Latest information on operational modifications for fall 2021 Roadrunner Roadmap

Establishment and Financial Management of Recharge Centers and Specialized Service Facilities

Effective: 02/01/08 Approved By: Sr. Associate Vice President for Financial Affairs and Deputy CFO
Revised: 09/10/21
For Assistance Contact: Accounting Services

Purpose/Scope

This guideline provides a framework for the fiscal operations of UTSA recharge centers and specialized service facilities to ensure compliance with federal cost principles and consistency in accounting and costing practices. Recharge centers and specialized service facilities must maintain common accounting and administrative practices despite variations in volume and complexity of goods and services rendered. This guideline is not applicable to auxiliary enterprises (for information on auxiliary enterprises, see UTSA Handbook of Operating Procedures (HOP)  9.42 — Auxiliary Enterprises).

Authority

As a recipient of federal funds, UTSA must comply with Code of Federal Regulations t2CFR200.ecfr.

University Guidelines

Table of Contents
  1. Overview
  2. Establishment of Service Centers
  3. Requirements for External Customers
  4. Billing Rates
    1. Allowable and Unallowable Costs
    2. Recharge Center Internal Billing Rates
    3. Recharge Center External Billing Rates
    4. SSF Billing Rates
  5. Billing Procedures
  6. Accounting Guidelines
    1. Cost Centers
    2. Expenditures
    3. Fiscal Review
    4. Subsidies
  7. Records Retention

A. Overview

In this guideline, recharge centers and specialized service facilities are referred to collectively as service centers. Service centers are UTSA units that provide goods and/or services to users, primarily within UTSA, and recover costs through charges to users for the goods and services.

There are three major types of service centers at UTSA:

  1. Research recharge centers provide services and access to equipment and tools for research activities for a fee. The  Kleberg Advanced Microscopy Center is an example of a research recharge center.
  2. Institutional recharge centers reallocate costs from a central Cost Center to users throughout UTSA. The rates charged represent a redistribution of expenses and not a fee for goods provided or services rendered. Examples include Facilities Services and Facilities Coordinated Projects.
  3. Specialized service facilities (SSFs) are highly complex or specialized facilities that offer services not readily available from outside sources. Additional criteria for designation as a specialized service facility include, but are not limited to, the amount of total annual revenue and the significance of revenue from federal awards. An example is the Laboratory Animal Resource Center.

For service centers that may directly or indirectly charge federal grants and contracts, UTSA must comply with the cost principles and accounting standards required by 2 CFR 200.

B. Establishment of Service Centers

Submit new service center establishment requests to the associate director, Accounting (ADA) for initial review using Appendix A – Research Recharge Center Information Sheet. Also use this information sheet when a service center intends to expand its customer base to include external users, to add additional services or to update billing rates.

The approval of the relevant director and/or dean and the appropriate vice president is required. Specialized service facilities also require the approval of the vice president for Research, Economic Development and Knowledge Enterprise (VPREDKE) or designee.

The ADA or designee will review the request with the initiator. Final budget and billing rates will be presented to the senior associate vice president for Financial Affairs and deputy CFO (SAVPFA) for final approval.

C. Requirements for External Customers

An external customer is a customer that does not pay using a UTSA Cost Center/Project ID, such as a faculty member or student acting in an individual capacity. A unilateral agreement signed by the customer is required for all external customers (see Appendix E). The agreement may not be revised or edited in any way. The billing schedule may be appended to the document along with a full description of the goods/services to be provided. To determine the appropriateness of the proposed work, the official to whom the service center reports should review the agreement. The service center must keep these agreements on file.

Revenues from external customers must be tracked separately.

External customers who identify themselves as federally funded must provide appropriate documentation (e.g., a copy of the federal award that is paying for the services). Contact the ADA for assistance in such cases.

Service centers must collect sales tax from external customers who do not provide an exemption certificate or otherwise prove that they are exempt.

Charges to external customers may result in a liability for unrelated business income tax (UBIT), which is paid by the service center. For information on UBIT, contact the Office of Financial Services and University Bursar.

D. Billing Rates

1. Allowable and Unallowable Costs

Billing rate calculations may only include allowable costs. The conditions below apply to both recharge centers and SSFs.

Allowable costs include but are not limited to

  • Salaries, wages, fringe benefits
  • Materials and supplies
  • Equipment lease or rental
  • Equipment maintenance contracts/repairs
  • Postage and telephone
  • Non-capitalized equipment (unit cost less than $5,000)
  • Travel expenses related to center business

Unallowable costs cannot be included in internal billing rate calculations. Typical unallowable costs include but are not limited to

  • Advertising and public relations costs
  • Alcoholic beverages
  • Bad debts or uncollected billings
  • Contingency provisions
  • Cost of equipment $5,000 or greater per item
  • Entertainment costs
  • Fines and penalties
  • Goods/services for personal use
  • Insurance and indemnification
  • Memberships, subscriptions and professional activity costs of a social or individual nature
  • Selling and marketing costs
2. Recharge Center Internal Billing Rates

The following applies to recharge center internal billing rates

  • Internal billing rates should be designed to recover the direct costs of the goods/services provided. Indirect costs of operating the service center that are paid by UTSA and not charged to the recharge center Cost Center (operating account) must not be included in the calculation of billing rates.
  • All UTSA internal customers must be charged the same rate for the same level of service under the same circumstances.
  • Federal grants and contracts administered by UTSA are internal customers.
  • Federal grants or contracts must be charged a rate equal to or lower than the rate charged to any other customer.
  • Federal grants and contracts must not be charged for goods/services provided free of charge to other customers.
  • To determine the billing rate, the total annual costs to provide the goods or services plus or minus any surplus/deficit from the prior year is divided by total annual usage.
    EXAMPLE: Billing Rate = Budgeted operating costs ± prior year adjustment / expected units of activity (customer base)
  • All costs must be reasonable, allowable, allocable and consistently treated. Unallowable costs cannot be budgeted or expensed on recharge center Cost Centers. See 2 CFR 200 Subpart E for guidance on allowable and unallowable costs.
  • The cost of capital equipment purchases may not be charged to the recharge center Cost Center (operating account), but the cost of capital equipment purchased with non-federal funds may be recovered by including a depreciation component in the billing rate (straight-line depreciation over the useful life of the equipment). This depreciation component is transferred to the recharge center equipment reserve, which will be used to purchase replacement equipment. Service Center equipment is identified in the asset management system to ensure that the related depreciation is not included in the Facilities and Administrative (F&A) rate calculation.
  • User rates must be supported by cost calculations based on historical costs and service levels. Estimated rates may only be used in the first year of service.
  • A recharge center may have different measurable units for different types and classes of goods/services offered. User rates consisting of flat fees that charge per range of actual use (e.g. light, medium or heavy) are not in compliance with cost accounting standards. Centers providing multiple services may not subsidize the cost of certain services by charging excessive rates for other services.
3. Recharge Center External Billing Rates

The following applies to recharge center external billing rates

  • Recharge center non-federal external billing rates should recover all costs—both direct and appropriate indirect costs. These rates should include a surcharge at least equivalent to the current approved Facilities and Administrative (F&A) rate. For more information on F&A costs, see Financial Guideline —  Grants and Contracts Accounting Practices.
  • External rates should not be so low as to constitute unfair competition with private enterprise for similar goods/services available in the area.
  • External customers must not be charged less than internal customers or the federal government for the same service.
  • See Appendix B for an example of billing rate calculations for recharge centers.
4. SSF Billing Rates

The following applies to specialized service facility billing rates

  • SSF rates should recover all costs—both direct and appropriate indirect costs.
  • SSF rates must be designed to recover only the aggregate costs (direct and indirect) of providing the goods/services.
  • All costs must be reasonable, allowable, allocable and consistently treated. Unallowable costs cannot be budgeted or expensed on an SSF (see Allowable and unallowable costs above).
  • All customers of an SSF (including internal, external, federal and non-federal) must be charged the same rate for the same service. This is to ensure that all costs related to the SSF's highly specialized goods/services (including applicable indirect costs) are charged directly to the users and not allocated to awards that do not benefit from the SSF's goods/services.

NOTE: All service centers are required to review and update rates annually.

E. Billing Procedures

Billing procedures are outlined below:

  1. All customers must be billed consistently, timely (at least quarterly) and accurately for goods/services received. User bills must have sufficient detail to identify the goods/services provided. Billings must be based upon measured and documented use.
  2. Billings to internal customers are charged through Interdepartmental Transfers of expense (IDTs). Sufficient detail must be included to identify the goods/services provided, billing rates and usage. For internal customers, a copy of the required project agreement (see Appendix D) should be attached as authorization to charge the Cost Center/Project ID.
  3. Service centers must comply with UTSA cash handling and billing procedures. Some external customers may be subject to sales tax, which is collected by the service center. For more information, see fmog.11.37.1.utsa.
  4. Invoices to external customers must be on UTSA letterhead. Service centers may customize invoices, but all invoices must include the elements shown in Appendix C.
  5. Advance billings are not allowed. “Pre-billing” customers at year-end for goods/services to be delivered in the next fiscal year is prohibited.
  6. Payments must be deposited to the associated service center Cost Center.
  7. Accounts receivable will be recorded on the same schedule as customer billing. Fund receipts will be applied to accounts receivable.

F. Accounting Guidelines

1. Cost Centers

Service centers may have multiple Cost Centers in which to record revenue and expenditures, depending on the customer base:

  • A single Service Center Fund Cost Center will be used to record all income and expenditures derived from internal customers.
  • A separate Designated Fund Cost Center will be established for external customers:
    • A single Designated Fund Cost Center will be used for multiple external agreements that are less than $5,000 per agreement.
    • Individual Designated Fund Cost Centers must be established for each external agreement totaling $5,000 or more.
  • A separate Equipment Reserve Cost Center may be established in the Designated Fund for recovery of depreciation on equipment purchased with non-federal funds.

For more information on Service Center and Designated Funds see fmog.0301.utsa.

2. Expenditures

All costs related to the operation of service centers must be recorded in specified Cost Centers within Service Center or Designated Funds. This includes salaries, fringe benefits, supplies and related travel costs. Shared expenses must be allocated on an equitable basis to all user Cost Centers/Project IDs.

See Allowable and Unallowable Costs for examples.

3. Fiscal Review

Service centers should target break-even goals through proper budgeting, rate-setting and billing practices. Service centers are responsible for comparing actual costs and revenues at the end of each fiscal year and taking appropriate action:

  • Deficit balances: Service centers may not operate for more than one complete fiscal year with a deficit balance unless approved by the SAVPFA. Any center with a deficit greater than 10% of operating costs must provide the ADA with a written plan to eliminate the deficit. This plan may include one or a combination of the following:
    • Rate increases sufficient to liquidate the deficit
    • A transfer of funds from another UTSA department
  • Surplus balances: Surplus balances greater than 10% of operating costs will be reduced by rate reductions. Surplus balances up to 10% of operating costs may be carried forward as an operating reserve. Surplus amounts will not be transferred from service center Cost Centers to subsidize other university operations or to purchase goods/services for operations unrelated to the service center unless the transfer is to a Cost Center that previously provided a subsidy to cover an operating deficit or provided start-up funds.

The ADA conducts periodic reviews of institutional recharge centers and the office of the VPREDKE conducts reviews of research recharge centers and specialized service facilities for compliance with this guideline. The ADA may also review the break-even and other financial information of research recharge centers and specialized service facilities, but the Office of the VPREDKE has primary responsibility for reviewing research recharge centers and specialized service facilities.

Annual reviews include, but are not limited to, the following considerations:
  • Consistent, accurate and timely billing of customers
  • Appropriate accounting for allowable and unallowable costs and subsidies
  • Attainment of break-even goals and the treatment of any surpluses or deficits

Biennial reviews include, but are not limited to, the following:

  • Billing rates and practices, including annual update of rates and methodology for calculating rates
  • Adequacy of record keeping procedures

Service centers must maintain a schedule of current billing rates, which must be made available upon request.

4. Subsidies

If fees cannot be set at a rate sufficient to recover operating costs, another department may not directly pay the operating costs of a service center. Instead, make the subsidy using a transfer of funds to the service center Cost Center. The transfer is not accounted for as revenue or negative expense.

Any partial subsidy of a center either included as part of the budget or absorbed as a deficit at the end of the fiscal year must be identified as an unallowable cost for F&A rate calculation purposes.

A class of users (e.g., students) may receive services at a reduced fee if the discount is subsidized by another source, but not through a reduction or elimination of the billing. The subsidy must be deposited in the Cost Center as income to avoid misstating either usage or revenue.

G. Records Retention

Service centers must retain documents and other records including but not limited to the following:

  • Work papers showing how billing rates were calculated
  • Approval of rates
  • Records supporting the level of activity and units of goods/services provided, including an annual usage schedule for each billing rate. Service centers must track all use of billable equipment. For example
    • If the rate is census-based, a cumulative census by species/lab must be tracked
    • If the rate is hour-based, total hours must be tracked
  • External and internal customer agreements
  • Other records as necessary to document:
    • Actual direct operating costs of providing the goods/services
    • Revenues, billings and collections
    • Annual surplus or deficit
    • Customer charges, including invoices and other records that identify the goods/services provided to each customer

Related Forms

  1. Appendix A – Research Recharge Center Information Sheet
  2. Appendix B – Sample Rate Calculation
  3. Appendix C – Sample Invoice
  4. Appendix D – UTSA Project Agreement
  5. Appendix E – UTSA Unilateral Agreement

Revision History

Date Description
09/10/21 Updates to Appendix forms, position titles and department names. Editorial updates throughout.