Capital Credit and Patronage Allocation

ASTAC mails annual patronage statements to its members no later than September 15 each year, advising them of their prior year patronage allocation which reflects their equity ownership in ASTAC.


These statements are a record of the allocation and the amount that will be retired at a future date to be determined by the Board of Directors based on the Cooperative’s cash position and future plans. The amounts on these Statements cannot be applied to your bill nor can they be cashed out at this time. ASTAC has retired capital credits through the year 1986.



What are capital credits (also known as patronage)?

Because ASTAC is a Cooperative, owned by its members, it does not technically earn profits. Instead, any revenues over and above the cost of doing business are considered "net tax margins". These net tax margins represent an interest-free loan of operating capital by the membership to the Cooperative. This capital allows ASTAC to finance operations and construction, with the intent that this capital will be repaid to you in later years when the Cooperative is financially able to do so, and when the Board elects to do so. Capital Credits are not cash and they cannot be cashed in or used to pay your bill.


How are capital credits (patronage) allocated?

The amount of patronage you earn in a given year is based upon the amount of capital you contribute to the Cooperative through payment of your monthly bills. The more services you buy, the greater your capital credits earned. The sum of your monthly bills for a year is compared to the total monthly bills for all subscribers to determine your capital credits. Capital credits accumulate in the member’s account until retired at the direction of the Board or the dissolution of the Cooperative. Allocated capital credits appear as an entry on the permanent financial records of the Cooperative and reflect your equity or ownership in ASTAC. When capital credits are retired, a check is issued to you and your equity in the Cooperative is reduced. 


Why doesn’t ASTAC retire capital credits?

Like most telecommunications Cooperatives across the country, ASTAC is being constantly challenged to offer the newest technologies, similar to much larger, less costly urban areas. The upgrades in technology are expensive and spread over a sparsely populated, remote serving area. The Board has made a conscious choice to reinvest net tax margins to bridge the gap between the cost to deliver new services and the revenue we can expect to earn from offering those services. This does not mean that the member has lost their capital credits. We still allocate them to each member’s account and carry the obligation to retire them at some future date as they represent your ownership in the Cooperative.


Can I apply my capital credits to my existing bill?

Allocated capital credits may not be used to pay current bills. Your bill is due now, whereas you may not be entitled to be paid your capital credits for many years.


Why is my capital credits check less than what my statement reflects?

Any capital credits owed to a member with an outstanding bad debt balance, will have that amount deducted from their check.


If a member passes away, what happens to their capital credits? 

The estate or executor of the member can petition for the capital credits to be retired early, on a discounted basis. The Board of Directors must approve the request during a subsequent quarterly meeting. For more details download our Estate Retirements Application.


How often will I receive an allocation notice?

You should receive an allocation notice annually after the finances for the previous year have been audited and the Cooperative's federal tax returns are filed. Remember this is only a record of the allocation and the amount will be paid at a future date to be determined by the Board of Directors when the Cooperative can afford to issue checks for retirement of capital credits.


What percent of my bill is returned as capital credits?

The percentage of your total payment that is allocated as capital credits varies from year to year, depending upon the success of the Cooperative and your total spending compared to all members' spending. Capital credits are only allocated for a year in which ASTAC earns positive net tax margins. Since capital credits are a member's share of the net tax margins, no credits are allocated for a year with negative tax margins.


Do I have to be a customer for an entire year to earn capital credits?

No, capital credits are calculated based upon a member's monthly bills. If you are billed for a service even one month, you will accumulate some capital credits, if ASTAC earned positive net tax margins in that year. Capital credits are calculated by ASTAC for everyone who purchased services during a year in which the Cooperative earned positive net tax margins. No special action is required to start a capital credit account. Your membership with ASTAC activates your capital credits account immediately. 


Will I receive a capital credits check every year?

Not necessarily. The Board of Directors must authorize a retirement before you receive a retirement check. ASTAC has retired capital credits through the year 1986. When considering a retirement, the Board analyzes the financial health of the Cooperative and will not authorize a retirement if ASTAC cannot afford it. The receipt of a statement does not guarantee a payment is forthcoming in the near future. 


What happens to my capital credits when I leave ASTAC's service area or my business closes?

Your capital credits remain on the books in your name and member number until they are retired. Because payments are made many years after capital credits are earned, it is your responsibility to ensure that ASTAC always has your current mailing address.




Swoosh 2017