UTMB HANDBOOK OF OPERATING PROCEDURES

Section 4 Fiscal Policies Subject 4.5 Cost Accounting Policy 4.5.1 Service Centers

07/20/98 -Originated 12-10-03 -Reviewed w/ changes -Reviewed w/o changes Cost Accounting -Author

Service Centers

Audience

The information in this document is for use by all employees.

Definition

Service centers: University facilities that provide specialized services to the UTMB community and charge a fee for their services. Note: Auxiliary Enterprises is not considered a service center.

Policy

Service centers are established for the benefit of the UTMB community and will be created and maintained only when services or goods are needed by a broad base of internal UTMB customers. Service centers will not be established to provide services primarily to outside customers. Note: Cost transfer activities within departments are not subject to this policy. Those activities must comply with the cost transfer policy.

Provision of Services

Service centers are established for the purpose of providing specialized services to the university community. They may provide services to external users but only on a limited and incidental basis. Service center prices should be competitive with outside vendors where services or goods are available outside the University unless specific circumstances or requirements of the customers increase the cost. Service centers recover their expenses of operations by directly charging their users predetermined billing rates based on the actual use of services. Because service centers may provide services to federal contracts and grants directly or indirectly, they must comply with federal cost recovery principles included in the Office of Management and Budget Circular A-21 and in the Cost Accounting Standards published by the Cost Accounting Standards Board. New service centers can be established only with the approval of the appropriate vice president or dean. Requests to establish a new service center must be submitted to the department’s vice president or dean with documentation of the service center purpose and activities and with a comprehensive business plan that meets the requirements of the service center procedures. More detailed explanations, guidelines, and procedures regarding service centers can be found in the UTMB costing procedures at the following URL address. http://www.utmb.edu/rds/mpproc.htm

Types of Service Centers

The three types of service centers are depicted in the chart below.

Types of Service Center	Services Provided To	Billing Rates Include	Comments
Major	Wide customer base within the institutional community and/or with annual expenses and billings of $500,000 or greater.	All allowable direct operational expenses and certain allowable institutional indirect expenses specified by the Vice President for Business and Administration (VPBA).	Any unrecovered direct and/or indirect expenses for these centers will not be included in UTMB's indirect cost calculations.
Intermediate	Customers within the institutional community with annual expenses and billings of less than $500,000 but greater than $5,000.	All allowable direct operational expenses and may include certain allowable institutional indirect expenses specified by the VPBA.	Any unrecovered direct and/or indirect expenses for these centers will not be included in UTMB's indirect cost calculations.
Minor	Federal contracts and grants and/or have minimal annual billings and expenses of less than $5,000.	Only allowable operating expenses of the operation.	The unrecovered allowable indirect expenses may be included in UTMB's indirect cost calculation.

Billing Rates

Service center billing rates will recover only actual expenses and must be based on the actual use of services. The billing rates must not discriminate between federally and non-federally sponsored activities of the Institution. Service centers must charge the same rate to all users for the same service under the same circumstances. Service center billing rates must be based on actual allowable expenses and must be designed to recover only the aggregate expenses of goods and/or services within a five year period. Unallowable expenses as defined in OMB Circular A-21 must not be included in the billing rate computation. The billing rates for all service centers

Billing Rates, continued	must be reviewed annually, compared to actual expenses and utilization, and adjusted as necessary to achieve break-even status across the five year cycle.
Service Center Accounts	Separate operating accounts must be maintained for all service centers. Expenses related to service center operations should not be co-mingled with other expenses. Unrelated expenses must not be included in service center accounts. Transfers from service center accounts to other non-service center accounts are not allowed.

Review and Monitoring

Each service center is responsible for compliance with all applicable federal costing laws. To ensure compliance with service center policies and procedures, each service center must include a review of their costing practices in their annual control self-assessment required by U.T. System Administration and reviewed by the appropriate vice president or dean. This annual review must include an analysis of service center billing practices to ensure that only actual allowable costs are being billed to users, that all users are charged the same rates for the same services, and that billing rates are adjusted annually to recover aggregate expenses over a five year period. Documentation supporting the annual review should include annual operating budgets, schedules of current and proposed billing rate(s), the methodology used to determine the rate(s), and the rate(s) calculations including any over/under recovery from prior years. Service centers will be audited by UTMB Audit Services at least every three (3) to five (5) years as a part of the annual control self-assessment audit. Service center operations are subject to audit at any time by the Department of Health and Human Services, Office of Inspector General.

Retention of Records

Each service center is responsible for retaining sufficient records to document and answer inquiries regarding service center costs and cost transfers, billing rate calculations, utilization of services, and billed charges. Service center charges are subject to audit as long as the grants or contracts they charge remain subject to audit. Records must be retained for fiscal year end plus seven years (FE+7) unless an audit or litigation claim is started before expiration of this period.