Carolyn Ainslie, vice president for finance and treasurer
Roberta Newmeyer, costing policy and analysis manager, (609) 258‐3964
I. Policy StatementBACK TO TOP
Academic departmental units that provide goods and/or services on a cost-recovery basis are referred to as Recharge Centers (RCs). Recharge center services may include departmental computing facilities, clean rooms, machine shops, special purpose equipment, and the like.
The purpose of this policy is to ensure compliance with the Office of Management and Budget Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (hereinafter referred to as the OMB Uniform Guidance). The policy also establishes consistent standards when charging government grants and other users for departmental services.
II. Who is Affected by this PolicyBACK TO TOP
This policy applies to all recharge centers regardless of the level of usage by federal sponsored awards. It should be understood by all University employees responsible for RC accounting, budgeting, and reporting, including Principal Investigators (PIs), Grants Managers, Department Managers, staff within Sponsored Research Accounting (SRA), and staff within the Office of Research and Project Administration (ORPA).
IV. PolicyBACK TO TOP
Recharge Centers must be accounted for separately from other department activities and must allow for easy identification of revenue and expense, as well as any surplus/deficit (see paragraph 6 below). As of July 1, 2014, this requires establishing a separate sub-department within the department administering the RC.
Costs charged to RCs must be allowable under Federal regulations. To be allowable they must be reasonable, be incurred either solely to benefit the service provided by the recharge center or proportionally allocated to the recharge center based on reasonable allocation methods, and be treated consistently by the institution. In addition, Federal regulations specify certain costs as unallowable (e.g., entertainment). Details are discussed below.
Departments should budget allowable costs and projected usage on an annual basis in order to arrive at a rate that will break even over a reasonable period of time, normally 1-3 years. See below for further details.
OMB Uniform Guidance Requirements:
See OMB Uniform Guidance § 200.468 Specialized service facilities for guidance on determining costs and rates for departmental service centers. Additional guidance may be found at NOT-OD-13-053: FAQs for Costing of NIH-Funded Core Facilities.
1) Internal & External Users: Although recharge centers primarily serve users internal to Princeton, in some case external entities may also use the facility. All users should be charged directly for actual use of services at a pre-approved rate. In order to ensure compliance with federal Unrelated Business Income Tax (UBIT) and NJ sales tax laws, consult with the Tax Department and Budget Office for guidance prior to billing external users.
2) Rate Establishment: Charges to internal users may not recover more than the cost of the service, and may not discriminate between activities under Federal awards and other activities. Departments may choose to subsidize recharge centers, but all use should be consistently accounted for. Special rates, such as for high volume work, are allowed. Such rates should be available and applied consistently to all users who meet the criteria. Rates may include costs for:
- Technical Staff – salaries and wages of technical staff dedicated to and directly supporting the service center. The costs of individuals benefiting more than one service center or activity should be allocated proportionally to each activity.
- Materials and Supplies – Costs of materials and supplies necessary to operate a Recharge Center.
- Capital Equipment Depreciation Expense – Capital equipment includes items of tangible personal property with a cost of $5,000 or more and a useful life of more than one year. Federal regulations allow the recovery of equipment depreciation for equipment purchased with University funds. For more information on what components may be capitalized please see Capital Equipment Policy.
- Miscellaneous Expenses – Rental and service contracts, equipment operating leases, and professional services utilized by the service centers should be included in the rate calculation.
Rates may not include:
- Unallowable Costs – The costs that have been designated as unallowable for government funds may not be included in the calculation of rates for services since those services may be charged to a government grant or contract. Please see the “ADDITIONAL UNALLOWABLE EXPENSES – FEDERAL FUNDS” section of the Business Expense Policy.
- Departmental administrative staff who help to administer the Recharge Center as well as perform other departmental duties, such as departmental business managers, may not be included in RC rates.
- Cost sharing – Any costs formally committed as cost sharing to any Federal sponsored project cannot be included in RC rates.
- Depreciation associated with capital equipment purchased with Federal funds cannot be included in RC rates.
- Reserves for anticipated future equipment repairs and replacement cannot be included in RC rates.
3) Rate Approval:
- Proposed rates for the budget year beginning July 1 should be submitted to the Budget Office in advance of the fiscal year, allowing sufficient time for review. Recharge Center operating income and expenses should be monitored through the year for deficits or surpluses. Rates should be adjusted during the fiscal year if projections indicate a significant variance from the approved budget. In such cases, a revised rate proposal should be submitting to the Budget Office for approval.
- Significant changes in the budget from year to year and significant variances between budget and actual should be explained in detail.
- Actual and projected external usage should be identified separately in the rate calculation.
4) Surplus/Deficit Policy: Since billing rates are calculated based on estimated costs and usage it is not expected that income and expenses will net to zero in any one year. Billing rates should be designed to break even over a reasonable period of time, not to exceed 3 years. As a general guideline, annual surplus/deficit balances should fall within +/- 10% of expenses. Rates must take into consideration over/under recoveries from prior periods. Deficits may be offset by a transfer in from departmental discretionary funds with the approval of the Budget Office. Surpluses may not be transferred to another chartstring.
5) Accounting and Record-keeping: Separate departments with an “(RC)” suffix must be established in the University’s accounting system to record the direct operating costs and revenues of each recharge center including, if applicable, capital expenditures. Fund A0004 Recharge Center/Chargeback is used to record the Recharge Center operating costs. Fund A0027 is used to record any capital expenditures.
Revenue received by a Recharge Center is recorded on a revenue account code (Non-University revenue use account 4704, University revenue use account 7149). User billings are charged on a 71## expense account code (see list here). The complete list of Revenue and Expense Accounts is accessed through the ChartField Reference Guides webpage.
Documentation to support billings and rate calculations, as well as documentation supporting the billing methodology, should also be maintained. It is the Recharge Center’s responsibility to maintain detailed records of all charges and answer inquiries in reference to those charges. Records should be retained for seven years.
V. Procedures BACK TO TOP
VI. Forms BACK TO TOP
VII. Contact Roles and Responsibilities BACK TO TOP
VIII. Update Log BACK TO TOP
Updated to align with current business practices and our Prime systems implementation.
No changes. Copied to web-based policy library.