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Service Centers: Service Center Policy

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1. PHILOSOPHY:

Service centers are established for the benefit of the UTMB community. They 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. 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.

2. PURPOSE:

This policy provides guidelines for fiscal operations of UTMB service centers to promote consistent operating practices among the various service centers and to ensure compliance with federal government cost principles. This policy is revised for Fiscal Year 1999/2000 and supercedes the original policy of September 1, 1996.

3. SCOPE:

This policy applies to all areas that charge other departments for goods and/or services and that meet the definitions of a service center.

4. DEFINITION:

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 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.

There are three types of service centers:
 
A. Major Service Center

Service centers which provide services to a wide customer base within the institutional community or which have annual expenses and billings of $500,000 or greater are referred to as Major Service Centers. The billing rates for Major Service Centers will include all allowable direct operational expenses and certain allowable institutional indirect expenses specified by the Vice President for Business Affairs. Any unrecovered direct and/or indirect expenses for these centers will not be included in UTMB's indirect cost calculation.

B. Intermediate Service Centers

Service centers which provide services within the institutional community and which have annual expenses and billings of less than $500,000 but greater than $5,000 are referred to as Intermediate Service Centers. The billing rates for Intermediate Service Centers will include all allowable direct operational expenses and may include certain allowable institutional indirect expenses specified by the Vice President for Business Affairs. Any unrecovered direct and/or indirect expenses for these centers will not be included in UTMB's indirect cost calculation if material in amount.

C. Minor Service Centers

Service centers that provide any services to federal contracts and grants and/or have minimal annual billings and expenses of less that $5,000 are referred to as Minor Service Centers. The billing rates for Minor Service Centers will include only allowable operating expenses of the operations. The unrecovered allowable indirect expenses may be included in UTMB's indirect cost calculation.

Cost transfer activities within departments are not subject to this policy. These activities must comply with the cost transfer policy.

5. GENERAL GUIDELINES AND/OR REQUIREMENTS:

A. 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 supported 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 must be reviewed annually, compared to actual expenses and utilization, and adjusted as necessary to achieve break-even status across the five year cycle.

B. 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.

C. New Service Centers:

New service centers can be established only with the approval of the appropriate Vice President. Requests to establish a new service center must be submitted to the department's Vice President with documentation of the service center purpose and activities and with a comprehensive business plan that meets the requirements of the Service Center Procedures. If approved by the Vice President, the business plan will be submitted to Accounting to obtain valid service center account numbers.

D. Review and Monitoring:

Each service center is responsible for compliance with all applicable federal costing laws. To ensure compliance with Service Center Policy 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. 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 rates, the methodology used to determine the rates, and the rates 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.

Accounting will provide education, training, and consulting services to Service Centers as requested.

E. 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.

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