Recharge Rates Office of Financial Analysis

1. Recharge RatesOffice of Financial Analysis

2. Agenda • Recharge definition & principles • What to include / exclude • Requesting a rate • Fund Usage • Responsibilities • Contact information • Questions

3. What is a Recharge? A recharge is a charge for goods or services provided by one internal university unit to other internal university units. • Reviewed and approved by the Office of Financial Analysis. • Review and approval required to ensure that rates are in compliance with… • Federal OMB A-21 (now CFR 220) guidelines • University standards • Financial Operations 3 R’s policy.

4. Recharge Principles Core Principles: • Include direct costs only • Rates must be consistently applied to all internal users of a service • Rates must be calculated with the intention of breaking even.

5. What Can be Included? • Direct costs only • Salary & benefit expense • Individuals must be appointed to the recharge chartfield • Minimal administrative time • Other items (ex. maintenance, supplies; etc) • Equipment depreciation • Equipment must be used exclusively for the recharge activity • If purchased on auxiliary fund the item(s) were expensed at the time of purchase. The expense can be included but depreciation cannot be taken. • Balance adjustments

6. What Cannot be Included? • Indirect costs • Certain salary expenses • Ex. tuition reimbursement • Space, in 99.9% of all recharges • Built in surplus • Other items (ex. Postage, communication expense, travel, hosting; etc.)

7. Process for Requesting a New/Updated Rate • Complete the following forms: • Recharge Rate Request Summary Form • Detail Cost Composition • Equipment Exclusive to Recharge (if applicable) • Space Exclusive to Recharge (if applicable) • Request for a recharge vendor ID (when submitting a new rate) • Forms and instructions are located: http://www.finance.umich.edu/analysis/financial/recharge-rates/procedure • Submit to recharge@umich.edu

8. Fund Usage • Auxiliary Fund (52000) – Recharge activity related to internal customers • Designated Fund (40000) – Used to cover an overdraft on the recharge or recharge activity related to external customers • Sponsored Fund (25000) – Used when Office of Research and Sponsored Projects (ORSP) has determined the external service is related to the mission of the university and has a contractual agreement. • Contact ORSP to ensure contractual arrangements abide by university policy • Sales must be reviewed for tax liability

9. Fund Usage, continued • Maintenance & Equipment Reserve (83000) – Transfer depreciation amount to replace equipment on Recharge • Transfer annual depreciation amount from recharge to reserve • Sample depreciation journal entry:

10. Financial Analysis Responsibilities • Review and approve recharge rate requests • Review rates a minimum of every two years • Maintain and document rate procedures and guidelines • Issue rate terminations when services have ended • Initiate non-compliance procedures if necessary • Upon expiration of a rate • One rate approval extension may be granted. However, if rates aren’t received before that period expires then the vendor ID will be inactivated.

11. Recharge Unit Responsibilities • Request recharge rate approval • Accumulate all costs and revenues in a single chartfield • Maintain records documenting the recharge activity • Including both revenue and expense activity • Should be auditable • Review results of activity at least annually (monthly recommended) and request rate revisions as required • Submit rate renewals prior to expiration date on approval letter • Establish a chartfield that will cover any overdraft, most likely a designated fund chartfield • Bill customers monthly

12. Other Unit’s Responsibilities • Financial Operations • Establish shortcode and project grant • Request vendor ID • Provides Service Unit Billing (SUB) training • Office of Research & Sponsored Programs (ORSP) • Review requests from outside organization to ensure consistency with University policies and procedures. • Tax Department • Review non-University activity for unrelated business income tax (UBIT) liability

13. Contact Information • Tony Burger, Director • Sheryl Bourlier, Sr. Business Analyst • Cory Belote, Sr. Business Analyst • Brittany Galisdorfer, Business Analyst • Eileen Mallory, Sr. Administrative Assistant Submit rates to: recharge@umich.edu

14. Questions?? Please contact Sheryl Bourlier (sbourlie@umich.edu; 647-3431) or Cory Belote (ctremp@umich.edu; 936-1843) with any additional questions.