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

2. 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
Breakeven period—fiscal year
--balances out over several years
--not likely to breakeven because rates are based on estimates of cost & usage

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

4. 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

5. 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

6. Timelines
Budget FY On-line Budget Entry Deadline -- May 14, 2010
Cost Study FY 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.

7. 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.

8. 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 -

9. 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.

10. Revenue Account Codes External Sales Internal Sales Sales to UPI
Use account code
(Miscellaneous Income)
(Sales to Gov Agency)
(ISU Sales to other Colo agency)
(ISU Sales to Public)
(Sales to Business)
Internal Sales
Use account code (Service Center IN Revenue)
Sales to UPI
Use account code (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

11. Accounts Receivable Credit worthiness of client
Record outstanding revenue at end of the month
Via JE
Account codes:
Debit # AR Miscellaneous
Credit # Misc Revenue Operating
Watch age of receivable
30 days past due
60-days past due
Cut-off services
AR Policy
Available in Fiscal 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)

12. 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:
Exhibit B--Guidelines--How to do a Cost Study
Exhibit C--Template

13. Contact: Grace Reed Matt Artley 303.315.2260 Grace.Reed@ucdenver.edu