University Policy Office

2.01.1—Establishing and Reviewing Use Charge Rates

Effective: 09/05/2006
Senate Proposal: No
Responsible University Officer: Vice President for Finance
Responsible Office: Financial Services and Operations

Introduction

There are five steps to developing a special fee or use charge:

  1. Develop an hourly or natural base rate.
  2. Approval by department chair/director or higher in supervisory chain of command.
  3. Approval by dean or higher in supervisory chain of command.
  4. Approval by controller.
  5. Establishment of the use charge index.

Process

  1. Complete a Special Fees and Use Charge Rate Justification and Calculation form to develop an hourly or natural base rate (such as per unit/hour/test) to be charged. The rate must be rational and justifiable.
    • When completing the form, consider the following:
    1. Extraordinary expenses may be included only if the expense is for a repair part (not an accessory) or per diem service. The expense may be incurred when needed and may be amortized over a justifiable period of time, not to exceed four years. The rate will be adjusted by the annual amount for that extraordinary expense. The use rate application must include the Amortization Schedule form. During the amortization period a negative balance may be carried forward. See Operating Procedures Manual, Section 2.12.2. Equipment Identification.
    2. All use of the equipment/service/facility must be tracked and factored into the rate calculation.
    3. The use rate equals the total costs to operate the service/instrument/laboratory divided by total hours of use. This rate will come closest to recovering the actual cost of operating the service/instrument/laboratory. A lower rate may be used, but never a higher one.
    • NOTE: Depreciation and the cost of equipment cannot be included in the rate because these items are included in the University Facilities & Administrative (F&A) cost rate. Maintenance costs, consumable supplies, and technician time are examples of allowable costs.
  2. If a new rate is being requested attach examples of use rates at other institutions for the same or similar service/instrument/laboratory.
  3. Send the proposed rate to the department chair/director or higher in supervisory chain of command for approval.
  4. Upon approval by the department chair/director or higher in supervisory chain of command, submit to the dean or higher in supervisory chain of command for approval.
  5. Submit the proposed rate to the Use Charge Committee for review and recommendation for approval. The request must include the Use Rate Justification and Calculation form. Detail of how the rate was developed and justification for why the use charge is needed must be included.
  6. The Use Charge Committee will forward the Use Rate Justification and Calculation Form to the controller for approval.
  7. Upon approval by the controller, Financial Services and Operations establishes a use charge index.
    • NOTE: All expenses related to and incorporated in the use charge rate, must be charged to the index provided by Financial Services and Operations. Account code E446 should be used for charges to indexes and E496 should be used for credits. The financial manager of the use charge index should authorize interaccount bills. Interaccount bills must be processed on a monthly basis and include the time period of charges, rates being charged, and the numbers of units/hours/tests.
  8. Notify the appropriate individuals of the new index and approved rate.

Forms and Instructions


Revisions

02/15/2019 Processed minor revisions.
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 from "Accounting Services" to "General and Auxiliary Accounting."
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 "2.2001.1—Establishing and Reviewing Use Charge Rates" to "2.01.1—Establishing and Reviewing Use Charge Rates".