University of Colorado Denver Service Center Training March 4, 2010 Training is based on UCD fiscal policy

Service Centers Service Center Policy Federal Requirement Set a fair rate Breakeven Non-profit -Service Ctr Policy is based upon federal guidelines in OMB A-21. -Service Ctrs are a means for UCD depts to provide convenient, cost-saving services to other internal UCD departments. -Service Centers are found in Fund 28; All new SC’s are set up in Fund 28 with unique Org. - IN Revenues – account code 380100 Breakeven period—fiscal year --balances out over several years --not likely to breakeven because rates are based on estimates of cost & usage

COST STUDY Step 1: Inputs Labor Operating Costs Overhead Costs--GAR & GIR Capital Equipment--Depreciation Reserve

COST STUDY Step 2: Organize Labor % of effort in Service Center Grant subsidy Billable hours Type of employees—FT, PT, hourly Time shrinkage Reality check Operating Costs Identify costs to specific product/test Capital Equipment PO # or Tag # Capital equipment --$5,000 or over --cost of equipment purchases not allowed in the service center --equipment has to be given to the service center by department or other source --only the depreciation expense is allowed in the rate. --depreciation expense is transferred quarterly to a Plant Fund speedtype tied to the SC

COST STUDY Step 3: Enter Data in Model Select template model Allocate costs appropriately. Calculate rate for various services. --Dept should complete steps 1 & 2 before moving into step 3. --By doing completing steps 1 & 2, it helps us help you to enter the data into the template. --Encourage use of existing template; if it doesn’t work for the specific situation, have other options. Allocate costs --direct and indirect costs for labor, operating, etc. Rate calculation --Total expenses divided by total # procedures/services per service --based on per hr, per unit, per run

Timelines Budget FY2011 -- On-line Budget Entry Deadline -- May 14, 2010 Cost Study FY2011 -- Submit between March 1 and April 16, 2010 Service Centers with Revenue > $20k only. Submit to Finance office FIFO—sooner the cost study is submitted the sooner it will be returned; All service centers must complete an annual cost study but only those with $20K or more of revenue from the prior year must submit them to the finance office for review and approval of their rates for the next FY.

Appendix Info Policy Summary Billing Rates Revenue/Revenue Codes Unallowable Expenses Recordkeeping Reserve A/R for external sales Useful links Revenue & Revenue Acct Codes --Billing transactions should not precede the providing of goods/services. --Progress billings may be made for jobs in progress but only to the extent of goods/services provided. --External sales on credit should be booked as an Accounts Receivable at the time of the sale. Billing RATES --Rates must be based on actual and reasonable costs and not rate structures of external businesses. --Rates for internal sales must provide recovery only for allowable costs. --Rates for external customers can be higher than rates for internal customers but never lower. --Non-discriminatory billing between fed & non-fed funded activities. Unallowables: --Unallowable expenses must be funded by other resources. --Cannot be included in billing rates. Recordkeeping: Required for each sale-- Identify customer Goods or services provided Rate charged --Documentation on how billing rates were calculated and all supporting records. --Maintain all records for at least 7 years Reserve --recommend 60 days --can be built into the rates Accounts Receivable Accounts --A/R accounts are allowable for use with external clients/billings. --Verify that the client is a stable, viable entity.

Summary of Policies Applicable to Service Centers Annual Sales Annual Sales >= $20,000 < $20,000 Annual Review of Rates Yes Yes Cash Deficit Allowed Start-up Only Start-up Only Cost Study Required Yes Yes Comprehensive Finance Review Yes No Equipment Expense Fund 72 Only Fund 72 Only Exclude Unallowables from Rates to Internal Customers Yes Yes Net Asset Limitation Yes Yes Published Rates Schedule Yes Yes -

Billing Rates Rates must be based on actual and reasonable costs and not rate structures of external businesses. Rates for internal sales must provide recovery only for allowable costs. Rates for external customers can be higher than rates for internal customers but never lower. Rates must be: predetermined based on a cost study published stated in measurable units of goods or services reviewed and adjusted at least annually to minimize surpluses or deficits. Billing rates determined from the cost study.

Revenue Account Codes External Sales Internal Sales Sales to UPI Use account code 325100 (Miscellaneous Income) 325106 (Sales to Gov Agency) 325200 (ISU Sales to other Colo agency) 325300 (ISU Sales to Public) 325108 (Sales to Business) Internal Sales Use account code 380100 (Service Center IN Revenue) Sales to UPI Use account code 335003 (Sales to UPI) Where to book revenue--Various account codes used to book revenue. fiscal policy for A/R. Internal customers—charge speedtypes --UPI & UCH are affiliates and treated as internal customers

Accounts Receivable Credit worthiness of client Record outstanding revenue at end of the month Via JE Account codes: Debit #013100-AR Miscellaneous Credit #325100-Misc Revenue Operating Watch age of receivable 30 days past due 60-days past due Cut-off services AR Policy Available in Fiscal Policies @ Finance website Credit worthiness Use Exhibit A in AR policy to gather financial information about client. Age of receivable @ 30 days past due, begin follow-up to collect past due account @ 60 days past due, send information to Central Collection Services (State collection agency)

Useful Links Search @ UCD website Current SC Policy: Policies and Procedures Scroll down to Fiscal and Finance Policies Information located under Internal Service Centers Policy Current SC Policy: http://www.administration.ucdenver.edu/admin/policies/fiscal/IntServiceCtrs.pdf Exhibit B--Guidelines--How to do a Cost Study http://administration.ucdenver.edu/admin/policies/fiscal/fp2-08b.doc Exhibit C--Template http://www.administration.ucdenver.edu/admin/policies/fiscal/CostStudyInstructions.xls

Contact: Grace Reed Matt Artley 303.315.2260 Grace.Reed@ucdenver.edu 303.315.2056 Matthew.Artley@ucdenver.edu