Wisconsin Administrative Code
Department of Agriculture, Trade and Consumer Protection
ATCP 90-139 - Trade and Consumer Protection
Chapter ATCP 100 - Milk Contractors
Subchapter II - Financial Standards and Security
Section ATCP 100.135 - Contributing milk contractors; fund assessments

Universal Citation: WI Admin Code ยง ATCP 100.135

Current through August 26, 2024

(1) GENERAL. A contributing milk contractor shall pay an annual fund assessment for each license year. The annual fund assessment shall be calculated under this section, rather than under s. 126.46, Stats. Except as provided in sub. (6) or (10), or s. ATCP 100.13, the annual fund assessment amount shall equal the sum of the assessments in subs. (1e) and (1m).

(1e) BASIC ASSESSMENT. A contributing milk contractor shall pay a basic assessment equal to the minimum assessment amount listed in sub. (9) or the sum of the following multiplied by 0.8, whichever is greater:

(a) The milk contractor's current ratio assessment. The current ratio assessment for a license year equals the milk contractor's current ratio assessment rate under sub. (2) multiplied by the annual milk payroll obligations reported under s. 126.41(6) (a), Stats., in the milk contractor's license application for that license year.

(b) The milk contractor's debt to equity ratio assessment. The debt to equity ratio assessment for a license year equals the milk contractor's debt to equity ratio assessment rate under sub. (4) multiplied by the annual milk payroll obligations reported under s. 126.41(6) (a), Stats., in the milk contractor's license application for that license year.

(1m) DEFERRED PAYMENT ASSESSMENT. A contributing milk contractor shall pay a deferred payment assessment under s. 126.485(5), Stats., equal to the amount the milk contractor reports under s. 126.41(6) (ag), Stats., in the milk contractor's license application for that license year multiplied by 0.0035.

(2) CURRENT RATIO ASSESSMENT RATE. A milk contractor's current ratio assessment rate is calculated, at the beginning of the license year, as follows:

(a) If the milk contractor has filed an annual financial statement under s. 126.44, Stats., and that financial statement shows a current ratio of at least 1.25 to 1.0, the milk contractor's current ratio assessment rate equals the greater of zero or the current ratio assessment factor in sub. (3) (a) multiplied by an amount determined as follows:
1. Subtract 3 from the current ratio.

2. Divide the amount determined under subd. 1. by 6.

3. Multiply the amount determined under subd. 2. by negative one.

4. Raise the amount determined under subd. 3. to the 3 rd power.

5. Divide 0.55 by the current ratio.

6. Raise the amount determined under subd. 5. to the 7 th power.

7. Add the amount determined under subd. 4. to the amount determined under subd. 6.

8. Add 0.075 to the amount determined under subd. 7.

(b) If the milk contractor has filed an annual financial statement under s. 126.44, Stats., and that financial statement shows a current ratio of less than 1.25 to 1.0, but greater than 1.05 to 1.0, the milk contractor's current ratio assessment rate equals the current ratio assessment factor in sub. (3) (b) multiplied by an amount determined as follows:
1. Subtract 3 from the current ratio.

2. Divide the amount determined under subd.1. by 6.

3. Multiply the amount determined under subd. 2. by negative one.

4. Raise the amount determined under subd. 3. to the 3 rd power.

5. Divide 0.55 by the current ratio.

6. Raise the amount determined under subd. 5. to the 7 th power.

7. Add the amount determined under subd. 4. to the amount determined under subd. 6.

8. Add 0.075 to the amount determined under subd. 7.

(c) Except as provided in par. (e), if the milk contractor has filed an annual financial statement under s. 126.44, Stats., and that financial statement shows a current ratio of less than or equal to 1.05 to 1.0, the milk contractor's current ratio assessment rate equals the current ratio assessment factor in sub. (3) (b) multiplied by 0.1201478.

(d) Except as provided in par. (e), if the milk contractor has not filed an annual financial statement under s. 126.44, Stats., the milk contractor's current ratio assessment rate equals the current ratio assessment factor in sub. (3) (b) multiplied by 0.103005.

(e) If the milk contractor procures producer milk in this state solely as a producer agent and the milk contractor has not filed an annual financial statement under s. 126.44, Stats., or has filed an annual financial statement that shows a current ratio of not more than 1.05 to 1.0, the milk contractor's current ratio assessment rate is 0.00025, except that for the milk contractor's 5 th or higher consecutive full license year of participation in the fund the milk contractor's current ratio assessment rate is 0.000175.

(3) CURRENT RATIO ASSESSMENT FACTOR.

(a) A milk contractor's current ratio assessment factor under sub. (2) (a) is 0.001, except as follows:
1. For the milk contractor's 3 rd consecutive full license year as a contributing milk contractor, the milk contractor's current ratio assessment factor is 0.0007.

2. For the milk contractor's 4 th consecutive full license year as a contributing milk contractor, the milk contractor's current ratio assessment factor is 0.0003.

3. For the milk contractor's 5 th or higher consecutive full license year as a contributing milk contractor, the milk contractor's current ratio assessment factor is zero.

(b) A milk contractor's current ratio assessment factor under sub. (2) (b) to (d) is 0.0015, except that, for the milk contractor's 5 th or higher consecutive full license year of participation in the fund, the milk contractor's current ratio assessment factor is 0.000675.

(4) DEBT TO EQUITY ASSESSMENT RATE. A milk contractor's debt to equity ratio assessment rate is calculated, at the beginning of the license year, as follows:

(a) If the milk contractor has filed an annual financial statement under s. 126.44, Stats., and that financial statement shows positive equity and a debt to equity ratio of not more than 2.0 to 1.0, the milk contractor's debt to equity ratio assessment rate equals the greater of zero or the debt to equity ratio assessment factor in sub. (5) (a) multiplied by an amount determined as follows:
1. Subtract 2 from the debt to equity ratio.

2. Divide the amount determined under subd. 1. by 3.

3. Raise the amount determined under subd. 2. to the 9 th power.

4. Divide the debt to equity ratio by 3.25.

5. Raise the amount determined in subd. 4. to the 5 th power.

6. Add the amount determined under subd. 3. to the amount determined under subd. 5.

7. Add 0.025 to the amount determined under subd. 6.

(b) If the milk contractor files an annual financial statement under s. 126.44, Stats., and that financial statement shows a debt to equity ratio of greater than 2.0 to 1.0 but less than 2.9 to 1.0, the milk contractor's debt to equity ratio assessment rate equals the debt to equity ratio assessment factor in sub. (5) (b) multiplied by an amount determined as follows:
1. Subtract 2 from the debt to equity ratio.

2. Divide the amount determined under subd. 1. by 3.

3. Raise the amount determined under subd. 2. to the 9 th power.

4. Divide the debt to equity ratio by 3.25.

5. Raise the amount determined under subd. 4. to the 5 th power.

6. Add the amount determined under subd. 3. to the amount determined under subd. 5.

7. Add 0.025 to the amount determined under subd. 6.

(c) Except as provided in par. (e), if the milk contractor has filed an annual financial statement under s. 126.44, Stats., and that financial statement shows negative equity, or a debt to equity ratio of at least 2.9 to 1.0, the milk contractor's debt to equity ratio assessment rate equals the debt to equity ratio assessment factor in sub. (5) (b) multiplied by 0.590704.

(d) Except as provided in par. (e), if the milk contractor has not filed an annual financial statement s. 126.44, Stats., the milk contractor's debt to equity ratio assessment rate equals the debt to equity ratio assessment factor in sub. (5) (b) multiplied by 0.11325375.

(e) If the milk contractor procures producer milk in this state solely as a producer agent and the milk contractor has not filed an annual financial statement under s. 126.44, Stats., or has filed an annual financial statement that shows negative equity or a debt to equity ratio of at least 2.9 to 1.0, the milk contractor's debt to equity ratio assessment rate is 0.00025, except that for the milk contractor's 5 th or higher consecutive full license year of participation in the fund the milk contractor's debt to equity ratio assessment rate is 0.000175.

(5) DEBT TO EQUITY RATIO ASSESSMENT FACTOR.

(a) A milk contractor's debt to equity ratio assessment factor under sub. (4) (a) is 0.0015, except as follows:
1. For the milk contractor's 3 rd consecutive full license year as a contributing milk contractor, the milk contractor's debt to equity ratio assessment factor is 0.001.

2. For the milk contractor's 4 th consecutive full license year as a contributing milk contractor, the milk contractor's debt to equity ratio assessment factor is 0.0005.

3. For the milk contractor's 5 th or higher consecutive full license year as a contributing milk contractor, the milk contractor's debt to equity ratio assessment factor is zero.

(b) A milk contractor's debt to equity ratio assessment factor under sub. (4) (b) to (d) is 0.00225, except that, for the milk contractor's 5 th or higher consecutive full license year as a contributing milk contractor, the milk contractor's debt to equity ratio assessment factor is 0.001.

(6) REDUCED ASSESSMENTS.

(a) If a contributing milk contractor files security under s. 126.47(1) (b), Stats., the milk contractor's fund assessment under sub. (1) is reduced by the amount provided in s. 126.46(5m), Stats. This reduction is in addition to any reduction provided under par. (b).

(b) If a contributing milk contractor files security under par. (d) in an amount that is at least equal to the milk contractor's estimated default exposure less the maximum fund reimbursement amount, the milk contractor's annual fund assessment under sub. (1) for that year is reduced by an amount that is determined as follows:
1. Subtract the maximum fund reimbursement from the milk contractor's estimated default exposure.

2. Divide the result in subd. 1. by the milk contractor's estimated default exposure.

3. Multiply the results in subd. 2. by the amount of the milk contractor's annual fund assessment under sub. (1).

(c) Notwithstanding pars. (a) and (b), no contributing milk contractor may pay a fund assessment that is less than the minimum fund assessment under sub. (9).

(d) A milk contractor may at any time file security with the department, regardless of whether the milk contractor is required to file security. Except as provided in par. (b), a voluntary security filing under this paragraph does not relieve a milk contractor of any other obligation to file security or pay fund assessments.

Note: A milk contractor who files voluntary security under par. (d) may be eligible for a reduction in fund assessments under par. (b), and may be able to make a more favorable disclosure to producers under s. ATCP 100.20 (2).

(7) QUARTERLY INSTALLMENTS.

(a) A contributing milk contractor shall pay the milk contractor's annual fund assessment in equal quarterly installments that are due as follows:
1. The first installment is due on June 1 of the license year.

2. The 2 nd installment is due on September 1 of the license year.

3. The 3 rd installment is due on December 1 of the license year.

4. The 4 th installment is due on March 1 of the license year.

(b) A contributing milk contractor may prepay any of the quarterly installments under par. (a).

(c) A contributing milk contractor who applies for an annual license after the beginning of a license year shall pay for the full annual fund assessment required under this section. The milk contractor shall pay, with the first quarterly installment that becomes due after the day on which the department issues the license, all of the quarterly installments for that license year that were due before that day.

(d) If s. 126.45(1) (b), Stats., requires a license milk contractor to become a contributing milk contractor during the license year, the milk contractor shall pay only those quarterly installments that become due after the requirement takes effect.

(e) A contributing milk contractor who fails to pay the full amount of any quarterly installment when due shall pay, in addition to that installment, a late payment penalty of $50 or 10% of the overdue installment, whichever is greater.

(8) NOTICE OF ANNUAL ASSESSMENT AND QUARTERLY INSTALLMENTS. When the department issues an annual license to a contributing milk contractor, the department shall notify the milk contractor of all of the following:

(a) The amount of the milk contractor's annual fund assessment under this section.

(b) The amount of each required quarterly installment under sub. (7) and the date by which the milk contractor must pay each installment.

(c) The penalty that applies under sub. (7) (e) if the milk contractor fails to pay any quarterly installment when due.

(9) MINIMUM FUND ASSESSMENTS. A contributing milk contractor shall pay the following minimum assessment if that minimum assessment is greater than the amount calculated under sub. (1) less applicable reductions under sub. (6):

(a) If the milk contractor reports an amount under s. 126.41(6) (a), Stats., that is less than $1.5 million, the minimum assessment is $100.

(b) If the milk contractor reports an amount under s. 126.41(6) (a), Stats., that is at least $1.5 million but less than $6 million, the minimum assessment is $200.

(c) If the milk contractor reports an amount under s. 126.41(6) (a), Stats., that is at least $6 million, the minimum assessment is $500.

(10) EXEMPTION. A contributing milk contractor is not required to pay any fund assessment under this section for a license year, other than a deferred payment assessment required under sub. (1m), if all of the following apply:

(a) The milk contractor was classified as a contributing milk contractor in each of the 5 license years immediately preceding that license year.

(b) The fund balance attributable to milk contractors was at least $6 million on February 28 of the last preceding license year.

(c) The overall fund balance was at least $11 million on February 28 of the last preceding license year.

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