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<big>'''Service Center Policy'''</big>
<big>'''Service Center Policy'''</big>
== Basis and Purpose of the Policy ==
== Basis and Purpose of the Policy ==
The University at Nebraska Medical Center's (UNMC) policy for the financial management of service centers has been established to provide consistent operational practices among the various service center units and to ensure compliance with federal government regulations. This is important because UNMC conducts sponsored programs under federal government grants and contracts. Service center activities result in direct and indirect charges to sponsored grants and contracts. Therefore, Service Center policies and practices must reflect government regulatory costing principles such as those contained in the Office of Management Budget (OMB) Circular A-21, "Cost Principles for Educational Institutions," and those required by the Cost Accounting Standards Board. As a major research university, UNMC cost accounting must be consistent for all operations.
The University of Nebraska Medical Center's (UNMC) policy for the financial management of service centers was established to provide consistent operational practices among the various service center units and to ensure compliance with federal government regulations.
 
Service center activities result in direct charges to sponsored grants and contracts. The federal costing principles applicable to service center activities are contained in the Office of Management and Budget’s (OMB) Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards or Uniform Guidance - 2 CFR Part 200, and the Uniform Guidance Compliance Supplement under Cost Principles for Institutions of Higher Education Allowable Costs – Special Requirements – Internal Service, Central Service, Pension, or Similar Activities or Funds.


== Definitions ==
== Definitions ==
===Types of Auxiliaries at UNMC=== 
* '''Service Centers''' - Service centers are organizational units providing goods or services to users principally within the UNMC academic and administrative community for a calculated fee. All service centers are expected to recover the aggregate costs of their operations through charges to users and are expected to break even over time. Examples of service centers are UNMC printing services and various UNMC Core Facilities, such as the Confocal Microscope Core Facility, the DNA Sequencing Core Facility and the Cell Analysis Facility. Cost centers which purchase inventory and sell it to other departments without any additional mark-up or costs added to it are not a service center and should instead be considered a revolving center (see below).
*'''Auxiliary Enterprise''' - An organizational unit that provides goods or services primarily to students, faculty, staff and others for their own personal use, rather than as a service to internal University operations. Examples of auxiliary enterprises include the UNMC Bookstore and the Center for Healthy Living. Auxiliary enterprises are not subject to this policy.
*'''Revolving Center''' - A revolving center is an account established to run expenses through it but does not charge for any goods or services. Revolving centers are not subject to this policy.
*'''Student Fees''' - Student lab fees collected for lab supplies, technology, etc. Student fees are not subject to this policy.
*'''Contract Auxiliaries''' - Auxiliaries that involve negotiated contracts with an internal or external entity. Contract auxiliaries are not subject to this policy.
*'''Specialized Service Facility (SSF)''' - A service center that provides services that are highly complex. UNMC does not have a SSF but does have an Animal Research Facility (ARF) which follows the rules and regulations stipulated in the [http://grants.nih.gov/grants/policy/air/rate_setting_manual_2000.pdf National Institute of Health's Cost Analysis and Rate Setting Manual for Animal Research Facilities].
===Users===
Purchasers of goods/services can be internal or external to UNMC. 
*'''Internal''' - All colleges and institutions within UNMC are considered internal users as well as all University of Nebraska's campuses (e.g. University of Nebraska Omaha, Lincoln and Kearney).
*'''External''' - External users include the public, students, and any members of faculty or staff acting in a personal capacity.
===Components of Costs in Rates===
All costs, subsidies and revenue relating to a service center must be accounted for when determining charge rates.
*'''Direct Costs''' - All costs that can be specifically identified with a service or good provided by a service center.       
:*'''Direct Personnel''' - The salaries, wages and fringe benefits of all personnel directly related to the service center's activity (e.g. lab technicians or machine operators).
:*'''Materials and Supplies''' - The costs of materials and supplies needed to operate a service center.
:*'''Other expenses''' - Other operating expenses include rental and service contracts, equipment operating leases and professional services.
*'''Institutional Indirect Costs''' - The costs of administrative and supporting functions of UNMC. Institutional indirect costs consist of general administration and general expenses, such as executive management, payroll, accounting and personnel administration; operations and maintenance expenses, such as utilities, building maintenance and custodial services; building depreciation and interest associated with the financing of buildings; administrative and supporting services provided by academic departments; libraries; and special administrative services provided to sponsored projects.
*'''Capital Equipment''' - Capital equipment is an item with a purchase price over $5,000 and a useful life of at least one year.
*'''Service Center Child Account''' - A child account cost center is created to collect depreciation charges associated with capital equipment for a service center. Purchases of capital equipment for the service center should be capitalized through this account. Child should only be analyzed in conjunction with the operation cost center. Child accounts CANNOT be created or utilized without the approval of the Department of Financial Compliance and Cost Analysis (FCC). All depreciation entries will be calculated by FCC and booked by General Accounting.
*'''Depreciation''' - The depreciation of capital equipment charged to service center operations is based on the straight line method over the useful life of the asset.
*'''Useful Life''' - Service center capital equipment must be depreciated using the useful lives outlined in [https://info.unmc.edu/management/finance/general-accounting/information-manual/index.html Capitalization Policy and Definitions] section of the Accounting Information Manual.
*'''Unallowable Costs''' - Costs that cannot be charged directly or indirectly to sponsored programs. These costs are specified in the OMB Circular A-21. Common examples of unallowable costs include advertising, alcoholic beverages, bad debts, charitable contributions, entertainment, fines and penalties, goods and services for personal use, interest (except interest related to the purchase or construction of buildings and equipment), selling and marketing expenses. See [[Unallowable Cost Policy|Policy 6103, Unallowable Costs]], for additional information.


===Billing Rate===
*  '''Service Centers''' - Service centers are cost objectives that regularly provide goods or services to other UNMC departments for a calculated fee. The most common type of service center is a Core Facility. Service centers that charge federally sponsored cost objectives are subject to this policy.
The amount charged to a user for a unit of service. Billing rates are usually computed by dividing the total annual costs of a service by the total number of billing units expected to be provided to users of the service for the year. (See [https://info.unmc.edu/management/finance/fincompliance/core_lab_rate_congifuration_example.xls Rate Setting Procedure] for further explanation).  
* '''Auxiliary Enterprise''' - An organizational unit that provides goods or services primarily to students, faculty, staff, and others for personal use, rather than as a service to internal University operations. Examples of auxiliary policy enterprises include the UNMC Bookstore and the Center for Healthy Living. Auxiliary enterprises are not subject to this policy.
*'''Billing Unit''' - The unit of service provided by a service center. Examples of billing units include hours of service, animal care days, tests performed, machine time used, etc.
* '''Revolving Center''' - A cost objective that is used to house purchases or transactions that will later be allocated without additional mark-up or added costs.  Oftentimes, revolving centers are used to obtain bulk pricing or discounted supplies.  These may be described as a clearing account which can be used for tracking purposes or will be billed to an affiliate organization.  Revolving Centers are not subject to this policy.
*'''Break-even Concept''' - A rate development theory where revenues offset expenses over a reasonable period of time.
* '''Student Fees''' - Student lab fees collected for lab supplies, technology, etc. Student fees are not subject to this policy.
*'''Surplus''' - The amount of revenue generated by a service center that exceeds the cost of providing services during a fiscal year.
* '''Self-Funded Activities–'''A cost objective that derives funding from charging other sales/contract activities not defined above. Other self-funded activities do not anticipate charging and shall not charge UNMC federally sponsored projects. Other self-funded activities typically will not be subject to this policy so long as they do not charge federally sponsored cost objectives. Examples of self-funded centers would be continuing education programs, or other centers that provide contracted services with various community organizations or external customers.
*'''Allowable Surplus''' - A surplus (including both the annual surplus and the carry forward surplus/deficit from prior years) equal to or less than 60 days worth of operating expenditures for a fiscal year.
* '''Internal''' '''Customers'''- All University of Nebraska departments are considered internal users.  This is true regardless of funding source.  
*'''Deficit''' - The amount that the costs of providing services exceeds the revenue generated by the service center during a fiscal year.
* '''External''' '''Customers'''- External users include non-profit entities, for-profit entities, the public, students, and any members of faculty or staff acting in a personal capacity.
* '''Billing Unit''' - The unit of service provided by a service center. Examples of billing units include hours of service, animal care days, tests performed, machine time used, etc.
* '''Break-even Concept''' - A billing rate development model where revenues are set to equal expenses over a period, usually one year.


== Policy ==
== Policy ==
Service centers can result in charges, directly or indirectly, to sponsored programs at UNMC. As a recipient of federal grants and contracts, UNMC must comply with cost principles and cost accounting standards promulgated by the federal government.
Service centers, as defined by this policy, must follow both [[Sponsored Programs Costing|UNMC Policy 6100 - Sponsored Programs Costing]], as well as the additional requirements specific to Service Centers listed below.  
OMB Circular A-21: The Cost Principles for Educational Institutions are set forth in the Office of Management and Budget Circular A-21. Section J.47 of OMB Circular A-21 deals specifically with service centers and is explicit in the following two concepts:
 
*recipients of federal funds are not to recover more than cost.
* Service Centers must set and adjust rates to break-even or lower. Service Centers are not normally allowed to accumulate profits (surpluses). Rates that are set below breakeven can result in a deficit. Deficits are the responsibility of the administrative department that oversees the service center.  
*recipients are not to discriminate in the price of services charged to governmental and non-governmental users.
* The Service Center must identify all planned deficits. The University, college or department may elect to subsidize the operations of a service center, either by charging billing rates that are intended to be lower than costs or by not adjusting rates for a service center's deficits. Service center deficits caused by intentional subsidization cannot be carried forward as adjustments to future billing rates. Since subsidies can result in a loss of funds to the University, they should be provided only when there is a sound programmatic reason.
The principles provide for recognition of the full allocated costs of federal grants and contracts with no provision for profit or other increment above actual incurred, documented costs.<br />
* Capital reserves (cash balance at fiscal year-end) shall not exceed 60 days of annual expenses (approximately 16.4%).
<br />
* Billing rates must only include operational costs (direct costs) and exclude unallowable costs and indirect costs (see Policy 6100).  This means that equipment/capital purchases cannot be included in billing rates or used to calculate the operational surplus/deficit.  
Service centers also must follow three additional regulations stated in the A-133 Compliance Supplement (document page 3-B-39 & 3-B-40): 
* Surpluses and deficits will normally be carried over and used in the calculation of future billing rates.
*capital reserves (cash balance at fiscal year end) are not to be in excess of 60 days of annual expenses.
* Billing rates must be calculated every two years based on historical data, but preferably on an annual basis. In the absence of actual data, estimates can be used for new service centers or in justifiable changes to service center activities.
*billing rates must exclude unallowable costs (see Policy 6103).
* Billing rates must be developed for all distinct services provided. A surplus generated by one service cannot subsidize other services provided by the service center.
*billing rates are to be developed based on actual costs and adjusted annually.
* Incidental charges to federal grants may occur for various reasons. These infrequent charges may not qualify as a service center, but normal costing principles contained in Policy 6100 and the Service Center Policy would still apply.
* Billings must be based on actual use. Prepayments are not allowed. Billing must not occur until the service has been rendered. The service center must retain documentation supporting the charges, including documentation of the expenses and usage. All billings should be processed on a timely basis (usually monthly). Documentation should be retained by the service center to answer any user inquiries or in case of an audit.
* Services and pricing will be published on a departmental website. Price discrimination is not allowed for internal users.
* '''Rate Setting and the Service Center Procedure''' – contains additional information and detailed instructions on how to develop service center rates and other operational requirements of Service Centers.


== Responsibilities ==
== Responsibilities ==
The [https://info.unmc.edu/management/finance/fincompliance/ Department of Financial Compliance and Cost Analysis] (FCC) is responsible for reviewing service centers when there are more than $10,000 in federal charges within a fiscal year by a particular service center. FCC also must approve the use of depreciation in rate calculations for '''all''' service center that includes depreciation expense in their billing rate.
Office of Costing & Analysis (OCA)
 
*   OCA shall review all rates submitted by service centers for compliance.
*   OCA shall monitor all service centers with internal charges to Federal Projects in excess of $25,000 within a fiscal year.
* Service centers may request assistance from OCA when determining service center rates.
* OCA must approve the use of depreciation in rate calculations and billing rates.  (This is not a common situation.)
 
Service Centers
 
·       Service centers shall submit rate setting documentation to OCA when:
 
o  A service center is initially established.
 
o  A service center with internal charges to Federal Projects over $25,000 within a fiscal year that modifies any rates.
 
·       Service centers is responsible to follow all applicable guidelines contained in this policy and regulations and maintain day-to-day operations. The day-to-day operation include, but are not limited to:
 
o  Tracking operating expenses and documenting all service center usage by individual customer
 
o  Generating invoices and monitoring billing/receivables
 
o  Publishing approved billing rates on departmental website
 
o  Updating space and equipment inventories annually, at minimum
 
o  Retaining supporting documentation related to billing rate calculations, invoices for each customer, the billing rate charged, and billing rate approvals
 
o  Providing documentation requested by OCA for internal review
 
·       Service centers shall set rates at least once during a two-year rolling period. OCA recommends service centers review their rates every fiscal year by monitoring financial activities throughout the year and perform year-end review of fund balance to ensure breakeven operation or to evaluate the need to change rates.
 
Campus Departments
 
·       Departmental Administration (including Departmental Administrators, Chairs, Core Lab Directors) with financial and administrative oversight of a service center will follow applicable guidelines contained in this policy and the related procedure.
 
·       Departments shall cover all planned deficits, as well as capital outlays and any expenses (e.g. Institutional F&A expenses) that are not allowed to be recovered through service rates.
 
'''Special Consideration for External Customers- Unrelated Business Income Tax'''
 
Charges to external users may be subject to Unrelated Business Income Tax (UBIT). UBIT determination and calculation may require documentation from the departments that are providing services to external users. Cost objectives generating UBIT liability may be required to contribute to UBIT payments.
 
'''Additional Information'''


== Guidelines ==
* Manager, Office of Costing    & Analysis
=== Service Center Billing Rates ===
* Office of Costing & Analysis
Billing rates should be designed to recover the direct operating costs of providing the goods/services on an annual basis excluding all unallowable costs. Billing rates should be computed annually by the service center. The rates should be based on a reasonable estimate of the costs of providing the services for the year and the projected number of billing units for the one year period. The billing rate computation should be documented and maintained on file. Deficits or surpluses should be carried forward as an adjustment to the billing rates in the next fiscal year. Surpluses cannot exceed more than 60 days worth of operating expenses for the service center.
* Service Center Rate Setting Procedure
=== Service Center Billing ===
* Rate Setting - Sample Worksheet
All billing must be processed on a timely basis at established service center rates. Billing must not occur until the service has been rendered. Prepayments are not allowed. The service center must retain documentation supporting the charges, including documentation of the expenses and usage.
* Uniform Guidance - 2 CFR 200
=== Service Centers that Provide Multiple Services ===
* National Institute of Health's Cost Analysis and Rate     Setting Manual for Animal Research Facilities
Where a service center provides different types of services to users, separate billing rates should be established for each service that represents a significant activity within the service center. The costs, revenues, surpluses and deficits should also be separately identified for each service. The surplus or deficit related to each service should be carried forward as an adjustment to the billing rate for that service in the following period. The surplus from one service may be used to offset the deficit from another service only if the mix of users and level of services provided to each group of users is approximately the same.
* [[General Accounting|General Accounting Policy, UNMC    Policy No. 3000]]
=== Cost Allocation ===
* Accounting Information Manual
Where separate billing rates are used for different services provided by a service center, the costs related to each service must be separately identified through a cost allocation process. Cost allocations will also be needed where a cost partially relates to the operations of a service center and partially to other activities of a department or other organizational unit.<br />
* [[Sponsored Programs Costing|Sponsored Programs Costing Policy, UNMC Policy No. 6100]]
<br />
* General Ledger Account Listings
Depending on the specific circumstances involved, there may be two categories of cost that need to be allocated: (a) costs that are directly related to providing the services, such as the salaries of staff performing multiple services, (b) internal service center overhead.<br />
<br />
When cost allocations are necessary, they should be made on an equitable basis that reflects the relative benefits each activity receives from the cost. For example, if an individual provides multiple services, an equitable distribution of his or her salary among the services can usually be accomplished by using the proportional amount of time the individual spends on each service. Other cost allocation techniques may be used for service center overhead and institutional indirect costs, such as the proportional amount of direct costs associated with each service, etc. Questions concerning appropriate cost allocation procedures should be directed to Financial Controls and Compliance.
=== Service Center Accounting ===
To comply with the UNMC Accounting Policy, 3000, it is important that service centers use the correct general ledger account when recording revenue and expenditures. The complete list of general ledger accounts is located in the https://info.unmc.edu/management/finance/general-accounting/information-manual/index.html. For internal revenue transactions, general ledger account 481100, Sale Material & Service - Interdepartmental, should be utilized. External revenue transactions should use general ledger account 452100, Sale Material & Service.
=== Equipment Purchases ===
Federal guidelines do not allow the purchase cost of capital equipment to be included in the calculation of the annual surplus or deficit. Also the equipment purchase cost may not be used in the rate setting calculation.
=== Depreciation Expense ===
Federal guidelines allow for the recovery of depreciation associated with the capital assets. If the service center has been approved by FCC to include depreciation in the rate calculation, separate child accounts will be established for service centers to collect depreciation charges. All capital equipment purchases must be made from this child account or another funding source, not the service center's general operating cost center. Depreciation of equipment purchased by the federal government cannot be included in the user rates.<br />
<br />
Service center equipment must be depreciated using the useful lives outlined in UNMC Policy No. 3000, [[General Accounting]].<br />
<br />
Service centers which include depreciation in their rates must have funds or activities associated with the equipment to capture depreciation. It is important that the government not be charged for the depreciation of a piece of equipment through a user charge and again through UNMC's federally negotiated Facilities & Administration rate. To avoid this duplicate charge, '''FCC will review and approve rates for any service center that includes depreciation in their rates.'''
=== Non-discriminatory Rates ===
A service center must charge '''all internal users''' the same rate for the same level of services or products purchased in the same circumstances. The use of special rates, such as for high volume work, is allowed, but the special rates must be equally available to all users.
=== Services Provided to Outside Parties ===
If a service center activity provides services to individuals or organizations outside of the University, the billing rates may include institutional indirect costs even though these costs are not included in the rates for internal University users. Any amounts charged to outside parties in excess of the regular internal University billing rates should be excluded from the computation of a service center's surpluses and deficits for purposes of making carry-forward adjustments to future billing rates.
=== Transfers of Funds Out of Service Centers ===
It is normally not appropriate to transfer funds out of a service center account to the University's general funds or other accounts. If a transfer involves funds that have accumulated in a service center account because of prior or current year activity, an adjustment to user charges to compensate for the surpluses may be necessary. In the case of surpluses due to premiums charged to external users, these funds, once identified, may be transferred out to other accounts.<br />
=== Subsidized Service Centers ===
In some instances, the University, or a school or department, may elect to subsidize the operations of a service center, either by charging billing rates that are intended to be lower than costs or by not making adjustments to future rates for a service center's deficits. Service center deficits caused by intentional subsidies cannot be carried forward as adjustments to future billing rates. Since subsidies can result in a loss of funds to the University, they should be provided only when there is a sound programmatic reason.
==Additional Information==
*[mailto:mhrncirik@unmc.edu Senior Manager, Financial Compliance and Cost Analysis]
*[https://info.unmc.edu/management/finance/fincompliance/index.html Financial Compliance and Cost Analysis]
*UNMC Policy No. 3000, [[General Accounting]]
*UNMC Policy No. 6103, [[Unallowable Cost Policy|Unallowable Costs]]
*OMB Circular A-21
*Cost Accounting Standards Board
*[http://grants.nih.gov/grants/policy/air/rate_setting_manual_2000.pdf National Institute of Health's Cost Analysis and Rate Setting Manual for Animal Research Facilities]
*[https://info.unmc.edu/management/finance/general-accounting/information-manual/index.html Accounting Information Manual]
*A-133 Compliance Supplement
*[https://info.unmc.edu/management/finance/general-accounting/general-ledger.html General Ledger Account Listings]
*[https://info.unmc.edu/management/finance/fincompliance/core_lab_rate_congifuration_example.xls Rate Setting Procedure]
*[http://grants.nih.gov/grants/guide/notice-files/NOT-OD-13-053.html NIH FAQs to Explain Costing Issues for Core Facilities ]<br />


== NIH FAQs to Explain Costing Issues for Core Facilities ==
This page maintained by [mailto:mhurlocker@unmc.edu mh].
This page maintained by [mailto:mhurlocker@unmc.edu mh].

Revision as of 15:37, September 17, 2024

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Sponsored Programs | Sponsored Programs Costing | Institutional Base Salary | Sponsored Project Cost Share | Effort Certification | Cost Transfer | Service Center | Subrecipient Policy | On-Campus and Off-Campus Indirect Cost Rates on Federally Sponsored Projects

Policy No.: 6107
Effective Date: 06/27/02
Revised Date: 04/08/10
Reviewed Date: 01/17/13

Service Center Policy

Basis and Purpose of the Policy

The University of Nebraska Medical Center's (UNMC) policy for the financial management of service centers was established to provide consistent operational practices among the various service center units and to ensure compliance with federal government regulations.

Service center activities result in direct charges to sponsored grants and contracts. The federal costing principles applicable to service center activities are contained in the Office of Management and Budget’s (OMB) Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards or Uniform Guidance - 2 CFR Part 200, and the Uniform Guidance Compliance Supplement under Cost Principles for Institutions of Higher Education Allowable Costs – Special Requirements – Internal Service, Central Service, Pension, or Similar Activities or Funds.

Definitions

  •  Service Centers - Service centers are cost objectives that regularly provide goods or services to other UNMC departments for a calculated fee. The most common type of service center is a Core Facility. Service centers that charge federally sponsored cost objectives are subject to this policy.
  • Auxiliary Enterprise - An organizational unit that provides goods or services primarily to students, faculty, staff, and others for personal use, rather than as a service to internal University operations. Examples of auxiliary policy enterprises include the UNMC Bookstore and the Center for Healthy Living. Auxiliary enterprises are not subject to this policy.
  • Revolving Center - A cost objective that is used to house purchases or transactions that will later be allocated without additional mark-up or added costs.  Oftentimes, revolving centers are used to obtain bulk pricing or discounted supplies.  These may be described as a clearing account which can be used for tracking purposes or will be billed to an affiliate organization.  Revolving Centers are not subject to this policy.
  • Student Fees - Student lab fees collected for lab supplies, technology, etc. Student fees are not subject to this policy.
  • Self-Funded Activities–A cost objective that derives funding from charging other sales/contract activities not defined above. Other self-funded activities do not anticipate charging and shall not charge UNMC federally sponsored projects. Other self-funded activities typically will not be subject to this policy so long as they do not charge federally sponsored cost objectives. Examples of self-funded centers would be continuing education programs, or other centers that provide contracted services with various community organizations or external customers.
  • Internal Customers- All University of Nebraska departments are considered internal users.  This is true regardless of funding source.
  • External Customers- External users include non-profit entities, for-profit entities, the public, students, and any members of faculty or staff acting in a personal capacity.
  • Billing Unit - The unit of service provided by a service center. Examples of billing units include hours of service, animal care days, tests performed, machine time used, etc.
  • Break-even Concept - A billing rate development model where revenues are set to equal expenses over a period, usually one year.

Policy

Service centers, as defined by this policy, must follow both UNMC Policy 6100 - Sponsored Programs Costing, as well as the additional requirements specific to Service Centers listed below.

  • Service Centers must set and adjust rates to break-even or lower. Service Centers are not normally allowed to accumulate profits (surpluses). Rates that are set below breakeven can result in a deficit. Deficits are the responsibility of the administrative department that oversees the service center.
  • The Service Center must identify all planned deficits. The University, college or department may elect to subsidize the operations of a service center, either by charging billing rates that are intended to be lower than costs or by not adjusting rates for a service center's deficits. Service center deficits caused by intentional subsidization cannot be carried forward as adjustments to future billing rates. Since subsidies can result in a loss of funds to the University, they should be provided only when there is a sound programmatic reason.
  • Capital reserves (cash balance at fiscal year-end) shall not exceed 60 days of annual expenses (approximately 16.4%).
  • Billing rates must only include operational costs (direct costs) and exclude unallowable costs and indirect costs (see Policy 6100).  This means that equipment/capital purchases cannot be included in billing rates or used to calculate the operational surplus/deficit.
  • Surpluses and deficits will normally be carried over and used in the calculation of future billing rates.
  • Billing rates must be calculated every two years based on historical data, but preferably on an annual basis. In the absence of actual data, estimates can be used for new service centers or in justifiable changes to service center activities.
  • Billing rates must be developed for all distinct services provided. A surplus generated by one service cannot subsidize other services provided by the service center.
  • Incidental charges to federal grants may occur for various reasons. These infrequent charges may not qualify as a service center, but normal costing principles contained in Policy 6100 and the Service Center Policy would still apply.
  • Billings must be based on actual use. Prepayments are not allowed. Billing must not occur until the service has been rendered. The service center must retain documentation supporting the charges, including documentation of the expenses and usage. All billings should be processed on a timely basis (usually monthly). Documentation should be retained by the service center to answer any user inquiries or in case of an audit.
  • Services and pricing will be published on a departmental website. Price discrimination is not allowed for internal users.
  • Rate Setting and the Service Center Procedure – contains additional information and detailed instructions on how to develop service center rates and other operational requirements of Service Centers.

Responsibilities

Office of Costing & Analysis (OCA)

  •   OCA shall review all rates submitted by service centers for compliance.
  •   OCA shall monitor all service centers with internal charges to Federal Projects in excess of $25,000 within a fiscal year.
  • Service centers may request assistance from OCA when determining service center rates.
  • OCA must approve the use of depreciation in rate calculations and billing rates.  (This is not a common situation.)

Service Centers

·       Service centers shall submit rate setting documentation to OCA when:

o  A service center is initially established.

o  A service center with internal charges to Federal Projects over $25,000 within a fiscal year that modifies any rates.

·       Service centers is responsible to follow all applicable guidelines contained in this policy and regulations and maintain day-to-day operations. The day-to-day operation include, but are not limited to:

o  Tracking operating expenses and documenting all service center usage by individual customer

o  Generating invoices and monitoring billing/receivables

o  Publishing approved billing rates on departmental website

o  Updating space and equipment inventories annually, at minimum

o  Retaining supporting documentation related to billing rate calculations, invoices for each customer, the billing rate charged, and billing rate approvals

o  Providing documentation requested by OCA for internal review

·       Service centers shall set rates at least once during a two-year rolling period. OCA recommends service centers review their rates every fiscal year by monitoring financial activities throughout the year and perform year-end review of fund balance to ensure breakeven operation or to evaluate the need to change rates.

Campus Departments

·       Departmental Administration (including Departmental Administrators, Chairs, Core Lab Directors) with financial and administrative oversight of a service center will follow applicable guidelines contained in this policy and the related procedure.

·       Departments shall cover all planned deficits, as well as capital outlays and any expenses (e.g. Institutional F&A expenses) that are not allowed to be recovered through service rates.

Special Consideration for External Customers- Unrelated Business Income Tax

Charges to external users may be subject to Unrelated Business Income Tax (UBIT). UBIT determination and calculation may require documentation from the departments that are providing services to external users. Cost objectives generating UBIT liability may be required to contribute to UBIT payments.

Additional Information

NIH FAQs to Explain Costing Issues for Core Facilities

This page maintained by mh.

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