2020-11-11T11:19:32-06:00 2019-12-31 750882037 BOLINGER SEGARS GILBERT AND MOSS LLP 8215 NASHVILLE AVENUE LUBBOCK TX 79423 990 2019-01-01 740758801 MAGIC VALLEY ELECTRIC COOPERATIVE INC MAGI 9565141200 PO BOX 267 MERCEDES TX 785700267 JOHN W HERRERA GENERAL MANAGER 9565141200 2020-11-10 1 WILLIAM M MILLER P00439459 8067473806 2020-11-10 X 65.182.80.152 2020-11-10 15:57:32 CS P 954CA8D01CFBC3DD23DC63FC91DC923EB9CBFAF9 587A88673713A033F58E04FDF6801CBB1F7DD2F2 2019 2022-01-07 14:23:13Z JOHN W HERRERA PO BOX 267 MERCEDES TX 785700267 237939211 0 X WWW.MAGICVALLEY.COOP X 1937 TX TO PROVIDE QUALITY AND RELIABLE ELECTRIC SERVICE TO MEMBERS OF THE COOPERATIVE. 7 7 299 0 0 0 0 0 234776241 236498836 309985 317621 746574 1116472 235832800 237932929 134227 104746 19948747 21265858 15883884 17188385 0 0 0 199676942 199423940 235643800 237982929 189000 -50000 458621928 492236085 194686003 212714255 263935925 279521830 TO ENHANCE PEOPLE'S LIVES BY SAFELY PROVIDING THE MOST RELIABLE AND AFFORDABLE ELECTRIC SERVICE BY KEEPING OUR MEMBER'S BEST INTEREST IN MIND. 0 0 PROVIDING ELECTRIC ENERGY TO OUR MEMBERS ON A COOPERATIVE BASIS THROUGH THE ALLOCATION OF PATRONAGE CAPITAL. THERE WERE 130,629 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 1 0 1 0 0 0 0 0 0 0 0 0 0 0 0 0 0 1 53 0 299 1 1 1 0 0 0 0 224739673 1129692 0 0 0 X 7 7 0 0 0 0 1 1 1 1 0 0 0 1 1 1 1 1 0 1 1 0 X DANE HOCOTT 9565141200 1 3/4 MILE WEST HWY 83 MERCEDES TX 785700267 X JOHN W HERRERA GENERAL MANAGER 50.00 X 313706 0 179594 DANE HOCOTT SERVICES DIVISION MANAGER 40.00 X 148486 0 70576 BRIAN ACOSTA EASTERN DIVISION MANAGER 40.00 X 145824 0 60173 FELIPE AMAYA TECHNICAL SERVICES MANAGER 40.00 X 132900 0 55965 ATANACIO HINOJOSA WESTERN DIVISION MANAGER 40.00 X 146589 0 40080 JUAN SANCHEZ LEAD LINEMAN 40.00 X 127813 0 55390 ABRAHAM QUIROGA BUSINESS & EMPLOYEE DEVELOPMENT 40.00 X 135926 0 41464 MARTIN GARCIA PRESIDENT 8.50 X X 44000 0 0 REYNALDO LOPEZ VICE PRESIDENT 7.00 X X 40500 0 0 NILA T WIPF DIRECTOR 6.50 X 38000 0 0 ROLANDO ALANIZ ASST SECRETARY/TREASURER 7.20 X X 37000 0 0 ADRIENNE PENA-GARZA DIRECTOR 7.20 X 37000 0 0 BARBARA S MILLER SECRETARY/TREASURER 6.40 X X 35000 0 0 DOUGLAS MARTIN DIRECTOR 5.10 X 31500 0 0 1414244 0 503242 16 0 1 0 VOLT POWER 2910 HWY 31 NW HARTSELLE AL 35640 CONSTRUCTION CONTRACTOR 8250784 ASPLUNDH TREE EXPERT CO PO BOX 532729 ATLANTA GA 30353 TREE TRIMMING 1255247 NETSYNC NETWORK SOLUTIONS 2500 WEST LOOP SOUTH SUITE 410 HOUSTON TX 77027 TECHNOLOGY SOLUTIONS 785845 DOXIM UTILITEC LLC PO BOX 933346 CLEVELAND OH 44193 BILLING SERVICES 232961 OPEN SYSTEMS INTERNATIONAL INC 4101 ARROWHEAD DRIVE MEDINA MN 55340 AUTOMATION SOLUTIONS 190121 11 X SALES OF ELECTRICITY 221000 217408263 217408263 PATRONAGE DIVIDENDS 221000 14011615 14011615 SERVICE FEES 221000 5057314 5057314 OTHER PROGRAM REVENUE 221000 21644 21644 236498836 291569 291569 6000 0 6000 6000 6000 30279 4227 26052 26052 26052 2215 2055 160 160 POLE ATTACHMENT INCOME 221000 1110312 1110312 1110312 237932929 236498996 0 1433933 X 104746 21265858 975362 11102320 2395525 1888495 826683 6664830 12583611 PURCHASED POWER 163453539 ADMIN & GENERAL EXPENSE 7143204 DISTRIBUTION EXPENSE 6064880 CONSUMER EXPENSE 3219548 294328 237982929 4095450 5736556 184374 3567723 9454769 10520045 4408107 4487609 4451371 3806550 399262247 76457667 307339251 322804580 125402948 139262241 3285658 2050781 458621928 492236085 22928152 23742013 889781 912975 160207017 178208734 10661053 9850533 194686003 212714255 X 515725 534475 0 0 263420200 278987355 263935925 279521830 458621928 492236085 X -50000 15635905 X X 0 1 X 1 0 0 1 X 30846 214094 244940 13547060 5376862 8170198 376720481 71080805 305639676 8749766 8749766 322804580 PATRONAGE CAPITAL - CFC 4106467 C PATRONAGE CAPITAL - TEC 1771772 C PATRONAGE CAPITAL - STEC 118692696 C PATRONAGE CAPITAL - COBANK 290495 C PATRONAGE CAPITAL - NRTC 19180 C CONTRIBUTED CAPITAL - STEC 11199850 C MEMBER CAPITAL SECURITIES - CFC 100000 C CAPITAL TERM CERTIFICATES - CFC 3079621 C MEMBERSHIPS IN ASSOC. ORGS. 2160 C 139262241 CUSTOMER DEPOSITS 5883751 ACCRUED OPERATING TAXES 3561078 POWER COST RECOVERY - OVERBILLED 405704 9850533 X 237932929 0 237932929 0 237932929 216717071 0 216717071 21265858 21265858 237982929 PART IV, LINE 2B: PURSUANT TO SECTION 74.3013 OF THE TEXAS PROPERTY CODE, THE COOPERATIVE HAS ESTABLISHED A RURAL SCHOLARSHIP FUND WITH AMOUNTS DESIGNATED 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. ALSO PURSUANT TO SECTION 74.3013 OF THE TEXAS PROPERTY CODE, THE COOPERATIVE HAS ESTABLISHED AN ECONOMIC DEVELOPMENT FUND WITH AMOUNTS DESIGNATED UNCLAIMED UNDER STATE LAW. THE AMOUNTS DEPOSITED INTO THE ECONOMIC DEVELOPMENT FUND ARE APPROVED BY THE STATE OF TEXAS AND CAN ONLY BE USED FOR THE STIMULATION AND IMPROVEMENT OF BUSINESS AND COMMERCIAL ACTIVITY FOR ECONOMIC DEVELOPMENT IN RURAL COMMUNITIES. ANY AMOUNTS SO DEPOSITED INTO THE ECONOMIC DEVELOPMENT FUND ARE STILL PAYABLE TO THE PERSON TO WHOM THE ORIGINAL PAYMENT WAS MADE BUT UNCLAIMED. PART X, LINE 2: THE COOPERATIVE 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 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 21,265,858. 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 CAPITAL 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". PATRONAGE DIVIDENDS ARE ALLOCATED ON A PATRONAGE BASIS AND DONE SO PURSUANT TO A PRE-EXISTING OBLIGATION AS PROVIDED FOR IN THE "NON-PROFIT OPERATION" ARTICLE OF THE COOPERATIVE'S BYLAWS. 0 RIO GRANDE VALLEY PARTNERSHIP 322 S MISSOURI AVE WESLACO TX 78596 742765624 501(C)(3) 7500 SCHOLARSHIP PROGRAM SUPPORT 1 PART II: 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. X X 0 0 0 JOHN W HERRERA GENERAL MANAGER 290261 0 6364 0 17081 0 171482 0 8112 0 493300 0 0 0 DANE HOCOTT SERVICES DIVISION MANAGER 130437 0 4282 0 13767 0 52583 0 17993 0 219062 0 0 0 BRIAN ACOSTA EASTERN DIVISION MANAGER 128258 0 3997 0 13569 0 38377 0 21796 0 205997 0 0 0 FELIPE AMAYA TECHNICAL SERVICES MANAGER 115779 0 3701 0 13420 0 31802 0 24163 0 188865 0 0 0 ATANACIO HINOJOSA WESTERN DIVISION MANAGER 129880 0 3287 0 13422 0 21225 0 18855 0 186669 0 0 0 JUAN SANCHEZ LEAD LINEMAN 123198 0 4413 0 202 0 30609 0 24781 0 183203 0 0 0 ABRAHAM QUIROGA BUSINESS & EMPLOYEE DEVELOPMENT 119182 0 3346 0 13398 0 26686 0 14778 0 177390 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. 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 CONTRIBUTION TO THE PLAN IN LIEU OF THE ACTUARIAL INCREASE ARE EXPENSED IN THE FINANCIAL STATEMENTS. JOHN W HERRERA: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN $ 158,899 EMPLOYER CONTRIBUTION TO 401(K) PLAN 12,583 TOTAL REPORTED IN COLUMN C $ 171,482 LESS: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN (158,899) ADD: CASH CONTRIBUTION TO DEFINED BENEFIT PLAN 70,597 EXPENSE TO THE COOPERATIVE $ 83,280 DANE HOCOTT: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN $ 46,590 EMPLOYER CONTRIBUTION TO 401(K) PLAN 5,993 TOTAL REPORTED IN COLUMN C $ 52,583 LESS: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN (46,590) ADD: CASH CONTRIBUTION TO DEFINED BENEFIT PLAN 32,296 EXPENSE TO THE COOPERATIVE $ 38,289 BRIAN ACOSTA: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN $ 32,390 EMPLOYER CONTRIBUTION TO 401(K) PLAN 5,987 TOTAL REPORTED IN COLUMN C $ 38,377 LESS: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN (32,390) ADD: CASH CONTRIBUTION TO DEFINED BENEFIT PLAN 32,266 EXPENSE TO THE COOPERATIVE $ 38,253 FELIPE AMAYA: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN $ 26,323 EMPLOYER CONTRIBUTION TO 401(K) PLAN 5,479 TOTAL REPORTED IN COLUMN C $ 31,802 LESS: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN (26,323) ADD: CASH CONTRIBUTION TO DEFINED BENEFIT PLAN 29,527 EXPENSE TO THE COOPERATIVE $ 35,006 ATANACIO HINOJOSA: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN $ 15,238 EMPLOYER CONTRIBUTION TO 401(K) PLAN 5,987 TOTAL REPORTED IN COLUMN C $ 21,225 LESS: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN (15,238) ADD: CASH CONTRIBUTION TO DEFINED BENEFIT PLAN 32,266 EXPENSE TO THE COOPERATIVE $ 38,253 JUAN SANCHEZ: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN $ 26,798 EMPLOYER CONTRIBUTION TO 401(K) PLAN 3,811 TOTAL REPORTED IN COLUMN C $ 30,609 LESS: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN (26,798) ADD: CASH CONTRIBUTION TO DEFINED BENEFIT PLAN 20,494 EXPENSE TO THE COOPERATIVE $ 24,305 ABRAHAM QUIROGA: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN $ 21,207 EMPLOYER CONTRIBUTION TO 401(K) PLAN 5,479 TOTAL REPORTED IN COLUMN C $ 26,686 LESS: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN (21,207) ADD: CASH CONTRIBUTION TO DEFINED BENEFIT PLAN 29,527 EXPENSE TO THE COOPERATIVE $ 35,006 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 LOSS OF $50,000, WHICH IS THE INCOME STATEMENT EFFECT OF ACCRUED UNBILLED REVENUE. THE GAAP BASIS FINANCIAL STATEMENTS INCLUDE AN ACCRUAL FOR UNBILLED REVENUE BECAUSE THE COOPERATIVE'S BILLING CYCLE DOES NOT END ON THE LAST DAY OF THE MONTH. THEREFORE, IT HAS REVENUE IN DECEMBER OF EACH YEAR THAT IT HAS EARNED BUT WILL NOT BILL UNTIL THE FIRST BILLING CYCLE OF THE FOLLOWING YEAR. THE COOPERATIVE ESTIMATES THIS REVENUE AND RECORDS IT AS ACCRUED UNBILLED REVENUE IN ORDER TO MATCH THE REVENUE WITH THE YEAR EARNED. HOWEVER, THE COOPERATIVE ALLOCATES THE REVENUE TO MEMBERS IN THE YEAR IT IS BILLED RATHER THAN WHEN ACCRUED. THIS TIMING DIFFERENCE IS FAIR AND EQUITABLE BECAUSE IT MATCHES THE PATRONAGE DIVIDEND ALLOCATED WITH THE BILLING RECORDS USED TO ALLOCATE THE MARGINS. DUE TO THE TIMING OF WHEN THE COOPERATIVE ALLOCATES ACCRUED UNBILLED REVENUE, PAGE 1, PART I, LINE 19 ANNUALLY REPORTS NET INCOME EQUAL TO THE NET INCREASE IN ACCRUED UNBILLED REVENUE OR A NET LOSS EQUAL TO THE NET DECREASE IN UNBILLED REVENUE. THE FOLLOWING SCHEDULE IS PROVIDED TO FURTHER EXPLAIN THE IMPACT OF THIS TRANSACTION: ADD: UNBILLED REVENUE 12/31/19 $ 2,018,000 LESS: UNBILLED REVENUE 12/31/18 (2,068,000) (A) - NET INCOME(LOSS) ON PAGE 1, PART I, LINE 19 $ (50,000) (B) - BENEFITS PAID TO MEMBERS (I.E. PATRONAGE DIVIDENDS), PART I, LINE 14 $21,265,858 TOTAL 2019 NET MARGIN (A + B) $21,215,858 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. 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 12C THE BOARD OF DIRECTORS AND OFFICERS ARE REQUIRED TO REVIEW AND BE FAMILIAR WITH THE POLICIES OUTLINED IN THE COOPERATIVE'S CONFLICT OF INTEREST POLICY. THE BOARD OF 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. THE CONFLICT OF INTEREST POLICY IS REVIEWED ON AN ANNUAL BASIS. FORM 990, PART VI, SECTION B, LINE 15 THE BOARD OF DIRECTORS USE A COMPENSATION SURVEY WHEN DETERMINING THE COMPENSATION OF THE GENERAL MANAGER. THE SURVEY SHOWS COMPARATIVE SALARIES FOR GENERAL MANAGERS FROM COOPERATIVES LOCATED IN TEXAS AND THE NATION. THE BOARD AND THE GENERAL MANAGER USE A COMPENSATION SURVEY WHEN DETERMINING THE COMPENSATION OF THE COOPERATIVE'S OTHER EMPLOYEES MEETING THE DEFINITION OF OFFICER AND KEY EMPLOYEE, IF ANY. THE SURVEY INCLUDES SALARIES FROM SIMILAR COOPERATIVES THROUGHOUT TEXAS AND THE NATION. FORM 990, PART VI, SECTION C, LINE 19 THE COOPERATIVE PROVIDES A SUMMARIZED AUDITED FINANCIAL STATEMENT TO THE MEMBERS OF THE COOPERATIVE AT THE ANNUAL MEETING. THE COOPERATIVE WILL PROVIDE A COMPLETE COPY OF THE AUDITED FINANCIAL STATEMENTS, CONFLICT OF INTEREST POLICY, OR GOVERNING DOCUMENTS 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 AND LIFE INSURANCE TO ALL ELIGIBLE EMPLOYEES, INCLUDING OFFICERS AND HIGHLY COMPENSATED EMPLOYEES, 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 BY THE COOPERATIVE TO THE DEFINED CONTRIBUTION PLAN AND INSURANCE PAID ON BEHALF OF AND FOR THEIR BENEFIT. 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) AS 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, 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 $12,077,682 LESS: DIRECTOR FEES REPORTED ON FORMS 1099-MISC (263,000) LESS: EMPLOYEE OFFICER BENEFITS REPORTED ON LINE 5 (250,170) PLUS: SALARIES AND WAGES ALLOCATED TO NONOPERATING MARGINS 240 PLUS: SALARIES AND WAGES CAPITALIZED DIRECTLY TO PLANT 2,640,471 PLUS: SALARIES AND WAGES CAPITALIZED/EXPENSED INDIRECTLY THROUGH CLEARING & OTHER ACCOUNTS 3,355,172 TOTAL WAGES ACCRUED AND/OR PAID $17,560,395 FORM 990, PART IX, LINE 24: ADMINISTRATIVE AND GENERAL EXPENSE IS COMPRISED OF THE FOLLOWING: ADMINISTRATIVE & GENERAL $ 1,378,592 GENERAL OFFICE 3,182,655 OUTSIDE SERVICES EMPLOYED 512,603 INJURIES & DAMAGES 662,242 PROPERTY INSURANCE 119,387 PERFORMANCE BONUS & RELATED BENEFITS 788,412 REGULATORY COMMISSION 370,916 DIRECTORS 371,640 DUES IN ASSOCIATED ORGANIZATIONS 14,138 ANNUAL & DISTRICT MEETINGS 68,932 MISCELLANEOUS GENERAL 162,411 OUT OF TOWN BUSINESS MEETINGS 130,643 MAINTENANCE OF GENERAL PLANT 2,784,607 TOTAL ADMIN & GENERAL EXP PER FINANCIAL STATEMENTS $ 10,493,178 LESS: RECLASS OF DIRECTOR FEES TO PART IX, LINE 5 (263,000) LESS: RECLASS OF LABOR TO PART IX, LINES 5 & 7 (2,109,195) LESS: RECLASS OF BENEFITS TO PART IX, LINES 8-10 (977,779) TOTAL ADMIN & GENERAL EXPENSE PER FORM 990, PART IX $ 7,143,204 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 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 2019 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 XI, LINE 9: PATRONAGE CAPITAL ALLOCATED OR TO BE ALLOCATED 21,265,858. PATRONAGE CAPITAL RETIRED -5,648,703. NET INCREASE IN MEMBERSHIPS 18,750. FORM 990, PART XII, LINE 2C: THE BOARD OF DIRECTORS HAVE ASSIGNED MEMBERS TO AN AUDIT COMMITTEE TO OVERSEE THE FINANCIAL STATEMENT AUDIT AND SELECTING THE INDEPENDENT FINANCIAL STATEMENT AUDITOR. PROCEDURAL CHANGES DID NOT OCCUR DURING THE YEAR.