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TIN:
SCHEDULE O
(Form 990 or 990-EZ)
Department of the Treasury
Internal Revenue Service
(Form 990 or 990-EZ)
Department of the Treasury
Internal Revenue Service
Supplemental Information to Form 990 or 990-EZ
Complete to provide information for responses to specific questions on
Form 990 or 990-EZ or to provide any additional information.
Attach to Form 990 or 990-EZ.
Information about Schedule O (Form 990 or 990-EZ) and its instructions is atwww.irs.gov/form990.
OMB No. 1545-0047
2014
Open to Public
Inspection
Inspection
Name of the organization
KAY ELECTRIC COOPERATIVE INC
Employer identification number
73-0308955
73-0308955
| Return Reference | Explanation |
|---|---|
| FORM 990, PART, LINE 14 | THE COOPERATIVE BEGAN REPORTING THE AMOUNT OF PATRONAGE CAPITAL ASSIGNABLE TO THE PATRONS FOR THE 2014 CALENDAR YEAR AS BENEFITS PAID TO MEMBERS. TO INCREASE CONSISTENCY, PATRONAGE CAPITAL ASSIGNABLE TO THE PATRONS FOR THE 2013 CALENDAR YEAR IN THE AMOUNT OF $3,942,817 WAS RECLASSIFIED FROM LINE 19 "REVENUE LESS EXPENSES" TO LINE 4. |
| FORM 990, PART I, LINE 15 | THE COOPERATIVE PREVIOUSLY INCLUDED ALL LABOR COSTS AS COMPONENTS OF OTHER FUNCTIONAL EXPENSES USED FOR NORMAL FINANCIAL REPORTING. ACCORDINLY, ONLY COMPENSATION FROM PART VII IN THE AMOUNT OF $675,641 WAS REPORTED ON LINE 15 FOR THE 2013 CALENDAR YEAR. HOWEVER, FOR THE 2014 CALENDAR YEAR, THE COOPERATIVE BEGAN SEPARATELY STATING THE TOTAL OF ALL LABOR COST EXPENSED TO THE INCOME STATEMENT FOR FORM 990 REPORTING PURPOSES. TO INCREASE CONSISTENCY, LABOR COSTS OF $2,433,689 WERE FROM LINE 17 "OTHER EXPENSES" RESULTING IN A COMPARATIVE LINE 15 TOTAL OF $3,127,989. |
| 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 COOPERATIVE IS GOVERNED BY A 9 MEMBER BOARD OF TRUSTEES, EACH REPRESENTING A SEPARATE DISTRICT AND THE MEMBERS LOCATED THEREIN. THREE DISTRICT MEETINGS ARE HELD ANNUALLY WHEREBY THE MEMBERS NONMINATE TWO CANDIDATES TO BE VOTED ON AT THE ANNUAL MEETING FOR A THREE YEAR TERM. ALL ELECTIONS ARE CONDUCTED PURSUANT TO GUIDELINES ESTABLISHED IN THE BYLAWS AND ARE ON A ONE MEMBER ONE VOTE BASIS. |
| Form 990, Part VI, Section A, line 7b | THE DULY ELECTED BOARD OF TRUSTEES IS THE MEMBER'S VOICE FOR NORMAL BUSINESS ACTIVITY. AN ANNUAL MEETING IS HELD EACH YEAR TO ENABLE THE MEMBERSHP TO PARTICIPATE IN TRUSTEE ELECTIONS, VOTE ON ACCEPTING FINANCIAL REPORTS FROM THE SECRETARY/TREASURER, APPROVE MINUTES FROM THE PRIOR ANNUAL MEETING AND OTHERWISE BE INFORMED REGARDING THE ONGOING OPERATIONS OF THE COOPERATIVE. OUTSIDE OF THESE ACTIVITIES, THE FOLLOWING ACTS REQUIRE APPROVAL OF THE MEMBERS: 1. DISPOSAL OF A SUBSTANTIAL PORTION OF THE COOPERATIVE'S ASSETS; 2. DISSOLUTION/LIQUIDATION OF THE COOPERATIVE; 3. MERGER OR CONSOLIDATION OF THE COOPERATIVE WITH ANOTHER ORGANIZATION; 4. AMENDMENTS TO ARTICLES OF INCORPORATION; AND 5. AMENDMENTS TO THE BYLAWS. |
| Form 990, Part VI, Section B, line 11 | MANAGEMENT PRESENTED A COPY OF THE FORM 990 TO THE BOARD FOR DISCUSSION, REVIEW AND APPROVAL PRIOR TO FILING. THE DISCUSSION AND REVIEW WAS PERFORMED AT THE BOARD MEETING IMMEDIATELY BEFORE FILING THE FORM 990. |
| Form 990, Part VI, Section B, line 12c | ALL EMPLOYEES OF THE COOPERATIVE ARE BOUND BY AN EMPLOYEE CONDUCT POLICY THAT DEFINES SITUATIONS RESULTING IN CONFLICTS OF INTEREST AND PROVIDES PROCEDURES FOR HOW SUCH CONFLICTS OF INTEREST SHALL BE REPORTED. ANY EMPLOYEE NOT TIMELY NOTIFYING THE COOPERATIVE OF A CONFLICT OF INTEREST IS SUBJECT TO DISCIPLINARY ACTION. A SEPARATE WRITTEN CONFLICT OF INTEREST POLICY DOES NOT EXIST FOR THE BOARD OF TRUSTEES. HOWEVER, ARTICLE IV, SECTION 4.02 OF THE COOPERATIVE'S BYLAWS PROHIBIT A TRUSTEE FROM BEING A CLOSE RELATIVE TO ANOTHER TRUSTEE, NON-TRUSTEE COOPERATIVE OFFICER OR EMPLOYEE. A TRUSTEE IS ALSO PROHIBITED FROM HAVING A FINANCIAL INTEREST IN A COMPETING ENTERPRISE. A VIOLATION OF THESE PROHIBITIONS DISQUALIFIES A PERSON FROM SERVING AS A TRUSTEE AND SHALL RESULT IN SUCH PERSON BEING REMOVED FROM THE BOARD. TO ASSIST WITH ENFORCING BOTH THE EMPLOYEE CONDUCT POLICY AND QUALIFICATIONS FOR SERVING ON THE BOARD, ALL TRUSTEES, EMPLOYEE OFFICERS AND HIGHLY COMPENSATED EMPLOYEES ARE REQUIRED TO ANNUALLY COMPLETE A QUESTIONNAIRE. THE PURPOSE OF THE QUESTIONNAIRE IS TO IDENTIFY BUSINESS AND FAMILY RELATIONSHIPS THAT MAY RESULT IN A CONFLICT OF INTEREST. |
| Form 990, Part VI, Section B, line 15 | THE BOARD OF TRUSTEES ANNUALLY USES A COMPENSATION SURVEY WHEN DETERMINING THE COMPENSATION OF THE CEO. THE SURVEY PROVIDES RELEVANT INFORMATION REGARDING SALARIES FOR CEOS FROM ELECTRIC COOPERATIVES OF SIMILAR SIZE, OPERATIONS AND LOCATION. PERFORMANCE RELATED FACTORS MAY ALSO BE CONSIDERED. COMPENSATION FOR OTHER OFFICERS AND HIGHLY COMPENSATED EMPLOYEES ARE ALSO BASED ON A SIMILAR COMPENSATION SURVEY AND INQUIRIES MADE WITH LIKE SIZE COOPERATIVES WITHIN THE REGION AND STATE OF OKLAHOMA. |
| Form 990, Part VI, Section C, line 19 | ALL NEW MEMBERS ARE PROVIDED A COPY OF THE COOPERATIVE'S BY-LAWS. THE COOPERATIVE ALSO PROVIDES FINANCIAL STATEMENTS AND RELATED INFORMATION TO THE MEMBERS IN ITS ANNUAL MEETING REPORT. ANY MEMBER MAY REQUEST ADDITIONAL INFORMATION DURING THE COOPERATIVE'S NORMAL BUSINESS HOURS AND OFFICE BUILDING BY SUBMITTING SUCH REQUEST TO THE CEO. |
| 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. THE COOPERATIVE CONTRIBUTES BASED ON A PERCENTAGE OF THE PARTICIPATING EMPLOYEE'S SALARY AS DETERMINED UNDER 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 ELIGIGLE EMPLOYEES THROUGH A QUALIFIED PLAN. THE AMOUNTS REPORTED ON PART VII, COLUMN (F) FOR OFFICERS AND HIGHLY COMPENSATED EMPLOYEES ARE COMPRISED OF THE ACTUARIAL INCREASE IN THE DEFINED BENEFIT PLAN FOR THE OFFICER, TOTAL CONTRIBUTIONS TO THE 401(K) PENSION PLAN AND THE INSURANCE PREMIUMS PAID 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 2B | 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 PATRONS. |
| FORM 990, PART IX | ALTHOUGH THE COOPERATIVE IS NO LONGER A BORROWER OF THE RURAL UTILITIES SERVICE (RUS),THE ACCOUNTING RECORDS ARE MAINTAINED IN ACCORDANCE WITH THE RUS UNIFORM SYSTEM OF ACCOUNTS (USOA) AS PRESCRIBED FOR ELECTRIC BORROWERS OF THE RUS. 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. |
| 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 THE TOTAL WAGES ACCRUED AND/OR PAID: TOTAL PER LINES 5-7 $2,339,170 LESS DIRECTORS FEES REPORTED ON 1099-MISC (288,412) LESS EMPLOYEE OFFICER BENEFITS REPORTED ON LINE 5 (281,190) PLUS SALARIES AND WAGES ALLOCATED TO NONOPERATING MARGINS 33,674 PLUS SALARIES AND WAGES CAPITALIZED DIRECTLY TO PLANT 934,013 PLUS SALARIES AND WAGES CAPITALIZED/EXPENSED INDIRECTLY THROUGH CLEARING AND OTHER ACCOUNTS 614,659 TOTAL WAGES ACCRUED AND/OR PAID $3,351,914 |
| FORM 990, PART IX, LINE 24 | ADMINISTRATIVE AND GENERAL EXPENSE IS COMPRISED OF THE FOLLOWING: OFFICE SUPPLIES AND EXPENSES $279,694 OUSIDE SERVICES EMPLOYED 171,607 INSURANCE 279,326 DIRECTORS FEES AND EXPENSES 75,167 GENERAL MANAGER EXPENSES 47,368 ADVERTISING 53,337 EDUCATIONAL EXPENSES 310,099 MISCELLANEOUS GENERAL EXPENSES 129,256 TOTAL ADMINISTRATIVE AND GENERAL EXPENSE PER 990 $1,345,854 |
| FORM 990, PART IX, LINE 4 | THE FORM 990 INSTRUCTIONS SPECIFICALLY STATE THAT 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 AND IS SUMMARIZED AS FOLLOWS: (A) IN ORDER TO INDUCE PATRONAGE AND TO ASSURE THAT THE COOPERATIVE WILL OPERATE ON A NONPROFIT BASIS, THE COOPERATIVE IS OBLIGATED TO ACCOUNT ON A PATRONAGE BASIS TO ALL ITS PATRONS FOR ALL AMOUNTS RECEIVED AND RECEIVABLE FROM THE FURNISHING OF ELECTRIC POWER AND ENERGY IN EXCESS OF OPERATING COSTS AND EXPENSES PROPERLY CHARGEABLE AGAINST SUCH SERVICES (I.E. MARGINS FROM THE PROVISION OF ELECTRIC POWER AND ENERGY). (B) THE MARGINS FROM THE PROVISION OF ELECTRIC POWER AND ENERGY ARE RECEIVED WITH THE UNDERSTANDING THAT THEY ARE FURNISHED BY THE PATRONS AS CAPITAL. (C) THE COOPERATIVE IS OBLIGATED TO PAY BY CREDITS TO A CAPITAL ACCOUNT FOR EACH PATRON FOR ALL SUCH MARGINS. AND (D) ALL SUCH AMOUNTS CREDITED TO THE CAPITAL ACCOUNT OF ANY PATRONS SHALL HAVE THE SAME STATUS AS THOUGH THEY HAD BEEN PAID TO THE PATRON IN CASH IN PURSUANCE OF A LEGAL OBLIGATION TO DO SO AND THE PATRON HAD THEN FURNISHED TO THE COOPERATIVE CORRESPONDING AMOUNTS OF CAPITAL. 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 2014 CALENDAR YEAR. AS NOTED ABOVE, SUCH AMOUNTS ARE ALLOCATED SUBSEQUENT TO YEAR-END IN A FAIR AND EQUITABLE MANNER ON THE BASIS OF PATRONAGE (I.E. PURCHASES). THE AMOUNTS ALLOCATED ARE REPRESENTATIVE OF THE MARGINS FROM THE PROVISION OF ELECTRIC POWER AND ENERGY TO THE PATRONS AND ARE DONE PURSUANT TO THE OBLIGATION THAT EXISTED IN THE BYLAWS PRIOR TO THE COOPERATIVE PROVIDING ELECTRICITY TO ITS PATRONS. THEREFORE, THESE AMOUNTS MEET THE DEFINITION OF THE TERM "PATRONAGE DIVIDENDS PAID". PLEASE NOTE, HOWEVER, THAT BECAUSE PATRONAGE DIVIDENDS IS 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 THE AMOUNT OF ITS 2014 MARGIN THAT HAS BEEN OR IS TO BE ALLOCATED TO THE PATRONS SUBSEQUENT TO YEAR-END. SUCH AMOUNTS ARE AN EXPENSE FOR FORM 990 REPORTING AND IS NOT AN EXPENSE FOR FINANCIAL STATEMENTS PREPARED IN ACCORDANCE WITH GENERALLY ACCEPTED ACCOUNTING PRINCIPLES. AS A RESULT, THE DIFFERENCE BETWEEN THE COOPERATIVE'S GAAP BASIS FINANCIAL STATEMENTS AND THE REVENUE LESS EXPENSES REPORTED ON PART I, LINE 19 IS THE AMOUNT OF PATRONAGE DIVIDENDS REPORTED AS BENEFITS PAID TO MEMBERS. |
| FORM 990, PART IX, LINE 24(E) | ALL OTHER EXPENSES ARE COMPRISED OF THE FOLLOWING: CONSUMER ACCOUNTS EXPENSE $ 173,026 CUSTOMER SERVICES AND INFORMATION EXPENSE 118,549 ADMINISTRATIVE & MANAGEMENT SERVICE COSTS 119,006 ELECTRICIAN SERVICE COSTS 38,865 OTHER 9,800 TOTAL ALL OTHER EXPENSE PER FORM 990 $ 459,246 |
| Form 990, Part XI, line 9: | EQUITY METHOD INCOME FROM SUBSIDIARY 27,614. NET CHANGE IN MEMBERSHIP 4,080. OCI - UNREALIZED HOLDING GAIN ON SECURITIES 312. OCI - POSTRETIREMENT BENEFIT ADJUSTMENT 633,399. UNCLAIMED PATRONAGE CAPITAL RETAINED 148,444. PATRONAGE CAPITAL ASSIGNABLE 6,774,250. PATRONAGE CAPITAL RETIRED -627,330. |
| FORM 990, PART XII LINE 2C | THE BOARD OF DIRECTORS HAVE ASSIGNED MEMBERS 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. |
For Paperwork Reduction Act Notice, see the Instructions for Form 990 or 990-EZ.
Cat. No. 51056K
Schedule O (Form 990 or 990-EZ) 2014
Additional Data
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