2024-11-15T23:10:19-06:00 2023-12-31 750882037 BOLINGER SEGARS GILBERT AND MOSS LLP 8215 NASHVILLE AVENUE LUBBOCK TX 79423 990 2023-01-01 480526038 LANE-SCOTT ELECTRIC COOPERATIVE INC LANE 6203975327 PO BOX 758 DIGHTON KS 67839 RICHARD MCLEON GENERAL MANAGER 6203975327 2024-11-15 1 0 WILLIAM M MILLER P00439459 8067473806 2024-11-15 X 2023 2024-10-15 13:58:12Z RICHARD MCLEON PO BOX 758 DIGHTON KS 67839 19834006 0 X WWW.LANESCOTT.COOP X 1941 KS TO PROVIDE QUALITY AND RELIABLE ELECTRIC SERVICE TO MEMBERS AT COST ON A COOPERATIVE BASIS. 9 9 26 0 1055706 0 0 0 21646414 18374120 134990 400256 1441049 1059630 23222453 19834006 14250 34366 1298255 501621 2116390 2417280 0 0 0 19520782 16576165 22949677 19529432 272776 304574 64701717 65866173 39052229 39929674 25649488 25936499 X LANE-SCOTT ELECTRIC COOPERATIVE, INC. BELIEVES THAT EVERY MEMBER IS ENTITLED TO RELIABLE AND EFFICIENT ELECTRIC SERVICE AT THE LOWEST POSSIBLE COST COMPATIBLE WITH GOOD GOVERNANCE POLICIES AND MANAGEMENT PRACTICES. WE ALSO BELIEVE THAT WE HAVE THE OBLIGATION TO PROVIDE OTHER RELATED SERVICES THAT ENRICH PEOPLES' LIVES AND IMPROVE THE COMMUNITIES IN WHICH THEY LIVE. WE BELIEVE ADHERENCE TO COOPERATIVE PRINCIPLES IS THE BEST WAY TO ACHIEVE THE ABOVE DESIRED OBJECTIVES. 0 0 PROVIDING ELECTRIC ENERGY TO OUR MEMBERS ON A COOPERATIVE BASIS THROUGH THE ALLOCATION OF PATRONAGE CAPITAL. THERE WERE 5,741 ACTIVE SERVICES AT YEAR. 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 1 1 0 0 1 0 0 0 0 0 0 0 0 0 0 0 1 99 0 26 1 1 1 0 0 0 0 17542209 2448390 0 0 0 X 9 9 1 0 0 0 1 1 1 1 0 0 0 1 1 1 0 1 0 1 1 0 X KATHERINE E LEWIS FINANCE MANAGER 6203975327 PO BOX 758 DIGHTON KS 67839 X ERIC DOLL TREASURER 2.00 X X 4100 0 0 RANDALL EVANS TRUSTEE 1.60 X 6800 0 0 CHAD GRIFFITH TRUSTEE 0.90 X 4150 0 0 HAROLD HOSS SECRETARY 1.40 X X 6800 0 0 RICHARD JENNISON PRESIDENT 1.20 X X 5150 0 0 CRAIG RAMSEY VICE PRESIDENT 5.30 X X 14000 0 0 RAD ROEHL TRUSTEE 2.20 X 4800 0 0 SUSAN NUSS TRUSTEE (JULY-DEC) 1.40 X 2350 0 0 JAMES JORDAN TRUSTEE (JULY-DEC) 1.20 X 2700 0 0 PAUL SEIB JR TRUSTEE (JAN-JULY) 3.10 X 3150 0 0 RICHARD SOREM TRUSTEE (JAN-JULY) 1.10 X 2800 0 0 RICHARD MCLEON GENERAL MANAGER/CEO 48.00 X 243299 0 102536 KATHERINE E LEWIS FINANCE MANAGER 43.00 X 130823 0 70362 KASEY JENKINSON LINE SUPERINTENDENT 45.00 X 126950 0 90839 BENJAMIN MANN CREW FOREMAN 43.00 X 111647 0 65347 CHRIS TERHUNE JOURNEYMAN LINEMAN 45.00 X 108287 0 56550 CHAD RUPP CREW FOREMAN 44.00 X 112912 0 56506 MYRON SEIB JOURNEYMAN LINEMAN 45.00 X 113757 0 60594 1004475 0 502734 11 0 1 0 UTILITY ASSET MANAGEMENT INC 2373 CENTRAL PARK BLVD STE 100 DENVER CO 80238 POLE INSPECTIONS & TRUSSING 109037 1 X SALES OF ELECTRICITY 221000 17800043 17800043 PATRONAGE DIVIDENDS 221000 534102 534102 SERVICE FEES 221000 39975 39975 18374120 400256 400256 2330 0 2330 2330 2330 ELECTRICIAN/HVAC SERVICE 221000 1053376 1053376 MISC NON-OPERATING INCOME 221000 3924 3924 1057300 19834006 18378044 1055706 400256 X 23866 10500 501621 603820 1158611 269836 281752 103261 1222359 1955181 PURCHASED POWER 10346476 DISTRIBUTION EXP. 1023202 ELECTRICIAN/HVAC EXP. 978021 ADMIN & GENERAL EXP. 837940 212986 19529432 29960 157091 5167155 6596459 1957432 1411374 508040 703772 1930259 1003054 65689143 23543489 41136027 42145654 13636718 13712352 336126 136417 64701717 65866173 1350905 1524708 37171353 36771902 529971 1633064 39052229 39929674 X 0 0 0 0 25649488 25936499 25649488 25936499 64701717 65866173 X 304574 -20140 X X 0 1 X 0 0 112549 112549 2870408 1313564 1556844 61593004 22229925 39363079 1113182 1113182 42145654 PATRONAGE CAPITAL-SUNFLOWER 11998935 C PATRONAGE CAPITAL-KEC 17062 C PATRONAGE CAPITAL-NISC 70231 C PATRONAGE CAPITAL-S&T TEL 110691 C PATRONAGE CAPITAL-GB TEL 35220 C PATRONAGE CAPITAL-FEDERATED 184335 C PATRONAGE CAPITAL-COBANK 20346 C PATRONAGE CAPITAL-MKEC 777013 C PATRONAGE CAPITAL-CFC 239220 C CAPITAL TERM CERTIFICATES-CFC 221958 C MEMBERSHIPS IN ASSOC ORGS 3200 C OTHER INVESTMENTS 34141 C 13712352 CONSUMER DEPOSITS 106856 ACCRUED OPERATING TAXES 376464 POWER COST ADJUSTMENT - OVERCOLLECTED 793424 DEFERRED CREDITS 356320 1633064 X 18855985 0 18855985 978021 978021 19834006 18047213 0 18047213 1479642 1479642 19526855 PART X, LINE 2: THE COOPERATIVE UTILIZES 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) AND THAT ALL TAX BENEFITS ARE LIKELY TO BE REALIZED UPON SETTLEMENT WITH TAXING AUTHORITIES. PART XI, LINE 4B - OTHER ADJUSTMENTS: NON-OPERATING EXPENSES RECLASSIFIED TO PART IX, LINE 24 978,021. PART XII, LINE 4B - OTHER ADJUSTMENTS: PATRONAGE CAPITAL ALLOCATED OR TO BE ALLOCATED 501,621. NON-OPERATING EXPENSES RECLASSIFIED TO PART IX, LINE 24 978,021. PART VIII: 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". 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. 1 SECONDARY EDUCATION SCHOLARSHIPS 7 10500 CASH RECEIVED 7 SCHOLARSHIPS AWARDED AT $1,500 EACH. PART I, LINE 2: SCHOLARSHIPS FOR SECONDARY EDUCATION ARE AWARDED ANNUALLY TO ASSIST QUALIFIED INDIVIDUALS IN FURTHERING THEIR EDUCATION. APPLICANT MUST ENROLL OR BE ENROLLED AT AN ACCREDITED EDUCATIONAL OR TRAINING INSTITUTION. SCHOLARSHIP MERIT IS BASED ON GPA, ACHIEVEMENTS, EXTRA-CURRICULAR ACTIVITIES, COMMUNITY, SCHOOL INVOLVEMENT, AND YOUR GOALS FOR THE FUTURE. ANYONE MAY APPLY, BUT PRIORITY WILL BE GIVEN TO THOSE IN THE LANE-SCOTT ELECTRIC COOPERATIVE, INC. SERVICES TERRITORY AND STUDENTS ENTERING INTO AN ELECTRICAL OR HVAC FIELD/TRADE. X 1 0 X 0 0 0 RICHARD MCLEON GENERAL MANAGER/CEO 239617 0 250 0 3432 0 81028 0 21508 0 345835 0 0 0 KASEY JENKINSON LINE SUPERINTENDENT 125935 0 250 0 765 0 60268 0 30571 0 217789 0 0 0 KATHERINE E LEWIS FINANCE MANAGER 126862 0 250 0 3711 0 49449 0 20913 0 201185 0 0 0 BENJAMIN MANN CREW FOREMAN 110557 0 250 0 840 0 47548 0 17799 0 176994 0 0 0 MYRON SEIB JOURNEYMAN LINEMAN 112748 0 250 0 759 0 39834 0 20760 0 174351 0 0 0 CHAD RUPP CREW FOREMAN 111636 0 250 0 1026 0 26671 0 29835 0 169418 0 0 0 CHRIS TERHUNE JOURNEYMAN LINEMAN 106136 0 1750 0 401 0 26085 0 30465 0 164837 0 0 0 PART I, LINE 1A TRAVEL FOR COMPANIONS - PURSUANT TO APPLICABLE TRAVEL POLICIES, THE COOPERATIVE WILL REIMBURSE TRUSTEES THE COST OF HIS/HER SPOUSE TO ACCOMPANY HIM/HER ON OFFICIAL BUSINESS OF THE COOPERATIVE. REIMBURSABLE COSTS INCLUDE TRAVEL AND MEAL ALLOWANCES. THE COOPERATIVE WILL ALSO REIMBURSE AN EMPLOYEE FOR TRANSPORTATION AND LODGING COSTS OF HIS/HER SPOUSE FOR APPROVED TRAVEL. DURING THE YEAR, TWO INDIVIDUALS REPORTED ON FORM 990, PART VII - HOSS AND RAMSEY - RECEIVED THIS BENEFIT. SINCE THE COOPERATIVE CONSIDERS THE REIMBURSEMENT TO BE CONSISTENT TO A BONA FIDE BUSINESS PURPOSE, SUCH REIMBURSEMENTS WERE TREATED AS EXPENSES EXCLUDED FROM THE REPORTABLE COMPENSATION OF EACH. 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 CONTRIBUTIONS TO THE PLAN IN LIEU OF THE ACTUARIAL INCREASE ARE EXPENSED IN THE FINANCIAL STATEMENTS. RICHARD MCLEON ACTUARIAL INCREASE IN DEFERRED BENEFIT PLAN $ 73,877 EMPLOYER CONTRIBUTION TO 401(K) 7,151 TOTAL REPORTED IN COLUMN C 81,028 LESS: ACTUARIAL INCREASE IN DBP (73,877) ADD: CASH CONTRIBUTION TO DBP 72,580 EXPENSE TO THE COOPERATIVE $ 79,731 KASEY JENKINSON ACTUARIAL INCREASE IN DEFERRED BENEFIT PLAN $ 54,769 EMPLOYER CONTRIBUTION TO 401(K) 5,499 TOTAL REPORTED IN COLUMN C 60,268 LESS: ACTUARIAL INCREASE IN DBP (54,769) ADD: CASH CONTRIBUTION TO DBP 31,251 EXPENSE TO THE COOPERATIVE $ 36,750 KATHERINE E. LEWIS ACTUARIAL INCREASE IN DEFERRED BENEFIT PLAN $ 42,967 EMPLOYER CONTRIBUTION TO 401(K) 6,482 TOTAL REPORTED IN COLUMN C 49,449 LESS: ACTUARIAL INCREASE IN DBP (42,967) ADD: CASH CONTRIBUTION TO DBP 39,885 EXPENSE TO THE COOPERATIVE $ 46,367 BENJAMIN MANN ACTUARIAL INCREASE IN DEFERRED BENEFIT PLAN $ 42,487 EMPLOYER CONTRIBUTION TO 401(K) 5,061 TOTAL REPORTED IN COLUMN C 47,548 LESS: ACTUARIAL INCREASE IN DBP (42,487) ADD: CASH CONTRIBUTION TO DBP 31,251 EXPENSE TO THE COOPERATIVE $ 36,312 MYRON SEIB ACTUARIAL INCREASE IN DEFERRED BENEFIT PLAN $ 35,022 EMPLOYER CONTRIBUTION TO 401(K) 4,812 TOTAL REPORTED IN COLUMN C 39,834 LESS: ACTUARIAL INCREASE IN DBP (35,022) ADD: CASH CONTRIBUTION TO DBP 30,054 EXPENSE TO THE COOPERATIVE $ 34,866 CHAD RUPP ACTUARIAL INCREASE IN DEFERRED BENEFIT PLAN $ 21,708 EMPLOYER CONTRIBUTION TO 401(K) 4,963 TOTAL REPORTED IN COLUMN C 26,671 LESS: ACTUARIAL INCREASE IN DBP (21,708) ADD: CASH CONTRIBUTION TO DBP 28,850 EXPENSE TO THE COOPERATIVE $ 33,813 CHRIS TERHUNE ACTUARIAL INCREASE IN DEFERRED BENEFIT PLAN $ 21,412 EMPLOYER CONTRIBUTION TO 401(K) 4,673 TOTAL REPORTED IN COLUMN C 26,085 LESS: ACTUARIAL INCREASE IN DBP (21,412) ADD: CASH CONTRIBUTION TO DBP 28,850 EXPENSE TO THE COOPERATIVE $ 33,523 GUI GRIFFITH FAMILY RELATIONSHIP - TRUSTEE (C. GRIFFITH) 1500 SCHOLARSHIP SECONDARY EDUCATION FORM 990, PART IV, LINE 27: LANE-SCOTT ELECTRIC COOPERATIVE BELIEVES IN EDUCATING THE LEADERS OF TOMORROW. FOR THIS REASON, SCHOLARSHIPS ARE AWARDED TO LEADERS OF THE COMMUNITY WHO WISH TO CONTINUE THEIR EDUCATION BEYOND HIGH SCHOOL. DURING THE YEAR, TRUSTEE CHAD GRIFFITH'S SON, GUI GRIFFITH, WENT THROUGH THE APPLICATION PROCESS AND WAS SELECTED. FORM 990, PART VI, SECTION A, LINE 2 RICHARD MCLEON (GM) AND RICHARD JENNISON (BOARD PRESIDENT) SERVED ON THE BOARD OF SUNFLOWER ELECTRIC POWER CORPORATION AT THE REQUEST OF AND FOR THE BENEFIT OF THE COOPERATIVE. KATHERINE LEWIS (FINANCE MANAGER) IS AN ALTERNATE ON THE BOARD. CRAIG RAMSEY (VP), AND HAROLD HOSS (BOARD SECRETARY) SERVED ON THE BOARD OF KANSAS ELECTRIC COOPERATIVES AT THE REQUEST OF AND FOR THE BENEFIT OF THE COOPERATIVE. RICHARD MCLEON (GM) IS AN ALTERNATE ON THE BOARD. 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 TRUSTEES. 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 5. AMENDMENT TO THE BYLAWS 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 TRUSTEES UTILIZE AN ANNUAL PERFORMANCE APPRAISAL WHEN DETERMINING THE COMPENSATION OF THE GENERAL MANAGER. THE BOARD AND THE GENERAL MANAGER UTILIZE 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 KANSAS 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. ADDITIONALLY, THE COOPERATIVE PROVIDES A SUMMARIZED COPY OF ITS BALANCE SHEET AND INCOME STATEMENT TO THE MEMBERS OF THE COOPERATIVE WITH THE ANNUAL REPORT. FINALLY, A CURRENT COPY OF THE BYLAWS CAN BE FOUND ON THE COOPERATIVE'S WEBSITE. FORM 990, PARTS VI & VII: THE COOPERATIVE ANNUALLY PROVIDES EACH TRUSTEE WHO SERVED ON THE BOARD DURING THE YEAR A QUESTIONNAIRE AND TIME LOG. THE COMPLETED QUESTIONNAIRES AND TIME LOGS ARE USED TO COMPLETE THE APPLICABLE QUESTIONS ON THE FORM 990 PERTAINING TO BUSINESS RELATIONSHIPS AMONG DIRECTORS, OFFICERS, AND KEY EMPLOYEES, AS WELL AS TO DETERMINE IF THERE ARE ANY TRANSACTIONS WHICH MUST BE REPORTED IN DETAIL ON SCHEDULE L - "TRANSACTIONS WITH INTERESTED PERSONS". IF THE COOPERATIVE WAS UNABLE TO OBTAIN A COMPLETED QUESTIONNAIRE AND/OR TIME LOG, THE COOPERATIVE RELIED UPON THE COMPLETED INFORMATION FOR THE PRIOR YEAR. THE COOPERATIVE DID NOT RECEIVE A QUESTIONNAIRE FROM TRUSTEE PAUL SEIB; THEREFORE, THE PRIOR YEAR QUESTIONNAIRE HAS BEEN RELIED UPON WHILE PREPARING THE RETURN. THERE WERE NO KNOWN CHANGES FROM 2022 TO 2023. 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 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 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: THE ACCOUNTING RECORDS OF THE COOPERATIVE ARE MAINTAINED IN ACCORDANCE WITH THE RURAL UTILITIES SERVICE (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 $ 1,759,854 LESS: DIRECTORS FEES REPORTED ON FORM 1099-NEC (56,800) LESS: EMPLOYEE OFFICER BENEFITS INCLUDED IN LINE 5 (172,898) PLUS: SALARIES AND WAGES ALLOCATED TO NONOPERATING MARGINS 203,904 PLUS: SALARIES AND WAGES CAPITALIZED DIRECTLY TO PLANT 427,274 PLUS: SALARIES AND WAGES CAPITALIZED/EXPENSED INDIRECTLY THROUGH CLEARING AND OTHER ACCOUNTS 102,932 TOTAL WAGES ACCRUED AND/OR PAID $ 2,264,266 FORM 990. PART IX, LINE 24: ADMINISTRATIVE & GENERAL EXPENSE IS COMPRISED OF THE FOLLOWING: ADMINISTRATIVE & GENERAL SALARIES, BENEFITS, & OTHER $ 672,586 OFFICE SUPPLIES 150,643 OUTSIDE SERVICES 85,220 EMPLOYEE EDUCATION AND TRAINING 425,568 DIRECTORS 72,060 ANNUAL MEETING 196,012 CAPITAL CREDITS 15,492 DUES TO ASSOCIATED ORGANIZATIONS 92,902 MISCELLANEOUS GENERAL 42,463 REGULATORY COMMISSION 1,956 MAINTENANCE OF GENERAL PLANT 197,711 TOTAL ADMIN & GENERAL EXP PER FINANCIAL STATEMENTS $ 1,952,613 LESS: RECLASS OF SCHOLARSHIPS TO PART IX, LINE 2 (10,500) LESS: RECLASS OF DIRECTOR FEES TO PART IX, LINE 5 (56,800) LESS: RECLASS OF LABOR TO PART IX, LINES 5 & 7 (679,690) LESS: RECLASS OF BENEFITS TO PART IX, LINES 8-10 (367,683) TOTAL ADMIN & GENERAL EXPENSE PER FORM 990, PART IX $ 837,940 FORM 990, PART IX, LINE 24E: OTHER EXPENSES IS COMPRISED OF THE FOLLOWING: OTHER DEDUCTIONS $ 722 SALES 36,792 CONSUMER ACCOUNTS 140,308 CUSTOMER SERVICE AND INFORMATION 35,164 TOTAL OTHER EXPENSES PER FORM 990, PART IX $ 212,986 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 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 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, 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 XI, LINE 9: PATRONAGE CAPITAL ALLOCATED OR TO BE ALLOCATED 501,621. PATRONAGE CAPITAL RETIRED - TOTAL -577,316. PATRONAGE CAPITAL RETIRED - DISCOUNT 56,070. DONATED CAPITAL -515. 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.