Service Center: Difference between revisions

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Policy No: '''6107'''<br />

Effective Date: '''06/27/02'''<br />

Revised Date: '''04/08/10'''<br />

Reviewed Date: '''04/08/10'''<br />

== Basis and Purpose of the Policy ==

'''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).  

'''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.         

'''Billing Rate''' - 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 rate setting procedure for further explanation).

      

* '''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.

*    '''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.

*    '''Deficit''' - The amount that the costs of providing services exceeds the revenue generated by the service center during a fiscal year.<br />

== Policy ==

[http://www.whitehouse.gov/omb/rewrite/circulars/a021/a21_2004.html 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.

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.

Service centers also must follow three additional regulations stated in the [http://www.whitehouse.gov/omb/assets/omb/circulars/a133_compliance/04/pt3.pdf A-133 Compliance Supplement] (document page 3-B-39 & 3-B-40):

      

* capital reserves (cash balance at fiscal year end) are not to be in excess of 60 days of annual expenses.

*    billing rates must exclude unallowable costs (see Policy 6103).

*    billing rates are to be developed based on actual costs and adjusted annually.<br />

== Responsibilities ==

The 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.<br />

== Guidelines ==

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.<br />

=== Service Center Billing ===

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.<br />

=== Service Centers that Provide Multiple Services ===

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.<br />

=== Cost Allocation ===

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.<br />

=== 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 on Sapphire. 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.<br />

=== 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.<br />

=== Depreciation Expense ===

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.'''<br />

=== 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.<br />

=== 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.<br />

=== 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 ===

Any questions about this policy should be referred to [http://mailto:wlawlor@unmc.edu Financial Controls and Compliance].<br />

[http://www.whitehouse.gov/omb/rewrite/circulars/a021/a21_2004.html OMB Circular A-21] / [http://www.whitehouse.gov/omb/procurement_casb/ Cost Accounting Standards Board] / [http://www.ncrr.nih.gov/publications/comparative_medicine/CARS.pdf National Institute of Health's Cost Analysis and Rate Setting Manual for Animal Research Facilities] / [[General Accounting|General Accounting Policy, UNMC Policy No. 3000]] / [http://info.unmc.edu/dept/accounting/index.cfm?CONREF=5 Accounting Information Manual] / [[Unallowable Cost Policy|Unallowable Costs Policy, UNMC Policy No. 6103]] / [http://www.whitehouse.gov/omb/assets/omb/circulars/a133_compliance/04/pt3.pdf A-133 Compliance Supplement] / [http://sapphire.nebraska.edu/content/glaccountlistlinks/reference%20materials_doc/html/index.htm General Ledger Account Listings] / [http://info.unmc.edu/dept/fincompliance/index.cfm?L1_ID=2&CONREF=24 Rate Setting Procedure]

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