FABULOUS FUNDS
	NATURAL HIGH
	Editorial
	Wisconsin Favorites Revisiting the Medical Frontier

   Fabulous Funds
Foundation Helps Co-ops Champion Scholarships, Charities

   Each spring, the pages of local newspapers and this magazine abound with photos of students awarded scholarships by electric cooperatives. Announcing the winners, the co-ops sometimes cite unclaimed capital credits as the source of their scholarship funds, but behind the co-ops’ ability to make such awards is a decades-old, persistent drive by Wisconsin cooperatives to earmark money for education and charitable purposes.

   The effort—which last year yielded more than $380,000 in scholarships and donations—has been marked by legal and legislative wrangling, on occasion pitting the co-ops against some of the most prominent officeholders in state government.

Principle Prescription

   Basic to the nonprofit operation of electric co-ops is a guiding principle that dictates revenue collected in excess of what it takes to meet annual operating expenses must be returned to the co-op membership. These allocations are known by a number of names: capital credits, patronage dividends, refunds, retirements, or simply patronage. Since many co-ops, depending on their individual financial conditions, make the payments based on rotation cycles that may be as long as 20 years, some members leave co-op territory and are not able to be found when it comes time to refund the capital credits.

   Unclaimed funds of this type, after a specified number of years, are deemed under Wisconsin law to be forfeited and ordinarily have to be turned over to the state, but the co-ops saw them as a source for doing some good in the local communities where the money originally came from.

   So nearly 50 years ago, in a major revision to the state law governing cooperatives, co-op leaders proposed and won language that permitted local co-ops to adopt bylaws designating forfeited, unclaimed capital credits for educational use. From that 1955 law’s passage until 1969, many cooperatives took advantage of the provision and authorized scholarship awards to children of co-op members.

   But with passage in 1969 of the Uniform Unclaimed Property Act, the state essentially repealed all conflicting statutes, including the portion of the 1955 law on which the co-ops based their education funding.

The Co-ops Respond

   “As soon as the new law was adopted, the electric co-ops promptly set about establishing a way to retain those unclaimed funds,” recalled cooperative attorney Charles Van Sickle, who began his long career lobbying the Wisconsin Legislature on behalf of the statewide electric cooperative association as a result of the act’s passage. Van Sickle and his law firm helped set up a nonprofit trust to which the co-ops could assign their forfeited, unclaimed capital credits.

   The trust, initially called the Wisconsin REC Youth Foundation, Inc., was incorporated on December 2, 1970, originally (as the name implies) organized to serve the needs of just the electric co-ops. The following July, its articles of incorporation were amended to broaden its application to all types of co-ops, and a new name was picked: the Federated Youth Foundation, Inc.

   As with the earlier unclaimed-funds procedures, co-ops needed to adopt bylaws spelling out that they were turning over forfeited funds to the Federated Youth Foundation (FYF) to be redistributed locally in the form of educational grants and loans. In 1978, FYF also secured a federal income-tax exemption, further establishing it as a charitable organization.

Uneasy Times

   Although the foundation proved popular with the co-ops, the legal standing under which FYF operated came under consistent scrutiny from state officials, who periodically questioned the applicability of unclaimed property statutes to its functions.

   “It seems that every time the state had a fiscal crisis, it tried to come after the money in Federated Youth Foundation,” observed Allen Beadles, long-time director of Jump River Electric Co-op and the statewide electric co-op association. “We had to go back and fight for it.” Beadles recounted how under administrations of both governors Pat Lucey and Lee Dreyfus, attempts were made to “grab” the fund—initiatives that were beaten back through active grassroots lobbying by co-op leaders, he recalled.

   On the heels of a 1984 revamping of the Uniform Property Act, which further muddied the legal waters as far as co-ops’ ability to retain and use unclaimed funds, the co-ops decided to take legislative action to shore up the statutory footing on which FYF had been operating for a dozen years. Electric co-ops helped spearhead an effort to legislatively endorse the capital credit forfeiture process and FYF’s goals.

   “We could have tried for a declaratory ruling from a judge, and we could have gone for separate legislation, but we decided against those options,” said David Erickson, member services director for the Wisconsin Federation of Cooperatives and current FYF executive director. “But then along came a larger revision to the general cooperative statute, and we decided to include our provisions as part of that package.”

   Van Sickle, who was “point person” lobbying for the FYF provision, remembers that both the attorney general and the state treasurer opposed enactment of the proposal. “The treasurer’s office thought exempting co-ops from provisions of the Unclaimed Property Act would open the door for other groups seeking exemptions; the attorney general argued that constitutional questions were involved,” said Van Sickle. “We disputed both those claims.”

   In a relatively rapid move through the Legislature, the bill passed both houses by voice votes and was signed into law by Governor Tony Earl on August 13, 1985. Among new provisions of the law was the addition of “charitable purposes” as an authorized use for the unclaimed funds.

Participation Swells

   With the new law in place, cooperative participation in FYF increased. Today, 75 co-ops have accounts within FYF, with their unclaimed-funds totals ranging from $250 to $102,000. Besides the stalwart electric co-ops, there are telephone, farm-supply, livestock, genetics, grocery, dairy, mututal insurance, petroleum, and other co-ops that use foundation to channel their unclaimed funds into worthy local gifts.

   Erickson noted the foundation currently has assets of more than $1.3 million, and during the past 15 years it has been the source of more than $3 million in scholarships and charitable contributions.

   “The foundation simplifies the handling of unclaimed property for its members, and because of its tax-exempt status and professional administration, it protects contributing organizations from potential legal and administrative problems regarding distribution of unclaimed property,” he observed.

   All but one of the state’s electric co-ops participate in FYF, and the non-member (Oconto Electric) manages a fund locally from which its scholarships are given. The 1985 co-op law that solidified FYF also set such local efforts on firm legal footing.

Broad Representation, Giving

   The foundation’s governing board consists of seven directors—four elected from among the FYF membership, one representative each from the Wisconsin Electric Cooperative Association and Wisconsin Federation of Cooperatives, and a director chosen from among the ranks of education professionals.

   Erickson said directors’ main functions are to approve charitable awards requested by member co-ops and to authorize grants from a discretionary fund set up to boost statewide or national cooperative education and training programs. Scholarship disbursements from the co-ops’ accounts, Erickson noted, are routinely made available upon request of each co-op.

   Charitable purposes, which last year amounted to $88,000 out of the total $379,000 distributed from FYF, went to support such programs as local fire departments and first responders, municipal libraries, FFA and 4-H foundations, hospitals, recreational facilities, Relay for Life, and other community activities.

   The majority of the scholarship funds, according to Erickson, are annually awarded to students headed for four-year undergraduate programs, although each co-op has its own criteria for picking recipients, for setting the size of each scholarship, and for determining the appropriate educational programs for which the scholarships may be used.

   “We can all be proud of what we’ve accomplished here,” commented Al beadles. “It’s an example of the co-ops’ determination and our concern for community.” However, given the arduous path the Federated Youth Foundation has traveled, he cautioned, “We have to not assume we’ll always have it. We have to make sure we take care of it.”—Perry Baird

Natural High
Breaking the energy industry’s addiction to natural gas

   We’re at a crossroads in energy policy. Critical, long-term choices are being made, right now.

   Between late January and early April, without seriously trying, this writer collected 18 major newspaper stories about the high and volatile price of natural gas and alternatives to gas as a fuel for generating electricity. Half the stories examined coal’s resurgence as the major electric generating fuel after being out of favor for the better part of three decades.

   Out of favor but not out of business. Coal today is the basic energy source creating more than half the electricity produced in the United States—and a little more than 70 percent of that produced in Wisconsin. What’s different about the recent attention to coal is that many now see it not as a relic of the 19th century but rather as the fuel of the future.

Turnaround Time

   Coal’s suddenly brighter future is a decidedly unexpected result of the electric power industry’s mad embrace of coal’s chief rival, natural gas. Early in the 1990s, gas producers were practically giving the stuff away. Now, it’s bringing prices that shift advantage to the foreign competitors of American industries and explode the energy costs of individual homeowners.

   There are several reasons: domestic sources past their prime; unusually cold weather interfering with the refilling of reserves; and far heavier reliance on what had been mainly a heating fuel, to meet growing electricity demand during the cooling season. Almost every U.S. power plant built since the mid-1980s burns natural gas. Large ones burn it at rates comparable to all the other uses of gas in a good-sized city, combined.

   Put another way, if we want to get rid of all the natural gas in the country as quickly as possible, we’ve found the right recipe. Robert Garvin of Wisconsin’s Public Service Commission agreed with that statement, and he warned about “the profound economic and policy consequences of putting all your eggs in one basket,” where electric generation is concerned.

   A mid-February Wall Street Journal story noted that U.S. chemical manufacturers had lost almost 80,000 jobs since 2000. The Journal reported industry executives were asking for federal policies that promote more domestic gas drilling and reduce incentives to use gas generating electricity. Otherwise, the executives said, “investments and jobs will increasingly go to Asia and the Middle East,” where products heavily dependent on abundant gas supplies are made at lower cost.

   Late this past winter, Energy Committee Chair Pete Domenici (R–NM) took the floor of the U.S. Senate to call for passage of a comprehensive energy bill. His remarks were hard to dismiss: “The simple truth is we are approaching the limits of our ability to provide affordable, reliable power. In the winter, that means prices that are higher than ever before, but it is no longer just the winter. Because natural gas has become the fuel of choice for new electricity plants, we now face the same squeeze during the summer cooling months.”

   That was Domenici’s short-term view. Looking farther out, “I predict that natural gas volatility will become as difficult a political issue as oil prices, and I predict that blackouts will increasingly become something to be expected,” he said.

   Gas-dependent industries face more problems than just high fuel prices. Obtaining the product can be as challenging as paying for it. As reporter Bill Pritchard wrote in Electric Co-op Today earlier this year, a federal study found that “scheduling timely deliveries of natural gas to electricity generators is a growing problem in the energy market.”

   Unprompted, Commissioner Garvin identified gas delivery as uniquely worrisome in this state. “Wisconsin has a particular concern in that we are at the end of the pipe, surrounded on two sides by Great Lakes, and have no storage facilities,” he said.

   The problems inherent to an overburdened pipeline system combined with gas-fired power plants’ ravenous appetite for the fuel are exemplified in Western Wisconsin. It’s impractical to build a large gas-fired plant there, where in the view of policy makers, pipelines are already “constrained” and unlikely to be built to a higher capacity in the foreseeable future.

Not Without Alternatives

   One state energy official recently told Wisconsin Energy Cooperative News that in a private conversation this spring, a federal counterpart referred to natural gas as “the crack cocaine of the energy industry.”

   If electricity producers got themselves hooked on natural gas, the reasons are straightforward. Gas burns cleaner than coal, and in an era of unregulated independent generators offering power on the open market, gas-fired plants were cheaper and faster to build.

   But those advantages have lost some allure.

   High gas prices and failed state-level utility restructuring schemes have made it uneconomical to run many older, less efficient gas-fired plants. And with improving control technology, pollutant emissions from coal plants are dramatically reduced.

   Since the Clean Air Act of 1970, emissions of nitrogen oxides are down 40 percent, sulfur dioxide down 39 percent, volatile organic compounds (smog precursors) down 42 percent, particulate matter down 75 percent, and lead down 98 percent. Mercury emissions are down 40 percent compared with 1970, and of those that remain, 70 percent will be eliminated by 2018.

   Most remarkable is that over the 30 years during which those reductions were achieved, the use of coal to generate electricity tripled. And since plants are not yet widely equipped with the new clean-coal combustion technologies, greater improvement is assured.

   A recent paper from the Edison Electric Institute, an industry association, put it bluntly: “None of what you read today about worsening air quality is true.”

   All of which makes North America’s status as “the Saudi Arabia of coal” considerably more meaningful. The continent’s known 250-year coal reserves may be the antidote to the electric power industry’s unhealthy gas addiction, and help stretch the life of existing gas reserves for uses to which they’re better suited.

   Otherwise, we may belatedly come to grips with the eye-opening question Minnesota Public Utilities Commission Chair Leroy Koppendrayer raised earlier this year at a joint board meeting of Minnesota and Wisconsin cooperative directors.

   Koppendrayer noted that his state, like most others, had seen all its new electric generating capacity in recent decades fueled with natural gas, and he reflected on recent federal estimates that, assuming continuation of current usage patterns, reserves would be depleted to the point of no longer being practical for mass-market use in about 43 years.

   If we burn up all the natural gas running power plants, Koppendrayer asked, “then what am I going to use to heat my home?”—Dave Hoopman

Editorial
by Perry Baird

Revisiting the Medical Frontier

   In Prairie du Chien, modern-day museum-goers have a unique chance to trace medical progress during the first part of the 19th century. There, at the confluence of the Mississippi and Wisconsin rivers, the United States Army built Fort Crawford shortly after the close of the War of 1812 to maintain order on the frontier. Though the first structure was damaged irreparably by floods, the United States rebuilt the fort on higher ground, complete with an impressive stone army hospital, in 1829.

   It was at Fort Crawford that the now-famous Dr. William Beaumont served as army surgeon from 1828–32. His revolutionary experiments on the human digestive system were conducted on voyageur Alexis St. Martin, whose unhealed stomach wound had resulted from a near-fatal gun wound. Other notable residents of Fort Crawford were Colonel Zachary Taylor, Lieutenant Jefferson Davis, and Black Hawk—the latter as a prisoner after the Black Hawk War.

   By 1868, the fort was abandoned; most of the buildings were sold and eventually demolished, but the army hospital remained.

   Today, it is part of the Prairie du Chien Museum complex operated by the city’s Historical Society. Within the old Fort Crawford Hospital, visitors can glimpse unique vignettes of frontier medicine. Exhibits include the history and restoration of the fort, the history of military medicine, a doctor’s office of the 1850s, a refurbished pharmacy and dental office, a collection of medical instruments, and a series of dioramas tracing the progress of surgery. Two other buildings in the complex deal with such diverse exhibits as the Black Hawk War, Native American artifacts, fossils, clams, the iron lung, the “transparent twins,” and a medical library.

   The Fort Crawford Museum is located at 717 S. Beaumont Road in Prairie du Chien. It is open daily from May 1 through October 31, 10 a.m.–5 p.m. Call 608/326-6960 or visit http://www,fortcrawfordmuseum.com for more information.—Linda Hilton