Recharge Policies and Procedures for Cost Recovery
R
e
c
h
a
r
g
e
P
o
l
i
c
i
e
s
&
P
r
o
c
e
d
u
r
e
s
Hervé Bruckert
Januar
y
11
th
,
20
18
1
Agenda
1.
Framing recharge activities
2.
What is a Recharge Center?
3.
Functional Responsibilities
4.
How to Develop a Recharge Rate
5.
Billing for Recharge Goods or Services
6.
Surpluses and Deficits
7.
Self Monitoring
8.
Self
-
Certification
9.
Close/Shutdown a Recharge Operation
10.
Common Issues
11.
References
and
Contact
Information
12.
Recharge Form
2
Framing Recharge activities: Why recharge
?
UC Berkeley
Academic
Recharge
Unit A
Admin
Recharge
Unit B
External
Clients
Affiliates,
including
other UC
campus
Research
Recharge
Unit C
Research
Recharge
Unit D
Sponsored Projects –
Contract & Grants
3
Framing Recharge activities: Why recharge
?
Sponsored projects policies require that expenses be broken down between:
•
Direct expenses
•
Indirect expenses (Facilities & Administration – F&A)
Direct expenses are directly charged to C&G.
Indirect expenses are charged to C&G by multiplying Direct expenses by an
F&A rate.
Recharge rates are established based on direct expenses and provide a
mechanism to allocate costs to C&G enabling the University to be reimbursed
for the C&G activities it conducts.
4
Topic
1.
What is a
Recharge
Center?
2.
What is a recharge center?
3.
Common
Issues
4.
References,
Forms
and
Contact
Information
5
Wha
t
i
s
a
Recharg
e
Center?
Rule
s
an
d
Criteria
•
Unit providing
specific
good
s
o
r
service
s
to
a
numbe
r
of
campu
s
department
s
o
n
a
n
ongoing
basis
.
The
unit
is
allowed
to
recove
r
its
cost
s
i
n
provid
i
n
g
those
good
s
o
r
service
s
through a
charge
to
its
users.
•
Som
e
recharge
center
s
ma
y
genera
te
revenue
s
fro
m
incidental
sales
or
services
to
indiv
i
duals
or
off-campus
entities.
•
Servi
c
es
provided
should
not
be
readily
available
from
outside
source
s
(O
r
if
the
y
are
,
there
mus
t
b
e
overriding economic
or
ethical
issues
requ
i
ring
the
Uni
v
ersit
y
to
provide these
services).
•
Service
s
ca
n
b
e
provide
d
t
o
non-campus
,
non-affiliat
e
entities onl
y
i
f
the
y
ar
e
uniqu
e
an
d
suppor
t
th
e
campus’
s
academic
mission
or
are
not
in
competition
with
commercial
sources
–
rate
s
shoul
d
b
e
full
y
coste
d
and include
a
surcharge t
o
recove
r
campu
s
indirec
t
costs.
6
Wha
t
i
s
a
Recharg
e
Center?
Rule
s
an
d
Criteria
•
All recharge activity on campus is expected to
comply with the University's recharge policy.
•
If a recharge activity charges contract & grants for
any amount, the unit is expected to submit an
annual self-certification for divisional and recharge
committee review.
•
If a recharge activity does not charge contracts &
grants but charges more than $200K per year, the
unit is expected to submit an annual self-certification
for divisional and recharge committee review.
•
If a recharge activity charges less than $200K per
year and does not charge contracts & grants, the
unit does not need to submit an annual self-
certification for divisional and recharge committee
review.
7
Activity
charged to
C&G
Recharge
income
> $200k per
year
Self Certify
No need to
self certify
Yes
Yes
No
No
Wha
t
i
s
a
Recharg
e
Center?
Rules
and
Criteria
•
All campus
users are charged the same
rat
e
for
the
same
services
performed
or goods provided.
•
Rates
to
affiliates
can
include
a
surcharge
up to the ICR rate
to
cover
any
indirect cost
.
•
Recharge centers must only charge their published, authorized
rates.
•
Separate
costs
and
budgets
must
be
clearly defined
for
recharge
activities
•
Units should operate at close to break even.
•
To ensure that the services are necessary and are the best use of
departmental/University resources, units should evaluate their services
on a regular basis, at least annually. Your control unit is your primary
contact for assistance in this area.
8
Wha
t
i
s
a
Recharg
e
Center?
Rule
s
an
d
Criteria
•
All recharge activities are expected to comply with recharge policy.
•
However, only recharge activities
charged to C&G or
with annual
income >$
20
0,000:
•
are
required
to
sel
f
cer
t
ify
onc
e
a
year
as part of the budget process
•
hav
e
rate
s
tha
t
are
posted
to
the
recharge
we
b
site
•
submi
t
request
s
fo
r
in year
rate
c
hange
s
a
s
thei
r
busines
s
needs
demand
,
subjec
t
to contro
l
uni
t
an
d
centra
l
revie
w
.
9
Wha
t
i
s
a
Recharg
e
Center?
Issues
to
Consider
when evaluating setting up a recharge center
•
Why
do
we
want
to
conduct
this
recharge activity
?
•
Should we be in this business?
•
Do we have the expertise to provide this service?
•
What
are
the
risks
and
how
will
we
manage
them (e.g.
product/service
liability,
workers
comp,
etc.)?
•
Do
we
have
the
time
to
manage/monitor
this
activity?
10
Wha
t
i
s
a
Recharg
e
Center?
Issues
to
Consider
when evaluating setting up a recharge center
•
Is this service covered by our existing budget (e.g. 19900,
69750
fund
sources
etc.)?
•
How will we determine rates?
•
Who are our customers?
•
How will we budget for this activity?
•
Will we breakeven?
•
How will we cover an unforeseen loss?
•
How will we monitor the financial status?
11
Wha
t
i
s
a
Recharg
e
Center?
Issues
to
Consider
when evaluating setting up a recharge center
•
How will we bill?
•
How will we monitor the receivables?
•
How will we handle cash receipts: cash, checks, credit
cards
etc.?
•
How will we prepare the recharge journals?
•
How will we handle sales tax issues?
•
How will we report unrelated business income tax
(UBIT)?
•
Do we have adequate insurance coverage?
12
Wha
t
i
s
a
Recharg
e
Center?
Example
s
o
f
Recharg
e
Activities
•
Nanolab Services
•
Chemical Waste Disposal
•
Electron Microscope Facility
•
Services
•
Animal Care
•
IT and Facilities
Services
*
13
*Some of the IST and FS services might shift to a common goods assessment model instead of the
current recharge model.
Wha
t
i
s
a
Recharg
e
Center?
Example
s
o
f
Non-recharg
e
Activities
•
Customary services within general administration – Central
Accounting,
Human Resources,
Budgeting.
•
Tw
o
department
s
shar
e
th
e
cost
s
o
f
a machine
equally.
•
General, non-identifiable services –
g
eneral
administration
fee.
•
Auxiliary
Services:
servi
c
e to individuals –
parking, residential and
student services.
14
Wha
t
i
s
a
Recharg
e
Center?
Auxiliaries
•
Provides
service
s
to
students,
faculty
or
staff.
•
Auxiliaries are considered to be self supporting & provide non-
instructional support, but not all “self supporting”
units are auxiliaries.
•
Some
Auxiliaries:
•
Residential
and
Student
Service
Programs
•
Re
c
Sports
•
Intercollegiat
e
Athletics
•
Parking
and
Trans
portation
15
Topic
1.
What is a
Recharge
Center?
3.
Functional Responsibilities
4.
Common
Issues
5.
References,
Forms
and
Contact
Information
16
Functiona
l
Responsibilities
Role
of
the
Department
•
Overall
operation
of
recharge
centers.
•
Assures compliance with current University recharge policy.
•
Reviews services provided on an ongoing basis.
•
Reviews budget, revenue and expenditures on an ongoing basis.
•
Reviews rates as business needs change to assure unit’s balances remain
within tolerance.
•
Submit
annual
self
certification
form
as part of the yearly budget process
.
17
Functiona
l
Responsibilities
Role
of
the
Control
U
n
it
(Division)
•
Oversees and assists with operation of recharge units.
•
Approves all recharge rate changes and annual self certification forms
prior to submission to the
recharge committee
.
•
Reviews services provided by the recharge centers periodically.
•
Assures all units with
in
the control unit submit an annual self
certification form.
18
Functiona
l
Responsibilities
Role
of
the
Recharge
Committee
•
Acts
in
an
advisory
capacity
to
recharge
centers
and campus
departments.
•
Acts in an advisory capacity for developing University
recharge policy and procedure.
•
Approves the establishment of all new recharge centers.
•
Reviews all surplus or deficit reduction plans and monitors a unit’s
progress toward reduction goals.
•
Approves all in year recharge rates changes and all recharge rates
submitted as part of the yearly budget process.
19
Functiona
l
Responsibilities
Role
of
the
Office of the VC Finance and CFO
•
Provides general accounting assistance to the recharge
centers.
•
Provides training to the campus community.
•
Provides binding mediation on all recharge disputes between recharge
centers and their customers.
•
Provides
ongoing
fiscal
review
of
the
University’s recharge
operations.
•
Consolidates yearly rate change request for review and approval by
the Recharge Committee.
•
Presents in year rate change request for review and approval by the
Recharge Committee.
20
Topic
1.
What is a
Recharge
4.
How to Develop a Recharge Rate
5.
Billing for Recharge Goods or
Common
Issues
6.
References,
Forms
and
Contact
Information
21
Ho
w
to
Develo
p
a
Recharg
e
Rate
Step
s
t
o
Rat
e
Development
Template
s
fo
r
rat
e
developmen
t
ca
n
b
e
foun
d
o
n
th
e
recharg
e
we
b
site:
https://cfo.berkeley.edu/recharge
Estimate
Revenues
and
Volumes
Identify
costs along
lines
of
business
Identify
lines
o
f
business
Identify
methodology to
allocate costs
Develop
rates
Self
Certify
22
Ho
w
to
Develo
p
a
Recharg
e
Rate
Basic
Formula
Basic
Rate
Formula:
Estimated
Cost
of
Providing
Goods
or
Service*
Recharg
e
Rat
e
=
Estimate
d
Numbe
r
o
f
Servic
e
Unit
s
t
o
b
e
Provided
*Costs
may
need
to
be
adjusted
to
include
allowable
surpluses and
deficits
from
prior
years
and
subsidies
23
Ho
w
to
Develo
p
a
Recharg
e
Rate
Rat
e
Development
•
Different services offered within the same unit or department
may
have
separate
recharge
rates (Separate
rates
for
each
class
of
goods
or
services).
•
Identical goods and services must carry identical prices for
any
and
all
campus
customers.
•
Units may charge only the rates posted on the
campus recharge
website:
https://cfo.berkeley.edu/recharge
24
Ho
w
to
Develo
p
a
Recharg
e
Rate
Cost
Pool
Development
Include all direct costs
•
Costs must
b
e
allowable.
•
Costs
need
to
be
reasonable,
i.e
.
generall
y
recognized
as
nece
s
sar
y
fo
r
the
operation.
•
Cost
s
mus
t
b
e
treated
consistentl
y
i.e
.
direc
t
v
.
indirect.
Cos
t
are
identifiable
to
the
recharge
unit.
•
Cos
t
are
reasonabl
y
allo
c
able
.
When
allo
c
ating
a
cos
t
to
a
recharge
unit
,
we
mus
t
b
e
able
to
as
sign
the
c
ost
,
or
a
group
of
cost
s
,
to
the
recharge
poo
l
i
n
reasonable
and
realistic
proportion
tha
t
demonstrate
s
the
benefi
t
provided.
25
Ho
w
to
Develo
p
a
Recharg
e
Rate
Allowable
Costs
Identify
costs
to
be
included
in
cost
pool.
Allowable costs normally
include but are not limited to:
•
Salaries,
Wages
and
Fringe
Benefits
•
Supplies and Services
•
Costs of Leased Non-Capital Equipment/Facilities
•
Equipment Depreciation
•
Repairs and Maintenance
•
Prior
Year
Operating
Surplus/Loss
that
occurred through the
normal
course of business
26
a)
Costs
of
capitalized
renovation
s
o
r
leasehold improvements
b)
Interna
l
Interes
t
Expense
c)
Bad
Debts
d)
Fines/Penaltie
s
e)
Inventorial/Capital
Equipment
Purchases
f)
Commencement/Convo
cation Costs
g)
Fund Raising Expense
h)
Contingency
Reserves
i)
Cos
t
Pai
d
b
y
Federal
Government
j)
Alumni
Activities
k)
Entertainmen
t
(Alcohol, even
t
tickets
,
flowers
,
gifts,
etc.)
l)
Donations/Contributions
m)
Memberships/Civic/Commu
nity
/
Socia
l
Org.
n)
Abnorma
l
(non-operating) deficits
Ho
w
to
Develo
p
a
Recharg
e
Rate
Unallowable Costs
27
Ho
w
to
Develo
p
a
Recharg
e
Rate
Equipmen
t
Depreciation
•
C
apital equipment with useful life
> 1 year and value > $5,000 shall be depreciated on a
straight line basis.
•
Recommended useful life tables can be found
at
the following link of
the UCOP website
:
https://eulid.ucop.edu/index.php
•
Depreciation expense is included as a cost in the rate development,
except when:
•
Equipment
is
funded
by
the
federal
government,
•
Equipment
is
funded
by
an
incomplete,
private contract
or
grant,
•
Equipment
is
identified
as
cost
sharing
to
a federal
research project.
28
Ho
w
to
Develo
p
a
Recharg
e
Rate
Reserv
e
Funds
•
Throug
h
depreciation
journal
entries
,
a
r
e
serve
fund
is
establi
s
hed.
•
Plea
s
e
refe
r
to
the recharge policy
fo
r
sample
of
depre
c
iation
journal
entries
•
Equipment
reserve
funds
should
be
used
to
purchase
replacement
equipment
needed
for
the
recharge
operation.
•
Exceptions are subject to
the
Recharge Committee
approval.
•
A
decommissioned
recharge
unit
c
a
n
us
e
its
equipmen
t
reserve fund
s
to
of
f
se
t
an
y
recharge
operational
deficit.
Residual
reserve
fund
s
ma
y
b
e
retained
b
y
the
departmen
t
subject to the Recharge Committee
approval.
29
Ho
w
to
Develo
p
a
Recharg
e
Rate
Subsidies
•
Subsidies
fund
a
portion
of
the
recharge
unit’s
total costs which result
in lower
recharge rates.
•
Subsidies included in ra
te
s
reduce
the
price
fo
r
all
campu
s
user
s
o
f
s
p
ecifi
c
produ
c
t
s
o
r
services produ
c
e
d
b
y
the
recharge.
•
Non-campu
s
user
s
must
b
e
charged
the
unsubsidized
rates
plus a minimum surcharge based on the current ICR rates.
30
Ho
w
to
Develo
p
a
Recharg
e
Rate
Surcharges
•
In addition to charging fully costed rates, units
m
ust
assess a
minimum
additional charge to non-campus customers intended to recover campus
indirect costs
(ICR)
.
The minimum surcharge is the ICR rate.
•
Affiliates
and
auxiliaries are
campus
customers.
•
Affiliates,
h
o
wever,
can
b
e
assesse
d
a
surcharge
u
p
to
the
current
campus
ICR
rate
.
•
Exceptions to charging a surcharge at the full ICR rate for external
customers are subject to the Recharge Committee approval.
31
Ho
w
to
Develo
p
a
Recharg
e
Rate
Surcharges
•
Surcharge funds generated are recorded to a separate
fund
and
are
retained
by
the
generating department
to
be
used
at
the
unit’s
discretion, generally
to
defray
administrative
cost
s
.
•
Codin
g
to
a
separate
fund
an
d
accoun
t
ensure
s
tha
t
the balance
o
f
the
recharge
operation
s
fund
is
no
t
distorted
by
surcharge
income.
•
For
recharge
units,
the
administrative
full
costing
(AFC)
assessmen
t
wil
l
b
e
posted
to
the
surcharge
fund.
32
Ho
w
to
Develo
p
a
Recharg
e
Rate
Surcharges
•
For
Educational
Activities,
code
surcharge
income
to revenue account
46XXX and fund 60050.
•
For all other activities, code surcharge income using revenue account
48XXX and fund 66350.
33
Ho
w
to
Develo
p
a
Recharg
e
Rate
Recharg
e
Rat
e
Chang
e
Procedure
•
Units may charge only the rates posted on the
campus recharge
website
•
T
o
revis
e
rates
,
fil
l
ou
t
an
d
submi
t
sel
f
certification for
m
plu
s
a
lis
t
o
f
rate
s
to the recharge portfolio lead.
34
Topic
1.
What is a
Recharge
5.
Billing for Recharge Goods or Services
6.
Surpluses
and
Deficits
7.
Self
Monitoring
8.
Self
Certification
9.
Close/Shutdown a Recharge
Common
Issues
10.
References,
Forms
and
Contact
Information
35
Billing
fo
r
Recharg
e
Good
s
o
r
Services
Timel
y
Billing
•
A
recharge
center
must
bill
their
customers
in
a timely manner.
•
Within
6
0
day
s
afte
r
the
good
s
o
r
service
s
hav
e
been
delivered
o
r
the
projec
t
is
complete
;
or
•
Within
6
0
day
s
afte
r
the
recharge
cente
r
ha
s
bee
n
billed
by
a
third
part
y
providing
the
good
s
o
r
services.
•
A revenue center should bill their customers in a timely
manner
to
minimize
the
risk
of
non-payment.
•
Best practice is to bill in
advan
c
e.
•
If
the
billing
schedule
cannot
be
met,
immediately contact your
customers to negotiate a new schedule.
•
If a mutually agreeable schedule cannot be met, the recharge center
must contact the recharge lead for mediation.
36
Billing
fo
r
Recharg
e
Good
s
o
r
Services
Posting
to
the
General
Ledger
•
A recharge customer has 60 days from the time a recharge is posted to
the general ledger to dispute the
charge.
37
Billing
fo
r
Recharg
e
Good
s
o
r
Services
Uncollectibl
e
Recharges
•
Uncollectible recharges are unallowable cost
s
.
•
Recharge units must identify a non-recharge chartstring
to
which
these
costs
are
charged.
•
Recharge units may not include these costs in future
rate
developments.
38
Billing
fo
r
Recharg
e
Good
s
o
r
Services
Statement
Format
and
Content
•
Invoices for recharge goods or services must contain the following
information:
(see
policy
document
for
complete
list):
•
Full chartstring charged
•
Description of goods/services provided
•
Date
of
service
•
Amount charged
39
Billing
fo
r
Recharg
e
Good
s
o
r
Services
Record
s
Retention
•
Because
recharge
centers
are
subject
to
periodic review
and
their
charges
are
subject
to
audit,
each recharge center must retain the
following records:
•
“Founding
”
documentation
:
5
year
s
afte
r
the
uni
t
is
decommissioned
•
Rat
e
developmen
t
detail
:
5
years
•
Recharge
billing supporting documentation:
5
years
•
Recharg
e
cente
r
operating
costs-see
U
C
retention
guidelines:
http://www.policies.uci.edu/adm/records/721-11a.h
t
ml
40
Topic
1.
Responsibilities
6.
Surpluses and Deficits
7.
Self
Monitoring
8.
Self
Certification
9.
Close/Shutdown a Recharge
Common
Issues
10.
References,
Forms
and
Contact
Information
41
Surpluse
s
an
d
Deficits
Recharge Operations Must Break-even
•
Break-even
occurs
when
costs
of
products
or services is equal to the
recharge income received
fro
m
customers.
•
A
recharge
center
is
expected
to
operate
close
to break-even
over
a
period
of
time
and be within the recharge tolerance for its rates.
•
Monitoring operating revenues, expenditures and fund balances
is the
usual method for determining break-even compliance.
42
Surpluse
s
an
d
Deficits
Definition
of
a
Large
Surplus/Deficit
•
A
large
surplus/deficit
defined
as:
recharge fund balance
> 1 month
operating expense (rolling 12 month average expenses).
•
If
a
unit
needs
to
maintain
a
balance
>
1
month operating
expense
for
day-
to-day
operations,
it
can
seek approval
from
the
recharge
committee
through
the control unit.
43
Surpluse
s
an
d
Deficits
Deficits
•
Unit must develop deficit reduction plan to eliminate out-of-tolerance
deficits
as
soon
as
possible. Reduction period should not exceed
1
year.
•
Deficits outside of tolerance or outside of any approved deficit reduction
plan at fiscal year’s end will be subject to the terms of the campus’
deficit resolution policy.
44
Surpluse
s
an
d
Deficits
Surpluses
•
Unit cannot raise rates without a detailed review.
•
Unit must submit reduction plan to eliminate surplus within
3
months
notification
of
out-of-tolerance
status.
•
Surplu
s
reduction
plan
s
are
submitted
to
the
recharge lead.
•
Plan should eliminate surplus as soon as
possible
to be within tolerance by fiscal year end.
•
Surpluses
cannot
be
transferred
to
reserve
funds.
45
Topic
Fu
nctional
and
Deficits
7.
Self Monitoring
8.
Self
Certification
9.
Close/Shutdown a Recharge
Common
Issues
10.
References,
Forms
and
Contact
Information
46
Sel
f
Monitoring
•
The recharge unit should monitor its recharge activity on a monthly
basis or at a minimum on a quarterly basis.
•
Forecast should be updated to reflect the latest thinking for the balance
of the year regarding recharge activities.
•
Units can use BAIRS reports and smartview reports, including the
smartview report captured in the self-certification file to monitor
recharge activities.
47
Topic
8.
Self
Certification
9.
Close/Shutdown a Recharge
Common
Issues
10.
References,
Forms
and
Contact
Information
48
Sel
f
Certification
When to Self Certify
•
In
Jan- Feb
of each year
as part of the yearly recharge budget process
•
To establish a new recharge center
•
To establish new services in an existing recharge center
•
To change rates for existing services
•
To apply new costing methodologies to existing rates
49
Sel
f
Certification
Unit
completes sel
f
cer
t
form
Control Unit
reviews self
cert
Office of VC
Finance reviews self
cert
Disapp
r
ove
d
sel
f
c
e
rt
s
Approv
e
d
sel
f
certs
Disapprove
d
sel
f
certs
Complete
d
sel
f
cer
t
i
s
for
w
arde
d
t
o
contro
l
unit
Office of VC
Finance posts
rates
to recharge
website
Recharge
Committee
review and
approve rates
50
Sel
f
Certification
Recharg
e
Rat
e
Chang
e
Procedure
•
Normall
y
within
one month
o
f
receip
t
o
f
al
l
required
document
s
in
the
Office
of VC Finance
,
revised
in year
rate
s
are
posted
to
the
recharge
website.
•
Afte
r
posting
to
the
web
,
re
c
harge
center
s
ma
y
star
t
appl
y
ing new
rates.
•
Recharge
centers
should
notify
customer
s
o
f
rate
changes.
51
Sel
f
Certification
Detaile
d
Review
All
self
certification
forms
are
reviewed
centrally.
•
If unit’s revenue > $200,000
, a self certification needs to be issued.
•
If unit’s recharges C&G, a self certification needs to be issued.
•
If unit’s revenue < $200,000
and unit’s does not recharge C&G, a self
certification does not need to be issued.
52
Sel
f
Certification
Units
Less
than
$
20
0,000/yr
in
Income/Revenue
•
If annual recharge activity drops below $
20
0,000 in annual recharge
income and
recharge activities are not charged to C&G
,
control
unit
to exempt
from
self-certification
process.
•
After their review, control unit will notify the Recharge
Lead
to
update recharge records.
•
Need not self-certify until $
20
0,000 income level is reached and
determined to be permanent
unless recharge activities are recharged
to C&G
53
Topic
on
9.
Close/Shutdown a Recharge Operation
10.
Common
Issues
11.
References,
Forms
and
Contact
Information
54
Closin
g
a
Recharg
e
Operation
•
Withi
n
1
0
day
s
o
f
decidin
g
t
o
clos
e
a
recharg
e
operation
,
notif
y
C
ontro
l
Unit/Dean’s Office
.
Contro
l
Uni
t
wil
l
forwar
d
t
h
e
reques
t
t
o
th
e
Recharg
e
Lead.
•
Advis
e
o
f
dat
e
o
f
closur
e
an
d
proposa
l
o
n
ho
w
t
o
accoun
t
fo
r
surplus/defici
t
i
n
the unit.
•
If surplus >
1 month operating cost, ba
l
anc
e
wil
l
b
e
refunde
d
t
o
custome
r
s
o
n
pro- rat
a
basis.
•
If
surplus
<
1
month
operating
cost,
balan
c
e
i
s
move
d
t
o
appropriat
e
cha
r
t
string.
•
Mus
t
settl
e
balanc
e
withi
n
3
0
day
s
o
f
closure.
•
Deficit
s
a
t
fisca
l
year’
s
en
d
are
s
ubject to the te
r
m
s of
th
e
campus
’
defici
t
resolution polic
y
withou
t
th
e
applica
t
io
n
o
f a
toleranc
e .
55
Topic
is
a
Recharge
Center?
10.
Common Issues
11.
References,
Forms
and
Contact
Information
56
Commo
n
Issues
•
How to fund equipment purchases
•
Equipment
reserves
•
Gifts/donations
•
Campus or 3
rd
party
loans
•
Operating or capital lease
•
Surcharge income
57
Commo
n
Issues
•
Depreciation
omitted
from
rate
development.
•
Failure to follow billing policies & procedures.
•
Adjustments
for
inventory.
•
Established surplus/deficit reduction plan n
ot
executed.
•
Unallowable costs in rate development.
•
Distortion of financial position by surcharge income and/or
depreciation
income
recorded
to
operations
fund.
•
Inappropriate allocation basis in rate development.
•
Charging unapproved rates.
•
Inappropriate use of surplus balances.
58
Topic
11.
References
and
Contact
Information
59
References
•
Recharg
e
We
b
Site
https://cfo.berkeley.edu/recharge
•
Recharge
Policy
Document
https://cfo.berkeley.edu/file/ucberkeleyrechargepolicysept2017pdf
•
Bu
s
iness
&
Finance
Bulletin
A-47
http://www.ucop.edu/ucophome/policies/bfb/a47.html
•
Bu
s
iness
&
Finance
Bulletin
A-56
http://www.ucop.edu/ucophome/policies/bfb/a56.html
•
Contrac
t
&
Gran
t
Manual
http://www.ucop.edu/research-policy-analysis-coordination/resources-tools/contract-and-
grant-manual/
•
Recharge
Billing Policies
& Procedures
https://cfo.berkeley.edu/recharge-billing-policies-and-procedures
•
Facilities & Administrative rates (F&A rate)
https://spo.berkeley.edu/policy/fa2017.pdf
•
OMB Uniform Guidance
https://www.grants.gov/web/grants/learn-grants/grant-policies/omb-uniform-guidance-
2014.html
60
Resources
Where
do
I
get
help?
•
All
recharge
related
correspondence:
recharge_certification@berkeley.edu
•
Recharge
policy
&
procedures queries
Herve’
Bruckert
:
hbruckert
@
B
erkeley
.edu
61
Topic
12.
Forms
and
templates
62
Form
s
&
Templates
•
Forms and templates can be found on the recharge website at:
•
https://cfo.berkeley.edu/recharge
63
Explore the guidelines and processes related to recharge activities, including developing rates, monitoring, and closing operations. Discover the significance of recharge centers in recovering costs and supporting the academic mission. Learn about direct and indirect expenses in sponsored projects and how recharge rates are established.
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Presentation Transcript
Recharge Policies & Procedures Recharge Policies & Procedures Herv Bruckert January 11th, 2018 1
Agenda Framing recharge activities What is a Recharge Center? Functional Responsibilities How to Develop a Recharge Rate Billing for Recharge Goods or Services Surpluses and Deficits Self Monitoring Self-Certification Close/Shutdown a Recharge Operation Common Issues References and Contact Information Recharge Form 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 2
Framing Recharge activities: Why recharge? UC Berkeley Admin Recharge Unit B Academic Recharge Unit A Affiliates, including other UC campus External Clients Research Recharge Unit C Research Recharge Unit D Sponsored Projects Contract & Grants 3
Framing Recharge activities: Why recharge? Sponsored projects policies require that expenses be broken down between: Direct expenses Indirect expenses (Facilities & Administration F&A) Direct expenses are directly charged to C&G. Indirect expenses are charged to C&G by multiplying Direct expenses by an F&A rate. Recharge rates are established based on direct expenses and provide a mechanism to allocate costs to C&G enabling the University to be reimbursed for the C&G activities it conducts. 4
Topic 1. 2. 3. 4. What is a RechargeCenter? What is a recharge center? Common Issues References, Forms and Contact Information 5
What is a Recharge Center? Rules and Criteria Unit providing specific goods or services to a number of campus departments on an ongoing basis. The unit is allowed to recoverits costs in providingthose goods or services through a chargeto its users. Some rechargecenters may generate revenues fromincidental sales or servicesto individualsor off-campus entities. Services provided should not be readily available from outside sources (Or if they are, there must be overriding economic or ethical issues requiring the University to provide these services). Services can be provided to non-campus, non-affiliate entities only if they are unique and support the campus s academic mission or are not in competition with commercial sources rates should be fully costed and include a surcharge to recover campus indirect costs. 6
What is a Recharge Center? Rules and Criteria Activity charged to C&G Yes All recharge activity on campus is expected to comply with the University's recharge policy. If a recharge activity charges contract & grants for any amount, the unit is expected to submit an annual self-certification for divisional and recharge committee review. If a recharge activity does not charge contracts & grants but charges more than $200K per year, the unit is expected to submit an annual self-certification for divisional and recharge committee review. If a recharge activity charges less than $200K per year and does not charge contracts & grants, the unit does not need to submit an annual self- certification for divisional and recharge committee review. No Yes Recharge income > $200k per year No No need to self certify Self Certify 7
What is a Recharge Center? Rules and Criteria All campus users are charged the same rate for the same services performed or goods provided. Rates to affiliates can include a surcharge up to the ICR rate to cover any indirect cost. Recharge centers must only charge their published, authorized rates. Separate costs and budgets must be clearly defined for recharge activities Units should operate at close to break even. To ensure that the services are necessary and are the best use of departmental/University resources, units should evaluate their services on a regular basis, at least annually. Your control unit is your primary contact for assistance in this area. 8
What is a Recharge Center? Rules and Criteria All recharge activities are expected to comply with recharge policy. However, only recharge activities charged to C&G or with annual income >$200,000: are required to self certifyonce a year as part of the budget process have ratesthat arepostedto the rechargeweb site submit requests for in year rate changes as their businessneeds demand, subjectto control unit and central review. 9
What is a Recharge Center? Issues to Consider when evaluating setting up a recharge center Why do we want to conduct this recharge activity? Should we be in this business? Do we have the expertise to provide this service? What are the risks and how will we manage them (e.g. product/service liability, workers comp, etc.)? Do we have the time to manage/monitor this activity? 10
What is a Recharge Center? Issues to Consider when evaluating setting up a recharge center Is this service covered by our existing budget (e.g. 19900, 69750 fund sources etc.)? How will we determine rates? Who are our customers? How will we budget for this activity? Will we breakeven? How will we cover an unforeseen loss? How will we monitor the financial status? 11
What is a Recharge Center? Issues to Consider when evaluating setting up a recharge center How will we bill? How will we monitor the receivables? How will we handle cash receipts: cash, checks, credit cards etc.? How will we prepare the recharge journals? How will we handle sales tax issues? How will we report unrelated business income tax (UBIT)? Do we have adequate insurance coverage? 12
What is a Recharge Center? Examples of Recharge Activities Nanolab Services Chemical Waste Disposal Electron Microscope Facility Mail Services Animal Care IT and Facilities Services* *Some of the IST and FS services might shift to a common goods assessment model instead of the current recharge model. 13
What is a Recharge Center? Examples of Non-recharge Activities Customary services within general administration Central Accounting, Human Resources, Budgeting. Two departments share the costs of a machine equally. General, non-identifiable services general administration fee. Auxiliary Services: service to individuals parking, residential and student services. 14
What is a Recharge Center? Auxiliaries Provides servicesto students, faculty or staff. Auxiliaries are considered to be self supporting & provide non- instructional support, but not all self supporting units are auxiliaries. Some Auxiliaries: Residential and Student Service Programs Rec Sports Intercollegiate Athletics Parking and Transportation 15
Topic 1. 3. 4. 5. What is a RechargeCenter? Functional Responsibilities Common Issues References, Forms and Contact Information 16
Functional Responsibilities Role of the Department Overall operation of recharge centers. Assures compliance with current University recharge policy. Reviews services provided on an ongoing basis. Reviews budget, revenue and expenditures on an ongoing basis. Reviews rates as business needs change to assure unit s balances remain within tolerance. Submit annual self certification form as part of the yearly budget process. 17
Functional Responsibilities Role of the Control Unit (Division) Oversees and assists with operation of recharge units. Approves all recharge rate changes and annual self certification forms prior to submission to the recharge committee. Reviews services provided by the recharge centers periodically. Assures all units within the control unit submit an annual self certification form. 18
Functional Responsibilities Role of the Recharge Committee Acts in an advisory capacity to recharge centers and campus departments. Acts in an advisory capacity for developing University recharge policy and procedure. Approves the establishment of all new recharge centers. Reviews all surplus or deficit reduction plans and monitors a unit s progress toward reduction goals. Approves all in year recharge rates changes and all recharge rates submitted as part of the yearly budget process. 19
Functional Responsibilities Role of the Office of the VC Finance and CFO Provides general accounting assistance to the recharge centers. Provides training to the campus community. Provides binding mediation on all recharge disputes between recharge centers and their customers. Provides ongoing fiscal review of the University s recharge operations. Consolidates yearly rate change request for review and approval by the Recharge Committee. Presents in year rate change request for review and approval by the Recharge Committee. 20
Topic 1. 4. 5. What is a Recharge How to Develop a Recharge Rate Billing for Recharge Goods or Common Issues References, Forms and Contact Information 6. 21
How to Develop a Recharge Rate Steps to Rate Development Identify costs along lines of business Identify lines of business Identify methodology to allocate costs Develop rates Estimate Revenues and Volumes Self Certify Templates for rate development can be found on the recharge web site: https://cfo.berkeley.edu/recharge Templatesfor rate development can be foundonthe rechargewebsite: https://cfo.berkeley.edu/recharge 22
How to Develop a Recharge Rate Basic Formula Basic Rate Formula: Estimated Cost of Providing Goods or Service* Recharge Rate = Estimated Number of Service Units to be Provided *Costs may need to be adjusted to include allowable surpluses and deficits from prior years and subsidies 23
How to Develop a Recharge Rate Rate Development Different services offered within the same unit or department may have separate recharge rates (Separate rates for each class of goods or services). Identical goods and services must carry identical prices for any and all campus customers. Units may charge only the rates posted on the campus recharge website: https://cfo.berkeley.edu/recharge 24
How to Develop a Recharge Rate Cost Pool Development Include all direct costs Costs must be allowable. Costs need to be reasonable, i.e. generallyrecognizedas necessaryfor the operation. Costs must be treatedconsistently i.e.directv. indirect.Cost are identifiable to the rechargeunit. Cost are reasonablyallocable. Whenallocatinga cost to a rechargeunit, we must be able to assign the cost, or a groupof costs, to the recharge pool in reasonable andrealistic proportionthat demonstrates the benefitprovided. 25
How to Develop a Recharge Rate Allowable Costs Identify costs to be included in cost pool. Allowable costs normally include but are not limited to: Salaries, Wages and Fringe Benefits Supplies and Services Costs of Leased Non-Capital Equipment/Facilities Equipment Depreciation Repairs and Maintenance Prior Year Operating Surplus/Loss that occurred through the normal course of business 26
How to Develop a Recharge Rate Unallowable Costs Costs of capitalized renovations or leasehold improvements Contingency Reserves Cost Paid by Federal Government Alumni Activities Entertainment (Alcohol, event tickets, flowers, gifts, etc.) Donations/Contributions Memberships/Civic/Community/ Social Org. Abnormal (non-operating) deficits a) h) i) b) Internal Interest Expense Bad Debts c) j) d) Fines/Penalties k) e) Inventorial/Capital Equipment Purchases Commencement/Convocation Costs l) f) m) Fund Raising Expense g) n) 27
How to Develop a Recharge Rate Equipment Depreciation Capital equipment with useful life > 1 year and value > $5,000 shall be depreciated on a straight line basis. Recommended useful life tables can be found at the following link of the UCOP website: https://eulid.ucop.edu/index.php Depreciation expense is included as a cost in the rate development, except when: Equipment is funded by the federal government, Equipment is funded by an incomplete, private contract or grant, Equipment is identified as cost sharing to a federal research project. 28
How to Develop a Recharge Rate Reserve Funds Through depreciation journal entries,a reserve fund is established. Please refer to the recharge policy for sample of depreciation journal entries Equipmentreserve funds should be usedto purchase replacement equipmentneededfor the rechargeoperation. Exceptions are subject to the Recharge Committee approval. A decommissionedrecharge unit can use its equipment reserve funds to off set any recharge operationaldeficit. Residual reserve funds may be retainedby the department subject to the Recharge Committee approval. 29
How to Develop a Recharge Rate Subsidies Subsidies fund a portion of the recharge unit s total costs which result in lower recharge rates. Subsidies included in rates reducethe pricefor allcampus users of specific products or services producedby the recharge. Non-campus users must be chargedthe unsubsidized rates plus a minimum surcharge based on the current ICR rates. 30
How to Develop a Recharge Rate Surcharges In addition to charging fully costed rates, units must assess a minimum additional charge to non-campus customers intended to recover campus indirect costs (ICR). The minimum surcharge is the ICR rate. Affiliates and auxiliaries are campus customers. Affiliates, however, can be assessed a surchargeup to the current campus ICR rate. Exceptions to charging a surcharge at the full ICR rate for external customers are subject to the Recharge Committee approval. 31
How to Develop a Recharge Rate Surcharges Surcharge funds generated are recorded to a separate fund and are retained by the generating department to be used at the unit s discretion, generally to defray administrative costs. Coding to a separate fundand account ensures that the balance of the recharge operations fund is not distortedby surchargeincome. For recharge units, the administrative full costing (AFC) assessment will be postedto the surchargefund. 32
How to Develop a Recharge Rate Surcharges For Educational Activities, code surcharge income to revenue account 46XXX and fund 60050. For all other activities, code surcharge income using revenue account 48XXX and fund 66350. 33
How to Develop a Recharge Rate Recharge Rate Change Procedure Units may charge only the rates posted on the campus recharge website To revise rates,fill out and submit self certification form plus a list of rates to the recharge portfolio lead. 34
Topic 1. 5. Billing for Recharge Goods or Services 6. Surpluses and Deficits 7. Self Monitoring 8. Self Certification 9. Close/Shutdown a Recharge Common Issues 10. References, Forms and Contact Information What is a Recharge 35
Billing for Recharge Goods or Services Timely Billing A recharge center must bill their customers in a timely manner. Within60 days after the goods or services have been delivered or the projectis complete; or Within60 days after the recharge center has been billedby a third partyprovidingthe goods or services. A revenue center should bill their customers in a timely manner to minimize the risk of non-payment. Best practice is to bill in advance. If the billing schedule cannot be met, immediately contact your customers to negotiate a new schedule. If a mutually agreeable schedule cannot be met, the recharge center must contact the recharge lead for mediation. 36
Billing for Recharge Goods or Services Posting to the General Ledger A recharge customer has 60 days from the time a recharge is posted to the general ledger to dispute the charge. 37
Billing for Recharge Goods or Services Uncollectible Recharges Uncollectible recharges are unallowable costs. Recharge units must identify a non-recharge chartstring to which these costs are charged. Recharge units may not include these costs in future rate developments. 38
Billing for Recharge Goods or Services Statement Format and Content Invoices for recharge goods or services must contain the following information: (see policy document for complete list): Full chartstring charged Description of goods/services provided Date of service Amount charged 39
Billing for Recharge Goods or Services Records Retention Because recharge centers are subject to periodic review and their charges are subject to audit, each recharge center must retain the following records: Founding documentation:5 years after the unit is decommissioned Rate development detail: 5 years Recharge billing supporting documentation: 5 years Recharge center operatingcosts-see UC retention guidelines: http://www.policies.uci.edu/adm/records/721-11a.html 40
Topic 1. 6. 7. 8. 9. Responsibilities Surpluses and Deficits Self Monitoring Self Certification Close/Shutdown a Recharge Common Issues 10. References, Forms and Contact Information 41
Surpluses and Deficits Recharge Operations Must Break-even Break-even occurs when costs of products or services is equal to the recharge income received from customers. A recharge center is expected to operate close to break-even over a period of time and be within the recharge tolerance for its rates. Monitoring operating revenues, expenditures and fund balances is the usual method for determining break-even compliance. 42
Surpluses and Deficits Definition of a Large Surplus/Deficit A large surplus/deficit defined as: recharge fund balance > 1 month operating expense (rolling 12 month average expenses). If a unit needs to maintain a balance > 1 month operating expense for day- to-day operations, it can seek approval from the recharge committee through the control unit. 43
Surpluses and Deficits Deficits Unit must develop deficit reduction plan to eliminate out-of-tolerance deficits as soon as possible. Reduction period should not exceed 1 year. Deficits outside of tolerance or outside of any approved deficit reduction plan at fiscal year s end will be subject to the terms of the campus deficit resolution policy. 44
Surpluses and Deficits Surpluses Unit cannot raise rates without a detailed review. Unit must submit reduction plan to eliminate surplus within 3 months notification of out-of-tolerance status. Surplus reductionplans are submitted to the recharge lead. Plan should eliminate surplus as soon as possible to be within tolerance by fiscal year end. Surpluses cannot be transferred to reserve funds. 45
Topic Functional and Deficits 7. Self Monitoring 8. Self Certification 9. Close/Shutdown a Recharge Common Issues 10. References, Forms and Contact Information 46
Self Monitoring The recharge unit should monitor its recharge activity on a monthly basis or at a minimum on a quarterly basis. Forecast should be updated to reflect the latest thinking for the balance of the year regarding recharge activities. Units can use BAIRS reports and smartview reports, including the smartview report captured in the self-certification file to monitor recharge activities. 47
Topic 8. 9. Self Certification Close/Shutdown a Recharge Common Issues 10. References, Forms and Contact Information 48
Self Certification When to Self Certify In Jan- Feb of each year as part of the yearly recharge budget process To establish a new recharge center To establish new services in an existing recharge center To change rates for existing services To apply new costing methodologies to existing rates 49
Self Certification Control Unit reviews self cert Unit Completed self cert is forwardedto controlunit completes self cert form Disapproved self certs Office of VC Finance reviews self cert Approved self certs Disapprovedself certs Office of VC Finance posts rates to recharge website Recharge Committee review and approve rates 50
