Charges, Fees, Assessments and You UAccess Community Symposium 2018

Administrative Service Charge What is ASC? Why does the University charge it? Assessed on external revenues and operational expenditures Intended to recover overhead costs An assessment on external revenues and operational expenses intended to support overhead costs and administrative services that benefit the entire University.

Administrative Service Charge Recovers costs not easily assignable Payroll processing Human resources Budgeting Procurement The revenues generated from the Administrative Service Charge (ASC) are used specifically to support overhead costs (activities on campus which benefit the entire institution, but which are not easily assignable to any one unit, for example, utilities, processing payroll and purchase orders) University charges non-state/grant accounts a fee to recover facilities and administrative costs like utilities or building maintenance or processing payroll or purchase orders.

Administrative Service Charge How much is charged and who determines it? ASC % determined by President’s Cabinet Revenue: 9.5% as of July 1, 2015 Expense: 1% as of July 1, 2015

Administrative Service Charge Exemptions? Special exemptions granted for ASC on Revenue only Must be approved by Senior VP & CFO Exemptions are very rare and must be approved by Senior VP & CFO.

Administrative Service Charge Revenue Base Auxiliary (AX), Designated (DE), and Designated- Service Center (DR) External Revenue Auxiliary examples: Bookstore, Student Union, Campus Recreation, Intercollegiate Athletics Designated examples: Department or Administrative Sales and Services and Conference Accounts Designated Service Centers examples: Research Service Centers like Arizona Research Lab, Telecom

Administrative Service Charge Revenue exemptions Tuition Course Fees Retained Fees Gifts Mandatory Fees Internal Revenue Example accounts that are exempted: Accounts that record mandatory fees like Campus Recreation Student Fees, Student Technology Fees, Student programs.

Administrative Service Charge Expenditure Base Auxiliary (AX) and Designated (DE) Operational Expenditures

Administrative Service Charge Expense Exemptions Cost of Goods Sold Cost of Farm Feed Student Aid ASC Bad Debt Expense Capital Expenditures Transfers Out

Administrative Service Charge Expense Exemptions Exempted Sub-funds Allocated Funds Banner Exempted sub-funds: Allocated Administrative Service Chg (ALCASC); Allocated Investment Income (ALCINV); Allocated Program Fees and Differentials (ALCPRG); Allocated Student Retained Fees (ALCSRF); Banner Affiliation Agreement Clinic Svcs (BAACS); Banner Academic Funds Flow (BAFF); Banner Supplementary Agreements (BANSUP); Banner Continuing Medical Education (BCME)

Administrative Service Charge Expense Exemptions Exempted Accounts Institutional Designated Accounts Handle institutional mandated costs What are some institutional mandated costs: Institutional Legal Fees, Licenses, and obligations (like to Tucson Fire) Institutional Student Aid Institutional Banking Fees Institutional Leases Institutional debt service

Administrative Service Charge When is it Assessed? ASC is assessed monthly Posting occurs on the last day of monthly close after all transactions have posted ASC is automatically assessed by the Prorate Journal Entry module. Posting occurs on the last day of the monthly close (usually 2nd business day of new month)

Prorate Journal Entry Account Line Revenue: UAccess Financials Prorate Journal Entry Account Line

Prorate Journal Entry Account Line Expense: UAccess Financials Prorate Journal Entry Account Line

Administrative Service Charge $25.5M Generated ASC on Revenue ~$19.6M ~$2.8M Endowment Management Fee ASC on Expenditures ~$3.1M

Administrative Service Charge Division Budget % of Total Units of the President $12,924,465 51% Business Affairs $9,332,490 36% All Other Divisions $3,243,045 13% Total $25,500,000 100%

Endowment Management Fee What is it? 1.35% annual management fee based market value (1.25% After July 1, 2018) Applies to all University and Foundation endowments Non-cash, non-income producing assets are not subject to the management fee 1.35% annual management fee based on the market value of the assets held in the endowment. Non-cash, non-income producing assets are not subject to the management fee until the assets are sold and reinvested.

Endowment Management Fee How is it Assessed? Fee is collected monthly Posts on object code 0781 The fee is collected monthly through a DI initiated by the endowment accountant. Fee post to the Endowment account (7XXXXXX) on OC 0781.

Development Fee What is it? Supports development activities and oversight Applies to gifts $1,000 or greater Applies to the first $3.5M of a major gift

Development Fee Accounting Revenue in OC 0962 Expenditure in OC 7960 DI processed monthly by FSO.

Development Fee Exemptions? Pass-through scholarships Fully expended within 12 mos. Gifts to purchase specified equipment New gifts from donors who have cumulatively given $15 million or more

Development Fee ~$500k Generated Gift Fee 6% on Revenue 4% Development Office 1% President’s Office 1% College Development Offices

Facilities and Administrative (F&A) Cost What is F&A? Defined in CFR 2 Part §200.420 Costs incurred for a joint purpose Not readily assignable F&A costs are defined in CFR 2 Part §200.420 as costs that are "incurred for common or joint objectives and therefore cannot be identified readily and specifically with a particular sponsored project, an instructional activity, or any other institutional activity."

Facilities and Administrative (F&A) Cost  F&A costs are sometimes referred to as indirect costs. 

Facilities and Administrative (F&A) Cost How is the F&A rate calculated? Negotiated with the federal Department of Health and Human Services (DHHS) Developed and negotiated every four to six years The University negotiates F&A rates with its cognizant agency—the Department of Health and Human Services (DHHS), Division of Cost Allocation (DCA), San Francisco office.  Rates are developed and negotiated approximately every four to six years

Facilities and Administrative (F&A) Cost Action Amount A researcher buys supplies on a sponsored project $100 The F&A rate on sponsored project 53.5% F&A expenses generated by UAFinancials (obj. code 7950) $53.50 Total $153.50

Facilities and Administrative (F&A) Cost Project Type Effective Date Rate On-Campus Research 7/1/16-6/30/20 53.5% Off-Campus Research 26.0% On-Campus Instruction 50.0% Off-Campus Instruction On-Campus Other 47.0% Off-Campus Other

Facilities and Administrative Revenue $77.8M Generated Allocated ~$56.3M 211xxxx Budgeted Departmental Accounts ~$21.5M 210xxx/214xxx Cash Style

Facilities and Administrative Revenue Division Budget % Colleges $25,100,008 32% Inst. Debt, O&M, Etc. $21,736,087 28% Research Incl. Dev. Fund $18,374,645 24% All Others $12,586,360 16% Total $77,797,100 100%

Federal Work-Study Overhead Fee (SWS Overhead) What is it? 10% fee assessed on Federal Work-Study gross earnings processed through payroll. Funds the administrative cost of On-Campus and Off-Campus Federal Work-Study Programs.

Federal Work-Study Overhead Fee (SWS Overhead) What is it? Exclusions WordCats and MathCats tutoring positions

Federal Work-Study Overhead Fee (SWS Overhead) How is it Assessed? Assessed bi-weekly the same time as payroll.

Work Study Revenue $350k Generated Local Fund Budget Support of Operations of the Office of Scholarships and Financial Aid (OFSA) 95% Salary & ERE 5% Operations

UA Online Revenue and Assessments UA Online Program Distributes on OC 0255 TUITION MODELS COLLEGE AISS UA Undergrad 65% 35% UA Grad 70% 30% 3rd Party Grad/Int’l Partner 80% 20%

UA Online Revenue and Assessments Distance Campus Program Distributes on OC 0256 TUITION MODELS COLLEGE AISS UA Undergrad 70% 30% UA Grad 3rd Party Grad 80% 20%

UA Online Revenue and Assessments International Education Program Distributes on OC 0256 TUITION MODELS COLLEGE AISS UA Undergrad 70% 30% UA Grad

UA Online Revenue and Assessments Community Campus Distributes on OC 0257 TUITION MODELS COLLEGE AISS UA Undergrad 100% 0% UA Grad Subject to 5.7% ASC

UA Online Revenue and Assessments Massive Online Courses (MOOCs) Distributes on OC 0940 College 80%, AISS 20% Subject to ASC UA Online has a partnership with Coursera for MOOCs. Enrolled students can choose to pay for a certification, and Coursera shares a portion of the revenue with UA under a partnership agreement.  This revenue is distributed on a quarterly basis as received.

Responsibility Centered Management (RCM) Current Model Assumptions Undergraduate Tuition 30.96% Subvention 30.96%

Responsibility Centered Management (RCM) Current Model Assumptions Graduate Tuition 12.38% Program Fees and Differential Tuition 12.38% Sponsored F&A 12.38% Undergraduate and Subvention Rates Set first, then Graduate, F&A, and PFDT set at 40% of UG/Subvention Rate

Responsibility Centered Management (RCM) Current Model Assumptions Strategic Investment 2.75% FY18 3.5% FY19, 5% FY20 and Beyond NASF $25.19/sq. ft.

Responsibility Centered Management (RCM) Location of Assessments Model/Spreadsheet/”Paper Exercise” Program Fees and Differential Tuition Accounting Plus Model “True Up”

Responsibility Centered Management (RCM) Location of Assessments Budget Allocation Not Revenue Allocation Lump Sum Distribution Year Lag

Responsibility Centered Management (RCM) Revenues and Assessments Undergraduate Tuition (Net of Aid) $369M Graduate Tuition (Net of Aid) $66M Program Fees and Differential Tuition (Net of Aid) $48M

Responsibility Centered Management (RCM) Revenues and Assessments F&A Recovery (see previous) $78M Subvention $314M (Appropriations and ASC) Assessments $371M

Responsibility Centered Management (RCM) Budgets Support by Assessments Facilities $111M Debt Service, Operations & Maintenance (incl. Utilities), Leases Institutional Funds, Planning, Design, and Construction and Facilities Management

Responsibility Centered Management (RCM) Budgets Support by Assessments Administrative Support Units $233M Senior Leadership, Libraries, UITS, Human Resources, FSO, Student Affairs Administration, Budget Office, etc.

Responsibility Centered Management (RCM) Budgets Support by Assessments Strategic Investment $27M Reinvestment in Colleges/Strategic Initiatives

References 6.17 Administrative Service Charge Policy 8.33 University Development Fund Policy and Procedure