Fiscal Operations Manual
Section 500: Financial Accounting and Anaylsis
This policy establishes guidelines and a process under which the sales of goods and services for University fees may be approved; it establishes a mechanism for the review of such sales. Instruction, research, and public service activities central to the mission and obligations of the university are excluded from this policy.
Excluded are activities which charge for instruction in regular, summer school, extension, evening, and continuing education; services provided in the practicum aspects of university instructional and research programs; services mandated by state statutes; sales of residual products of research programs; services for fees in its extracurricular or residential life programs, including residence halls, food services, alumni, athletic and recreational programs, conferences and workshops, and the performing arts programs.
Oregon's Land, Sea, Space, and Sun Grant University, Oregon State University's mission and obligations include teaching, research, and service to many constituencies. Funding for OSU's diverse activities is derived from federal, state, other governmental/public agencies, and private sources. Competition for public funding at all levels of government and the continuing goal of making the most effective use of limited resources have created an environment in which some university components are encouraged to become self-supporting. Self-support is accomplished through direct compensation for goods and services.
Conflict may result when university enterprises are deemed to be in competition with private entrepreneurs. These conflicts must be reduced or eliminated through a process which is sensitive to the need for entrepreneurial activity by both parties, because both parties are fulfilling crucial societal and economic roles.
Tax implications, for both income and property taxes, are frequently found in these areas of conflict. Legislative goals of discouraging "unfair competition" and increasing tax revenues have resulted in close scrutiny to determine what is and is not an "unrelated business activity," and subject to Unrelated Business Income Tax (UBIT).
Oregon State University may engage in the direct sale of goods and services to individuals, groups, or external agencies for fees only when those services or goods are directly and substantially related to the mission of the university, which includes teaching, research, and public service. Charges for such goods and services shall be determined taking into account their full cost, including university overhead when applicable, as well as the prices of such items in the marketplace.
When the question of whether or not any particular education-related business activity should be provided by Oregon State University, a determination shall be made as to whether the activity is currently and adequately provided by private businesses. If the services of private businesses are considered adequate but the activity is nevertheless deemed important to be provided by the university, the reasons and justification for the activity shall be stated in writing and submitted by the President or his designee to the Vice Chancellor for Finance and Administration for the Oregon University System (OUS) or their designee, in accordance with applicable policies of the State Board of Higher Education. (Required by OUS "Education-related Business Activity" IMD 6.500).
State Board policy allows system institutions to promote and market in off-campus public media only those services and events which are of interest to the general public, such as cultural presentations, intercollegiate athletic contests, and educational programs.
When entering into contractual arrangements with third parties to provide goods and services in fulfillment of obligations of the university, the intent and spirit of the policies expressed herein shall, to the extent practicable, be incorporated in the terms and conditions of such contracts. All contracts must have official university signature. Signature authority is limited to those on the approved list.
There are three distinct categories of relevant transactions which occur at the university:
- Internal university interdepartmental transactions for goods and services necessary for the mission of the university;
- Sales of goods and services to faculty, staff, and students which are for the convenience of and in support of the broad mission of the university; and
- Sales to persons or organizations external to the university.
Transactions in category one are characterized as within the "campus community;" transactions in category two are characterized as within the "university community;" and in category three as the "external community." The unique nature of each of these kinds of transactions makes it appropriate to use different criteria in evaluating requests for each type of sales program.
Campus Community, Non-cash Transactions
Internal non-cash transactions of official university business between units, departments, and offices, necessary to meet the teaching, research, and service mission of the university, shall be governed by the university regulations on budget, accounting, and auditing which apply to such transactions.
Criteria for Sales to the University Community
Each of the following criteria shall be used in assessing the validity of providing goods and services for charge to students, faculty, and staff.
- The good or service is substantially and directly related to the university's instructional, research, or public service mission;
- Provision of the good or service on campus represents a special convenience to and supports the campus community or facilitates the extracurricular, public service, or residential life of the campus community;
- The price or fee for the good or service is established at such a level as to account for the full cost, including university overhead as applicable;
- Procedures are in place for ensuring that goods or services are provided only to members of the university community.
Criteria for Sales to the External Community
The University shall not engage in any sales activities solely for the purpose of raising revenue to support an educational, service, or research activity if the goods or services sold are not directly and substantially related to the educational, research or service program or activity. Each of the following criteria shall be used in assessing the validity of providing goods or services to the external community:
- The good or service represents a resource which is directly related to a unit's educational, research, or service mission, which is not commonly available or otherwise easily accessible, and for which there is a demand from the external community.
- The price or fee of the good or service is established to account for the full costs of the goods or services, including university overhead as applicable. The price of such items in the private marketplace shall be taken into account in establishing the price or fee. Fees to external community can not be less than those charged to campus (internal) customers.
Review and Approval Procedures
Except in instances requiring the approval of the Vice Chancellor of OUS or his/her designee, approval for the direct sale of any goods or services covered by this policy shall be vested in the OSU Vice President of Finance and Administration.
Before any sales of goods or services may be implemented, the unit proposing the sale shall provide to the Internal/External Fee Committee (I/EFC) [appointed by the Vice President of Finance and Administration] a request setting forth all pertinent information about the sales plan as set forth in OSU Recharge Activities policy FIS 519. Each category of goods or services sold is considered individually. All new categories of sales shall be justified. The I/EFC will notify the department/unit and respective Dean or VP the results of the review. If the proposal is approved, the sales fee will be posted in the appropriate fee schedule. State Board policy requires the adoption of a fee schedule as part of this process. This adoption is required before any fee can be charged to the external community.
The Vice President of Finance and Administration is designated as the officer who shall :
- Resolve matters concerning the internal application of this policy. It is the role of the Office of Budget and Fiscal Planning to review requests from Deans/Executive Administrators to establish revenue budgets. Should the Budget Office believe that the request is inconsistent with this policy, it shall refer the matter to the VP for Finance and Administration for final decision.
- Address questions from members of the external community about specific sales programs
- Review proposed sales of goods or services to other governmental agencies when they involve university-wide considerations.
External Revenue policy FIS 100
Internal Revenue policy FIS 200
Board Standard 580-040-0010 Institutional Authority to Establish Fees and Charges