fy2008 service center billing rate proposal training dates:monday, february 26, 2007 friday, march...
TRANSCRIPT
FY2008 Service Center Billing Rate Proposal Training
Dates: Monday, February 26, 2007
Friday, March 2, 2007
Presented by: Rick Keller, Director – Cost Accounting
UH Policy (MAPP 03.01.01)
POLICY STATEMENT: Units within the University of Houston may establish and run service centers to provide unique and specialized goods or services to university faculty, staff, and students, as well as other academic and administrative units.
UH Policy (MAPP 03.01.01)
All activities related to service centers must be carried out pursuant to OMB Circular No. A-21, “Cost Principles for Educational Institutions,” all applicable UH System Administrative Memoranda, other applicable UH MAPPs, and this document.
UH Policy (MAPP 03.01.01)
• Goods or services shall not be sold to the general public if the sales will compete with commercial sources.
• For service centers other than auxiliary enterprises, the Associate Vice President for Administration and Finance must approve sales to the general public.
• Service centers shall charge all users of goods or services at established, approved rates.
• Rates established by service centers must be non-discriminatory.
• Volume discounts or other special pricing mechanisms must be equally available to all users who meet the criteria.
UH Policy (MAPP 03.01.01)
• Rates charged for external customers must be equal to those charged to university customers plus the university IDC rate.
• Billing rates shall be developed, updated, and approved at least once a year.
• Service centers shall operate on a break-even basis, rather than a profit basis.
• Service centers should not transfer revenues, expenditures or fund balances between cost centers without prior approval by the Associate Vice President for Administration and Finance.
SERVICE CENTER AND SPECIALIZED SERVICE CENTER
• A Service Center is an entity that offers goods and/or services to other university departments, that does not receive a material portion of their funding from federally supported activities or sponsored agreements, and that charges a fee directly related (although not necessarily equal) to the cost of the goods or services delivered.
• A Specialized Service Center is an entity that offers goods and/or services involving the use of highly complex or specialized facilities primarily to other university departments and whose total recovered costs from federally sponsored activities exceeds $100,000 for two or more consecutive fiscal years.
• Both Service Centers and Specialized Service Centers are governed by the same policies and procedures, except where otherwise indicated in MAPP 03.01.01.
SERVICE CENTER AND SPECIALIZED SERVICE CENTER
• Request to establish service center will be reviewed by the Division of Finance and approved by the Associate Vice President for Finance. The total recovered costs from federally sponsored activities do not exceed $100,000.
• Requests to establish a specialized service center (i.e., a service center that anticipates recovering more than $100,000 of costs from federally sponsored activities for two, or more, consecutive fiscal years) will be reviewed by the Division of Finance and the SSCC and then forwarded to the Associate Vice President for approval.
Discontinuing Service Center and Specialized Service Center Operations
• Service centers and specialized service centers shall notify the Division of Finance in writing of the intention to discontinue operations. This notification shall include the planned termination date, reason for discontinuing the operation, an explanation of the specialized service center’s plan for the resolution of any cost center surplus or deficit, and the planned disposition of remaining inventory.
• Service centers and specialized service centers shall not take action to dispose of equipment, inventory, or cost center balances without first submitting a request to the Division of Finance. The request will be reviewed by the Division of Finance and, in the case of specialized service centers, the Specialized Service Center Committee, and then forwarded to the Associate Vice President for Finance for approval.
• Upon completion of close out, the service center cost center should have a zero balance and be frozen and flagged for deletion.
BILLING RATE PROPOSALS
General Comments:
• The objective is to break even by matching recovered costs and expenditures.
• All recovered costs must be recorded in the service center’s primary PeopleSoft Cost Center.
• It is important to identify and include all operating costs of the service center in the billing rates.
BILLING RATE PROPOSALS
General Comments:
• Expenses that are charged to the service center cost center must directly relate to the specific good(s) or service(s) provided. Unrelated expenses must be charged to other cost centers.
• All operating costs that are included in a billing rate should be charged to the service center’s primary PeopleSoft Cost Center.
• In those instances where service center operating costs are paid for from another PeopleSoft cost center (i.e., subsidy funding), the source(s) of the amount and source of subsidy funding must be disclosed in the billing rate proposal. (This disclosure is usually included as part of the S&W and M&O detailed schedules.)
BILLING RATE PROPOSAL FORMS
• Form 1 - Cost Study for FY2006
• Form 1A - FY2006 S&W Detail Schedule (The detailed information on this form supports the summary information on Form 1.)
• Form 1B - FY2006 M&O Detail Schedule (The detailed information on this form supports the summary information on Form 1.)
• Form 2 - Cost Study for FY2007
• Form 2A - FY2007 S&W Detail Schedule (The detailed information on this form supports the summary information on Form 2.)
• Form 2B - FY2007 M&O Detail Schedule (The detailed information on this form supports the summary information on Form 2.)
BILLING RATE PROPOSAL FORMS
• Form 3 - Cost Study for FY2008
• Form 3A - FY2008 S&W Detail Schedule (The detailed information on this form supports the summary information on Form 3.)
• Form 3B - FY2008 M&O Detail Schedule (The detailed information on this form supports the summary information on Form 3.)
• Form 4 - Capital Equipment Inventory and Depreciation Expense
• Form 5 - Location Summary
• Schedule of Proposed Billing Rates (Rates should be expressed in units of time or goods provided.)
• Service Center Pricing Policy Certification
Compiling a Cost Study
• Service centers should adapt Cost Study Form 1, Form 2 and Form 3 to their operations.
• If specific PeopleSoft cost center accurately reflect all expenditures of the service center and there are no costs unrelated to the service center recorded in the cost center(s), expenditure amounts for salaries and wages and M&O used in the calculation of actual costs should come directly from PeopleSoft.
• If service center costs are commingled with costs that are unrelated to the service center operation, it is necessary to identify those costs separately for the calculation of actual costs. The information below should assist in compiling the actual and estimated costs of the service center operations.
Compiling a Cost Study
• Fiscal Years Included in Cost Study/Billing Rate Proposals:
1. Provide actual costs for the prior year using Form 1 (FY2006 PeopleSoft Report).
2. Provide current year activity using Form 2 (FY2007) with estimated over- or under-recovery of costs (FY2007 estimated activity).
3. Provide projected future costs using Form 3 (i.e., budgeted costs) for the next fiscal year (FY2008) in which the proposed billing rates are to take effect (i.e., FY2008).
Detailed Supporting Schedules
• Service centers should provide details for Salaries, Wages, and Benefits costs using Form 1A (FY2006), Form 2A (FY2007), and Form 3A (FY2008).
• Details for Maintenance and Operating costs should be included on Form 1B (FY2006), Form 2B (FY2007), and Form 3B (FY2008).
Depreciation
Capital equipment used in service center rate calculations is removed from the IDC calculation to avoid double charging. For equipment that is used in more than one activity (i.e., shared use), determine the percentage of usage by the service center when the asset is shared with another area. Allocate the cost of the asset by the percentage of use and depreciate only that cost applicable to the service center.
• If equipment purchased with Federal funds or used for cost sharing on Federal awards, it cannot be depreciated
• Effective September 1, 2001, the capitalization threshold for equipment increased from $1,000 to $5,000. Therefore, equipment with cost less than $5,000.00 should not be included in depreciation schedule; it should be treated as an operating expense in the fiscal year the item is purchased. (i.e., The purchase of equipment costing less than $5,000 will now be immediately recognized as an M&O expense in the year incurred.)
Developing Billing Rates
• When charging university accounts, billing rates must be based on the actual cost of providing the goods or service.
• Further, under examination (i.e., audit) departments may be required to provide documentation that proves that each rate or price charged is based on cost.
Approval for Rates
• Service center submitted the forms for review and approval to the department chairman, college dean or division head. After approval by the department chair/administrative unit head, forward the billing rate to Division of Finance for review and then forward it to the Associate Vice President for Finance for his review and approval.
• Specialized service center submitted the forms for review and approval to the department chairman, college dean or division head. After approval by the department chair/administrative unit head, forward the billing rate to the Division of Finance. The proposed billing rates will be reviewed by the Division of Finance and the SSCC and then forwarded to the Associate Vice President for Finance for approval.
