Mid-West Electric Consumers Association Board of Directors Meeting

September 20-21, 2018

DoubleTree Denver Stapleton-North

Denver, Colorado

Preliminary Agenda Thursday, September 20, 2018 Convene @ 1:00 p.m. 1. Administrative Report a. Determination of Quorum b. Approval of Agenda c. Approval of June Board Minutes d. 2018 Quarterly Budget Report e. Selection of Mid-West Auditor for 2018 financial review 2. U.S. Army Corps of Engineers:

Gary Hinkle, Chief, Maintenance, Engineering and Management Support Branch, Operations Division, Omaha District

Andrew Wright, Hydropower Program Manager, Omaha District

3. U.S. Bureau of Reclamation Mike Maroncelli, Power, Operating and Maintenance Administrator, Great Plains

4. Western Area Power Administration Mark Gabriel, Administrator Dennis Sullivan, Chief Financial Officer

5. Pick – Sloan Update

Jody Sundsted, Manager, Upper Great Plains Region Mike McElhany, Manager, Rocky Mountain Region

a. Purchase Power & Wheeling Unobligated Balances b. Contract renewal update c. Mountain West Transmission Group update d. Rates Update 6. Resolutions Committee Report

Duane Feekes, Chairman, Resolutions Committee 7. Western States Power Corporation

Dan Payton, General Manager, Western States Power Corporation

2

8. Federal Power Issues a. FY2019 Energy & Water Development Appropriations b. WRDA FY2019

c. Grand Lake Clarity d. MRRIC Update 9. Manager’s Report 5:30 PM Reception DoubleTree Denver Stapleton - North Friday, September 21 7:30 AM Continental Breakfast 8:00 AM Reconvene 10. Mid-West 2019 Budget Proposal (Executive Session) a. Review of the last 12 months b. Manager Review c. 2019 Budget 11. Review and Discussion of Federal Power Issues (continued) 12. Other Business

1

Mid-West Electric Consumers Association

Board of Directors Meeting

June 12-13, 2018

Stanley Hotel

Estes Park, Colorado

Tuesday, June 12, 2018

President Doug Hardy convened the Mid-West Electric Consumers Association (Mid-West) Board of Directors (Board) at 9:00 a.m. Mr. Hardy determined that a quorum was present. The following Directors and guests were present:

Name System State Don Franklund Mor-Gran-Sou North Dakota Dale Berndt Panhandle REMA Nebraska Glen Pfeifer Cornhusker Nebraska Bruce Pontow Nebraska Electric G&T Nebraska Tom Boyko East River South Dakota Mark Joffer Heartland CPD South Dakota Claire Vigesaa Upper Missouri Montana Patti Murphy Upper Missouri Montana Ray Tescher McKenzie Electric North Dakota Ron Greenhalgh Mid-West Virginia Jim Lueck Highline Electric Assoc. Colorado Paul Neil Dawson PPD Nebraska Tim Peggram MCREA Colorado Tom Meland Central Power Electric Coop. North Dakota Michael D. McElhany WAPA-RMR Colorado Bill Schwandt Morehead Public Service Minnesota David Keener Niobrara Electric Association Wyoming Mark Sandberg South Central Electric Assoc. Minnesota Gary Hinkle USACE-Omaha Nebraska Lori Frisk-Thompson WAPA South Dakota Chris Studer East River South Dakota Chris VandeVenter Basin Electric North Dakota Dan Payton WSPC Colorado Mike Black Reclamation Montana Chris Beardsley Reclamation Montana Mike Ferguson WSPC Montana Jody S. Sundsted WAPA Montana

2

Michael Maroncelli Reclamation Montana Monica Griffitt Reclamation Colorado Mark Gabriel WAPA Colorado Signe Snortland Reclamation Colorado Karl Thiel Reclamation Colorado Keith Fink USACE-Omaha Nebraska Kayla Eckert-Uptmor USACE-Omaha Nebraska Col. John Hudson USACE-Omaha Nebraska Kurt Breigenzer Central Montana Montana Bill Drummond Mid-West Electric Colorado Doug Hardy CMEPC Montana Jeff Peters MRES South Dakota Steve Lehner Watertown Municipal Utilities South Dakota Vernell Roberts Detroit Lakes Public Utilities Minnesota Vic Simmons Rushmore South Dakota Matt Washburn Northwest Iowa Power Coop Iowa Ken Kuyper Corn Belt Power Cooperative Iowa Joel Bladow Tri-State G&T Colorado Gary L. Smith High West Energy Wyoming Duane Feekes Orange City Municipal Iowa Luther Meberg Nodak Electric North Dakota Jack R. Preston Wyrulec Wyoming Elizabeth Drummond Mid-West Electric Colorado

Administrative Report: A motion was made to approve the June 2018 Board meeting agenda. The motion was seconded and passed.

Mr. Hardy turned the Board’s attention to the March 2018 Board meeting minutes. A motion was made to approve the March 2018 Board meeting minutes. The motion was seconded and passed.

Mr. Drummond, Executive Director of Mid-West, then briefed members on Mid-West’s financial and budget report through April 2018. He noted that revenues are on track for the year, helped by an increase in the ‘Interest and Misc.’ line item from his service on the Board of the Northwest Power Pool. Mid-West’s costs are slightly higher than anticipated due to larger contracting costs from the purchase power & wheeling (PP&W) issue and the cost of hiring Elizabeth Drummond to fill in while Rosalie Hathaway is on maternity leave. Regarding Mid-West’s reserves (under cash balances), Mr. Drummond indicated that Mid-West’s policies require $350,000 in reserve funds; $200,000 for operating reserves and $150,000 for special projects. The current total of reserve funds is $412,000, although he stated that will decline this year as Mid-West budgeted a net loss for the year.

3

Mr. Drummond then discussed the process for developing Mid-West’s 2019 budget. He indicated that he will prepare a draft budget for consideration by the Organization Committee. Following a conference call with Mid-West’s Organization Committee, the draft budget will be presented to the Board at the September Board meeting. Mr. Drummond stated he did not currently see significant changes from the 2018 budget, but asked the Board for direction on two issues. First, he asked whether the Board wanted to have an audit or a financial review performed on the FY2018 financial records. Noting that a financial review is less expensive, Mr. Drummond indicated that an audit was performed on the 2017 financial results. The Board consensus was to have a financial review performed on 2018 financial results, and then have an audit performed on 2019 financial results.

Mr. Drummond then sought direction on new alternatives offered by the National Rural Electric Cooperative Association (NRECA) regarding its defined benefit retirement program. NRECA is offering members participating in its defined benefit program the options of eliminating the quasi-retirement benefit and the lump-sum distribution option at retirement. The latter comes with up to a five-percent discount in the cost to employers of participating in the defined benefit program. The Board consensus was not to participate in either of the new options from NRECA.

Mr. Drummond then asked the Board if they were comfortable with the executive director review process that would normally commence in July. The process historically has been that counsel to Mid-West Jeff Genzer sends out questions to the Board, then collects and collates the results. Those results are shared with the Board prior to the September Board meeting where the 2019 budget will be discussed. There was Board consensus to use the same approach as in past years.

Turning to the 2018 Mid-West Annual Meeting, Mr. Drummond solicited Board input on the agenda and any suggested speakers. Mr. Drummond asked Board members to contact him with ideas on both topics. He also indicated that it is time to start consideration of nominees for the Simonton/Graves’ award and asked Board members to recommend worthy individuals. He noted that the final decision rests with Mid-West’s Executive Committee.

Mr. Drummond began his manager’s report with a discussion of the Missouri River Recovery Implementation Committee (MRRIC). He first thanked Doug Hardy, Chris VandeVenter, and Chris Studer for serving as the other Hydropower member and alternates on MRRIC. He noted that MRRIC is transitioning from working on the environmental impact statement (EIS) and biological opinion (Bi-Op) to implementation and adaptive management. Showing the current timeline for MRRIC, he indicated that the Final EIS is due in August and the record of decision with a recommended alternative is due in October.

Turning to the proposed Ft. Peck operations, Mr. Drummond stated that because the Bypass facility around Intake Dam on the Yellowstone River has not been completed due to litigation, the U.S. Fish and Wildlife Service (USF&WS) has recommended experimenting with flows out

4

of Ft. Peck dam to test two hypotheses regarding the pallid sturgeon. The first hypothesis is that higher Ft. Peck flows will attract sturgeon up the Missouri River rather than having them turn up the Yellowstone River. Attracting sturgeon to the Missouri is believed to be more beneficial for these fish than the Yellowstone due to its longer drift distance before the anoxic waters of Lake Sakakawea. The second hypothesis is that releasing water over Ft. Peck’s spillway will raise temperatures downstream and encourage spawning. Of course, Mr. Drummond noted, both hypotheses would result in lower-valued or foregone power generation. The first year these hypotheses could be tested is 2022 due to required National Environmental Policy Act studies.

After the prior day’s tour of the Colorado – Big Thompson project, Mr. Drummond indicated he did not have much to add regarding the status of the Grand Lake clarity issue. He stated that the Bureau of Reclamation (Reclamation) is performing engineering-scale analyses on several alternatives to improve clarity, including a bypass pipeline. He noted that the economic model that will estimate power impacts still has not been released for review.

Western Area Power Administration (WAPA): Administrator Mark Gabriel began his presentation with a discussion of the recent political attacks on WAPA, noting that Representative Gosar’s (R-AZ) proposed amendment to the House Energy and Water Appropriations bill to reduce Mr. Gabriel’s salary to $1 was not an isolated incident. Although over the last five years WAPA has returned $1.8 billion to the U.S. Treasury, WAPA’s rates have been flat or fallen for 80 percent of the WAPA customers, and WAPA has reduced costs or saved some $55 million, the agency continues to be attacked in Congress on various fronts. Mr. Gabriel expressed concern for the impact on WAPA employees and thanked Mid-West for its support.

Turning to his slide presentation, Mr. Gabriel discussed the cultural changes at WAPA to focus on what can be done to reduce costs. He described the reliability centered maintenance and asset management programs, which have now been completed for line segments, transformers and breakers, with another 6-7 categories left. He indicated WAPA is still evaluating the alternatives for its transformer reserve program. While WAPA has completed the initial round of physical security assessments of its 319 substations and will complete secondary assessments on 75 substations in FY2018, he noted there were two break-ins at WAPA substations last week.

Mr. Gabriel stated that WAPA has posted 10-years of financial data on its website The Source and that the new power repayment study (PRS) model went live in late April. The new PRS model calculates rates for WAPA’s 15 power systems and it is secure. He also described WAPA’s newly-developed core values and the agency’s efforts at developing its workforce.

Jody Sundsted, WAPA’s SVP and Upper Great Plains (UGP) Regional Manager, began by introducing Lori Frisk-Thompson, the newly-named UGP Power Manager. He then described the resource pool application process that periodically solicits new preference customers to purchase UGP power. While he indicated that a Federal Register notice was just issued initiating

5

a 60-day application period, he stated is not aware of any new potential applicants. Mr. Sundsted indicated that the June 1 hydrology forecast estimates runoff at 34.6 MAF, which is 136 percent of normal. Annual generation is projected to be 12.7 GWH versus a normal output of 9.3 GWH. He also noted that through May FY2018, WAPA had sold $5 million more than it had purchased. Through May FY2017, WAPA had purchased $20 million more power than it had sold.

Mr. Sundsted also noted that the drought debt was paid off in FY2017 and that the next pinch point is 2020 when $45 million in aid to irrigation will come due. He stated that the current rate of $24.29/MWh might not need to change depending upon future water conditions. In response to a question regarding how much UGP power could be made available for new preference customers, Mr. Sundsted said that each resource pool is comprised of up to 1 percent of UGP power or approximately 20 megawatts.

Mr. Mike McElhany, SVP and WAPA’s Rocky Mountain Regional (RMR) Manager, explained that in FY2017 $1.5 million in transmission line work was expensed, which is too high. He indicated that the RMR goals are better transmission service at a lower cost. He also indicated that due to this year’s excellent water conditions, RMR has offered an additional 19,000 MWh of generation. He stated that with the exit of Xcel from the Southwest Power Pool (SPP) discussions, WAPA is reevaluating the benefits and costs of RMR joining SPP. WAPA has decided to take reliability coordinator services from SPP and has given notice to Peak RC that it will be leaving on January 1, 2019.

U.S. Army Corps of Engineers: Colonel John Hudson, Commander of the Omaha District, offered a short review of his history noting that he previously ran the Nashville District, which had hydroelectric assets. He thanked the Mid-West Board and Western States Power Corporation (Western States) members for providing an average of $50 million/year in advance customer funding and noted that it will be funding the rehabilitation of Fort Randall, scheduled to begin in 2020 with a total cost of $20 million.

Kayla Eckert-Uptmor, Chief of the Civil Works Branch at the Omaha District, introduced the other members of the Corps’ Omaha District staff present including Ted Streckfuss, Deputy District Engineer, Keith Fink, Chief of the Operations Division, and Gary Hinkle, Chief of the Maintenance, Engineering, and Support Branch. Noting that the Corps operates 25 percent of the nation’s hydroelectric capacity, Ms. Eckert-Uptmor stated that the Corps had executed $24.6 million in FY2017 customer-funded rehabilitation, with almost 75 percent of the FY2017-18 customer funding going to the Ft. Randall rehabilitation. In response to a question, Ms. Eckert-Uptmor stated that safety is the Corps’ number one objective in project rehabilitations.

Gary Hinkle then described some of the specific activities that the Corps has undertaken during these rehabilitations, including the medium voltage station service equipment, modernization of digital governance equipment and replacement of excitation equipment. The governance equipment is all original except at Garrison and the excitation equipment has all been replaced

6

except at Oahe and Gavins Point. Mr. Hinkle indicated that the rehabilitation of Unit 2 at Ft. Peck is substantially complete. When the project is finished, the operating range of the unit will be greatly expanded, thus allowing more control to either the Eastern or Western Interconnection. He also updated the Board on the oil filled cable replacement at Ft. Randall.

Turning to invasive species, Mr. Hinkle reported that the zebra mussel infestation at Gavins Point is getting worse. The cooling water intake filters that were cleaned last winter are now clogged with the mussels. A $3.5 million ultra-violet light system in the cooling water intake equipment will be installed at Gavins Point to kill the larvae of the zebra mussel, an approach that has proven successful at the Parker-Davis project in Arizona. Mr. Hinkle indicated that the zebra mussel will be a bigger problem when it reaches Ft. Randall because that project has 12 intakes for cooling water.

Focusing on the rehabilitation of Ft. Randall, Mr. Hinkle stated that the Corps has decided to retain the existing shafts, but that upgrades of the turbines and other equipment will result in an additional 53 MW of energy. Approximately $92.6 million of the required $240 million has been collected from Western States to fund the Ft. Randall rehabilitation. He also noted that virtually all of the cranes in the Corps’ Pick-Sloan projects are being replaced, largely because the original cranes were undersized for the necessary lifts. Additionally, many gates across the Pick-Sloan projects have failing or bad welds. An estimated 180 gates are used for power and over 200 gates are for flood control. Summarizing the Corps’ rehabilitation strategy for its Pick-Sloan projects, Mr. Hinkle stated that the plan will reduce the risk of plant failure by over 86 percent during the next 20 years.

Mr. Hinkle then reviewed the current hydrologic conditions, noting that Ft. Peck snowpack peaked at 141 percent of normal and the Ft. Peck to Garrison reach peaked at 137 percent of normal. The 2018 annual runoff above Sioux City is estimated to be 34.6 MAF, just above the upper decile.

Bureau of Reclamation: Mike Black, the new Great Plains Regional Director, introduced himself to the Board noting that he has now been on the job for five months. He started with Reclamation in October 2017 after 31 years with the Bureau of Indian Affairs, the last six and one-half years as Commissioner. Commenting that Reclamation Commissioner Brenda Berman wants Reclamation to be “can do,” he stated that the regional and area offices reporting has been realigned. Interior Secretary Zinke is trying to reduce silos at the Department of Interior and has recommended reorganizing Interior into 13 regions, with boundaries along state lines. Under the proposal, Wyoming, Colorado, Utah and New Mexico would all be in Region 8. A pilot is planned to determine how the reorganization would work.

Mike Maroncelli, Acting Great Plains Power Manager, began by stating that Reclamation is investigating the impacts of the Mountain West Transmission Group joining the Southwest Power Pool. Reclamation is particularly interested in any changes in metering that would be

7

necessary. Noting that retaining engineers is a problem, Mr. Maroncelli indicated that the recently-approved special salaries for engineers should be a helpful tool.

Turning to rehabilitation and extraordinary projects (RAX), Mr. Maroncelli reported that with the decrease in scope, the costs of the Mt. Elbert rehabilitation have fallen from $68 million to $19.2 million. The Yellowtail rehabilitation continues, with Unit 3 now completed and in service. The rewind of Unit 1 is finished, but a balancing issue has pushed the completion to next month. In August, Unit 4 rehabilitation will commence. The Canyon Ferry Unit 1 winding failure has been repaired and the unit de-rated. An assessment report on the unit will be completed in September at which time a decision will be made on how to move forward. The original decision to move the Canyon Ferry switchyard is now being reconsidered based on a proposal from Northwestern Energy to build a new substation nearby. In total, 49 power RAX projects are underway during FY2018 with 18 anticipated to be completed during this fiscal year.

Mr. Maroncelli then thanked the members of Western States for their customer advance funding for Reclamation RAX projects. Turning to Pick-Sloan project use pumping power, Mr. Maroncelli stated that 25 contracts are up for renewal in 2020. The new contracts will raise the project use pumping rate, which is paid by the irrigation users to pump water at Reclamation projects, from $2.50/MWh to the then-current rate. The project use rate is now $13.7/MWh.

Western States Power Corporation: Dan Payton, CEO of Western States, reported that by the end of this month, the members of Western States will have provided over $800 million in advance customer funding since its inception in 1997. By the end of FY2019, Western States will have provided Reclamation with $236 million, the Corps $266 million and WAPA with $317 million. During FY2019, Western States expects to provide the Corps with $60 million (of which $42 million will be for the rehabilitation of Ft. Randall), Reclamation with $13 million and WAPA with $13 million. WAPA will actually have $80-85 million in customer funding available due to reprogramming of funds from prior years. Mr. Payton recited a list of projects that Western States will be funding, including several substations, the Gavins Point cavitation rehabilitation, and the replacement of the Big Bend and Oahe cranes.

Mr. Payton reported he had been contacted by several people in the Pacific Northwest who are interested in the Western States’ model and whether it could be applied in that region. He also noted that Cube Hydro continues to press for providing private capital to fund rehabilitations and expansions at federal hydroelectric facilities. He stated that he believes the Cube Hydro business model simply would not work at federal hydroelectric facilities. Regarding the Colorado-Big Thompson project, Mr. Payton reported on his discussions with Northern Colorado Water Conservancy District regarding how to fill Chimney Hollow reservoir. He indicated that while the District wants to partner with Western States to build a pumping plant at Flatiron, the business case is not supported by the current economics.

The meeting was adjourned until the following morning.

8

Wednesday, June 13, 2018

The meeting reconvened at 8:00 am.

Mid-West Electric Consumers Association, Manager’s Report: Executive Director Drummond continued his report from the previous day by turning to legislative issues in Washington, D.C. He started by discussing his efforts to get Congress to appropriate the necessary funding for WAPA’s FY2019 purchase power and wheeling (PP&W). He recounted how the Congressional Budget Office (CBO) reduced WAPA’s FY2018 PP&W appropriation 40 percent below what was requested without explanation and that Congress was only able to restore a portion of that decrease. For FY2019, CBO again proposed reducing WAPA’s PP&W appropriation below what was requested.

Despite repeated entreaties to the House and Senate Appropriations Committee staff, CBO, and the Pick-Sloan Congressional Delegation, little headway has been made. Mr. Drummond highlighted two challenges. First, our Congressional Delegation opposed the sale of WAPA’s transmission assets and move to market-based rates, so they think they have already done the heavy lifting. Second, there is no burning platform; good water in recent years has reduced the sense of urgency to address this issue. The problem is that the longer the reduced baseline PP&W appropriation stays in place, the harder it will be to increase it when we get a serious drought. He requested the Board’s help in convincing our Congressional Delegation to support an increase in the PP&W appropriation. Further, Mr. Drummond stated he believes Mid-West needs to start considering viable alternatives in the event CBO and Congress do not increase WAPA’s PP&W appropriation to realistic levels.

Turning to other Congressional legislation affecting the Pick-Sloan Project, Mr. Drummond reviewed the WAPA Transparency Act (S.930). Introduced by Senator Flake (R-AZ), the proposal mirrors a version already passed by the House. While WAPA is already providing the data that would be required, he indicated that some are still worried that without legislation a future WAPA Administrator may not be willing to voluntarily share that information. Regarding another bill sponsored by Senator Flake concerning using more liberal reservoir operations (S. 2563), Mr. Drummond stated that the Pick-Sloan Project continues to be exempted from the bill’s requirements that the Corps use more “liberal” forecasting techniques and alter reservoir rule curves to preserve water for irrigation interests. However, he noted he had recently been called by Senator Barrasso’s (R-WY) staff regarding that exemption for Glendo reservoir. While holding Glendo reservoir above the flood control rule curve during a drought would generate power when it was more valuable, he told Senator Barrasso’s staff that there can be significant consequences from deviating above the established rule curves.

Mr. Drummond then described an effort by navigation interests on the Mississippi River to take 10 percent of the power revenues generated by the power marketing administrations (PMAs) and divert them to pay for rehabilitation of navigation locks and dams. Because the navigators pay

9

so little for repair of the projects they use, they are seeking other sources of funds. Mr. Drummond stated the navigation interests had used completely misleading information about the power revenues to support their claim and that the proposal would also score against the federal deficit. Additionally, this proposal could cause rate increases and impair customer advance funding. Although an amendment supporting this proposal was introduced to the FY2019 Water Resource Development Act, it was later withdrawn.

Mr. Drummond next described the recent amendment to the FY2019 Energy and Water Appropriations bill by Congressman Gosar (R-AZ) to reduce WAPA Administrator Mark Gabriel’s salary to $1/year. He stated that he had written a letter on behalf of Mid-West opposing the amendment and spoke with Congressman Gosar’s staff about it. Noting that the list of supporters included very few WAPA customers, he indicated he expected the amendment to fail. WAPA’s reporting level within the Department of Energy (DOE) continues to be an issue, Mr. Drummond stated. Although DOE decided to drop the PMAs two levels within DOE, the draft Senate Energy and Water Appropriations Report says that dropping the reporting level from the Deputy Secretary to an Assistant Secretary was unnecessary and that DOE should not do it.

Mr. Drummond then asked the Mid-West Board where they would like to hold next year’s June Board meeting. After some discussion, the Board agreed to hold the June 2019 Board meeting in Billings, Montana, with a tour of Yellowtail Dam. The 2020 June Board meeting will be held in Yankton, South Dakota, with a tour of Gavins Point dam and a nearby pallid sturgeon fish hatchery.

Finally, Mr. Drummond reminded the Board that its next meeting will be held September 20-21 at the DoubleTree Hotel – Denver Stapleton East. The Resolutions Committee will meet at 9:00 am on September 20th. A luncheon with the Mid-West Board will follow at noon and the Board meeting will begin at 1:00 pm. The meeting will reconvene at 8:00 am on September 21st and end no later than noon on that day.

There being no further business to come before the Board, the meeting was adjourned.

Actual YTD Annual 2018 Actual YTD

Aug 31, 18 Budget Aug 31, 17 Variance

Dues

Formula Dues 633,715.50$    763,975.00$  619,810.72$       13,904.78$     

Statewide Fixed Dues 825.00             900.00           900.00                 (75.00)             

Net Membership Dues 634,540.50     764,875.00   620,710.72         13,829.78      

Other Revenue

Annual Meeting Registrations 3,525.00$        130,000.00$  3,800.00$           (275.00)$         

Interest and Miscellaneous Income 17,256.00       9,000.00        7,775.00              9,481.00         

Total Other Revenue 20,781.00       139,000.00   11,575.00           9,206.00         

Total Revenue & Sources of Funds 655,321.50$    903,875.00$  632,285.72$       23,035.78$     

General and Administrative Expenses

Salaries and Benefits

Salaries 225,549.10$    327,066.00$  205,944.48$       19,604.62$     

Employee Benefits 135,362.63     * 141,990.00   125,561.06         * 9,801.57         

Total Salaries and Benefits 360,911.73     469,056.00   331,505.54         29,406.19      

Professional Services

Professional ‐ Legal/Engineering/Contract Services 96,068.53$      130,000.00$  85,516.74$         10,551.79$     

Professional ‐ Audit and Accounting 9,253.64          13,000.00      8,586.02              667.62            

Total Professional Fees 105,322.17     143,000.00   94,102.76           11,219.41      

Travel 26,534.10       50,000.00      35,231.76           (8,697.66)       

Office Expense

Memberships and Subscriptions 760.00$            3,800.00$       720.00$               40.00$             

Postage 267.44             1,500.00        420.93                 (153.49)           

Rent 19,430.39       29,125.00      18,060.29           1,370.10         

Total Office Expense 20,457.83       34,425.00      19,201.22           1,256.61         

Supplies and Operations

Supplies and Operations 6,206.11$        11,000.00$    4,536.59$           1,669.52$       

Printing 79.00               3,000.00        1,105.10              (1,026.10)       

Total Supplies and Operations 6,285.11          14,000.00      5,641.69              643.42            

Telephone 2,925.73          4,000.00        2,739.68              186.05            

Equipment Purchases ‐                   4,000.00        ‐                       ‐                  

Insurance

Director's Liability 2,288.39$        5,500.00$       2,675.48$           (387.09)$         

Directors Accident ‐                   ‐                 ‐                       ‐                  

Property and Casualty 2,482.87          3,500.00        2,604.66              (121.79)           

Total Insurance 4,771.26$        9,000.00$       5,280.14$           (508.88)$         

Annual Meeting 2,725.97          155,000.00   856.95                 1,869.02         

B. O. D. & Committee Meetings 23,466.78       35,000.00      15,709.25           7,757.53         

Contingencies and Contributions ‐                   ‐                 ‐                       ‐                  

Total General and Administrative Expenses 553,400.68$    917,481.00$  510,268.99$       43,131.69$     

* Balance includes $11,283.92 for amortization of NRECA R&S Prepayment

Mid-West Electric Consumers Association, Inc.Budget Variance Analysis

Balance 

08/31/2018 

Balance 

08/31/2017 Variance

Checking with interest:

Vectra Bank

7391 W. 38th Ave.

Wheat Ridge, CO 80033 54,769.73$    52,997.19$    1,772.54$         

Homestead Funds

c/o BFDS

P.O. Box 219486

Kansas City, MO  64121‐9486 416,451.73$  411,717.89$  4,733.84$         

Total Cash 471,221.46$  464,715.08$  6,506.38$         

Special Projects Fund 150,000.00$  150,000.00$  ‐$                 

Operations Reserve 200,000.00   200,000.00   ‐                    

Excess Funds/(Shortfall) 121,221.46   114,715.08   6,506.38           

Total Cash 471,221.46$  464,715.08$  6,506.38$         

Mid-West Electric Consumers AssociationCash Balances

Aug 18 Aug 17 $ Change

Ordinary Income/ExpenseIncome

4000 · Co-Op & Municipal Dues 36,864.25 0.00 36,864.254020 · Annual Meeting 3,050.00 2,825.00 225.00

Total Income 39,914.25 2,825.00 37,089.25

Gross Profit 39,914.25 2,825.00 37,089.25

Expense6000 · Executive Director 21,223.12 20,212.50 1,010.626010 · Salaries - Staff 6,354.58 5,530.56 824.026100 · FICA Expense 2,901.90 653.52 2,248.386105 · FUTA Expense 149.19 0.00 149.196110 · SUTA Expense 0.00 0.00 0.006120 · Local Tax Expense 158.44 8.00 150.446130 · Fringe Benefit Package

Employer 401(k) Contributions 810.92 772.30 38.62Health Insurance 4,143.92 4,143.92 0.00Health Insurance Fee 468.82 938.54 -469.72Pension Admin Fees 200.02 169.90 30.12Pension Contributions 7,241.41 6,691.92 549.49Section 125 Admin Fees 7.50 7.50 0.006130 · Fringe Benefit Package - Other 2,850.00 1,479.95 1,370.05

Total 6130 · Fringe Benefit Package 15,722.59 14,204.03 1,518.56

6200 · Dues & Subscriptions 0.00 0.00 0.006300 · Printing 29.68 0.00 29.686350 · Professional - Legal/Engineerng 4,940.00 13,070.42 -8,130.426450 · Professional Fees - Accounting 0.00 220.00 -220.006500 · Travel - Executive Director 1,470.80 3,863.11 -2,392.316550 · Travel - Staff 0.00 0.00 0.006555 · Meals & Entertainment 0.00 0.00 0.006600 · Office Rent 2,408.33 2,337.50 70.836610 · Lease Expense - Office Equip 375.70 375.70 0.006655 · Office - storage 0.00 0.00 0.006670 · Office - Postage 150.00 147.00 3.006680 · Office - Supplies 0.00 101.78 -101.786690 · Office - Other 509.41 68.91 440.506750 · Taxes 0.00 0.00 0.006800 · Telephone 390.01 147.85 242.166900 · Insurance - Directors Liability 562.17 294.33 267.846940 · Insurance - Renters Liability 576.33 327.33 249.007050 · Annual Meeting - Other 3,500.00 0.00 3,500.007100 · Board Meetings 0.00 1,506.33 -1,506.33

Total Expense 61,422.25 63,068.87 -1,646.62

Net Ordinary Income -21,508.00 -60,243.87 38,735.87

Other Income/ExpenseOther Expense

8500 · Depreciation 77.20 57.26 19.94

Total Other Expense 77.20 57.26 19.94

Net Other Income -77.20 -57.26 -19.94

Net Income -21,585.20 -60,301.13 38,715.93

9:22 AM Mid-West Electric Consumers Association, Inc.

09/13/18 Profit & Loss YTD ComparisonAccrual Basis August 2018

Page 1

Jan - Aug 18 Jan - Aug 17 $ Change

Ordinary Income/ExpenseIncome

4000-1 · Statewide Fixed Dues 825.00 900.00 -75.004000 · Co-Op & Municipal Dues 633,715.50 619,810.72 13,904.784020 · Annual Meeting 3,525.00 3,800.00 -275.004100 · Interest Income 250.00 0.00 250.004200 · Miscellaneous Income 17,006.00 7,775.00 9,231.00

Total Income 655,321.50 632,285.72 23,035.78

Gross Profit 655,321.50 632,285.72 23,035.78

Expense6000 · Executive Director 169,784.96 161,700.00 8,084.966010 · Salaries - Staff 55,764.14 44,244.48 11,519.666100 · FICA Expense 17,602.44 13,114.57 4,487.876105 · FUTA Expense 233.19 84.00 149.196110 · SUTA Expense 294.84 292.50 2.346120 · Local Tax Expense 210.44 64.00 146.446130 · Fringe Benefit Package

Employer 401(k) Contributions 6,487.36 6,178.40 308.96Health Insurance 33,151.36 33,151.36 0.00Health Insurance Fee 4,219.83 3,754.16 465.67Pension Admin Fees 1,600.16 1,359.20 240.96Pension Contributions 57,931.28 53,535.36 4,395.92Section 125 Admin Fees 218.50 67.50 151.006130 · Fringe Benefit Package - Other 13,413.23 13,960.01 -546.78

Total 6130 · Fringe Benefit Package 117,021.72 112,005.99 5,015.73

6200 · Dues & Subscriptions 760.00 720.00 40.006300 · Printing 79.00 1,105.10 -1,026.106350 · Professional - Legal/Engineerng 96,068.53 85,516.74 10,551.796400 · Professional Fees - Audit 6,500.00 4,500.00 2,000.006450 · Professional Fees - Accounting 2,753.64 4,086.02 -1,332.386500 · Travel - Executive Director 26,534.10 31,929.04 -5,394.946550 · Travel - Staff 0.00 3,302.72 -3,302.726555 · Meals & Entertainment 0.00 0.00 0.006600 · Office Rent 19,430.39 18,060.29 1,370.106610 · Lease Expense - Office Equip 3,318.90 3,023.22 295.686655 · Office - storage 2.89 0.00 2.896670 · Office - Postage 267.44 420.93 -153.496680 · Office - Supplies 411.41 534.00 -122.596690 · Office - Other 2,462.91 964.37 1,498.546750 · Taxes 10.00 15.00 -5.006800 · Telephone 2,925.73 2,739.68 186.056900 · Insurance - Directors Liability 2,288.39 2,675.48 -387.096940 · Insurance - Renters Liability 2,482.87 2,604.66 -121.797000 · Annual Meeting - Hotel -1,148.59 0.00 -1,148.597050 · Annual Meeting - Other 3,874.56 856.95 3,017.617100 · Board Meetings 23,466.78 15,709.25 7,757.53

Total Expense 553,400.68 510,268.99 43,131.69

Net Ordinary Income 101,920.82 122,016.73 -20,095.91

Other Income/ExpenseOther Expense

8500 · Depreciation 336.76 672.47 -335.71

Total Other Expense 336.76 672.47 -335.71

Net Other Income -336.76 -672.47 335.71

Net Income 101,584.06 121,344.26 -19,760.20

9:24 AM Mid-West Electric Consumers Association, Inc.

09/13/18 Profit & Loss YTD ComparisonAccrual Basis January through August 2018

Page 1

1:31 PM 03/13/17

Mid-West Electric Consumers Association, Inc.

Statement of Cash Flows January through August

2018 Jan ‐ Aug 18 Jan ‐ Aug 17 Variance

OPERATING ACTIVITIES

Net Income 101,584.06   121,344.26   (19,760.20)     

Adjustments to reconcile Net Income ‐                 

to net cash provided by operations: ‐                 

1102 ∙ Accounts Receivable ‐ Midwest 11,900.00    

1200 ∙ Prepaid Insurance (2,089.74)      (2,230.86)      141.12           

1300 ∙ Prepaid Insurance ‐                  ‐                 

1401 ∙ Homestead Funds Inc ‐ MECA (50,000.00)    (180,000.00) 130,000.00    

1510 ∙ Acc Depr ‐ Furniture & Equip 336.76           672.47           (335.71)          

1900 ∙ Deposits ‐                 (100.00)         100.00           

2001 ∙ Accounts Payable ‐                 7,392.91       (7,392.91)       

2010 ∙ Accrued Liabilities (6,166.37)      (539.16)         (5,627.21)       

2100 ∙ Federal Withholding Tax Payable 4,112.17       (179.74)         4,291.91        

2110 ∙ Federal  Tax Payable (86.65)           

2120 ∙ State Withholding Payable (298.88)         (2.00)               (296.88)          

2130 ∙ 401(k) Contributions Payable (3,000.00)      (174.79)         (2,825.21)       

2140 ∙ FUTA & SUTA Tax Payable 294.84           (80.00)             374.84           

2142 ∙ Local Tax Payable (74.60)            13.41              (88.01)            

2400 ∙ Sec 125 Cafeteria Plan Payable 1,600.00       1,600.00       ‐                 

Net cash provided by Operating Activities 1,113.59       (69,131.00)    70,244.59      

INVESTING ACTIVITIES ‐                 

1909 ∙ Current Portion NRECA R&S PrePd 11,283.92     11,283.92     ‐                 

1402 ∙ Homestead Funds Inc‐WDrummond (15,000.00)    (10,500.00)    (4,500.00)       

Net cash provided by Investing Activities (3,716.08)      783.92           (4,500.00)       

FINANCING ACTIVITIES ‐                 

2501 ∙ Deferred Comp Pay‐WDrummond 15,000.00     10,500.00     4,500.00        

Net cash provided by Financing Activities 15,000.00     10,500.00     4,500.00        

Net cash increase for period 12,397.51     (57,847.08)    70,244.59      

Cash at beginning of period 42,372.22     110,844.27   (68,472.05)     

Cash at end of period 54,769.73     52,997.19     1,772.54        

Page 1 of 1

September 11, 2018 MEMORANDUM To: Mid-West Board of Directors From: Bill Drummond Subject: Draft 2019 Mid-West Budget Attached you will find information regarding Mid-West’s proposed 2019 budget. This proposed budget has been reviewed by Mid-West’s Organization Committee, which approved forwarding it to the full Mid-West Board. The budget will be discussed and acted upon at the upcoming Mid-West Board meeting on September 20-21, here in Denver. The proposed 2019 budget does not include the individual member dues calculation because I am still collecting the necessary data from WAPA. I anticipate having that information in time for the Board meeting. The attached spreadsheet compares the draft 2019 budget with 2017 actual results, and 2018 budgeted and estimated actual results. The budget narrative describes the details behind the spreadsheet. The draft 2019 budget proposes some changes in expense items. For the purposes of example, the draft budget assumes a 5 percent increase in staff salaries, but the final decision on any increase is, of course, up to the Board. The draft budget also proposes performing a financial review of 2018 results after a full audit of 2017 results. I also raised the estimated cost of the annual meeting to a level that more accurately reflects the actual cost. The draft budget would show an operating deficit of approximately $49,000 without a dues increase, driving Mid-West’s operating reserves below the recommended $200,000 level.

The Organization Committee has reviewed the proposed 2019 budget and is recommending a two percent increase in dues. That increase will generate $15,280, bringing the negative net revenues down to approximately $33,600 and keeping Mid-West’s operating reserves above the $200,000 recommended level. The Organization Committee is also recommending a $15 per person increase in 2019 annual meeting registration fees. With that increase, annual meeting fees will be: Member: $365 Spouse: $140 Non-Member: $400 Despite the proposed increase in annual meeting registration fees, I did not increase the estimate of annual meeting registration revenue because these revenues have never hit the previously-budgeted amount of $130,000. For this reason, I am still estimating $130,000 for 2019. If you have questions about the proposed budget, please feel free to contact me.

MIDWEST ELECTRIC CONSUMERS ASSOCIATION, INC.2019 Draft Budget Revision September 6, 2018

2017 CALENDAR 2018 CALENDAR PROPOSED

ANNUAL YEAR 2017 ANNUAL YEAR 2018 2019 BUDGET BUDGET ACTUAL BUDGET ESTIMATED 2% INCREASE % CHANGE

DUES Formula Dues 763,975$ 777,562$ 763,975$ 763,975$ 779,255$ 2.00% 1/

763,975 777,562 763,975 763,975 779,255 2.00% Statewide Fixed Dues 975 900 900 900 900 0.00%

NET MEMBERSHIP DUES 764,950 778,462 764,875 764,875 780,155 2.00%

Annual Meeting Registrations 120,000 116,790 130,000 120,000 130,000 0.00% 2/Interest & Miscellaneous Income 4,000 17,584 9,000 18,000 11,000 22.22%Unrestricted Cash Applied to Budget - - - - -

TOTAL REVENUE & SOURCES OF FUNDS 888,950$ 912,836$ 903,875$ 902,875$ 921,155$ 1.91%

GENERAL AND ADMINISTRATIVE EXPENSE

SALARIES AND BENEFITS Salaries 311,491$ 311,491$ 327,066$ 327,066$ 343,419$ 5.00% Employee Benefits 138,283 140,468 141,990 141,990 146,770 3.37%

PROFESSIONAL SERVICES Professional - Legal/Engineering/ Contract Services 130,000 131,173 130,000 135,000 130,000 0.00% Professional - Audit & Accounting 13,000 9,929 13,000 13,000 11,300 -13.08%

TRAVEL 50,000 46,320 50,000 47,000 50,000 0.00%

OFFICE EXPENSES Memberships and Subscriptions 3,700 3,809 3,800 3,800 3,800 0.00% Postage/Federal Express 2,000 473 1,500 500 1,000 -33.33% Rent 28,052 29,748 29,125 29,500 30,000 3.00% Supplies and Operations

Supplies and Operations 11,000 7,176 11,000 7,200 10,000 -9.09%Printing 3,000 1,105 3,000 1,200 3,000 0.00%

Telephone 4,000 4,324 4,000 4,300 4,300 7.50%

EQUIPMENT PURCHASES 3,490 - 4,000 1,000 4,000 0.00%

INSURANCE Directors Liability (Federated) 5,300 3,853 5,500 3,483 3,600 -34.55% Property and Casualty (Federated) 3,373 3,914 3,500 3,373 3,500 0.00%

ANNUAL MEETING 150,000 170,489 155,000 175,000 175,000 12.90%

BOARD OF DIRECTORS & COMMITTEE MEETINGS 32,000 24,138 35,000 35,000 35,000 0.00%

CONTINGENGIES AND CONTRIBUTIONS - - - - -

TOTAL EXPENDITURES 888,689$ 888,410$ 917,481$ 928,412$ 954,689$ 4.06%

NET REVENUES 261$ 24,426$ (13,606)$ (25,537)$ (33,534)$

Notes:1/ Without a dues increase, the 2019 projected negative net revenues would be almost $49,000.2/ Although a $15 per person increase is proposed in this 2019 budget, no increase in registration revenues is projected.

1

Proposed 2019 Mid-West Budget The proposed 2019 Mid-West budget assumes a continuation of stable operations. However, as with the 2018 budget, it does result in negative net revenues for 2019. Because Mid-West’s operating reserves at the end of 2019 will dip below the level set by Mid-West’s policies, the Organization Committee is recommending a two percent increase in dues and a $15 per person increase in 2019 annual meeting registration fees. Mid-West’s total reserves have been rebuilt to a current sum of almost $416,000 – a level that exceeds the $350,000 goal included Mid-West’s organizational policies. That goal of $350,000 in total reserves is comprised of $200,000 for an Operations Reserve Fund and $150,000 for the Special Projects Reserve Fund. The 2018 Mid-West budget anticipated negative net revenues of almost $14,000. Primarily due to lower than forecast annual meeting revenues and higher than anticipated professional services and annual meeting costs, I now estimate 2018 negative net revenues to be closer to $26,000. That level of negative net revenues would reduce Mid-West’s total reserves to $390,000, which would still be above the target of $350,000 in total reserves. A two percent increase in dues will generate approximately $15,280 and will reduce the negative net revenue for 2019 to $33,534. If dues are not increased, negative net revenues are forecast to be $49,000, reducing Mid-West’s operating reserve at the end of 2019 to $191,000. Raising the annual meeting fees by $15 per person would also generate additional revenue, although no increase is shown in the proposed budget. The Mid-West Board last raised dues in the 2014 budget by 1.6 percent and annual meeting registration fees were last raised in 2015.

Revenues There are three sources of revenues for Mid-West: Dues, Annual Meeting Registrations and Interest and Miscellaneous Income. Dues: There are two types of Dues, Formula and Fixed. The vast majority of Mid-West’s revenues are generated from what are termed “Formula Dues.” Formula Dues are based upon the members’ firm power purchases from the Western Area Power Administration (WAPA). The data for the Formula Dues calculations come from WAPA’s most recent Annual Report Statistical Appendix. Due to the timing of the publishing of WAPA’s Annual Report, the 2019 dues will be calculated using WAPA’s 2017 Statistical Appendix. To calculate member dues, we first total all Mid-West member firm power purchases from the Pick-Sloan and Loveland Area Projects. The Mid-West budget, less anticipated Fixed Dues, Interest Income and Annual Meeting registrations, is then divided by all Mid-Wests members’ firm power purchases from WAPA to create a dues rate per dollar of purchased WAPA power.

2

Mid-West Dues Rate = Mid-West Budget / Total Mid-West Member WAPA Firm Purchases Each member’s firm power purchases from WAPA are then multiplied by the Mid-West Dues Rate to calculate the dues for Mid-West. The attached spreadsheet details the Mid-West dues for each member. Even if the proposed revenue requirement from the 2019 budget is held constant, individual member dues will vary from past years due to the changes in firm power purchases from WAPA. Fixed Dues are generated from rural electric cooperative, municipal electric utility, and public power district statewide associations. Western States Power Corporation also falls into this category. Fixed dues are assessed at $75/year and account for $900 per year in revenue. Annual Meeting Registrations: Revenues from Annual Meeting registrations largely cover the cost of Mid-West’s Annual Meeting and are obviously a function of the number of people attending the event. The registration fee covers the cost of three meals, coffee breaks, and reception and speaker fees where applicable. The Mid-West Annual Meeting registration fees for 2019 are proposed to increase by $15 per person to: Member: $365 Spouse: $140 Guest: $400 These fees are expected to generate an estimated $130,000 in revenues, covering a significant portion of the approximately $175,000 estimated 2018 Annual Meeting cost. Interest and Miscellaneous Income: For budgeting purposes this category is primarily for interest income and fees from my service on the Northwest Power Pool Board. Interest income is derived from interest earned on Mid-West’s Homestead Short-term Bond Fund where Mid-West’s reserves are held. Due to the current interest rate environment interest income is expected to be slightly less than the 2018 level. In 2018 it is anticipated Mid-West will earn approximately $8,000 in interest income. For 2019 I am assuming interest income of $7,000. I anticipate $4,000 in revenue from my serving on the Power Pool Board. Other sources of income, particularly contributions for Annual Meeting coffee breaks, are uncertain and thus are not included in this line item.

3

Expenses For the purposes of this budget, Mid-West’s expenses are divided into the following line items: Salaries and Benefits; Professional Services; Audit and Accounting; Travel; Memberships and Subscriptions; Postage/Federal Express; Rent; Supplies and Operations; Printing; Telephone; Equipment Purchases; Insurance; Annual Meeting; Meetings. No expenditures in 2019 are proposed for Contingencies and Contributions. Salaries and Benefits: For the purposes of providing some context, the following information on Salaries and Benefits is provided to the Board. By way of example, the 2019 budget shows an increase of 5% in Salaries for both the Executive Director and Executive Assistant, which bring the total line item to $343,419. Past practice at Mid-West has been to provide any salary increases starting on November 1 to accommodate the timing of the NRECA benefits calculations. Mid-West’s Board of Directors will determine any increases in staff salaries for the November 1, 2018 to October 31, 2019 period at the September 2018 Board meeting. Employee Benefits: Employee benefits include federal and state taxes, and Mid-West benefits. Mid-West benefits include the R&S pension program, long- and short-term disability, a 401(k) contribution, life insurance and medical insurance. Vision and dental insurance are available, but paid solely by the employee. Both employees are eligible for the R&S pension program. Prepayment of the R&S funding requirement cost $169,259, but has resulted in a reduction in that funding requirement with significant savings over the remaining seven years. The reduced funding requirement is assumed in the proposed 2019 budget. Several years ago Mid-West changed its medical insurance coverage to reduce costs by adopting a PPO plan and increasing the deductible. Single employees pay 10 percent of the premium while family coverage calls for a 20 percent contribution. Based upon these assumptions and a 5 percent increase in the salary for both employees in 2019 as discussed above, the Total Employee Benefits line item results in the following: Benefits w/ 5 % salary increase: $ 146,770 Professional Services: This line item is primarily the cost of the services provided by Duncan, Weinberg, Genzer and Pembroke, Mid-West’s counsel in Washington, D.C., Barry Strumpf for help on WAPA’s purchase power & wheeling issue, and special counsel Kent Holsinger of Denver on the Grand Lake Clarity issue. The $130,000 figure is the same as was assumed in the 2018 Mid-West budget. Actual 2018 expenses are expected to be $135,000 due to increased use of consultants on the purchase power & wheeling issue and for a temporary replacement for Rosalie Hathaway while she was on leave. We continue to receive very high quality service from Jeff Genzer and his firm at a significant discount to what we would pay if we were to

4

change firms, although their hourly rates increased in 2018. Mid-West also contracts on an as-needed basis with Ron Greenhalgh when necessary. Audit and Accounting: This budget item includes the costs of auditing Mid-West’s books, preparation of federal and state income tax returns, monthly reconciliation of Mid-West’s accounts, general ledger maintenance, payroll registers, monthly budget reports, writing checks, and development of the annual budget. The 2019 budget for Auditing and Accounting is proposed to decline to $12,000, an amount $1,000 less than anticipated 2018 expenditures. Per the recent Mid-West Board guidance to alternate performing audits and financial reviews, Mid-West will have a financial review performed in 2019 instead of an audit. The financial review is expected to cost $5,500. The remainder of this line item is the accounting function performed by Tri-State. Travel: The Travel line item includes the cost of travel and registration fees for meetings for Mid-West’s staff. For 2019, I propose leaving the Travel line item at the 2018 level of $50,000. Memberships and Subscriptions: The Memberships and Subscriptions line item includes Mid-West memberships in our national and regional associations. For 2019, I propose a level of $3,800. Memberships and Subscriptions are estimated to be:

• National Rural Electric Cooperative Association: $ 2,450 • American Public Power Association: $ 550 • Congressional Staff Directory: $ 655 • Missouri Sedimentation Action Coalition: $ 100

Membership and Subscriptions also includes the costs of our national association publications. Postage/Federal Express: I propose reducing this line item by $500 to $1000 for 2019. Rent: Rent is the cost of office space. Our five-year lease on office space was signed in July 2014 and will expire at the end of July 2019. I anticipate successfully negotiating a new lease for our current office space, although I expect an increase in our lease payment. For 2019, the Rent line item is estimated to be $30,000. Supplies and Operations: This line item includes the costs of printing, computer software, office supplies, technical help (computer repair, etc.), maintenance of office equipment, maintenance of the Mid-West website, lease/purchase costs, and copying done outside the office. The estimated actual 2018 expenses for this line item are estimated to be $7,800. The proposed 2019 budget for this line item is reduced to $10,000. Printing is also proposed at the same level as 2017 of $3,000. Telephone: This line item includes the cost of telephone service; land-lines, data, and cellular. The 2018 actual telephone expenses are anticipated to be $4,300 and the proposed budget for 2019 is that same amount.

5

Equipment Purchases: As the name suggests, this line item covers equipment purchases such as computers, printers, etc. Lease/purchase costs are included in the Supplies and Operations line item. The proposed 2019 budget for this line item is $4,000. Insurance: Mid-West’s Insurance is underwritten by Federated (Director’s and Officer’s Liability, Worker’s Compensation, and Property and Casualty). Our Federated policies are renewed each May and we are in the last year of a two-year policy. Slight increases are anticipated and included in this budget.

Director’s Liability: The proposed 2019 budget for this line item is $3,600. Property and Casualty: The actual 2018 expenses were $3,373 for this line item. The proposed 2019 budget increases it slightly to $3,500.

Annual Meeting: Annual meeting costs in 2017 were above budget due primarily to higher food and beverage costs. The 2019 proposed budget of $175,000 reflects a more accurate picture of expected annual meeting costs. This line item is largely off-set by Annual Meeting Registrations. Board of Directors and Committee Meetings: Anticipated 2018 expenditures for this line item are in line with the budgeted amount. The proposed 2019 Meetings line item is proposed to remain at the 2018 budget level of $35,000. Contingencies and Contributions: As in recent years, no money is included in the proposed budget for Contingencies and Contributions.