1005: Recharge Operations

Subject Area: Accounting
Responsible Office: Financial Services
Sponsor: Associate Vice President for Finance
Originally Issued: January 1989
Revised: October 1992, January 2010, December 2014, February 2017, February 2021
Refer Questions To: Carla Bucci; cbucci@uchicago.edu

Purpose: To provide information to recharge operations to ensure they are managed in accordance with University guidelines and Federal regulations (see Recharge Operations webpage).  This webpage includes a link to the recharge manual that describes the policies and procedures in detail.

Introduction

Recharge operations are an essential element in the educational and research environment of the University of Chicago. Recharge operations are shared resources that provide access to instruments, technologies, as well as expert consultation and other services to scientific and clinical investigators, other University personnel and the general public may be served incidentally by the operation.  A recharge operation charges a fee directly related to the recovery of the cost of the goods or services provided. Other characteristics of recharge operations are that they act only upon specific user request, provide goods or services measurable in terms of materials used or hours worked for each user order, and operate as an on-going concern rather than on a sporadic or intermittent basis. 

In addition to the policy outlined below, all recharges operations must comply with OMB Uniform Administrative Requirements, Cost Principals, and Audit Requirements for Federal Awards (2 C.F.R. §200) (“Uniform Guidance”).

Policy

Recharge operations are budgeted and accounted for as discrete operating units in the recharge operations range of accounts. The operation of each recharge unit must be separately budgeted and accounted for in accordance with the following guidelines:

1. All recharge operations must be approved by the Department Chair, if applicable, Dean or Dean’s office designee and Financial Services prior to providing goods/services to campus users or external parties. The recharge must also complete, sign and submit a New Recharge Operation Request Form and completed Recharge Rate Template to Financial Services.
2. All costs directly associated with the recharge operation should be charged to the recharge account, except for unallowable costs described in item 3 below.  
3. Recharge operations cannot have federally unallowable costs, as defined by Uniform Guidance §200.400, charged to the recharge account. As recharge accounts are in an account range that receives the University fringe benefit rate, the exception is for the differential between the Federal and University fringe benefit rate. This differential must be funded by external user rates or the department/division before fiscal close.
4. Depreciation expense recovery within rates is only allowable if the associated equipment is designated with the recharge equipment class code in the University’s Property Management System. Additionally, the determination of the recoverable depreciation expense must conform to University Policy 1004.2: Depreciation of Land Improvements, Buildings, Equipment and Books.
5. Recharge operations should be designed to recover the aggregate direct costs of the operation over some reasonable break-even period, preferably the University fiscal year. Established rates for internal users must not include a markup for “profit” over and above what is necessary to recover the costs of operations.
6. All recharge operations must prepare and retain the following:

• Recharge Questionnaire: This document describes the recharge operation.  It is prepared once by the recharge and submitted to Financial Services for review and approval.  Recharges will update and resubmit only if there are changes.
• Recharge Rate Template: This spreadsheet is the basis for calculating the recharge rates by service.  Recharges must complete an annual rate template which is submitted to Financial Services for review and approval.  Recharge rates should not be used until approved by Financial Services.

7. Mid-year changes to rates must be approved by Financial Services prior to the use of the revised rates.
8. Established rates must be applied consistently to all internal users. All internal users must be billed for services and must be billed at the same rates for the same services.
9. Users can only be billed for services performed/goods rendered.
10. Customer billings must document the rate and quantity sold on the invoice or interdepartmental order.
11. Revenue for internal customers must be tracked separately from external customers.
12. Surpluses and deficits are to be factored into the next year’s rate calculation. Also, surpluses cannot be removed from the recharge account and used for non-recharge purposes.
13. The recharge operation managing unit is responsible for maintaining all financial records associated with the recharge operation in accordance with University Policy 2708: Managing University Records.