University of Connecticut 1 Service Centers

University of Connecticut 2 Definition  The management of service centers is governed by University policy statement, Financial Management of Services Centers, Policy CADS-3 issued June 19, 1998, effective July 1, Following policy the University has a “Service Center and Cost Recovery Committee” (“SCCRC”).  NACUBO states: “A service department provides a specific type of service to various institutional departments rather than to individuals and is supported by internal charges. Such a service might be purchased from commercial sources, but for reasons of convenience, cost or control is often provided more effectively from a service department of the institution.” Service provided to individuals or the general public are Auxiliary Services.

University of Connecticut 3  Service centers may either be a recharge center, such as document production/copy center or physical maintenance labor charges, or a specialized service facility when the services are provided by highly complex or specialized facilities, that for instance perform scientific testing or analysis.  These services centers may provide services on an incidental basis to the external users. Definition (continued)

University of Connecticut 4 Criteria for Determining the Need for a Service Center  Does it meet the definition?  Does a demand exist for the goods/services to be provided? This demand should be by more than one department, unit or activity and should not be based on incidental use.  Will there be significant volume of recharging (sales), both in dollar amount and transactions?  Will the goods/services be provided on a regular basis?  If services are provided, will they be unique or specialized?

University of Connecticut 5 Criteria for Determining the Need for a Service Center (continued)  Can the service center be self-supported and not subsidized by the institution?  How will this activity be affected by competition with the private sector?  Establishment of a center must be approved by the SCCRC.

University of Connecticut 6 After Establishment of a Center - Determine that the following guidelines can be met:  All elements of cost incurred in providing the goods/services will be charged to the customers.  Costs of other activities may not be charged to the Service Center accounts.  Recharged amounts must be based on approved rates applied to the actual quantities of goods/services provided.  Service Centers must calculate and publish a rate schedule during the annual budget process. Initial Rates for centers must be reviewed and have the approval of the SCCRC.  The Cost Analysis area of Accounting can provide guidance in rate development.

University of Connecticut 7 Section J47 – Specialized Service Facilities  Charges must be established to recover no more than the total cost of the service over a long term period.  Billing rates charged directly to users must be based on the actual use of the services.  Rates must be reviewed periodically (at least biennially) and adjusted if needed. Currently the University requires annual.  A schedule of rates must be established which does not discriminate between federally and non-federally supported users. OMB Circular A-21 (Compliance)

University of Connecticut 8 Appendix A – Cost Accounting Standards and their application to service centers.  CAS 501 – Service Center costs budgeted in proposals must be reconcilable to actual charges in the accounting system.  CAS 502 – Cost must be charged consistently as direct or indirect cost and the rate development process must be consistently applied.  CAS 505 – Service centers must exclude unallowable costs from billing rates and must identify the actual costs of providing services to all users, regardless of the funding sources.  CAS 506 – Rates should be established based on the University’s fiscal year, unless there is a legitimate reason for using an alternative period. OMB Circular A-21 (Compliance) (continued)

University of Connecticut 9  Federal: Review Guide for Long-Form University Facilities and Administrative Cost Proposal 1. Specialized Service Centers 2. Special requirements for Animal Research facilities  A-133 (Audit) Compliance Supplement (Part 3, Compliance Requirements—Internal service, central service, pension, or similar activities) Other Sources of Federal Guidance