Senate Proposal: No
Responsible University Officer: Vice President for Finance
Responsible Office: Financial Services and Operations
University departments may charge a special fee or use charge for the service(s)/instrument(s)/laboratory(ies) used by another department or group within the University community.
Departments charging special fees and use charges must:
- Maintain a log of use and charges for auditing and rate review purposes.
- Review the use charges (rates) biennially and adjust if necessary. Base the review on the prior period activity and send the request forms to the Use Charge Committee for review and approval.
- Process Interaccount Bills using approved rates on a monthly basis.
- Retain the rate justification forms and logbooks for seven years.
Estimated (or actual) revenue for the proposed rate must exceed $5,000 per year. A rate may be approved if the $5,000 threshold is met over a two (2) year period. If the rate being proposed fails to meet the $5,000 threshold for two (2) consecutive years a rate will not be approved.
If the proposed rate fails to meet the $5,000 threshold, equipment may be grouped into a single rate if a process/sample passes through each piece of equipment in the group on a regular basis. The expenses to operate all grouped equipment will be combined and divided by the combined use. All users of this grouped facility will be charged the grouped use rate.
If the equipment can not be combined into a group then technician time can be direct charged to a project.
Reason for Policy
Departments have special fees and use charges to enable them to maintain service(s)/instrument(s)/laboratory(ies) to recover expenses (supplies and technician time) relating to service(s)/instrument(s)/laboratory(ies) use by sponsored projects, and by another department or group within the University community.
Federal regulations prohibit discriminatory pricing between federal and nonfederal funded activities, including use by the institution for internal purposes. All University users must be charged the same rate for the same service.
Related Policy Information
When the intent of an agreement (confirming order) with an external company is to solely provide service(s)/instrument(s)/laboratory(ies), the external company should be charged the approved use rate plus the indirect costs at a minimum.
The biennial balance of the use charge index will equal +/- 5% of the biennial recharge revenue, except in the case of the amortization of extraordinary expenses as referred to in item I.A. in the Section 2.01.1. The amount above the 5% of the biennial recharge revenue must be taken into consideration when recalculating the rate. Use charge indexes are allowed to run in a deficit due to the timing of expenditures and revenue.
The following can not be included in the use charge rate calculation:
- Replacement cost of the instrument(s)/laboratory(ies).
- Depreciation and the cost of instrument(s)/laboratory(ies) because these items are included in the University indirect cost rate.
- Use rates for printers or copiers will only be approved under extenuating circumstances. Per federal regulations, items such as office supplies, postage, and local telephone costs shall normally be treated as indirect costs. Therefore, printer and copier charges will be the responsibility of the department requesting the service.
- Federal regulations prohibit universities charging commercial enterprises, such as consulting services, a rate that is subsidized.
Special Fees and Use Charges - A set amount (rate) charged for service(s)/instrument(s)/laboratory(ies) use being charged to a sponsored project by a department or group within the University community.
Biennially - Every two years or every other year.
Accessory - An item that is not required for the instrument/equipment to carry out its original function.
Department - Develop an hourly or natural base rate; maintain a log of use and charges for auditing and rate review; process interaccount bills, via Banner or hard copy, for use charges/fees on a monthly basis; and review use charges/fees (rates) biennially and submit proposed rates and rate revisions for approval.
Dean/Department Chair/Director or higher in supervisory chain of command - Review and approve proposed charges/fees.
Controller - Review all initial rate requests and rate revisions.
Accounting Services - Establish use charge index.
In support of this policy, the following procedures are included:
Forms and Instructions
In support of this policy, the following forms/instructions are included:
|11/21/2003||Approved by CFO|
|6/26/2018||To reflect current university titles and practice, Responsible University Officer to "Vice President for Finance" and changed Responsible Office to "Financial Services and Operations." Changed contact to "General and Auxiliary Accounting—906-487-2242"|
|04/10/2017||Transfer of policy page from HTML to CMS. Business and Finance numbers renamed from "2.2000" to "2. Business and Finance". Specifically from "2.2001—Special Fees and Use Charges" to "2.01—Special Fees and Use Charges".|
|05/16/2016||To reflect change from specific OMB Circular A-21 language to more encompassing "Federal Regulations".|
|05/03/2012||To reflect current University titles and practice, MTU is now Michigan Tech and the email address for questions is now hbwebmaster.|
|05/12/2008||Deleted Amortization Schedule Form and updated Special Fees and Use Charge Rate Justification.|
|09/05/2006||Special Fee and Use Rate Justification and Calculation form prepared every two years rather than every year; an annual balance equal to 5% of use credits is allowable; extraordinary expenses for repair parts or per diem service may be amortized up to 4 years; effective 9/2008, a use rate will be approved if the use credits generated annual is $5,000 or greater.|
|05/26/2005||Changed equipment to service/instrument/laboratory and included special fees and use charge rate calculation example.|