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
Refer Questions To: Casey Campbell, 773-702-3695
Purpose: To provide information to recharge operations to ensure they are managed in accordance with University guidelines contained in the Financial Services’ Accounting Protocol for Recharge Operationsand the applicable provisions from federal regulations.
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.
Recharge operations are categorized as one of three types:
- Recharge Center: A unit that generally provides goods/services to a single department or division, has annual revenue less than $100,000, of which $10,000 or less in revenue is generated from federal awards.
- Service Center: A unit that generally provides goods/services to the broader University community, has annual revenue of $100,000 or greater, of which $10,000 or greater in revenue is generated from federal awards.
- Specialized Service Facility: A specialized service facility (SSF) is defined by Uniform Guidance (see 2 C.F.R. §200.468) as a highly complex or highly specialized facility, whose services are not typically available from an outside vendor.
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”).
Recharge operations are budgeted and accounted for as discrete operating units in the recharge operations section of Ledger 2 in the Financial Accounting System (FAS). The operation of each recharge unit in Ledger 2 must be separately budgeted and accounted for in accordance with the following guidelines:
- 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.
- Only costs directly associated to the recharge operation can be charged to the recharge FAS Ledger 2 account. Specialized Service Facilities are allowed to have a rate structure designed to recover an allocable shared of the University’s indirect costs.
- Recharge operations cannot have unallowable costs, as defined by Uniform Guidance §200.400, allocated to the associated FAS recharge account. As recharge accounts are Ledger 2 accounts, 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.
- 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.
- 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 or external federal users must not include a markup for “profit” over and above what is necessary to recover the costs of operations.
- All recharge operations must prepare and retain annual rate calculations:
- Service Centers and Specialized Service Facilities must submit rate calculations annually to Financial Services for review and approval.
- Recharge Centers must submit a self-certification form annually.
- Recharge Centers must submit rate calculations to Financial Services for review and approval every three years.