Recharge and Related Issues Basic Core Financial Structure University Rules for Recharge Operations Incongruities Dan Pinkel November 6, 2007

Platonic Form of Core Metabolism Money Services Core Investigator

Simplistic Core Metabolism Money Services Core Investigator Rates Subsidies Planned Emergency Equipment Donors Grants Funding

Approximate Core Metabolism Orders Services Core Investigator UCSF External Rates Subsidies Planned Emergency For all users Targeted users Equipment Donors Grants (special rates) Funding Money

Realistic Core Metabolism Orders Services Core Investigator UCSF External Rates Subsidies Planned Emergency For all users Targeted users Equipment Donors Grants (special rates) Funding Money? Billing UCSF Accounting

Of Course There are Rules

Basic Operating Principles I Cores are not businesses and should not compete supplying commercially available services. Rules compliant with Federal Guidelines (OMB Circular A-21) since most of core income is from Federal sources. Guiding concept – charges to a Federal project for a service must reflect ONLY the costs of providing that service. Therefore: Rates can’t allow generation of “profits”, even to enhance core functions (buy widgets to provide new services), since funding was not approved for those future purposes. (Depreciation on equipment can be charged if it was purchased with non-Federal funds.) Conversely a core should not run a deficit unless the “sponsor” of the core is happy to cover it.

Basic Operating Principles II UCSF has established a rate approval process, and requires rates to be published. Rate changes need to be approved prior to institution. Rates are Direct Cost charges and do not incur indirect costs. All UCSF investigators must be charged the same rate for the same service. External users can be charged whatever rate can be agreed upon, as long as it is sufficient to cover the costs of performing the service – e.g. at least as much as internal users. Need signed agreements concerning liability and IP, and perhaps tax forms. External users pay an overhead charge, currently 22%, which goes directly to UCSF central. Core can put the “excess” fees received from external users in a discretionary account that must be used for core purposes.

Accounting is Required Requirements depend on magnitude of yearly budget (under $50K, $50K to $500k, above $500K). Justify Core expenses and revenue for a given year. Protect the Core from whimsical actions of UCSF accounting system.

Setting Rates Required Guessing Utilization and Expenses for the Coming Year

Work Money Cost Income Fixed Costs Minimal Staff Service Contracts Profit Loss UCSF concerned reduce rates next year Sponsor concerned increase rates next year more subsidy

UCSF Rules May Need Adjustment to Meet Needs of Campus-Wide Coordination Sources of subsidies may mandate restriction of rate reductions to users in certain areas of work, e.g. Cancer Center Support Grant requires its subsidy be directed to investigators pursuing cancer research. Investigators that provide equipment (e.g. write shared instrument grants) should get consideration on rates.