIS THROUGH THE ALLOCATION OF PATRONAGE CAPITAL. THERE WERE 11,920 ACTIVE SERVICES AT YEAR END. 0 0 0 0 0 0 0 1 0 1 0 1 0 1 1 1 0 0 0 0 0 0 0 0 0 0 0 0 1 0 0 0 0 0 0 0 0 0 0 0 0 0 0 1 31 0 43 1 0 0 0 0 0 31534665 4023918 0 0 0 X 7 7 0 0 0 0 1 1 1 1 0 0 0 1 0 1 1 1 1 0 X KAREN RINTELMANN CFO 9035832117 PO BOX 250 BONHAM TX 75418 X RODNEY BRENT VICE-PRESIDENT 0.50 X X 7500 0 0 STEPHEN COLLIDA PRESIDENT 2.10 X X 7400 0 0 SCOTT GIBBS DIRECTOR 0.70 X 7500 0 0 ROBERT MILTON SECRETARY/TREASURER 0.80 X X 7500 0 0 JOHN SKOTNIK DIRECTOR 1.60 X 7200 0 0 ALFRED SCOTT DIRECTOR 0.60 X 7300 0 0 J SETH MAHLER DIRECTOR 0.50 X 7200 0 0 JOHN ED SHINPAUGH CHIEF EXECUTIVE OFFICER 55.00 X 267291 0 114523 KAREN RINTELMANN CHIEF FINANCIAL OFFICER 45.00 X 212161 0 76174 TIM KIDWELL ASSISTANT MANAGER 40.00 X 166629 0 73687 BARRY MURCHISON ENGINEER MANAGER 40.00 X 147308 0 92193 RODNEY GAMMONS LINE SUPERINTENDENT 40.00 X 134934 0 76184 KAYLEN FOGELBERG 1ST CLASS LINEMAN 40.00 X 118810 0 42578 CORY PATTON LINE FOREMAN 40.00 X 120200 0 54708 1218933 0 530047 10 0 1 0 COOPERATIVE BUILDING SOLUTIONS PO BOX 790100 SAINT LOUIS MO 63101 NEW HQ CONTRACTORS 12944185 LINETEC SERVICES LLC 19820 N 7TH STE 120 PHOENIX AZ 85027 ELECTRICAL CONTRACTOR 3172338 MOSS FARMS 135 CR 36950 ARTHUR CITY TX 75411 TREE TRIMMING 839603 HORTON TREE SERVICE PO BOX 1185 KENNEDALE TX 76060 TREE TRIMMING 552513 PRIMORIS T&D SERVICES LLC 1760 S STEMMONS FWY LEWISVILLE TX 75067 ELECTRICAL CONTRACTOR 549747 11 X SALES OF ELECTRICITY 221000 30537753 30537753 PATRONAGE DIVIDENDS 221000 775413 775413 SERVICE FEES 221000 361453 361453 WHOLESALE TRANSMISSION ACCESS 221000 168157 168157 31842776 578496 578496 121483 0 121483 121483 121483 BOND SECURITIZATION P'SHIP INCOME 221000 80829 80829 POLE ATTACHMENT INCOME 221000 17636 17636 MISCELLANEOUS REVENUE 221000 400 400 98865 32641620 32045488 0 596132 X 4979 1183625 721749 2027264 380742 829993 370838 1865040 2449619 PURCHASED POWER 18077634 DISTRIBUTION EXPENSE 2759892 ADMIN & GENERAL EXPENSE 753319 CONSUMER EXPENSE 370735 64983 31860412 545963 7169642 21430903 290508 901468 863432 191991 282075 1866690 1760925 90341189 24007297 47719294 66333892 7836736 8586689 2003514 1767738 82496559 87054901 8914366 9321760 66153 60638 38459548 40112505 7201725 8383182 54641792 57878085 X 82285 84000 0 0 27772482 29092816 27854767 29176816 82496559 87054901 X 781208 540841 X X 0 1 X 0 0 0 1 X 335578 335578 855059 437601 417458 70708673 23569696 47138977 18441879 18441879 66333892 PATRONAGE CAPITAL-NISC 77063 C PATRONAGE CAPITAL-TEC 258748 C PATRONAGE CAPITAL-CFC 644151 C PATRONAGE CAPITAL-RCEC 6781922 C PATRONAGE CAPITAL-CRC 16808 C CAPITAL TERM CERTIFICATES-CFC 343402 C INVESTMENT IN BOND SECURITIZATION PARTNERSHIP 464595 C 8586689 ACCUMULATED PROVISION FOR PENSION & BENEFITS 1524590 CONSUMER DEPOSITS 301253 ACCRUED OPERATING TAXES 216604 POWER COST RECOVERY - OVERBILLED 3312939 DEFERRED CREDITS - ADVANCES FOR CONSTRUCTION 2312755 DEFERRED CREDITS - UNCLAIMED CAPITAL CREDITS 715041 8383182 X 32641620 0 32641620 0 32641620 30676787 0 30676787 1183625 1183625 31860412 PART IV, LINE 2B: PURSUANT TO SECTION 74.3013 OF THE TEXAS PROPERTY CODE, THE COOPERATIVE HAS ESTABLISHED A RURAL SCHOLARSHIP FUND WITH AMOUNTS DETERMINED UNCLAIMED UNDER STATE LAW. THE AMOUNTS DEPOSITED INTO THE RURAL SCHOLARSHIP FUND ARE APPROVED BY THE STATE OF TEXAS AND CAN ONLY BE USED FOR SCHOLARSHIPS TO ENABLE STUDENTS FROM RURAL AREAS TO ATTEND COLLEGE, TECHNICAL SCHOOL OR OTHER POST SECONDARY EDUCATION INSTITUTION. ANY AMOUNTS SO DEPOSITED INTO THE RURAL SCHOLARSHIP FUND ARE STILL PAYABLE TO THE PERSON TO WHOM THE ORIGINAL PAYMENT WAS MADE BUT UNCLAIMED. PART X, LINE 2: THE COOPERATIVE HAS ADOPTED THE "UNCERTAIN TAX POSITIONS" PROVISIONS OF ACCOUNTING PRINCIPLES GENERALLY ACCEPTED IN THE UNITED STATES OF AMERICA. THE PRIMARY TAX POSITION OF THE COOPERATIVE IS ITS FILING STATUS AS A TAX EXEMPT ENTITY. THE COOPERATIVE HAS DETERMINED THAT IT IS MORE LIKELY THAN NOT THAT ITS TAX POSITION WILL BE SUSTAINED UPON EXAMINATION BY THE INTERNAL REVENUE SERVICE (IRS), OR OTHER STATE TAXING AUTHORITY AND THAT ALL TAX BENEFITS ARE LIKELY TO BE REALIZED UPON SETTLEMENT WITH TAXING AUTHORITIES. PART XII, LINE 4B - OTHER ADJUSTMENTS: PATRONAGE CAPITAL ALLOCATED OR TO BE ALLOCATED 1,183,625. PART IX: THE AMOUNT OF OTHER ASSETS ON FORM 990, PAGE 11, PART X, LINE 15 DOES NOT EQUAL OR EXCEED 5% OF THE TOTAL ASSETS ON FORM 990, PAGE 11, PART X, LINE 16, COLUMN B. CONSEQUENTLY, IN ACCORDANCE WITH IRS INSTRUCTIONS SCHEDULE D, PART IX HAS BEEN LEFT BLANK. PART XII, LINE 4B: FOR THE AUDITED FINANCIAL STATEMENTS, THE AMOUNT OF PATRONAGE DIVIDENDS ALLOCATED OR TO BE ALLOCATED TO THE MEMBERS IS REPORTED AS AN INCREASE IN EQUITY AND NOT AS AN EXPENSE. THEREFORE, NET INCOME PER THE AUDITED FINANCIAL STATEMENTS IS REPORTED GROSS OF THE AMOUNT OF PATRONAGE DIVIDENDS THAT ARE EITHER ALLOCATED OR TO BE ALLOCATED AT THE TIME THE AUDITED FINANCIAL STATEMENTS ARE PREPARED. HOWEVER, BECAUSE THE ALLOCATION OF PATRONAGE DIVIDENDS IS ONE ASPECT OF HOW THE COOPERATIVE FULFILLS ITS TAX EXEMPT PURPOSE OF OPERATING ON A COOPERATIVE BASIS, THE AMOUNT OF PATRONAGE DIVIDENDS EITHER ALLOCATED OR TO BE ALLOCATED TO THE MEMBERS IS REPORTED ON FORM 990, PART IX, LINE 4 AS "BENEFITS PAID TO MEMBERS". X X X X 0 0 0 JOHN ED SHINPAUGH CHIEF EXECUTIVE OFFICER 229216 0 500 0 37575 0 81205 0 33318 0 381814 0 0 0 KAREN RINTELMANN CHIEF FINANCIAL OFFICER 186335 0 380 0 25446 0 59388 0 16786 0 288335 0 0 0 TIM KIDWELL ASSISTANT MANAGER 152396 0 460 0 13773 0 40369 0 33318 0 240316 0 0 0 BARRY MURCHISON ENGINEER MANAGER 139911 0 420 0 6977 0 58875 0 33318 0 239501 0 0 0 RODNEY GAMMONS LINE SUPERINTENDENT 130462 0 940 0 3532 0 69921 0 6263 0 211118 0 0 0 CORY PATTON LINE FOREMAN 119016 0 740 0 444 0 21548 0 33160 0 174908 0 0 0 KAYLEN FOGELBERG 1ST CLASS LINEMAN 118061 0 520 0 229 0 11018 0 31560 0 161388 0 0 0 PART II, COLUMN C: INCLUDED IN THIS AMOUNT IS THE INCREASE IN ACTUARIAL VALUE OF BENEFITS PAYABLE UNDER A DEFINED BENEFIT RETIREMENT PLAN. THE CONTRIBUTION RATE FOR PARTICIPANTS IN THE NRECA R&S DEFINED BENEFIT PENSION PLAN ARE THE SAME FOR ALL INDIVIDUALS IN THIS MULTI-EMPLOYER PLAN. THE CHANGE IN ACTUARIAL VALUE FOR EACH PARTICIPANT, HOWEVER, VARIES WITH AGE, YEARS OF SERVICE AND THE CURRENT INTEREST RATE ENVIRONMENT. IN OTHER WORDS, THE OLDER A PLAN PARTICIPANT IS, THE GREATER THE INCREASE IN THAT INDIVIDUAL'S CHANGE IN ACTUARIAL VALUE, ALL OTHER THINGS BEING EQUAL. BECAUSE THIS RELATES TO A MULTI-EMPLOYER PLAN, CASH CONTRIBUTIONS TO THE PLAN IN LIEU OF THE ACTUARIAL INCREASE ARE EXPENSED IN THE FINANCIAL STATEMENTS. JOHN ED SHINPAUGH: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN $ 71,906 EMPLOYER CONTRIBUTION TO 401(K) PLAN 9,299 TOTAL REPORTED IN COLUMN C $ 81,205 LESS: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN (71,906) ADD: CASH CONTRIBUTION TO DEFINED BENEFIT PLAN 47,538 EXPENSE TO THE COOPERATIVE $ 56,837 KAREN RINTELMANN: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN $ 51,841 EMPLOYER CONTRIBUTION TO 401(K) PLAN 7,547 TOTAL REPORTED IN COLUMN C $ 59,388 LESS: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN (51,841) ADD: CASH CONTRIBUTION TO DEFINED BENEFIT PLAN 38,584 EXPENSE TO THE COOPERATIVE $ 46,131 TIM KIDWELL: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN $ 34,143 EMPLOYER CONTRIBUTION TO 401(K) PLAN 6,226 TOTAL REPORTED IN COLUMN C $ 40,369 LESS: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN (34,143) ADD: CASH CONTRIBUTION TO DEFINED BENEFIT PLAN 31,829 EXPENSE TO THE COOPERATIVE $ 38,055 BARRY MURCHISON: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN $ 53,148 EMPLOYER CONTRIBUTION TO 401(K) PLAN 5,727 TOTAL REPORTED IN COLUMN C $ 58,875 LESS: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN (53,148) ADD: CASH CONTRIBUTION TO DEFINED BENEFIT PLAN 29,312 EXPENSE TO THE COOPERATIVE $ 35,039 RODNEY GAMMONS: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN $ 64,958 EMPLOYER CONTRIBUTION TO 401(K) PLAN 4,963 TOTAL REPORTED IN COLUMN C $ 69,921 LESS: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN (64,958) ADD: CASH CONTRIBUTION TO DEFINED BENEFIT PLAN 25,374 EXPENSE TO THE COOPERATIVE $ 30,337 CORY PATTON: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN $ 17,331 EMPLOYER CONTRIBUTION TO 401(K) PLAN 4,217 TOTAL REPORTED IN COLUMN C $ 21,548 LESS: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN (17,331) ADD: CASH CONTRIBUTION TO DEFINED BENEFIT PLAN 21,423 EXPENSE TO THE COOPERATIVE $ 25,640 KAYLEN FOGELBERG: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN $ 7,479 EMPLOYER CONTRIBUTION TO 401(K) PLAN 3,539 TOTAL REPORTED IN COLUMN C $ 11,018 LESS: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN (7,479) ADD: CASH CONTRIBUTION TO DEFINED BENEFIT PLAN 17,978 EXPENSE TO THE COOPERATIVE $ 21,517 FORM 990, PART I: 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 $781,208, WHICH IS THE EFFECT OF NON-OPERATING MARGINS RETAINED. THE FOLLOWING SCHEDULE IS PROVIDED TO FURTHER EXPLAIN THE IMPACT OF THIS TRANSACTION: (A) - NET INCOME ON PAGE 1, PART I, LINE 19 $ 781,208 (B) - BENEFITS PAID TO MEMBERS (I.E. PATRONAGE DIVIDENDS), PART I, LINE 14 $1,183,625 TOTAL 2023 NET MARGIN PER FINANCIAL STATEMENTS (A + B) $1,964,833 FORM 990, PART VI, SECTION A, LINE 6 THE COOPERATIVE WAS FORMED BY THE MEMBERS TO PROVIDE ELECTRIC SERVICE AT COST ON A COOPERATIVE BASIS. FORM 990, PART VI, SECTION A, LINE 7A THE MEMBERS OF THE COOPERATIVE VOTE ON THE BOARD OF DIRECTORS. ELECTIONS ARE DONE ON A ONE MEMBER ONE VOTE BASIS BY DISTRICT. FORM 990, PART VI, SECTION A, LINE 7B 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. THE DISPOSAL OF A SUBSTANTIAL PORTION OF THE COOPERATIVE'S ASSETS 4. AMENDMENT TO THE ARTICLES OF INCORPORATION FORM 990, PART VI, SECTION A, LINE 8B 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". FORM 990, PART VI, SECTION B, LINE 11B MANAGEMENT PRESENTED A COPY OF THE FORM 990 TO THE BOARD FOR DISCUSSION AND REVIEW PRIOR TO FILING. FORM 990, PART VI, SECTION B, LINE 15 THE BOARD OF DIRECTORS USE A COMPENSATION SURVEY AND COMPARATIVE INFORMATION FROM FORM 990'S OF OTHER ORGANIZATIONS WHEN DETERMINING THE COMPENSATION OF THE GENERAL MANAGER. THE SURVEY SHOWS COMPARATIVE SALARIES FOR GENERAL MANAGERS FROM SIMILARLY SITUATED COOPERATIVES LOCATED IN TEXAS AND THE NATION. THE GENERAL MANAGER USES A COMPENSATION SURVEY AND COMPARATIVE INFORMATION FROM FORM 990'S OF OTHER ORGANIZATIONS 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 SIMILARLY SITUATED COOPERATIVES THROUGHOUT TEXAS AND THE NATION. FORM 990, PART VI, SECTION C, LINE 19 THE COOPERATIVE PROVIDES A SUMMARIZED COPY OF THE AUDITED BALANCE SHEET AND INCOME STATEMENT TO THE MEMBERS OF THE COOPERATIVE AT THE ANNUAL MEETING. THE COOPERATIVE WILL PROVIDE A COMPLETE COPY OF THE BYLAWS, TARIFFS, AND AUDITED FINANCIAL STATEMENTS TO ANY MEMBER WHO REQUESTS A COPY. FORM 990, PART VII, COLUMN F: 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 THE OFFICER AND HIGHLY COMPENSATED EMPLOYEES IS COMPRISED OF ACTUARIAL INCREASE IN THE DEFINED BENEFIT PLAN AND THE TOTAL AMOUNT CONTRIBUTED BY THE COOPERATIVE TO THE DEFINED CONTRIBUTION PLAN ON BEHALF OF AND FOR THEIR BENEFIT. IN ADDITION TO THE ABOVE PENSION PLANS, THE COOPERATIVE ALSO PROVIDES POST-RETIREMENT HEALTH INSURANCE BENEFITS THROUGH AN UNFUNDED WELFARE BENEFIT PLAN. THE VALUE OF THESE BENEFITS HAS NOT BEEN ESTIMATED. FORM 990, PART VIII, LINE 2: 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. FORM 990, PART IX: ALTHOUGH THE COOPERATIVE IS NO LONGER A RURAL UTILITIES SERVICE (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 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. FORM 990, PART IX, LINE 1: ALL GRANTS AND/OR DONATIONS ARE MADE TO NON-PROFIT AND CIVIC ORGANIZATIONS THAT ARE LOCATED IN THE COOPERATIVE'S SERVICE AREA, AND INTENDED TO IMPROVE THE COMMUNITIES IN WHICH OUR MEMBERS RESIDE. EACH GRANT AND/OR DONATION MADE DURING THE YEAR WAS BELOW THE REPORTING THRESHOLD OF SCHEDULE I, PART II. FORM 990, PART IX, LINE 4: PURSUANT TO 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 2023 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. FORM 990, PART IX, LINES 5-7: 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 $ 2,749,013 LESS: DIRECTOR FEES REPORTED ON FORMS 1099-NEC (51,600) LESS: EMPLOYEE OFFICER BENEFITS REPORTED ON LINE 5 (190,697) PLUS: SALARIES AND WAGES CAPITALIZED DIRECTLY TO PLANT 1,193,047 PLUS: SALARIES AND WAGES CAPITALIZED/EXPENSED INDIRECTLY THROUGH CLEARING AND OTHER ACCOUNTS 71,689 TOTAL WAGES ACCRUED AND/OR PAID $ 3,771,452 FORM 990, PART IX, LINE 24: ADMINISTRATIVE & GENERAL EXPENSE IS COMPRISED OF THE FOLLOWING: ADMINISTRATIVE & GENERAL SALARIES, BENEFITS, & OTHER $ 1,246,868 OFFICE SUPPLIES 211,316 OUTSIDE SERVICES 119,511 INSURANCES AND DAMAGES 221,840 MISCELLANEOUS GENERAL 75,691 DIRECTORS 195,681 MAINTENANCE OF GENERAL PLANT 98,845 TOTAL ADMIN & GENERAL EXP PER FINANCIAL STATEMENTS $ 2,169,752 LESS: RECLASS OF DIRECTOR FEES TO PART IX, LINE 5 (51,600) LESS: RECLASS OF LABOR TO PART IX, LINES 5 & 7 (799,546) LESS: RECLASS OF BENEFITS TO PART IX, LINES 8-10 (565,287) TOTAL ADMIN & GENERAL EXPENSE PER FORM 990, PART IX $ 753,319 FORM 990, PART XI, LINE 9: PATRONAGE CAPITAL ALLOCATED OR TO BE ALLOCATED 1,183,625. PATRONAGE CAPITAL RETIRED -620,362. OTHER COMPREHENSIVE INCOME - PENSION & BENEFITS -25,353. NET INCREASE IN MEMBERSHIPS 1,715. DONATED CAPITAL 1,216. FORM 990, PART XII, LINE 2C: 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.