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Service Centers

Service Centers. Definition.

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Service Centers

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  1. Service Centers

  2. Definition • The management of service centers is governed by University policy statement, Financial Management of Services Centers, Policy CADS-3 issued June 19, 1998, effective July 1, 1998. Following policy the University has a “Service Center and Cost Recovery Committee” (“SCCRC”). • NACUBO states: “A service department provides a specific type of service to various institutional departments rather than to individuals and is supported by internal charges. Such a service might be purchased from commercial sources, but for reasons of convenience, cost or control is often provided more effectively from a service department of the institution.” Service provided to individuals or the general public are Auxiliary Services.

  3. Definition (continued) • Service centers may either be a recharge center, such as document production/copy center or physical maintenance labor charges, or a specialized service facility when the services are provided by highly complex or specialized facilities, that for instance perform scientific testing or analysis. • These services centers may provide services on an incidental basis to the external users.

  4. Criteria for Determining the Need for a Service Center • Does it meet the definition? • Does a demand exist for the goods/services to be provided? This demand should be by more than one department, unit or activity and should not be based on incidental use. • Will there be significant volume of recharging (sales), both in dollar amount and transactions? • Will the goods/services be provided on a regular basis? • If services are provided, will they be unique or specialized?

  5. Criteria for Determining the Need for a Service Center (continued) • Can the service center be self-supported and not subsidized by the institution? • How will this activity be affected by competition with the private sector? • Establishment of a center must be approved by the SCCRC.

  6. After Establishment of a Center - Determine that the following guidelines can be met: • All elements of cost incurred in providing the goods/services will be charged to the customers. • Costs of other activities may not be charged to the Service Center accounts. • Recharged amounts must be based on approved rates applied to the actual quantities of goods/services provided. • Service Centers must calculate and publish a rate schedule during the annual budget process. Initial Rates for centers must be reviewed and have the approval of the SCCRC. • The Cost Analysis area of Accounting can provide guidance in rate development.

  7. OMB Circular A-21 (Compliance) Section J47 – Specialized Service Facilities • Charges must be established to recover no more than the total cost of the service over a long term period. • Billing rates charged directly to users must be based on the actual use of the services. • Rates must be reviewed periodically (at least biennially) and adjusted if needed. Currently the University requires annual. • A schedule of rates must be established which does not discriminate between federally and non-federally supported users.

  8. OMB Circular A-21 (Compliance) (continued) Appendix A – Cost Accounting Standards and their application to service centers. • CAS 501 – Service Center costs budgeted in proposals must be reconcilable to actual charges in the accounting system. • CAS 502 – Cost must be charged consistently as direct or indirect cost and the rate development process must be consistently applied. • CAS 505 – Service centers must exclude unallowable costs from billing rates and must identify the actual costs of providing services to all users, regardless of the funding sources. • CAS 506 – Rates should be established based on the University’s fiscal year, unless there is a legitimate reason for using an alternative period.

  9. Other Sources of Federal Guidance • Federal: Review Guide for Long-Form University Facilities and Administrative Cost Proposal 1. Specialized Service Centers 2. Special requirements for Animal Research facilities http://rates/psc.gov/lfrevugd1/pdf • A-133 (Audit) Compliance Supplement (Part 3, Compliance Requirements—Internal service, central service, pension, or similar activities)

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