1 Service Center FY2007 Billing Rate Proposal Preparation Training Proposed Policy Revisions & Guidelines for Preparing FY2007 Billing Rate Proposals

2 Proposed Policy Revisions Internal service provider defined as separately identifiable operational units that offer goods and/or services to other University of Houston affiliated departments, with no recovered costs coming from federally sponsored programs. Narrow definition of Specialized Service Facility (OMB Circular A-21, Section J.47) as separately identifiable operational units established to offer goods and/or services involving the use of highly complex or specialized facilities in support of federally sponsored programs or projects.

3 Proposed Policy Revisions (continued) MAPP will apply only to “specialized service facilities” and not auxiliary enterprises, recharge centers, or internal service providers. Specialized service facilities that recover costs from state funded sources will not be able to included state funded costs in their billing rates. (FM : Purchase Guidelines for On- Campus Service Centers and Auxiliary Enterprises)

4 Proposed Policy Revisions (continued) Biannual Billing Rate Proposals. All billing rates must be reviewed and approved before users can be charged. Annual reporting of: (1) Total Costs, (2) Total Recovered Costs, and (3) Over/Under Cost Recovery (i.e., Surplus/Deficit Balance)

5 Proposed Policy Revisions (continued) Material revisions to already approved billing rates must be reviewed and approved by the Division of Finance. Definition of “materiality”. For example, a revision to an already approved billing rate will be deemed material if any of the following apply:  The revision represents a 10%, or greater, increase in the already approved billing rate for the same, or comparable, quality of good or level of service.  The revision will results in a 10%, or greater, increase in the total anticipated recovered costs for the same, or comparable, quality of good or level of service.  Based upon the anticipated level of cost recovery resulting from the revision, recovered costs for the activity will exceed total costs. (i.e., The revision will result in the over-recovery of costs.)

6 Proposed Policy Revisions (continued) Already approved billing rates may be revised as deemed necessary by specialized service facility and college/division/departmental management.  In all instances, billing rates and modified billing rates must be based on the actual cost of providing the goods or services.  Billing rate computations modifying, adding or revising specialized service facility billing rates must be documented and approved by the college/division business administrator, the department chairman (where applicable), and the college dean or division head.  Documentation must be maintained to support each calculated billing rate, billing rate change, or price charged for a particular good or service.  All revisions to billing rates must be report to the Division of Finance. Updated price lists will need to be provided to the Division of Finance at least 3 working days before the revised billing rates are to take effect.

7 Guidelines for Preparing the FY2007 Billing Rate Proposals Target Deadline: April 1 st 1.Identify the services to be provided during FY Identify the funding sources from which the service center will recover costs. (For example, will the service center recover costs from customers that will pay with local, state, or federal funds?)

8 Guidelines for Preparing the FY2007 Billing Rate Proposals (Continued) 3.Prepare cost studies for FY2005 (actual), FY2006 (estimated) and FY2007 (projected / budgeted) by including all costs associated with providing the services identified in Step #1 (above). (This the information that has historically been used to complete Cost Study Forms 1, 1A, and 2) Include costs paid for out of the primary PeopleSoft Cost Center and all other cost centers, regardless of the funding source. (Although service centers that recover costs from state funded sources will no longer be able to include stated funded costs in their billing rates, it will still be important from a federal cost accounting perspective to identify all costs associated with service center activities.) Concentrate mainly on Salary & Wage Expenses (Form 3) and Maintenance & Operating Expenses (Form 4).

9 Guidelines for Preparing the FY2007 Billing Rate Proposals (Continued) 4.Review the listing of capital assets previously identified as being used to provide the services identified in Step #1 (above). (We will provide you with a copy of this listing.) Contact Victor a soon as you have completed your review of the capital asset listing and confirm that the listing is accurate and complete. Any items on the list that are no longer in service should be identified and eliminated. Any items not on the list, included newly acquired capital assets, should also be identified and added. There may be a one-time adjustment for converting from the depreciation method to the use allowance method for recovering the costs associated with capital asset usage. We will provide this adjustment, along with revised use allowance computations for all capital assets used in support of service center operations, as soon as you have confirmed the accuracy of the capital equipment listing. (The use allowance computations we provide will be the basis for Form 5.)

10 Guidelines for Preparing the FY2007 Billing Rate Proposals (Continued) 5.Once you have completed Forms 3 and 4 for FY2005, FY2006, and FY2007, and once you have received the Use Allowance Computations (Form 5) from Victor, contact us so we can make arrangements to meet with you and provide final instructions on how to complete the billing rate proposal package.