Service Center FAQ

Service Centers are operations created within university units that provide products and services to other university departments, often at an overall cost savings to the university or college over what each unit could obtain the services on their own from outside of the university. An example would be telephone services. It is much more cost effective to have one centralized campus telephone service rather than each department obtaining their own service, working with the phone company, and receiving individual billings. Another example is a departmental photocopier providing copies for many users. It is more cost effective to have one copier to serve many. Service Centers do not exist to make a profit. The financial objective of a service center is to break even by matching recovered costs with expenditures.

No, you must adhere to the break even policy, but you may subsidize the rate for internal customers.

Yes, but only to internal customers using non-discriminatory rates within the internal users. The fully costed rate must be charged to all external customers. A separate budget must be used for internal and external customers if the rate is subsidized for internal users. The budgets will roll up to the same fund; they have to be different for tracking/audit purposes.

Local service primarily serves external customers; a Service Center is primarily to serve internal customers.

Contact Gary Fuller in Asset Accounting with a budget number and asset tag if you have it. He will provide the necessary information.

Not if it was purchased using Federal Funds (i.e. grant $). Other sources, you should include in your worksheet the percentage the equipment is used for the Service Center.

Indicate on the spreadsheet the % for this service. That will only include that portion in the rate.

Charge based on the percentage of time the employee spends on the service center. That will only include that portion in the rate.

Please enter the correct salary amount in the worksheet and complete an EPAF to charge those portions of the salary to the service center.

By including depreciation in your rate, you are collecting replacement cost based on usage. You can collect this amount in a separate budget to be used to purchase new equipment at a later date.

A year end surplus should not exceed 15% of working capital. A surplus or deficit shall be included in the calculation of the subsequent year’s rates. See APM 20.20, C-4 and C-7.

Volume discounts or other special pricing mechanisms are allowable but they must be equally available to all users who meet the criteria (volume) and must not be subsidized by other users. See APM 20.20, C-2.

No. However, equipment can be “purchased” through the establishment of an Equipment Reserve Account (ERA). By establishing an ERA, future purchases of equipment can be “funded.” The ERA is built up by charging actual amounts of depreciation each fiscal year. Use of the reserve account is limited to the purchase of service center equipment.

See list of unallowable costs at APM 20.20, D-2, i.

The following are not suitable for UI units to pursue:

• Activities that compete with private enterprise
• Activities involving services or products that qualify as unrelated business income (activities not substantially related to the exempt from tax purposes of the UI)
• Activities that can be produced by another UI or private enterprise source
• Activities that will create harmful intra-University competition
• Activities that have low customer demand and comparatively high operating costs

Yes. See APM 20.20, D-6 and D-7.