Policy: V.A.2x inactive
Issued: January 21, 1992
Owner: University Comptroller
This policy describes the process for determining rates that can be assessed by internal support service units, to students as a condition of their enrollment, and nuisance charges assessed to prevent abuse of services.
2.0 Policy [Top]
The University has identified three categories of charges requiring reviews and/or approvals. The first category includes charges assessed to all students as a condition of their enrollment at the University. The amounts charged are determined as part of the University's revenue plan and take into consideration costs incurred by the charging unit as well as directives from the General Assembly regarding non-General Fund revenues. These charges are reviewed by the Budget Office and approved by the Board of Visitors.
The second category includes all charges by internal support service units. These charges are assessed by the service provider (e.g., Facilities Management, computer centers, research support centers, etc.) to other University accounts. All support service unit charges must be developed to recover actual costs consistent with the provisions of Office of Management and Budget Circular A- 21. Support service unit rates are reviewed in the department of Financial Reporting and Analysis and approved by the University Comptroller.
The third category includes nuisance charges. These charges are assessed against users to discourage abuse of the service. Examples include key deposits, room use reservation charges, cancellation fees, etc. They are not intended to recover costs and need not be cost-based. The nuisance charge is proposed by the service provider and reviewed for reasonableness by the Assistant Vice President for Finance and University Comptroller. The Budget Office approves all nuisance charges.
Rates for Revenue Generating Activities are established with the objectives of recovering applicable costs and providing for the continuation of present levels of service.
Rates for the University Hospitals and for Auxiliary Enterprises will be determined by University budgetary policy and the requirements of Federal and State agencies.
Rates for Support Service Units will be determined in accordance with Office of Management and Budget Circular A-21 and related University budgetary policy.
2.3 Authority to Approve Rates
The director of each Revenue Generating Activity is responsible for the initial calculation of all rates to be employed by that activity.
All rates charged by a Revenue Generating Activity must be reviewed and approved by the appropriate authority. The Executive Vice President and Chief Operating Officer is responsible for the review and approval of all rates. This responsibility has been delegated to:
- Hospital - Director of Finance
- Certain Auxiliary Enterprises and Support Service Units - Associate Comptroller for Financial Analysis
All rates for tuition, for fees that are a condition of enrollment, or for primary services of the University or the Hospitals must be approved by The Board of Visitors.
2.4 Purpose of Support Service Unit
To provide goods and services to the University community. Only in exceptional circumstances, where they are not in competition with commercial enterprises, may support service units provide goods and services to entities outside the University community.
2.5 METHOD OF ESTABLISHING SUPPORT SERVICE UNIT RATES
2.5A General Information
New or expanded services must be approved to operate under Procedure 15-70.
Each service center should be identified by an account number. Contact the General Accounting Department to obtain an appropriate account number. Procedure 2-1.
Rates should be developed for each function. Special rates, such as rates for one individual, should not be used.
No charge should be included for any item provided by the state or federal government.
All rates must be applied consistently to both federal and non- federal users.
All work sheets and documents supporting rate calculations should be retained for audit.
Annual rate reviews will be conducted by the Department of Financial Reporting and Analysis.
Rates can be changed at any time during the year provided a revised rate calculation is submitted and approved by the appropriate authority.
Operating statistics should be kept on all services charged out. Service centers should monitor and record the volume of activity for each service on a regular and timely basis.
It is the responsibility of the department head to ensure that the support service center operates on a balanced budget. The rates should be set at a level which will recover all allowable costs; the department head is responsible for funding any under-recovery from other funds. Items
2.5B To Be Considered And/Or Included In The Rate Calculation
Service charges/rates should be developed by service center personnel in accordance with sections D.2, J.21, and J.38 of the Office of Management and Budget Circular A-21.
All material and labor which can be identified as benefiting the center should be directly charged. Direct charges for salaries should be accompanied by direct charges for corresponding fringe benefits.
Night shift differentials or off-hour rates are authorized, but only actual costs should be charged.
Only actually incurred indirect costs which directly benefit the service center operation should be included (e.g., equipment repair, contractual service, etc.).
Space charges should be included as a cost only if rent is paid.
Equipment items may be expensed or depreciated depending on the cost of the item. If the costs are included in the rate, those items costing under $2,000 must be expensed and those costing over $2,000 with a two year (or longer) useful life must be depreciated.
Only charges for actual aggregate cost should be included. No charges for profit are authorized. A center cannot intentionally use a higher rate in order to generate surpluses for future uses.
Any over/under-recovery from prior years must be factored into the rate calculation. Over-recoveries resulting from depreciation are exempt from this requirement.
All subsidies received should be documented. Specify the source of the subsidy (e.g. Pratt, Cancer Center, etc.) and factor the dollar amount or discount rate into the rate calculation.
Any plans to incorporate recoveries for equipment replacement into the rate calculation must be accompanied by a signed letter from either the department chairperson or dean. The letter must contain the following information:
- the type of equipment the center is planning to purchase
- when the center plans to purchase the equipment,
- how much the center plans to pay for the equipment.
Procedure 5-1, "Format to be Used in Calculating Support Service Unit Rates."
3.0 Definitions [Top]
4.0 References [Top]
5.0 Approvals and Revisions [Top]