Research Service Centers
01.
UPPS No. 03.04.09
Issue No.
Effective Date:
Review: September 1 EY
POLICY STATEMENTS
01.01 This UPPS provides a framework for the approval and fiscal
operations of Texas State University research service centers
(RSCs) that will ensure compliance with federal cost principles,
consistency in accounting and costing practices, and flexibility to
meet the needs of different operations. Although there is a wide
variation in size, complexity, and services provided by RSCs, they
should all maintain common administrative practices.
01.02 As a recipient of federal funds, Texas State complies with current
applicable circulars published by the U.S. Office of Management
and Budget (OMB).
Generally, the university follows the OMB guidelines for all
sponsored projects, regardless of the funding source.
02.
GENERAL GUIDELINES
02.01 An RSC is an operating unit within the university that provides
goods and services primarily to other university units (especially
to the university’s sponsored programs) and secondarily to
external users for a fee.
The cost of providing products or services is allocated to users
including federally-sponsored agreements by applying established
recharge rates to the actual usage of services.
RSC targets breaking even on each unit sold through proper rate
setting, budgeting, and billing practices.
02.02 Deans, directors, department chairs and individual faculty may
propose the creation of an RSC. See Section 06 for the RSC
proposal and approval process. Staffing of duties shall be at the
direction of each unit head and shall follow salary projections
used in the rate calculation.
The benefits of a proposed RSC must be weighed against the
benefits of obtaining similar services or products from commercial
or other university services. In contemplating the creation of an
RSC, the following should be considered:
a. How is this proposed RSC related to the instructional,
research, or public service mission of the university?
b. Does the expected level of billed costs justify the establishment
of an RSC?
c. Does another unit at Texas State already provide similar
services?
d. Will the RSC be competing with an entity in the public sector?
02.03 The estimated revenue for an activity should exceed $10,000 per
year in order to be approved as an RSC.
03.
USERS OF RESEARCH SERVICE CENTERS
03.01 Internal users are university accounts with a 10-digit fund number
starting with 1-8. These include academic, research,
administrative, and auxiliary accounts that purchase RSC
products and services in support of Texas State’s mission.
When an RSC account manager is also a principle investigator,
his or her grants or contracts are considered to be customers
when they use the RSC’s output.
a. All internal users must be charged the same rate for operating
costs for the same level of service under the same
circumstances.
b. All internal users must be charged the same rate for
depreciation except academic departments using the
equipment for instructional use.
1) For reconciliation purpose, the revenue for unbilled units
used should be imputed.
2) Academic departments using the equipment for instructional
use may be charged the rate for depreciation if approved by
the associate vice president for Research (AVPR).
03.02 External users are users other than internal users as defined in
Section 03.01. They include agency accounts (with a 10-digit fund
number starting with 9), students, and faculty and staff acting in a
personal capacity, and third parties including companies owned
by Texas State faculty or staff. Other universities are also
considered external users unless Texas State has made them
sub-recipients of a grant or contract; then they will be considered
an internal users.
04.
RATE COMPONENTS
There are two components to the recharge rate: the operating cost rate
and the depreciation recovery rate. The recharge rate is charged to all
customers, both internal and external, except when depreciation is
imputed for academic departments.
Rates for external customers will also include a surcharge based on the
university’s Facilities & Administration (F&A) rate and possibly a market
differential. External customers will be quoted and charged a single
consolidated rate for each product or service.
04.01 Operating Cost Rate: Only allowable costs that will be incurred
by the RSC may be included in the operating cost rate. All costs
must be reasonable, allowable, allocable, and consistently
treated. The base rate of pay is calculated based on the
employer’s job title. The RSC will need to provide Human
Resources with a list of job duties so that the appropriate job title,
salary range, and FLSA overtime status can be determined.
a. The portion of total salaries and wages related to the time of
non-administrative personnel spent directly involved in the
center’s activity and which are not already paid through a grant
or contract must be included in the rate calculation and
charged to the center’s operating account. The employee’s
official base rate of pay is used in the calculation of the rate.
Overtime is not a consideration in rate calculation.
1) If an employee works directly on more than one service line,
the costs associated with that employee must be allocated
to the service lines based on proportional time spent.
All direct employee time should be tracked and factored into
the rate calculation for each service provided.
2) When charging on an hourly basis, the total maximum
hours available for a full-time employee is 2080 per year
adjusted for state holidays, vacation, sick leave, , etc.
A detailed explanation of the factors considered and
calculations used in arriving at a value for estimated
downtime must be included in the rate development
justification.
b. Employees involved in the administration of the center are
included only in the operating costs and related rates when
their time can be accurately measured and their salaries are
not already included in the F&A rate calculation. Salaries for
departmental administrative and support staff shall be
budgeted and charged to departmental accounts and not the
RSC.
c. Faculty salaries are included in user rates if they are budgeted
and paid from the RSC operating account and supported
through documented effort reporting.
d. Fringe benefits related to all personnel costs directly charged
to the RSC should be included in the rate calculation.
e. The cost of materials and supplies necessary for the operation
of the RSC may be budgeted and included as allowable costs
of the RSC. All materials and supplies charged must be clearly
identifiable with the RSC’s activities and be under the control of
the RSC’s staff.
f. If the RSC uses space not owned by the university, lease costs
should be included in the rate development. Any costs for
janitorial, building maintenance, and other operations and
maintenance not covered by the lease costs should also be
included.
g. Other expenses to be included in RSC direct operating cost
rates include service contracts, equipment operating leases,
professional services and travel expenses related to RSC
business.
h. Equipment with a purchase price under $5,000 is not
capitalized and may be included in the rate calculation as an
operating expense.
Capital equipment (defined as an item with a purchase price
over $5,000 and a useful life of at least a year) is not
purchased from the RSC’s operating account, so the cost is
not included in the operating cost rates. See Section 04.02 for
recovery of the costs of capital equipment via depreciation
recovery rate.
j.
Unallowable costs must be excluded from the rate calculations
as well as the operating budget and expenditures. These
include but are not limited to:
1) Advertising and public relations costs
2) Alcoholic beverages
3) Bad debts or uncollected billings
4) Contingency provisions
5) Cost of capital assets
6) Entertainment costs
7) Equipment replacement provision beyond depreciation
recovery
8) Fines and penalties
9) Goods and services for personal use
10) Insurance and indemnification
11) Memberships, subscriptions, and professional activity costs
of a social or individual nature
12) Scholarships
13) Selling and marketing costs
14) Start-up expenses
15) Unrelated business income tax (UBIT)
04.02 Depreciation Recovery Rate: The cost of eligible capital
equipment in the RSC may be recovered by including
depreciation as a component of the recharge rate.
Using replacement value as a component of user rates is not
permitted by OMB. Therefore RSCs cannot include the future cost
of capital expenditures in their recharge rates.
Equipment cannot be included in the depreciation rate for Federal
grants and contracts in the following instances:
a. Equipment already in the university’s F&A rate;
b. The portion of equipment purchased by a federally-sponsored
agreement, whether or not title has reverted back to the
university; and
c. The university-funded portion of equipment purchased under a
specific cost-sharing agreement.
The equipment excluded from depreciation for non-federal users
is equipment already in the university’s F&A rate and equipment
purchased by a federally-sponsored agreement where title has
not reverted to the university.
04.03 Surcharge: The rates charged to external customers should
include a surcharge equivalent to the university’s approved F&A
rate.
A surcharge less than the approved F&A rate (adjusted
surcharge) must be approved by the AVPR. The surcharge rate
shall be charged to all external customers for that product or
service.
University accounts (including sponsored programs) are not
subject to the surcharge. However, RSC charges to university
grants and contracts will be subject to the applicable F&A rate.
04.04 Market Differential: External user rates should not be so low as to
constitute unfair competition with private enterprise for similar
services available in the area. A market differential beyond the
surcharge equivalent to the approved F&A rate may be approved
by the AVPR.
05.
CALCULATING RESEARCH SERVICE CENTER RECHARGE
RATES
05.01 Components of RSC operating rate calculations are the
estimated demand for products and services and the anticipated
costs associated with providing those products and services.
The formula used for calculating the rate for each service or
product is:
Operating Rate = Budgeted Operating Costs ± Prior Year
Adjustment / Total Annual Units of Activity
a. The usage base is the volume of work expected to be
performed, expressed in units such as labor hours, machine
hours, CPU time, or any other reasonable measurement. An
RSC may have different measurable units for each type of
product or service it offers.
b. User rates must be supported by cost calculations based on
historical costs and service levels. Estimated rates may be
used in only the first year of service. An adjustment for known
or anticipated changes in service levels or services should be
clearly documented.
c. Established RSCs should include any surplus or deficit from
the prior year operations when calculating operating rates.
d. RSCs providing multiple services may not subsidize the
operating cost of certain service by charging rates in excess or
operating costs for other services.
05.02 Depreciation on eligible capital equipment should be calculated
on a straight-line basis with no salvage value, using the same
useful life schedule used by Financial Services.
Depreciation Recovery Rate = Annual Depreciation/Total Annual
Units of Activity
Using replacement value as a component of user rates is not
permitted by OMB. Therefore, RSCs cannot include the future
cost of capital expenditures in internal user rates.
06.
INITIAL RESEARCH SERVICE CENTER PROPOSAL AND
APPROVAL PROCESS
06.01 A Request to Establish a RSC form should be submitted to the
AVPR for initial review. The request requires the approval of the
department chair or school director (if applicable) and the dean or
vice president. It also requires a guarantee account that will be
responsible for deficits that might be incurred by the RSC. In
addition, it requires completion of the Rate Development
Information Form.
06.02 The AVPR will review the request in light of the criteria
established in Section 02.02 above. If approved, the request will
be forwarded to the proposed RSC manager and the director of
the Office of Sponsored Programs (OSP) for rate development.
06.03 The director of OSP will assist the proposed RSC manager to
develop recharge rates for each activity (product or
service) Recharge rate calculations will be used to develop the
budget for the RSC. The director, Commercialization Services will
review and negotiate with the RSC manager any changes to the
rate and make the final determination of the rate.
The final recharge rates and budget will be sent to the AVPR as
well as the proposed RSC manager, the chair/director, the
dean/vice president, and the General Accounting Office.
06.04 The AVPR will review and approve the final budget and recharge
rates. He or she will also approve whether an RSC will serve
external customers and the rate to be charged those customers.
If the rate charged to external customers includes a surcharge
less than the university’s full F&A rate, the AVPR will have to
approve the surcharge.
07.
RATE REVIEWS
07.01 Annual Budget Development: RSC account managers are
required to evaluate the RSC’s financial position and rates during
the annual budget development cycle (done in April for the
subsequent fiscal year starting September 1).
07.02 Year-End Rate Performance Review: Thirty days after the fiscal
year ends on August 31, RSC account managers will submit their
actual usage and financial results to the director of OSP, director
of Commercialization Services, and the AVPR.
07.03 Mid-year rate adjustments are allowable as needed to
accommodate changing circumstances or to correct for a
foreseeable deficit or surplus. Changes in rates must be approved
by the AVPR.
08.
BILLING PROCEDURES, REPORTS, AND RECORDS
08.01 All customers must be billed consistently and accurately for
services received. User bills may only be prepared after services
have been rendered and must have sufficient detail to identify the
services provided. Billings must be based on measured and
documented use using the rate currently in effect at the time of
the service. Billings must be prepared no less frequently than
monthly and must be submitted to Financial Reporting & Analysis
no later than the fifth working day of the month following the
performance of the service. Refer to the Financial Reporting &
Analysis website for billing procedures and forms.
a. Billings to Texas State internal customers (grants,
departmental accounts, individual professor accounts, etc.) are
processed through Interdepartmental Transfers (IDTs).
Sufficient detail must be included to identify the services
provided, billing rates, and usage.
b. Billings to external users are processed on an invoice which
identifies the services provided, usage, using the rate currently
in effect at the time of the service. RSCs must use the
standard university format provided by Financial Reporting &
Analysis. Modifications to the standard invoice template may
not be made without approval from Financial Reporting &
Analysis.
c. A customer should not be billed until services have been
rendered. RSCs should administer billings on a timely and
consistent basis to ensure that twelve months of cost recovery
are associated with twelve months of incurred cost, providing a
basis for evaluating user rates and reserves.
The RSC account manager is responsible for monitoring and
collecting accounts receivable from external customers.
08.02 RSCs must record the goods and services requested and
provided; the direct operating costs of providing those services;
revenues, billings and collections; and the annual surplus or
deficit. Examples of documents that must be maintained are:
a. Work papers showing how the rates were calculated.
b. Approval of rates
c. Records supporting the level of activity such as usage logs
d. Time keeping
e. Billing records that identify the service provided to each user
f. Depreciation schedules
Records should be maintained by the RSC for a minimum of ten
years.
09.
ACCOUNT STRUCTURE, RESERVES, AND TRANSFERS
09.01 Each RSC will have a unique cost center/fund center.
09.02 RSCs may have multiple funds in which to record revenues and
expenditures, depending on their customer base. The
combination of a cost center/fund center and fund makes up a
unique account.
a. The RSC Operations Fund account is used to budget for and
record operating expenditures (as defined in Section 04.01.a)
as well as the revenues based on the operating rate charged to
all customers.
1) The RSC Operations Fund may accumulate a working
capital reserve.
2) Available reserves are considered a surplus
balance. Surplus balances will be reduced either by rate
reductions or refunds to all internal customers or
both. Surplus amounts will not be used to start up new
services within the RSC or transferred to subsidize other
university operations including other RSCs.
3) Deficits of annual operating expenses must be used to
adjust rates up for the next year.
Deficits of expenses must be funded by another non-federal
source and transferred into the center’s account.
b. The RSC Depreciation Fund is used to record the revenue
based on the Depreciation Recovery Rate as defined in
Section 04.02. It is budgeted only for expenditure when capital
equipment is going to be replaced, contributing the
depreciation recovered.
c. RSC Above Direct Cost Fund is used to record the revenues
from the Surcharge based on F&A rates (as described in
Section 04.03) and the entire revenues base on Market
Differential (as described in Section 04.04).
1) The primary consideration of this account is funding future
capital equipment replacement beyond depreciation
recovery. Accordingly, revenues may not be fully budgeted.
2) This account may be budgeted for specific costs not
allowed in the RSC Operations account by OMB A-21:
a)
b)
c)
d)
e)
f)
Advertising and public relations costs
Bad debts or uncollected billings
Contingency provisions in excess of working capital
Indirect costs
Selling and marketing costs
Unrelated business income tax (UBIT)
3) This account may be used to support the needs of the RSC.
09.03 The relationship between rates, funds and costs are shown in the
RSC Rate Component and Account Matrix.
09.04 The institutional share of the surcharge revenue will be deposited
into a surcharge account managed by the Provost. Uses of this
account may include:
a. Funding the difference between equipment recovery and
equipment replacement
b. Subsidies for academic department
c. Imputed use where some part of the costs are not paid by the
user
d. Start-ups for new RSCs or lines of service which are strategic
or significant to the university
e. The institutional costs of administering RSCs.
10.
RESPONSIBILITIES
10.01 RSC Account Manager
a. Ensures only allowable costs are included in the billing rates
and charged to operations accounts.
b. Assists with the development of recharge rates in accordance
with OMB and university policy.
c. Monitors and collects accounts receivable from external
customers.
d. Evaluates the RSC’s financial position and rates during annual
budget development cycle (see Section 07.01) and year-end
rate performance review (see Section 07.02).
e. Maintain records (see Section 08.02).
10.02 Associate Vice President for Research
a. Approves RSC proposals for rate development.
b. Reviews and publishes rate changes approved by the director,
Commercialization Services, OCIR.
10.03 Office of Sponsored Programs
a. Assists RSC managers in developing recharge rates.
b. Reviews recharge rates and surcharges, RSC budgets
(including surcharge accounts), and the creation of incomegenerating accounts.
c. Reviews new or changed billing rates and units sold.
d. With OCIR, conducts periodic reviews of the financial
operations of existing service centers.
e. Ensures that RSC rates are properly built into sponsored
agreement budgets and charged to the sponsored
agreements.
10.04 Office of Commercial and Industrial Relations
a. review and negotiate with the RSC manager any changes to
the rate
b. final determination of the rate
c. conducts periodic reviews of the financial operations of existing
RSCs
11.
REVIEWERS OF THIS UPPS
11.01 Reviewers of this UPPS include the following:
Position
12.
Date
Associate Vice President for Research
& Director of Federal Relations
September 1 EY
Director, Office of Sponsored
Programs
September 1 EY
Director, Commercialization Services
September 1 EY
Director, Accounting
September 1 EY
CERTIFICATION STATEMENT
This UPPS has been approved by the following individuals in their
official capacities and represents Texas State policy and procedure from
the date of this document until superseded.
Associate Vice President for Research & Director of Federal Relations;
senior reviewer of this UPPS
Provost and Vice President for Academic Affairs
President