2022-10-03T12:00:26-05:00 2021-12-31 750882037 BOLINGER SEGARS GILBERT AND MOSS LLP 8215 NASHVILLE AVENUE LUBBOCK TX 79423 990 2021-01-01 740964933 VICTORIA ELECTRIC COOPERATIVE INC VICT 3615732428 PO BOX 2178 VICTORIA TX 77902 BLAINE WARZECHA GENERAL MANAGER 3615732428 2022-09-29 1 BLAINE WARZECHA 999009999 WILLIAM M MILLER P00439459 8067473806 2022-09-26 X 3 AAL1 IAL1 2021 2022-09-23 18:48:47Z BLAINE WARZECHA PO BOX 2178 VICTORIA TX 77902 64064946 0 X WWW.VICTORIAELECTRIC.COOP X 1938 TX TO PROVIDE ELECTRIC & BROADBAND INTERNET GOODS & SERVICES TO MEMBERS ON A COOPERATIVE BASIS. 7 7 90 0 301365 0 0 0 59984858 62215808 133925 119811 469667 1729327 60588450 64064946 3071 2404 3466818 2965798 5900502 6109985 0 0 0 51615680 54062736 60986071 63140923 -397621 924023 150946262 152267427 69412282 67580076 81533980 84687351 TO EXCEED OUR MEMBER'S EXPECTATIONS OF PROVIDING SAFE, RELIABLE, AFFORDABLE ELECTRICITY, AND CONTINUE TO IMPROVE QUALITY OF LIFE OF EACH MEMBER THROUGH LOYAL EMPLOYEES, WITH A FOCUS ON SERVICE AND COMMUNITY. 0 0 ELECTRIC DIVISION:PROVIDING ELECTRIC ENERGY TO OUR MEMBERS ON A COOPERATIVE BASIS THROUGH THE ALLOCATION OF PATRONAGE CAPITAL. THERE WERE 24,180 ACTIVE SERVICES AT YEAR END. INFINIUM DIVISION:PROVIDING BROADBAND INTERNET SERVICES THROUGH THE CONSTRUCTION OF A FIBER OPTIC NETWORK. WHEN CUMULATIVE NET MARGINS DERIVED FROM MEMBER SALES OF BROADBAND INTERNET SERVICES EXCEED CUMULATIVE NET LOSSES FROM SUCH SALES, THE COOPERATIVE WILL ALLOCATE PATRONAGE CAPITAL TO THE MEMBERS. THERE WERE 1,424 SUBSCRIBERS OF THE INFINIUM DIVISION AT YEAR END. 0 0 0 0 0 0 0 0 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 13 0 90 1 1 1 0 0 0 0 62143942 833485 0 0 0 X 7 7 0 0 1 0 1 1 1 1 0 0 0 1 1 1 1 1 1 1 1 0 X JESSICA GRAY FINANCIAL SERVICES MANAGER 3615732428 5502 US HWY 59 NORTH VICTORIA TX 77905 X SAMUEL F RUSCHHAUPT III PRESIDENT 4.50 X X 22476 0 0 BYRON HAUSMANN VICE PRESIDENT 4.30 X 21796 0 0 TAMMIE BOYD SECRETARY/TREASURER 6.40 X X 21656 0 0 RAYMOND BRANDL JR DIRECTOR 2.20 X 21656 0 0 MICHAEL MARAGGIA DIRECTOR 9.70 X 21344 0 0 BOB BONAR JAN-SEP DIRECTOR 4.10 X 18741 0 0 TODD ADAMS DIRECTOR 2.70 X 18037 0 0 JOHN BECK ASSISTANT SECRETARY 1.40 X X 14639 0 0 DONALD WEHMEYER JAN-JULY DIRECTOR 2.70 X 13129 0 0 RON SMITH JAN-JUN DIRECTOR 1.70 X 12438 0 0 BLAINE WARZECHA GENERAL MANAGER 55.00 X 219318 0 100322 JESSICA GRAY FINANCIAL SERVICES MANAGER 50.00 X 122008 0 38843 LADDY BROWN OPERATIONS MANAGER 48.00 X 114361 0 77521 DAVID NERADA SERVICE LINE SUPERVISOR 48.00 X 127454 0 56453 ROBERT FRANCIS ENGINEERING MANAGER 48.00 X 129936 0 47465 ESIQUIO YBARRA CREW FOREMAN 48.00 X 107477 0 57117 NINA CAMPOS BROADBAND INTERNET MANAGER 48.00 X 115994 0 31898 1122460 0 409619 12 0 1 0 JC COMMUNICATIONS 16504-1 RED WAGON LANE LEANDER TX 78641 FIBER CONTRACTOR 1274610 ABC PROFESSIONAL TREE SERVICE 201 FLINT RIDGE RD STE 201 WEBSTER TX 77598 TREE TRIMMING CONTRACTOR 875359 JAMES POWER LINE CONSTRUCTION 43 SHOOTING CLUB ROAD BOERNE TX 78006 CONSTRUCTON CONTRACTOR 742124 IRBY CO STUART C PO BOX 843959 DALLAS TX 75284 FIBER CONSULTANT 395525 IVM SOLUTIONS DBA ROADSIDE INC 2038 LEE RD 137 LOT 51 AUBURN AL 36832 HERBICIDE APPLICATION CONTRACTOR 194266 6 X SALES OF ELECTRICITY 221000 58196919 58196919 PATRONAGE DIVIDENDS 221000 1922955 1922955 BROADBAND ACCESS 517000 1669987 1368622 301365 SERVICE FEES 221000 425947 425947 62215808 99660 99660 47550 0 47550 47550 47550 20151 0 20151 20151 20151 5220 0 5220 5220 PPP LOAN FORGIVENESS 221000 1411000 1411000 POLE ATTACHMENT INCOME 221000 230191 230191 MISC. NON OPERATING INCOME 221000 35366 35366 1676557 64064946 61975180 301365 1788401 X 2404 2965798 666403 3765456 487534 896573 294019 1942145 4862385 PURCHASED POWER 42369667 DISTRIBUTION EXPENSE 2115526 ADMINISTRATIVE AND GENE 1124571 BROADBAND EXPENSES 765042 883400 63140923 6267092 2791533 5369 5802 3081368 3115468 1757928 1909529 715434 629777 139692729 45314748 92389832 94377981 44837400 46574045 1891839 2863292 150946262 152267427 5738636 5441664 59219560 59296081 4454086 2842331 69412282 67580076 X 84190 85895 80779466 82785493 670324 1815963 81533980 84687351 150946262 152267427 X 924023 2229348 X X 0 1 X 1 0 617818 617818 13424057 2344516 11079541 119014921 42970232 76044689 6635933 6635933 94377981 PATRONAGE CAPITAL - CFC CAPITAL TERM CERT 572479 C PATRONAGE CAPITAL - COBANK 550349 C PATRONAGE CAPITAL - NEC 4906 C PATRONAGE CAPITAL - NRTC 19939 C PATRONAGE CAPITAL - NRUCFC 309819 C PATRONAGE CAPITAL - SEDC 85835 C PATRONAGE CAPITAL - SOUTH TEXAS ELECTRIC COOP 44493020 C PATRONAGE CAPITAL - TEXAS ELECTRIC COOPS 537698 C 46574045 DEFERRED CREDITS 219720 ADVANCES FOR CONSTRUCTION 680849 ACCRUED LIABILITIES 1227572 CONSUMER DEPOSITS 714190 2842331 X 64894291 829345 829345 64064946 0 64064946 61004470 829345 829345 60175125 2965798 2965798 63140923 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 DETERMINED THAT IT IS MORE LIKELY THAN NOT THAT THEIR TAX POSITIONS 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 XI, LINE 2D - OTHER ADJUSTMENTS: ELIMINATION OF INTERDIVISIONAL MISC INCOME 829,345. PART XII, LINE 2D - OTHER ADJUSTMENTS: ELIMINATION OF INTERDIVISIONAL EXPENSE 829,345. PART XII, LINE 4B - OTHER ADJUSTMENTS: PATRONAGE CAPITAL ALLOCATED OR TO BE ALLOCATED 2,965,798. 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. 1 X X X 0 0 0 BLAINE WARZECHA GENERAL MANAGER 214450 0 4424 0 444 0 71894 0 28428 0 319640 0 0 0 LADDY BROWN OPERATIONS MANAGER 111038 0 2274 0 1049 0 49931 0 27590 0 191882 0 0 0 DAVID NERADA SERVICE LINE SUPERVISOR 126238 0 939 0 277 0 32341 0 24112 0 183907 0 0 0 ROBERT FRANCIS ENGINEERING MANAGER 126921 0 2678 0 337 0 17830 0 29635 0 177401 0 0 0 ESIQUIO YBARRA CREW FOREMAN 106084 0 859 0 534 0 29732 0 27385 0 164594 0 0 0 JESSICA GRAY FINANCIAL SERVICES MANAGER 119467 0 2396 0 145 0 26611 0 12232 0 160851 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. BLAINE WARZECHA: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN $ 49,936 EMPLOYER CONTRIBUTION TO 401(K) PLAN 21,958 TOTAL REPORTED IN COLUMN C $ 71,894 LESS: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN (49,936) ADD: CASH CONTRIBUTION TO DEFINED BENEFIT PLAN 29,418 EXPENSE TO THE COOPERATIVE $ 51,376 LADDY BROWN: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN $ 42,918 EMPLOYER CONTRIBUTION TO 401(K) PLAN 7,013 TOTAL REPORTED IN COLUMN C $ 49,931 LESS: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN (42,918) ADD: CASH CONTRIBUTION TO DEFINED BENEFIT PLAN 15,644 EXPENSE TO THE COOPERATIVE $ 22,657 DAVID NERADA: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN $ 28,745 EMPLOYER CONTRIBUTION TO 401(K) PLAN 3,596 TOTAL REPORTED IN COLUMN C $ 32,341 LESS: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN (28,745) ADD: CASH CONTRIBUTION TO DEFINED BENEFIT PLAN 12,983 EXPENSE TO THE COOPERATIVE $ 16,579 ROBERT FRANCIS: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN $ 9,784 EMPLOYER CONTRIBUTION TO 401(K) PLAN 8,046 TOTAL REPORTED IN COLUMN C $ 17,830 LESS: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN (9,784) ADD: CASH CONTRIBUTION TO DEFINED BENEFIT PLAN 9,077 EXPENSE TO THE COOPERATIVE $ 17,123 ESIQUIO YBARRA: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN $ 22,924 EMPLOYER CONTRIBUTION TO 401(K) PLAN 6,808 TOTAL REPORTED IN COLUMN C $ 29,732 LESS: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN (22,924) ADD: CASH CONTRIBUTION TO DEFINED BENEFIT PLAN 11,653 EXPENSE TO THE COOPERATIVE $ 18,461 JESSICA GRAY: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN $ 18,225 EMPLOYER CONTRIBUTION TO 401(K) PLAN 8,386 TOTAL REPORTED IN COLUMN C $ 26,611 LESS: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN (18,225) ADD: CASH CONTRIBUTION TO DEFINED BENEFIT PLAN 16,090 EXPENSE TO THE COOPERATIVE $ 24,476 SCHEDULE O - PART I, LINE 19 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 $924,023, WHICH CONSISTS OF THE FOLLOWING: BROADBAND DIVISION NET LOSS $ (694,924) NONOPERATING MARGINS 1,618,947 NET INCOME ON PAGE 1, PART I, LINE 19 $ 924,023 PURSUANT TO THE BYLAWS, THE BROADBAND DIVISION LOSSES WILL BE ACCUMULATED UNTIL CUMULATIVE NET INCOME EXCEEDS CUMULATIVE LOSSES. AT THAT TIME, NET INCOME OF THE DIVISION WILL BE ALLOCATED TO THE MEMBERS. NONOPERATING MARGINS ARE RETAINED BY THE COOPERATIVE AS AN UNALLOCATED RESERVE. FORM 990, PART VI, SECTION A, LINE 4 DURING THE YEAR, THE COOPERATIVE'S BYLAWS WERE AMENDED. THE FOLLOWING IS A SUMMARY OF THE CHANGES MADE: ARTICLE I - MEMBERSHIP SECTION 2: MEMBERSHIP FEE, WAS AMENDED TO STATE THAT "A MEMBERSHIP FEE SHALL BE SET, FROM TIME TO TIME, BY THE BOARD OF DIRECTORS. LEGAL SPOUSES MAY JOINTLY BECOME A MEMEBER PROVIDED BOTH COMPLY JOINTLY WITH ALL THE REQUIREMENTS OF MEMBERSHIP." ARTICLE II - MEETINGS OF MEMBERS SECTION 1: ANNUAL MEETING, WAS AMENDED TO STATE THAT THE BOARD OF DIRECTORS DESIGNATE THE DATE AND TIME AND PLACE OF THE ANNUAL MEETING FOR THE PURPOSE OF PASSING UPON REPORTS FOR THE PREVIOUS YEAR. SECTION 5: VOTING, WAS ALSO AMENDED TO STATE THAT IN THE EVENT A DIRECTOR POSITION TO BE ELECTED IS UNCONTESTED, THE COOPERATIVE RESERVES THE RIGHT TO DISPENSE WITH THE REQUIREMENT OF FORMAL BALLOTING AND MAY DEEM AN UNCONTESTED CANDIDATE AS DULY ELECTED. SECTION 7: ORDER OF BUSINESS, WAS AMENDED TO STATE THAT "AT ANY ANNUAL OR SPECIAL MEETING OF MEMBERS, THE BOARD; (1) SHALL DETERMINE THE AGENDA, OR ORDER OR BUSINESS; (2) MAY LIMIT THE ATTENDANCE AT A MEMBERS MEETING TO MEMBERS AND SPECIAL GUESTS ONLY; (3) MAY EXERCISE POWER REASONABLY NECESSARY FOR EFFICIENTLY AND EFFECTIVELY CONDUCTING THE MEMBERS' MEETING." ARTICLE III - DIRECTORS SECTION 1: GENERAL POWERS, CHANGED THE NUMBER OF DIRECTORS FROM TEN (10) TO EIGHT (8). SECTION 2: ELECTION AND TENURE, WAS AMENDED TO STATE THE FOLLOWING: "THE COOPERATIVE SHALL ANNUALLY SCHEDULE AN ELECTION FOR THE EXPIRING TERMS OF THE BOARD OF DIRECTORS. THE DIRECTOR ELECTION SHALL BE HELD BY VOTING MANNER, AND AT A TIME AND/OR PLACE, CONVENIENT FOR THE MEMBERS. DIRECTORS SHALL BE SUBJECT TO THREE (3) YEAR TERMS, WITH THE BOARD DIVIDED INTO THREE CLASSES, WITH LENGTHS-OF-TERM STAGGERED SUCH THAT APPROXIMATELY ONE-THIRD OF THE DIRECTORS ARE SCHEDULED WITH EXPIRING TERMS EACH YEAR. IF CURRENT DIRECTORS ARE UNABLE TO AGREE TO STAGGERED LENGTHS-OF-TERM, THE TERMS SHALL BE DETERMINED BY LOT. THE COOPERATIVE MAY, FROM TIME TO TIME, DESIGNATE INDIVIDUAL DISTRICTS, PLACES, OR AT-LARGE POSITIONS, FOR DIRECTORS IN SUCH A MANNER AS APPROPRIATE SO AS TO PROVIDE EQUITABLE REPRESENTATION OF THE WHOLE OF THE COOPERATIVE MEMBERSHIP. SUCH DESIGNATIONS SHALL BE NOTICED AND MADE AVAILABLE TO THE MEMBERSHIP. FROM TIME TO TIME THE BOARD OF DIRECTORS SHALL REVIEW THE DIRECTOR POSITIONS AND REDESIGNATE AND/OR REAPPORTION AS REASONABLY NECESSARY TO EQUITABLY REPRESENT THE MEMBERSHIP. THE COOPERATIVE SHALL GIVE TIMELY NOTICE TO THE MEMBERSHIP OF EACH ANNUAL DIRECTOR ELECTION, INCLUDING THE NUMBER AND DESCRIPTION OF EACH DIRECTOR POSITION UP FOR ELECTION, AND THE NOMINATION METHODS AVAILABLE FOR MEMBERS TO BECOME CANDIDATES. THE COOPERATIVE SHALL DESIGNATE THE METHOD AND MANNER OF THE DIRECTOR ELECTION PROCESS, WHETHER THE ELECTION IS TO BE DURING THE COOPERATIVE ANNUAL MEETING, BY MAIL, OR BY THE INDIVIDUAL IN-PERSON VOTING, BY ELECTRONIC PROCESS, OR A COMBINATION THEREOF, OR ANY OTHER REASONABLE METHOD. DIRECTOR ELECTIONS INVOLVING MULTIPLE CANDIDATES MAY BE DECIDED BY PLURALITY OF MEMBERSHIP VOTE, BASED ON ADVANCE NOTICE. ANY TIE VOTES IN ANY DIRECTOR ELECTION MAY BE DECIDED BY RE-VOTE, OR BY LOT." ARTICLE V - OFFICERS SECTION 7: SECRETARY, WAS AMENDED TO STATE THAT THE PURELY MINISTERIAL DUTIES OF THE OFFICE OF SECRETARY MAY BE DELEGATED TO A DESIGNATED STAFF MEMBER OF THE COOPERATIVE. SECTION 9: MANAGER, WAS AMENDED TO ADD THAT THE BOARD MAY DESIGNATE THE MANAGER AS THE CHIEF EXECUTIVE OFFICER (CEO) OF THE COOPERATIVE SO THAT CERTAIN EXECUTIVE DUTIES MAY BE DELEGATED AS DIRECTED BY THE BOARD. ARTICLE VII - NON-PROFIT OPERATION SECTION 1: DEFINITIONS, WAS AMENDED TO STATE THAT "REVENUES, IN ANY GIVEN SITUATION, SHALL HAVE THE MEANING AS DETERMINED BY THE BOARD. THE BOARD IS THE SOLE DECISION MAKER OF THE NATURE AND OF THE SOURCE OF ITS REVENUE." A COMPLETE COPY OF THE BYLAWS CAN BE FOUND UNDER MEMBER RESOURCES ON THE COOPERATIVE'S WEBSITE. 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. 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. 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 PROVIDED A COPY OF THE FORM 990 TO THE BOARD FOR DISCUSSION AND REVIEW PRIOR TO FILING. THE DISCUSSION AND REVIEW TOOK PLACE AT THE BOARD MEETING IMMEDIATELY BEFORE FILING THE RETURN. FORM 990, PART VI, SECTION B, LINE 12C ON AN ANNUAL BASIS, THE COOPERATIVE WILL REQUIRE THE BOARD OF DIRECTORS AND OFFICERS TO COMPLETE AND SIGN A CONFLICT OF INTEREST CERTIFICATION AND DISCLOSURE FORM. DIRECTORS AND OFFICERS ARE REQUIRED TO DISCLOSE ANY ACTION OR SITUATION THAT MIGHT VIOLATE THE POLICY TO THE FULL BOARD OF DIRECTORS AS SOON AS POSSIBLE. FORM 990, PART VI, SECTION B, LINE 15 THE COMPENSATION COMMITTE OF THE BOARD OF DIRECTORS USES THE EXPERTISE OF 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 TEXAS AND THE NATION. INTERNAL AND/OR EXTERNAL RESOURCES ARE ALSO USED TO COMPARE ANNUAL COMPENSATION WITHIN THE INDUSTRY. THE ENTIRE BOARD OF DIRECTORS APPROVES THE GENERAL MANAGER'S COMPENSATION. THE BOARD AND THE GENERAL MANAGER USE THE EXPERTISE OF 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 SIMILARLY SITUATED COOPERATIVES THROUGHOUT TEXAS AND THE NATION. FORM 990, PART VI, SECTION C, LINE 19 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 BYLAWS CAN ALSO BE FOUND UNDER MEMBER RESOURCES ON THE COOPERATIVE'S WEBSITE. 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 AND LIFE INSURANCE TO ALL ELIGIBLE EMPLOYEES THROUGH A QUALIFIED PLAN. THE AMOUNTS REPORTED ON PART VII, COLUMN (F) FOR THE OFFICERS AND HIGHLY COMPENSATED EMPLOYEES IS COMPRISED OF ACTUARIAL INCREASE IN THE DEFINED BENEFIT PLAN, THE TOTAL AMOUNT CONTRIBUTED BY THE COOPERATIVE TO THE DEFINED CONTRIBUTION PLAN AND INSURANCE PAID ON BEHALF OF AND FOR THEIR BENEFIT. FORM 990, PART VIII, LINE 2B: PATRONAGE DIVIDENDS RESULT FROM THE PURCHASE OF WHOLESALE POWER FROM GENERATION & TRANSMISSION COOPERATIVES. 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, 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 $ 4,431,859 LESS: TRUSTEE FEES REPORTED ON FORMS 1099-NEC (185,912) LESS: EMPLOYEE OFFICER BENEFITS REPORTED ON LINE 5 (139,165) PLUS: SALARIES AND WAGES CAPITALIZED DIRECTLY TO PLANT 1,161,649 PLUS: SALARIES AND WAGES CAPITALIZED/EXPENSED INDIRECTLY THROUGH CLEARING AND OTHER ACCOUNTS 225,249 TOTAL WAGES ACCRUED AND/OR PAID $ 5,493,680 FORM 990, PART IX, LINE 24: ADMINISTRATIVE AND GENERAL EXPENSE IS COMPRISED OF THE FOLLOWING: ADMINISTRATIVE & GENERAL SALARIES, BENEFITS, & OTHER $ 1,000,093 OFFICE SUPPLIES 318,989 OUTSIDE SERVICES 124,318 REGULATORY COMMISSION 98,018 DIRECTORS 197,165 MISCELLANEOUS GENERAL 420,361 MAINTENANCE OF GENERAL PLANT 700,564 TOTAL ADMIN & GENERAL EXP PER FINANCIAL STATEMENTS $ 2,859,508 LESS: RECLASS OF TRUSTEE FEES TO PART IX, LINE 5 (185,912) LESS: RECLASS OF LABOR TO PART IX, LINES 5 & 7 (1,073,843) LESS: RECLASS OF BENEFITS TO PART IX, LINES 8-10 (475,182) TOTAL ADMIN & GENERAL EXPENSE PER FORM 990, PART IX $ 1,124,571 FORM 990, PART IX, LINE 24E: OTHER EXPENSES IS COMPRISED OF THE FOLLOWING: CUSTOMER ACCOUNTS $ 893,219 OTHER DEDUCTIONS 13,056 TAXES 495,088 TOTAL OTHER EXPENSES REPORTED ON FINANCIAL STATEMENTS $ 1,401,363 LESS: RECLASS OF LABOR AND OVERHEAD (517,963) TOTAL OTHER EXPENSES PER FORM 990, PART IX $ 883,400 FORM 990, PART IX, LINE 4: 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 AND BROADBAND INTERNET RELATED GOODS AND SERVICES 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 AND BROADBAND INTERNET RELATED GOODS AND SERVICES FROM THE COOPERATIVE FOR THE 2021 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, LINE 1: 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. FORM 990, PART IX: THE ACCOUNTING RECORDS OF THE COOPERATIVE ARE MAINTAINED IN ACCORDANCE WITH THE RUS UNIFORM SYSTEM OF ACCOUNTS (USOA) PRESCRIBED BY RUS FOR 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 XI, LINE 9: PATRONAGE CAPITAL ALLOCATED OR TO BE ALLOCATED 2,965,798. PATRONAGE CAPITAL RETIRED -738,155. NET CHANGE IN MEMBERSHIPS 1,705. FORM 990, PART XII, LINE 2C: THE BOARD OF DIRECTORS HAS ASSIGNED MEMBERS OF THE BOARD TO AN AUDIT COMMITTEE TO OVERSEE THE FINANCIAL STATEMENT AUDIT AND SELECT THE INDEPENDENT FINANCIAL STATEMENT AUDITOR. PROCEDURAL CHANGES DID NOT OCCUR DURING THE YEAR.