1. 1 Recharge Rates Office of Financial Analysis

2. Agenda  Recharge definition & principles  What to include / exclude  Requesting a rate  Fund Usage  Responsibilities  Contact information  Questions 2

3. What is a Recharge? A recharge is a charge for goods or services provided by one internal university unit to other internal university units. Reviewed and approved by the Office of Financial Analysis. Review and approval required to ensure that rates are in compliance with… – Federal OMB A-21 (now CFR 220) guidelines – University standards – Financial Operations 3 R’s policy. 3

4. Recharge Principles Core Principles: Include direct costs only Rates must be consistently applied to all internal users of a service Rates must be calculated with the intention of breaking even. 4

5. What Can be Included? Direct costs only Salary & benefit expense – Individuals must be appointed to the recharge chartfield – Minimal administrative time Other items (ex. maintenance, supplies; etc) Equipment depreciation – Equipment must be used exclusively for the recharge activity – If purchased on auxiliary fund the item(s) were expensed at the time of purchase. The expense can be included but depreciation cannot be taken. Balance adjustments 5

6. What Cannot be Included? Indirect costs Certain salary expenses – Ex. tuition reimbursement Space, in 99.9% of all recharges Built in surplus Other items (ex. Postage, communication expense, travel, hosting; etc.) 6

7. Process for Requesting a New/Updated Rate Complete the following forms: – Recharge Rate Request Summary Form – Detail Cost Composition – Equipment Exclusive to Recharge (if applicable) – Space Exclusive to Recharge (if applicable) – Request for a recharge vendor ID (when submitting a new rate) Forms and instructions are located: http://www.finance.umich.edu/analysis/financial/recharge-rates/procedure Submit to recharge@umich.edu 7

8. Fund Usage Auxiliary Fund (52000) – Recharge activity related to internal customers Designated Fund (40000) – Used to cover an overdraft on the recharge or recharge activity related to external customers Sponsored Fund (25000) – Used when Office of Research and Sponsored Projects (ORSP) has determined the external service is related to the mission of the university and has a contractual agreement. – Contact ORSP to ensure contractual arrangements abide by university policy – Sales must be reviewed for tax liability 8

9. Fund Usage, continued Maintenance & Equipment Reserve (83000) – Transfer depreciation amount to replace equipment on Recharge – Transfer annual depreciation amount from recharge to reserve – Sample depreciation journal entry: 9

10. Financial Analysis Responsibilities Review and approve recharge rate requests Review rates a minimum of every two years Maintain and document rate procedures and guidelines Issue rate terminations when services have ended Initiate non-compliance procedures if necessary Upon expiration of a rate One rate approval extension may be granted. However, if rates aren’t received before that period expires then the vendor ID will be inactivated. 10

11. Recharge Unit Responsibilities Request recharge rate approval Accumulate all costs and revenues in a single chartfield Maintain records documenting the recharge activity – Including both revenue and expense activity – Should be auditable Review results of activity at least annually (monthly recommended) and request rate revisions as required Submit rate renewals prior to expiration date on approval letter Establish a chartfield that will cover any overdraft, most likely a designated fund chartfield Bill customers monthly 11

12. Other Unit’s Responsibilities Financial Operations – Establish shortcode and project grant – Request vendor ID – Provides Service Unit Billing (SUB) training Office of Research & Sponsored Programs (ORSP) – Review requests from outside organization to ensure consistency with University policies and procedures. Tax Department – Review non-University activity for unrelated business income tax (UBIT) liability 12

13. Contact Information Tony Burger, Director Sheryl Bourlier, Sr. Business Analyst Cory Belote, Sr. Business Analyst Brittany Galisdorfer, Business Analyst Eileen Mallory, Sr. Administrative Assistant Submit rates to: recharge@umich.edurecharge@umich.edu 13

14. Questions?? Please contact Sheryl Bourlier (sbourlie@umich.edu; 647-3431) or Cory Belote (ctremp@umich.edu; 936-1843) with any additional questions.sbourlie@umich.eductremp@umich.edu 14