Fiscal Operations Manual
Section 500: Financial Accounting and Analysis
WARNING: THESE ARE NOT CURRENT POLICIES!!
The 09xxxx series of funds (Fund Type 13) are used to account for self-sustaining Service Center activities. They are not supported by E&G budget funds. The primary function of a Service Center is to provide services for units or others within the institution, including grants/contracts. Services can be provided to external customers as long as they are less than 20% of total revenue. External customers may include non-OSU entities that are physically located on campus, other State of Oregon agencies, and other tax-supported Oregon entities, such as counties or cities.
Service Center operation funds are accounted for in the Other Funds Non-limited category in the OUS State Legislative Budget.
A Service Center:
is responsible for its own equipment depreciation
maintains a reserve for equipment replacement
may be assessed for building usage, utilities, operations/maintenance
OSU service centers include, but are not limited to:
Lab Animal Resource Center
Forestry Quantitative Science LAN Service
Printing and Mailing
Campus ID Center
Research Animal Isolation lab
All costs related to the operation of the Service Centers should be recorded in the fund. This includes salaries & OPE (including unit administrative costs), supplies, minor equipment, travel, equipment depreciation, and any building utilities/operations & maintenance charges.
Service Centers who purchase goods for resale must reconcile their inventories at least annually and make the necessary adjusting entries.
Capital equipment is recorded as an asset of the Service Center, not an operating expense. Only the annual equipment depreciation is recorded as an expense and can be used in the fee calculation.
Some Service Centers are charged for use of building space. These are explained in FIS 504 OSU Assessment.
Developing Fees or Rates
Rates must be based on allowable actual costs of the Service Center. The cost can include annual equipment depreciation, but cannot include the cost of a new piece of capital equipment. Rates to internal customers may not include unallowable costs, such as marketing or advertising.
All revenues received by Service Centers are for reimbursement of the actual cost of operations. If a Business Center elects to recover administrative costs that support Service Centers, those costs must be paid by the Service Center on that fund. Adequate documentation of time & effort must exist to support the transaction.
The Service Center may add a service fee to non-University users.
A class of users (students) may receive service at a reduced fee, if the reduction is subsidized from another source. The subsidy must be posted in the Service Center in the same manner as explained in the “Deficit” section below.
See FIS 519 Recharge Activities policy for specific information of allowable costs, unallowable costs, and determining the rates.
All users of a Service Center will pay at least the same determined fee for like services and the rates must be published in the OSU Internal Fee Book If any services are going to be offered on a per-service basis to external customers, the rates must also be listed in the External Fee Book.
All potential units of use and users of the service(s) must be considered when establishing the fee(s). Per OMB Uniform Guidance Circular, the fee must be designed to recover only the aggregate costs of the services and can not discriminate against federally-supported activities or the institution, including usage for internal purposes.
Use internal sales Account Code (09xxx) for non-cash activities in a Service Center. These are completed by Journal Voucher. See FIS 1107 Journal Vouchers.
All cash deposited in Service Center fund is to carry an income account code 06xxx. Cash received as a gift is not to be deposited in these funds; see FIS 102-05: Gift, Grant, and Contract Income.
Multiple Services in One Cost Center
A Service Center may provide more than one service and make a surplus on some services and a loss on others. If a loss results in one activity and a surplus results in another activity, the surplus may be used to offset the loss so long as the mix of users is the same for the activity that gains as for the one that loses.
Excess of income over expenses resulting in a positive balance cannot exceed 60 days of working capital. Working capital is defined as: current assets minus current liabilities. For federal compliance purposes, the 60-day upper limit is calculated as the average operating expenses for the last year of operation multiplied by .1667 (60 days divided by 360 days).
Excess balances will be reduced in one (or both) of the following ways:
A reduction of next year’s rates
A refund to users
If the fund balance at year-end is in a deficit position, funding is necessary and a journal voucher should be processed.
use account code 92255
(Tfr Out-from FT 11 Budgeted Ops)
Service Center index
use account code 91255
(Tfr In-from FT11 Budgeted Ops)
Keep in mind that a deficit in working capital means that expenses exceeded revenue and it may be necessary to request an increase in rates.
The amount recorded on the official books of record as of fiscal year-end (close of period 14; June 30) of each year will be the amount used for the determination of the working capital limits. Therefore, it is important that all accounts receivable and accounts payable, as determined in accordance with Generally Accepted Accounting Principles (GAAP), be posted in Banner before the close of the fiscal year.
Contributed Capital – transfer of funds from responsible department
Any transfer of funds made to a Service Center will be accounted for as contributed capital. If fees cannot be set at a rate sufficient to recover operating costs, the unit may not directly pay Service Center costs from other sources.
Examples of contributed capital include a subsidy to cover an operating deficit; transfer of beginning funds at inception of the Service Center; transfer or conversion of a storeroom inventory to a Service Center; or the purchase or transfer of equipment to a Service Center. Documentation related to the transaction that identifies the source, amount, date, reason, and authorization for the contribution must be retained for audit.
Contact the Associate Director of Business Affairs – Financial Accounting & Analysis unit for assistance with contributed capital matters.
Returning Funds - to responsible department from a service center
Any surplus amounts returned to units by Service Centers must be a return of previously contributed capital or a part of excess earnings being refunded as current year billing adjustments to all customers.
Inventory - may be a necessary component of service centers
If a Service Center normally deals in inventoried (stockroom) items such as parts or chemicals, an inventory (Balance Sheet) account code must be used to properly identify the value of inventory at fiscal year-end. Physical inventories must be taken and the value adjusted annually.
Funding Equipment Replacement Reserve (Depreciation)
Per FIS 702.210 Capital Plan Development, each Service Center is responsible to develop a business plan that includes setting aside funds for equipment replacement.
Both operating and reserve funds for Service Centers are non-interest bearing funds. Oregon Revised Statutes make no provision for these funds to be interest bearing.
Cash will be moved from the Equipment Reserveback to the operating fund when a funded asset is removed from inventory andreplaced with a similarly functioning item causing the Reserve to be over funded. Do not use the Reserve fund to process purchases. Most purchases should be made using the operating fund/index.
Cash is moved between the operating fund and reserve by use of transfer account codes 92001 Dr and 91001 Cr. See FIS 702 Administration of Service Center Reserve Funds for further information.
Reference: IMD 6.350 Buiilding/IOTB Repair and Equipment Replacement Reserves for Auxiliary Enterprises and Other Self-Liquidating Activities
A Service Center must adequately document its activities and maintain records to support expenditures, billings, and revenues. At a minimum, the following records must be retained by the Service Centers for no less than eight years because of possible charges to grants or contracts:
Work papers showing how the charge-out rates (fees) were calculated.
Records that identify all users, the services provided to each user, and amount billed.
Termination of Service Center Status
When a Service Center expands its customer base so the income from non-university users (external) exceeds 20% of the Service Center's annual income for two consecutive years, the status of the service department will change to a Designated Operating Fund. A new fund will be established for the activity. Equipment reserve funds will be moved back into the Service Center operating fund; then the cash balance of the operating fund will be transferred to the institution's Current Education & General Fund Balance.
The transaction will be:
Service Center Index
Account code 92005
(Tfr Out-Between FTYP Lvl 2)
ZARR70 E&G Fund Index
Account code 91005
(Tfr In-Between FTYP Lvl 2)
The Business Center then notifies the Office of Budget and Fiscal Planning of this transaction and desired index for E&G fund budget increase.
Reporting to OUS Controller’s Division
The Service Center Working Capital, as reflected in the official accounting records (FIS Banner), will be monitored and analyzed on an annual basis at fiscal year-end.
OSU Business Affairs will prepare and retain a report listing of all Service Center funds reconciled to the general ledger, computation of compliance to working capital limits, notation of plans for eliminating excesses or deficiencies, and notation of any exceptions to policy. Information for this report will be requested from each active Service Center. Only the OSU Vice President for Finance and Administration can authorize exceptions to the 60-day working capital maximum.
The Service Center manager will annually prepare and submit a Management Plan to the Director of Business Affairs for approval by OSU’s Vice President for Finance and Administration or designee. The plan shows a five-year forecast for the Service Center’s equipment repair or replacement needs and includes an analysis of the annual earnings necessary to accumulate the funds required to execute the plan. The plan does not go forth to the OUS Controller’s Division; however, it must be retained at OSU Business Affairs for audit purposes.
Fiscal Policy 05.713 Fiscal Operation of Service Centers
Board Standard 580-040-0010 Institutional Authority to Establish Fees and Charges
DHHS-Cost Allocation Services, FAQ’s