Policy Steward: 
Manager of Analytical Ops
Format Updated: 
University Policy & Standards Converted: 
Revision Date: 
Monday, November 6, 2017

* This information replaces FIS 519 Recharge Activities (Internal & External)



  1. To provide guidelines for requesting, reviewing and approving existing, new or revised fees for all University units who provide goods or services to other units, sponsored projects, or external sources.
  2. To provide standards to achieve compliance with government regulations and Oregon State University policies for fairly assessing and recovering the costs from each benefiting user.
  3. To ensure consistency in the accounting and application of all recharge activities; conforming to Generally Accepted Accounting Principles (GAAP).

Background Information

As a research intensive university, OSU is subject to many federal regulations including those which affect how the University accounts for recharge activities.  OMB Uniform Circular establishes principles for determining costs applicable to grants, contracts, and other agreements.  It provides guidance of what will be considered an acceptable direct or indirect charge to a Federal agreement, what are unallowable costs, and the proper method for preparing the University’s facilities and administrative (F & A) rate cost proposal. 

OMB Uniform Guidance also requires additional criteria:

  1. Adherence to four Cost Accounting Standards, including CAS 502 “Consistency in allocating costs incurred for the same purpose by educational institutions”.
  2. Preparation and approval of a Disclosure Statement (DS-2) for the University’s practices and policies, including recharge operation activities.


Recharge activities consist of all operations which provide services or supplies to others and charge a fee for the recovery of the cost incurred. These may include charges to users external to the University community.  Fees may not be established solely for the purpose of generating discretionary departmental income.  Academic and administrative units may engage in the direct sale of goods and services only when those goods or services are directly and substantially related to the mission of the University.  See FIS 518 “Sales of Goods and Services” for definitions of internal vs. external customers and sales as related to the mission of the University.

This policy contains these sections:

  1. The Fee
  2. Fee Book
  3. Internal vs. External Sales
  4. Record Retention
  5. Financial Accounting Structure
  6. Fee Calculations
  7. Responsibilities

1.  The FEE

The fee, or billing rate, is per unit of activity and charged to recover some or all of the costs associated with producing the goods or providing services.  It is recommended that the number of different billing rates be kept to a minimum.  Try to avoid establishing fees for small services that are insignificant in terms of the total operation.  The record keeping that would be necessary to justify the charges generally far exceed any benefit that would be gained.   

The following key rules must be considered when developing an internal or external fee:

  • All users of the service must be accounted for. 
  • Fees must be consistently charged for the service rendered.
  • If a fee is not charged to a class of customers or charged at a reduced rate (i.e. student projects), then this amount must be imputed during the annual fee calculation.   This exception of not charging the full fee is only allowed if the service is recorded in the appropriate E&G index, such as “instruction”.  See “Financial Accounting Structure” section below for details.
  • Any subsidization of a service should be approved by the college dean or appropriate VP.  See “Fee Calculation” section below for details.
  • Administrative support costs [such as accounting, purchasing, general computer support, business center support], and building/land operations, maintenance, utility costs cannot be charged (or included in a fee) as a direct charge to grants/contracts.
  • Internal fees cannot include charges for use of OSU buildings, land, or infrastructure unless those facilities are owned/operated by a self-support Auxiliary Enterprise and the charge is from that auxiliary. 
  • Grants, contracts, and SWPS projects cannot be charged a higher fee than any other internal or external user.   Charges to these activities may be made only when there is a direct relationship to the project.
  • Fees to external customers may not be less than for those of internal customers; although external fees may be greater and market pricing may be considered in setting the fee.
  • All requests for new fees must be approved by the Internal/External Fee Committee before they can be applied.  
  • The fee in effect at the time of service is what is charged. 


Recharge activities require approval and annual posting of the fee in the appropriate University fee book. Fees are updated each spring for use during the next fiscal year.  All fees are reviewed by the University Internal/External Fee Committee (I/EFC).  Fees which are charged to external customers must also go through a public hearing process.


Internal sales are non-cash transactions for goods and services necessary to meet the mission of the university. These may be between departments and units; or charges to externally funded grants/contracts or state-wide public service projects.  Internal sales are processed using journal vouchers.  These should be processed monthly (at a minimum quarterly) by the unit providing the service.   See Journal Vouchers FIS 1107.

External sales are cash transactions for goods and services sold to students, faculty, staff, and the public. The good or service is substantially and directly related to the University’s instructional, research, or public service mission.  Transactions involving 9xxxxx Agency funds are considered transactions with external customers even though processed with a journal voucher.

This policy does not apply to sales of residual products from research projects (such as wheat, potatoes, sheep, etc.), tickets for theater and athletic events, workshop registration fees, or instructional class lab fees for supplies.

See exhibits FIS-Ex003-07 “Internal vs. External Revenue” and
FIS-Ex003-12 “External Funding Approval Matrix” for further information.


For those units who have internal University sales, documentation is to be maintained for eight (8) years. External sale documentation should be kept for three (3) years.  Documentation includes:

  • Work papers showing how the fee was calculated; including job descriptions of employees whose salary is in the fee.
  • Record of all customers/users of the service, even if not charged.
  • Billing records that identify the service provided; amount charged and received.


The financial accounting for recharge activities is determined by the customer-base and dollar amount or volume of activity.   Some recharge, such as departmental charges for use of the fax and copy machines, are managed in the departmental index.  Other activities require a separation into other fund sources (i.e. 05xxxx Designed Operation funds, 09xxxx Service Center funds, and 1xxxxx Auxiliary Enterprise funds).  The recovery (income) from the recharge activity must be recorded in the same Index and fund as the costs.  Recharge activities cannot be operated out of gift, OSU Foundation, Agricultural Research Foundation (ARF), or grant/contract funds.

To determine the appropriate financial structure, review the following definitions.  A decision matrix is provided at: FIS-Ex003-06 “Recharge Activity Accounting Structure”

Additional information: FIS-Ex003-08 “Self-sustaining Activity.”

Redistribution of expense

A redistribution is where all or part of the cost is moved from the purchasing index to another index of an original expense paid to an outside vendor.   Generally these purchases for goods or services are made in bulk for greater buying leverage.  The Banner document code processing the original expense is referenced in the redistribution journal voucher.  The account code for debit and credit are identical to match the original expense transaction.   Since this is a redistribution of actual expenses, there is no fee listed in the University internal fee book.  This is not a recharge activity.

Department allocation of operating expense

Costs for departmental copiers and fax machines are in this category.  The fee and documentation is approved at the College/VP level (business manager).  The fee must be reasonable and is merely to recover the cost of supplies (paper, toner, etc.) and equipment rental; no salary.  The fee is not required to be in the University internal fee book, however, a record of all users and charges must be retained in the unit for five years.  Example:  photocopier charges at five (5) cents/copy.

Departmental Cost Center (DCC)

The activity being recharged is integral to the instructional or departmental research function of the unit as identified by the index’s program code and Ed & General fund 001100 or State-wide Public Service 03xxxx funds.  Services are provided to other units of the University or direct charged to projects, grants, or contracts.  The majority of the recharge is from internal sales. There should be minimal external cash revenue.

All costs to be recovered must be contained in an identifiable Index for review of fee structure. It may be necessary to use Activity codes to further separate the costs.  The fee may include all direct costs, including labor.  Expenses that cannot be included in the fee: facility (buildings/land) utilities, operations, maintenance; capitalized equipment purchases or replacements; equipment depreciation; business center support costs; department overhead or University indirect costs.   The fee must be approved by the University Internal/External Fee Committee (I/EFC) and listed in the University internal fee book.  See “Fee Calculation” section below for details.

Reference: FIS 514: Education & General (E&G) and Statewide Public Service (SWPS) Budgeted Operations

Designated Operation (DO)

A Designated Operation is a self-sustaining activity related to instruction and public service where 80% or greater of the revenue is derived from external sources. 

The following activities are included:
  Non-credit instruction portion of field trips and international education
  Community Education (non-credit conferences, workshops, seminars)
  Public Service (testing services)

A separate 05xxxx fund and index is established for the activity.  All costs and revenues of the service are recorded in this fund.  Costs include direct costs, departmental administrative costs (up to 15% as allowed by policy and documentation) and university overhead [currently 8%].   Facility, capital equipment purchases, or depreciation can not be included in the calculation of the fee.  OSU carry-forward rules apply.  

With the exception of workshop registrations, the fee must be listed in the University external fee.  If any services will be provided to internal customers, the fee will also be listed in the University internal fee book. See Designated Operations policy FIS 515 for details.

Service Center (SC)

A Service Center is a self-sustained activity which provides goods or services to the academic university community.  No more than 20% of revenue may be from external sales.

A separate 09xxxx fund and index(s) is established for these activities.  All costs and revenues of the service are recorded in this fund. Costs include direct costs, equipment depreciation, building maintenance, administrative costs of the service center unit, and university overhead (if charged). Capital equipment purchases and facility costs not direct charged to the service center can not be included in the fee calculations. OSU restrictions on working capital and reserve funds apply.  The fee will be listed in the University internal fee book.   If any services will be provided to external customers, the fee will also be listed in the University external fee book. See Service Center Operations policy FIS 516 for details.

Auxiliary Enterprise (AUX)

An Auxiliary enterprise is a self-sustaining unit which provides goods or services primarily to students, faculty, and staff as individuals.  It charges a fee directly related to, although not necessarily equal to, the cost of the goods or services.   The general public may be served incidentally by auxiliary enterprises.

A separate 1xxxxx fund and index(s) is established for these activities.  Expenditures include direct costs, equipment and building depreciation, administrative costs of the auxiliary unit, operations and maintenance, and University overhead.  OSU restrictions on reserve funds apply.  The fees will be part of Academic fee books and/or listed in the University external/internal fee books, as appropriate. See Auxiliary Enterprise policy FIS 517 for details.

Account Codes commonly used for recharge activities

External cash revenue – 06xxxx sales and services
Internal Journal Voucher income credit – 09xxx internal sales
            [use on 05xxxx DO, 09xxxx SC, and 1xxxxx AUX funds only]
Internal Journal Voucher income credit – 79xxx internal reimbursement
            [use on E&G and SWPS funds]
Internal Journal Voucher expense debit –
            24617 lab testing services
            24602 photocopies
            21008 animal care
            24503 data processing service


Regardless of the financial accounting structure (Ed & General, State-wide Public Service, Designated Operations, Service Centers, Auxiliaries), all internal recharge fees must be calculated using (1) actual allowable costs only, (2) measurable units of goods or services, (3) 100% of expected customer usage, (4) adjustment for prior year over/under recovery.

            Billing Rate (Fee) = Budgeted operating costs +/- prior year adjustment
                                             Expected units of activity (customer base)

Allowable costs
  1. Salaries and fringe benefits (OPE) of personnel directly related to the activity.
  2. Materials and supplies required to complete the activity.
  3. Minor equipment purchase cost, <$5,000 per item.  [capitalized equipment purchases are not allowed, see below]
  4. Equipment repairs and maintenance contracts, if the equipment is exclusively used for the recharge activity.
  5. Equipment depreciation – allowed only when activity is recorded under a service center or auxiliary fund and for only the amount posted to the fund.
  6. Facility costs (space, utilities, building operations & maintenance) - allowed only when activity is recorded under a service center or auxiliary fund and cost is posted to the fund.
  7. Departmental administration costs – allowed only when activity is recorded under a designated operation, service center, or auxiliary fund and cost is posted to the fund.

See exhibit FIS-Ex003-09 “Recharge Allowable Cost Matrix” for additional detail.

Unallowable costs

These costs must NOT be included in any internal fee calculation, even if recorded on a designated operation, service center, or auxiliary fund.

  • Advertising costs except for recruitment of personnel, procurement of supplies and services, and disposal of scrap or surplus material.
  • Alcoholic beverages
  • Alumni and fund raising activities
  • Public relations/marketing costs, such as merchandise distribution (pens, hats, t-shirts)
  • Bad debt expense; fines/penalties
  • Equipment purchases >$5,000 (These costs are capitalized and depreciated)
  • Commencement and convocation costs
  • Provision for contingencies
  • Value of donated services
  • Lobbying costs
  • Goods or services for personal use
  • Interest expense
  • Costs of meetings and conferences (except when the primary purpose is the dissemination of technical information)
  • Membership in any civic or community organization; social, athletic or  country club
  • Losses on the disposition of equipment
  • Scholarships and student aid costs
Measurable units of goods or services

Fee must be calculated using the same unit of service upon which the charge will be based.   Documentation of unit per customer is required for charges and must be retained for audits by the responsible unit.   Examples of acceptable units of measure are: hour of machine time, hour of labor, days, procedure or test, mileage.  

Customer base –expected units of activity

All users (customers) must be included in the fee calculation, including those provided services free of charge or at discounted rates.  A class of users (students) may receive service at a reduced fee if the reduction is subsidized from another source.  A fee cannot be waived for an individual customer.  Any reduced fee or non-charge (free) service must be imputed for the full cost during the annual fee calculation.  Any subsidization of a service must be approved by the college dean or VP and shown in the fund/index of the activity.    

To assist in fee calculations: Ex003-10 Recharge Fee Calculation Form is provided for those projects/fees which contain both variable and fixed costs. Fixed costs could include equipment maintenance contracts, equipment depreciation (service center or auxiliary fund only) and service center administration.  For fee calculations with labor only, use Ex003-11 Recharge Fee Calculation Form - Labor only


Fees to external customers may not be less than for those of internal customers, although they may be greater.  They should be set to recover at least the cost of providing the goods or services being sold.  Fees to external customers may include all allowable costs shown above plus: advertising costs, public relations/marketing costs, meetings and conference expense, interest expense, depreciation on equipment purchases or replacements >$5,000, and an amount to recover Unrelated Business Income Tax (UBIT).  Auxiliary enterprises may also recover bad debt and building-related costs.  The fee should also take into account the prices of such items or services in the marketplace.

Contact the Procurement and Contract Services office for a standard Fee Book Service Agreement template, if the external customer requires an agreement with University signatures.


This section outlines the responsibilities of the unit, College/VP, university, Internal/External Fee Committee (I/EFC), and Finance & Administration/Business Affairs.

  • Business Center will coordinate with the unit to submit information for fee book preparation according to instructions received from Finance & Administration (F&A).
  • Business Center will coordinate with the unit for proposed new fee-based activity and supplemental fee calculation information.
  • Business Center will complete FOAPAL Form to request new Fund and Index, if needed.
  • Business Center will work with units on annual review of fee rates and adjust them, if necessary, to eliminate surpluses or deficits.  Submit rates for fee book preparation according to instructions received from Finance & Administration (F&A). Fees must be approved and in OSU's fee book(s) before they can be charged.
  • Business Center will review current fees for elimination, either because the service is no longer being performed or the cost is being handled in another manner (such as budget change). Notify Business Affairs through the on-line fee process to delete fee.
  • Participate in the biennial study of recharge activities performed by Business Affairs, the business center, and college/unit business manager.  This review includes most recent fee calculation, unit of measure, documentation of users (customers), internal charge journal vouchers, and external customer revenue recognition.
  • Business Center will ensure that all expenses and revenues connected with a fee activity are properly recorded into the Index/Fund of that activity.
  • Responsible unit will retain records to document for eight (8) years for all internal sales and three (3) years for all external sales.
  • Work papers showing how the fee was calculated; including job descriptions of employees whose salary is in the fee.
  • Record of all customers/users of the service, even if not charged.
  • Billing records that identify the service provided; amount charged and received.
College or VP
  • Review department or unit request for all proposed new fee-based activities as it relates to the mission of the university and the customers to be served.
  • Identify how any deficits and unallowable costs, if any, will be covered.
  • Approve annual fee requests before they are submitted to F&A.
  • Approve internal department reallocation rates which are not submitted to the university fee book, such as photocopier charges.
  • Coordinate all recharge activity studies with the department/unit and Business Affairs.
Internal/External Fee Committee (I/EFC)
  • Review all requests for proposed new fee-based activity.
  • Is the activity part of the mission of the university?
  • Can fees be charged for this activity consistent with university policy and government regulations?
  • Are the fees calculated with only allowable costs, all estimated users, and verifiable measurable units?
  • Review request for revised fees.
  • Work with the Office of the General Counsel to ensure the External Fee book is presented for public review and hearing as required.
  • Assist in identifying enhancements for the on-line fee system.
F&A – Business Affairs
  • Conduct biennial studies of all recharge fee activities; concentrating on internal fees charged directly or indirectly to projects, grants, and contracts.  This review includes:
    • Most recent fee calculation
    • Annual expenditures
    • Unit or measure
    • Documentation of all users (customers)
    • Internal charge journal vouchers
    • External customer revenue recognition
  • Coordinate study activities with and through the business center.
  • Work with the business center to correct any inconsistencies.
  • Recommend appropriate financial accounting structure when necessary.

Additional References:

  • Board Standard 580-040-0010 Institutional Authority to Establish Fees and Charges
  • IMD 6.500 Policy for Education-Related Business Activities