1. University of Colorado Denver Service Centers Policy Summary

2. What is a Service Center? An organizational unit of UCD that provides a specific type of good or service –to other UCD departments; –to individuals or the general public; and is –supported primarily by fees charged to a user’s departmental speedtype.

3. What is a Service Center? Created for –Convenience –Cost control –Efficiency

4. What is a Service Center? Rates charged by a Service Center are formulated to recover the costs of running the Service Center. –Salaries & benefits –Materials & supplies –Travel –Depreciation –GAR / GIR

5. Definitions Cost Study –Summary of cost data –Documents compliance with fiscal policy and guidelines –Includes revenue, expense, and net asset information related to providing the goods or services of the service center –Calculated at least annually

6. Definitions Internal Customers –Goods/services charged to another UCD speedtype –UPI & UCH Fund 80 speedtypes External Customers –General Public –Students, Faculty, and Staff –Agency Fund speedtypes excluding UPI & UCH

7. Definitions Direct Costs –Costs that can be identified specifically with a particular UCD activity or can be assigned to an activity with a great deal of accuracy Salaries and benefits of those employees directly providing a service in a Service Center Supplies

8. Definitions Indirect Costs –Costs that cannot be readily identified to specific goods/services Administrative salaries and benefits Indirect supplies Cost allocations

9. Definitions Non-Discriminatory Billing Rates –All internal customers should be charged for goods/services at the same rate –Rates should not discriminate between federally funded and non-federally funded activities

10. Fiscal Policy for Service Centers Objectives of the Federal Government Ensure compliance with federal regulations. Consistent operational practices among the various Service Centers at UCD. Assure that UCD has adequate controls over the operation of Service Centers. Ensure that rates charged by Service Centers be equal to the cost of providing those services over a long-term period.

11. References Office of Management and Budget (OMB) Circular A- 21, “Cost Principles for Colleges and Universities” http://www.whitehouse.gov/ omb/circulars/index.html http://www.whitehouse.gov/ omb/circulars/index.html Cost Accounting Standards Board (CASB) regulations

12. General Guidelines Service Centers shall be budgeted and accounted for separately from other departmental activities. Budgets –Projected revenues and expenses for the upcoming year –Projected net asset for the end of the current fiscal year

13. General Guidelines Deficit cash balances should not occur. Profits or losses cannot normally be shifted to other goods/services. Cost studies are required for all service centers. Cost study review by the accounting office is required for service centers with revenues over $20,000.

14. 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.

15. Billing Rates 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.

16. Unallowable Expenses Unallowable expenses must be funded by other resources. Service Center managers are responsible for ensuring that unallowable costs are not included in billing rates to internal customers.

17. Unallowable Expenses Advertising Alcoholic Beverages Bad Debts Donations and Contributions

18. Unallowable Expenses Entertainment Costs Interest Memberships Promotional Items and Memorabilia

19. Revenue 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.

20. Revenue Account Codes External Sales –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)

21. Capital Equipment What is capital equipment? –Life greater than one year –Cost greater than $5,000

22. Capital Equipment Capital equipment costs –Recovered through depreciation of the asset –Depreciation cost only included in cost study Include in rate calculation Begin depreciating the asset the month it is put into service (acquisition date) Straight-line method Standard useful life –Renewal and replacement account

23. Capital Equipment Disposal of equipment not fully depreciated –Undepreciated cost less any salvage value to be used in next rate setting calculation. Only Service Center equipment is to be purchased out of the renewal and replacement speedtype.

24. Transfers A transfer is the movement of cash between accounts. Transfers are generally limited for Service Centers. Transfers out are limited to calculated depreciation moved to a renewal and replacement speedtype. Transfers in are normally allowed only for start-up costs.

25. Net Asset Limitations Goal is to break-even over a long-term period: –Net assets, on average, should not exceed 60 days of operating expenses; –Service Centers that charge external customers at a rate above cost may have a higher net asset; –Surpluses and deficits should be absorbed into future rate calculations to achieve the overall goal.

26. Record Keeping 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.

27. Summary of Policies Applicable to Service Centers Annual Sales >= $20,000 < $20,000 YesYes Annual Review of Rates YesYes Start-up Only Start-up Only Cash Deficit Allowed Start-up Only Start-up Only YesYes Cost Study RequiredYesYes YesNo Comprehensive Finance ReviewYesNo Fund 72 OnlyFund 72 Only Equipment Expense Fund 72 OnlyFund 72 Only Exclude Unallowables from Rates YesYes to Internal CustomersYesYes YesYes Net Asset LimitationYesYes YesYes Published Rates ScheduleYesYes

28. What to Include in a Cost Study Detailed Calculation of Costs –Direct Costs Salaries Operating Expenses Supplies –Indirect Costs Overhead—GAR & GIR Allocated costs (salaries, operating) –Subsidy—if you have one, show it Price List –Published via web, pamphlet, poster Preferred Format—Excel

29. Useful Links Search @ UCD website –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/IntService Ctrs.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/CostSt udyInstructions.xlshttp://www.administration.ucdenver.edu/admin/policies/fiscal/CostSt udyInstructions.xls

30. Contact: Grace Reed –303.315.2260 –Grace.Reed@ucdenver.eduGrace.Reed@ucdenver.edu Matt Artley –303.315.2056 –Matthew.Artley@ucdenver.eduMatthew.Artley@ucdenver.edu