Service Center and Recharge Center Fees Procedures
Provide a framework for the fiscal operations of University of Kansas service centers that will ensure compliance with federal cost principles, consistency in accounting and costing practices, and flexibility to meet the needs of different operations.
All University of Kansas departments designated a Service Center or Recharge Center
I. Procedures Overview
This document provides a framework for the fiscal operations of University of Kansas service centers that will ensure compliance with federal cost principles, consistency in accounting and costing practices, and flexibility to meet the needs of different operations. Although there is a wide variation in size, complexity, and services provided by service centers, they all should maintain common administrative practices. This policy addresses those practices and provides examples of billing rate structures and the steps involved in building such rates.
KU must comply with the US Office of Management and Budget (OMB) Circular A-21, Cost Principles for Educational Institutions (https://www.whitehouse.gov/omb/information-for-agencies/circulars). The Cost Accounting Standards in A-21 that pertain to service centers are in section J.47. Compliance with A-21 is implicit in this policy.
KU’s exposure from non-compliance with federal regulations may involve reimbursement to the government as well as adverse publicity, which could have a direct fiscal impact for the University.
II. General Guidelines
Establishing a Service Center:
Deans, directors, or department chairs should propose the creation of a service center and service center rates. The benefits of a proposed service center must be weighed against the benefits of obtaining similar goods/services from commercial or other University sources. In contemplating the creation of a service center, departmental management must consider a variety of criteria:
- How is this proposed service center fee related to the instructional, research or public service mission of the University?
- Does a demand (by more than one unit/entity) exist for the goods/services to be provided on a regular basis?
- Does the level of recharging (sales) transactions, both quantity and dollar amount, justify the need for the service center?
- Does another KU unit already provide similar goods/services?
- Will the service center be competing with an entity in the private sector?
The Chief Financial Officer and Vice Provost for Finance is responsible for final approvals.
III. To Whom Does This Policy Apply
Any fee that is charged to a University department (including sponsored activity) by another University department is designated a service center or recharge center fee. No service center or recharge center fee shall be instituted or increased without procedural approval as outlined in this document.
A department should not be paid more than once to perform the functions for which it exists. The intent of the charge back system is to reimburse a department for the actual cost of providing services beyond the state-funded portion of their budget. Exemptions to this general policy may be made by the deciding authority.
Auxiliary services (defined below) are not subject to this service center policy.
NOTE – Any fee that is charged to students, staff or the public must also follow the University’s separate policy for this type of charge, “Policy for Approval of Charges to Students, Staff and the Public.”
A recharge center is an operating unit that exists principally to provide goods or services to KU departments and recovers less than $10,000 in annual operating expenses unless the unit’s primary customers are sponsored projects or external customers.
Operating costs are recovered by charges (sales) to those departments and entities receiving the goods or services. Recharge centers develop rates based on incurred (historical) cost and rates should be designed to break even over predetermined periods of time (not to exceed 12 months).
Example: Academic Units charging for copier and fax machine usage.
Due to their smaller size of operations, recharge centers are not required to obtain administrative rate approval as documented within this policy. However recharge centers are still expected to use the same methodology established within this policy to establish their internal and external rates. Recharge center rates are also expected to be reviewed by department management as often as necessary to ensure compliance with this policy. Reviews should take place at least annually.
A service center is an operating unit that exists principally to provide goods or services to KU departments and recovers more than $10,000 in annual operating expenses or the unit’s primary customers are sponsored projects or external customers.
Operating costs are recovered by charges to those departments and entities receiving the goods or services. Service centers develop rates based on incurred (historical) cost and rates should be designed to break even over a 12 month time period (unless approved in advance by the Chief Financial Officer and the Vice Provost for Finance).
Examples: Chemistry storeroom, Animal Care Unit
An auxiliary service is a self-supporting entity that exists principally to furnish goods or services for a fee to students, alumni, or faculty and staff acting in a personal capacity. Independent boards govern auxiliary entities, and rates are established and approved according to separate policies and procedures.
Examples: Residence halls, Campus dining, Parking Services, University health services
Auxiliary services generally do not support KU departments. The general public may be served incidentally. Pricing for auxiliary services may be based on market rates, except when charging for service provided to federal awards. Federal awards must always receive the “most favorable price” charged by the auxiliary service for the good or service provided. Auxiliary services are not subject to this service center policy.
Internal users of service centers are those users whose sources of funds are within KU or flow through KU (i.e., KU federal awards performed on campus). These include academic, research, administrative, and auxiliary units that purchase services in support of KU’s mission.
External users are organizations or individuals whose originating source of funds is outside of KU. External users include students and any members of faculty or staff acting in a personal capacity. Other universities are also considered external users unless KU has subcontracted with them as part of a grant or contract, in which case they will be considered an internal user.
VI. Rate Components
All allowable costs relating to a service center must reside in the service center account. Allowable costs must satisfy all of the following conditions:
- Are reasonable
- Are consistently applied
- Are properly allocable
- Are not specifically unallowable
(See Appendix A for a detailed explanation of these conditions.)
1. Direct Personnel
The salaries and wages of all non-administrative personnel directly related to service center activity (e.g., lab technicians, machine operators, storeroom clerks) should be included in the rate calculation and charged to the service center's operating account unless charged as a direct cost to federal award. If an individual performs more than one activity, the costs associated with that individual should be allocated to the activities based on the proportional benefit to each. This proportion may be determined and allocated by effort reporting or by a special time study. Departments should contact the Comptroller’s Office for additional details on how to complete an effort reporting survey or time study. No more than 100% of any employee’s salary and wages may be recovered through a combination of service center charges and other (e.g. State appropriations) funding. Thus salary and wages provided by other funding must be excluded from the service center rate calculation.
2. Administrative Staff
The salaries and wages of administrative staff in direct support or management of a service center should be included in the rate calculation and charged to the service center's operating account. Administration costs benefiting more than one service center activity should be allocated to the benefiting services on a reasonable and documented basis. No more than 100% of any employee’s salary and wages may be recovered through a combination of service center charges and other (e.g. State appropriations) funding. Thus salary and wages provided by other funding must be excluded from the service center rate calculation.
3. Fringe Benefits
Fringe benefits related to all personnel costs directly charged to the service center operating account should be included in the rate calculation.
4. Materials and Supplies
The costs of materials and supplies needed to operate a service center should be included in the rate calculation. Any inventory maintained by the service center should be invoiced at actual cost including applicable discounts. In order to calculate inventory actual cost, service centers will be responsible for maintaining an inventory system using a recognized costing model. The University recommends the use of the “Average” method. For further information regarding recognized inventory costing models, review service center rate example #4 or contact a member of the Service Center Evaluation committee.
5. Other Expenses
Other operating expenses to be included in service center rates are rental and service contracts, equipment operating leases, and professional services.
6. Capital Equipment
Capital equipment is defined as an item with a purchase price over $5,000 and a useful life of at least one year. KU policy does not allow the purchase cost of a capital item to be recovered through service center rates. Equipment that is not capitalized (purchase price under $5,000) may be included in the rate calculation as an operating expense.
Equipment depreciation may be possible to include in the rate calculation if equipment usage is a significant part of providing the service, the service center is responsible for providing funds to replace the equipment, and the equipment was not purchased with federal funds.
· Useful Lives -- Service center equipment must be depreciated using the useful lives outlined in the “Regents’ Institutions Capital Asset Policy.” Depreciable life should not be confused with “physical life.” Physical life refers to the total length of time an item of equipment is physically retained and used.
Regent’s Institutions Useful Lives:
§ Vehicles---5 years
§ Land Nonstructural Improvements/Infrastructure---25 years
§ Buildings & Building Improvements---40 years
§ All other Equipment---8 years (including computers)
§ The estimated useful life of some capital items may deviate from the above standard policy based on industry standards, practical experience known at the time of acquisition, and/or building componentization.
- Federally-Funded Equipment -- Depreciation of equipment purchased by the federal government, whether or not title has reverted back the University, cannot be included in the user rates. Where the University has specifically agreed to "cost-share" a piece of equipment in a federal award, the depreciation of the University-funded portion is also unallowable in the rates. Federal funding of equipment will be identified through the University’s capital asset module of the financial system.
- Debt Funded Equipment -- Master lease option. Contact the Comptroller’s Office for more information.
NOTE – In order to ensure consistency with the University’s recorded depreciation expense as well as to ensure that any depreciation expense reflected in a service center rate is excluded from the University’s Federal Facilities and Administrative Rate calculation, the Comptroller’s Office will be responsible for providing all depreciation expense costs. Service centers that would like to include depreciation expense within their service center fee calculations are responsible for contacting the Comptroller’s Office Property Accounting Team.
8. Unallowable Costs
Unallowable costs must be excluded from the internal user rate calculation. Refer to Section J, OMB Circular A-21 for a list of unallowable expenses.
VII. Rate Development
A recharge or service center rate is the cost per unit of output used to recover the expenses of the service center. To compute this rate, departments should use the following equation: The per unit rate equals…
Budgeted Expenses ± Prior Year Under/Over Recoveries
Forecasted Usage Base
The “forecasted usage base” is the volume of work or number of units expected to be performed/sold, expressed in units (e.g., labor hours, machine hours, CPU time, pounds, packages) or any other reasonable and documented measurement.
This rate, based on forecasted activity, is applied to the actual activity when charging users. Care should be taken not to include duplicate amounts or the cost of unrelated activities in the rate calculation.
Example #1: CPU time (activity level) used to allocate expenses.
A computer costs approximately $100,000 per year to operate (total allowable costs) and has an estimated activity level of 1,500 hours per year. This would result in a “rate” of $100,000/1,500 hours = $66.67 per hour. If a researcher used the computer for four hours for a sponsored project, the award should be charged 4 x $66.67 or $266.68.
Example #2: Use of gross sales to allocate costs.
The Chemistry department provides chemicals and laboratory supplies (beakers, test tubes, etc.) to students, faculty and federal grants. The direct cost of maintaining the storeroom is estimated to be $50,000/year and the estimated cost of the goods to be sold during the year is $250,000. The rate would be developed as an add-on to each $1 of goods or services sold. In this example, expenses to be recovered ($50,000) ⁄ Sales (250,000) = 20% or an addition of $.20 for each $1 of goods/services sold will recover $50,000 if sales reach the $250,000 estimate.
Service center rates for the following fiscal year should be calculated by the business manager in each service center, approved by the Dean/Department Head and forwarded to the Service Center Fee Evaluation Committee by December 31st for review and approval. The Chief Financial Officer and Vice Provost for Finance is responsible for final approval of all service center rates.
When a service center is established in mid-year, rates may be set for longer than twelve months so that the end of the first break-even period coincides with a fiscal year end.
1. Non-discriminatory Rates
A service center must charge all internal users at the same rate for the same level of services or products purchased in the same circumstances. Rates will not differentiate among internal users.
The federal government does not object to charging external users a higher rate than that charged to internal users. However, to ensure that the “above cost recovery” portion of revenues from external users does not improperly adjust service center rates downward, service centers will be required to set up a separate cost center to track any additional revenues collected from external users over and beyond the “internal rate.” REMINDER – Federal and State sponsored projects are considered internal customers.
NOTE – Both internal and external sales are to be included in the rate calculation.
2. Break-Even Concept
A service center must endeavor to establish rates so that revenues exactly offset expenses over a reasonable (usually one fiscal year) period of time.
University administration recognizes that breaking even is not absolute, therefore service centers should strive to achieve a surplus or deficit for a given fiscal year that does not exceed ±10% of annual operating expenses.
Example: The rates submitted for approval by December 31stwould be based on projected volume and expenses for the upcoming year plus/minus under/over recoveries carried forward from the prior calendar year.
Example #3: Service Center XYZ
Less P/Y Surplus
Total Budgeted Expense to be recovered
Example #4: Service Center XYZ
Less Prior Year Deficit
Total Budgeted Expense to be recovered
Service centers may also operate on a long-term break-even so that rates reflect actual costs over an approved period of time. The Service Center Fee Evaluation Committee will provide assistance to develop a break-even term.
Service centers that repeatedly have surpluses or deficits in excess of ±10% of annual operating expenses will be monitored and evaluated on an individual basis by the Chief Financial Officer and Vice Provost for Finance. Management sanctions may include but are not limited to the following:
- Retroactive refunds to users for excess surpluses, or
- Transfers from separate non-federal source for excess deficits.
Service centers that have accumulated surplus funds through billings to internal users may not transfer these funds out of the service center operating account. The balance must be carried forward and used to adjust subsequent billing rates. REMINDER – Any revenues collected from external users over and beyond the “internal rate” are to be recorded in a separate cost center.
4. Pricing of Multiple Services
A service center providing more than one good and/or service may inadvertently make a surplus on some goods/services and a loss on others. Service centers must ensure that there is no cross-subsidization between user groups. Combining the results of “cost recovery” from the various goods and/or services is not acceptable if the mix of users of each good/service is different; that is, if higher prices charged to one set of users are subsidizing losses charged to a different group of users.
Examples: Animal Care Unit, NTS
Each service center has unique costs related to specific goods/services that should be applied only to the related good and/or service fee. Specific examples include:
- Breed Specific Bedding Supplies - Animal bedding supplies that are only used for mice and rats are only applied to the mice and rat per diem rate calculation and are not included in any other animal per diem rate calculations.
- Third Party Long-Distance Charges – Operating charges incurred only for long-distance service are only applied to the long-distance rate calculation and are excluded from the local telephone rate calculation.
5. Rates for External Users
At a minimum, external users will be charged for the full direct costs of the service center operation. The University's indirect cost rate should be charged to external users. At no time will an external customer be charged less than the federal government and internal users for the same service. The federal government must always be treated as the most favored customer. Sales tax, when applicable, must be charged to all external users who do not provide their tax-exempt certificates. Contact the University Tax Analyst for questions and assistance on sales tax issues.
Service centers that would like to establish an external market rate (rate above full direct costs plus indirect cost rate) will be reviewed on a case-by-case basis.
1. Rate Reviews
- Units wishing to impose a service center fee must prepare a detailed justification and submit it through the appropriate administrative channels to their Department Head/Dean. The proposal for establishing a service center fee should present a clear and compelling argument for its implementation. Data should include, but not be limited to, the items listed below. Answers to the questions should be as full and precise as possible.
§ How is this proposed service center fee related to the instructional, research or public service mission of the University?
§ Why is the fee being implemented or changed?
§ Was this service/good previously provided?
§ How was the amount of the fee determined? (Include specific calculations)
§ What service/goods will be provided for that fee?
§ How much money will the fee generate per year?
§ How will the fee income be spent?
§ Source of funds for capitalized start up costs?
§ Who will be the likely customers and what is the anticipated fiscal impact on them?
§ What is the overall benefit to the proposing unit?
§ What is the cost/benefit to the University as a whole?
- If approved, the Department Head/Dean will forward the proposal and justifications to the Service Center Fee Evaluation Committee. This committee will carefully scrutinize the submitted justification and, if necessary, request further information about the proposal. Prior to making a recommendation, the committee may consult with the proposing unit or appropriate office to modify the proposal. In addition, the Evaluation Committee may contact units likely to be impacted by the fee.
- Based upon its evaluation, a recommendation to approve or disapprove the fee will be mae to the Chief Financial Officer and Vice Provost for Finance.
- By implementing the standards & procedures outlined in this document, the Evaluation Committee is expected to ensure the equity and reasonableness of the fees it recommends.
- The department shall supply all pertinent accounting and cost information required to review the fee proposal; the Evaluation Committee’s responsibilities do not include calculating proposed fees.
- The Evaluation committee will work as expeditiously as possible, but departments should recognize the evaluation of fees is a complex process that may take considerable time.
Subsequent Rate Reviews:
- Rates will be re-calculated as described in this policy annually by the Business Manager of each service center, and submitted to the appropriate Dean or Department Head for approval. Approved recalculated rates and related backup materials will be sent to the Service Center Fee Evaluation Committee for review.
- Based upon its evaluation, the Evaluation Committee will provide a recommendation to approve or disapprove the fee to the Chief Financial Officer and Vice Provost for Finance.
2. Interim Reviews
Service center business managers should evaluate their financial position and rates periodically (suggested evaluation points - 6 months (fiscal year-end) and 9 months) to assess their position with respect to their break-even goals by category of goods and services.
Under special circumstances, rates will be adjusted through a mid-year reduction/increase in rates provided that mid-year rate adjustments are reviewed and approved by the Chief Financial Officer and Vice Provost for Finance.
3. Year-End Rate Performance Review
At calendar year end, all service centers will be required to submit their actual financial results to the Service Center Fee Evaluation Committee. Reports are due before December 31 of each year. The year-end rate performance review form is available at
4. Establishing Service Center Cost Centers
All service centers must maintain separate cost centers. The Service Center Managers are responsible for ensuring that all service centers have established a series of separate cost centers to track operating revenues and expenses, excess revenues collected from external customers, and annual surplus/deficits.
5. Billing Procedures and Record Retention
Billings must be based upon measured and documented utilization that was properly authorized for the account charged. All billings should be processed on a timely basis and will be at approved service center rates. It is recommended that billings be completed within one month from the time of service. The support for the charges, including documentation of expenses and usage, should be retained by the service center to answer any user inquiries or in case of an audit. Retention for service center documentation is current plus 5 years.
All invoices must provide the following information:
- Invoice # (or other unique identifier)
- Date of sale
- The nature of the services rendered (e.g., chemicals, sample processing) and/or, the number of units sold (e.g., # of pounds, # of hours, items of inventory) and
- The related unit charge and extension to show total cost per line item.
- The user (purchaser) of these services is responsible for documenting the purpose of the charge and for providing the appropriate basis for allocating the charges if more than one source of funding (e.g. cost center or speedtype) is used to pay the invoice.
An invoice will not be billed until the service has been rendered or materials provided. Service centers should handle fiscal and calendar year-end billing consistently, to ensure that twelve months of cost recovery are associated with the same twelve months of incurred cost, thus providing a more accurate break-even calculation at year-end.
Credits to expenditure accounts are normally used to record amounts received for returned goods and other expense-related adjustments. Service center revenues should not be recorded as credits to expenditure accounts. Such treatment would misstate both revenues and expenses and effect calculation of service center rates in the following periods.
Glossary of Terms:
Auxiliary. A self-supporting entity that exists principally to furnish goods or services for a fee to students, alumni, or faculty and staff acting in a personal capacity. Auxiliary services generally do not support KU departments. The general public may be served incidentally. Examples include residence halls, food services, intercollegiate athletics, college unions, and parking.
Break even. The point at which revenues equal expenses. The policy establishes that service centers should break even over a reasonable period of time and, on an annual basis, the surplus or deficit should not exceed ±10% of annual operating expenses.
Capital Equipment. Equipment with a purchase price greater than or equal to $5,000 and a useful life of at least one year. Per KU Policy, the purchase cost of a capital item may be recovered through depreciation if equipment usage is a significant part of providing the service, the service center is responsible for providing funds to replace the equipment, and the equipment was not purchased with federal funds. Service centers are required to obtain all depreciation expense costs from the Comptroller’s Office Financial Reporting Unit.
Deficit. A deficit occurs when the service center's expenses exceed revenues for a given fiscal year (7/1 –6/30).
Direct Operating Costs. Outflows or charges relating to the rendering of services and related support undertakings (i.e., administrative activities) that can be identified specifically with the service center. Direct operating expenses include salaries and wages, employee benefits, supplies and non-capital equipment. This does not include institutional overhead costs such as general administration and facilities management (i.e. utilities, landscaping, etc).
External Users. Organizations or individuals whose originating source of funds is outside of KU. External users include students and any members of faculty or staff acting in a personal capacity. Other universities are also considered external users unless KU has subcontracted with them as part of a grant or contract.
Federal Facilities & Administration ("F&A") Rate. This percentage is applied to the expenditures of federally sponsored projects in order to recover the portion of the University overhead costs related to the execution of sponsored programs and includes expenses such as building and equipment depreciation, interest, utilities, general administration, and the library.
Internal Users. Users whose ultimate source of funds is within KU or flow through KU (i.e., KU federal awards performed on campus). These include academic, research, administrative, and auxiliary units that purchase services to support their work at KU.
Long-term break-even agreement. OMB Circular A-21 Section J.47 provides the opportunity for service centers, under certain conditions, to establish a plan for recovering their operating costs over a multiple-year period. Such arrangements must be approved in advance in writing by the Chief Financial Officer and Vice Provost for Finance.
OMB Circular A-21 Cost Principles for Educational Institutions. This Circular provides the principles for determining the costs applicable to research development, training, and other sponsored work performed by colleges and universities under grants, contracts, and other agreements with the Federal Government.
Recharge Center. A recharge center is an operating unit that exists principally to provide goods or services to KU departments and recovers less than $10,000 in annual operating expenses unless the unit’s primary customers are sponsored projects or external customers.
Service Center. An operating unit which exists principally to provide goods or services to KU departments and recovers more than $10,000 in annual operating expenses or the unit’s primary customers are sponsored projects or external customers.
Surplus. A surplus occurs when the service center's revenues exceed expenses for a given fiscal year (7/1-6/30).
Unallowable Costs. The federal Cost Principles for Educational Institutions, OMB Circular A-21, establishes guidelines for the allowability of costs in Section J. Costs that are "unallowable" may not be recovered in the recharge center or service center rates. Examples of unallowable costs include alcohol, internal interest, lobbying, and advertising.
Allowable Costs: Costs that satisfy all of the following conditions:
1. Are reasonable: A reasonable cost reflects the action a prudent person would take under the circumstances in light of their stewardship responsibility to the university community, State of Kansas, Federal Government and the public. Major considerations involved in the determination of the reasonableness of a cost include:
a. Whether the cost is generally recognized as necessary.
b. The restraints or requirements imposed by such factors as arms-length bargaining and federal/state laws and regulations.
c. The extent to which the actions are consistent with established Lawrence Campus, University, and/or Board of Regents policy.
2. Are consistently applied according to Lawrence Campus cost accounting standards that have been documented for the federal disclosure statement DS-2. A copies of the DS-2 for KU-Lawrence and the DS-2 for Kansas University Center for Research are available at the following web site:
3. Are properly allocable to goods/services in accordance with relative benefits received or other equitable relationship. Costs allocable to a particular good or service cannot be shifted to other goods/services. A cost is allocable to a good or service if it is necessary to the provision of the goods or services and meets either of the following conditions:
a. The cost solely benefits the good or service.
b. The cost benefits the good or service and other goods or services or activities in proportions that can be reasonably approximated based on benefits derived, a traceable cause and effect relationship, or logic and reason where neither benefit nor cause and effect relationship is determinable.
4. Are not specifically unallowable. Section J of OMB Circular A-21identifies those costs that are allowable, as well as those that are prohibited, for charging to federal programs: (https://www.whitehouse.gov/omb/information-for-agencies/circulars). Therefore, service centers may not include the costs listed below in their internal customer billing rates. Other resources must fund these costs. Business managers are responsible for ensuring that the following unallowable charges are not included in the billing rates to internal customers:
- Advertising: Only advertising for recruitment of personnel and procurement of goods or services, e.g., position vacancies and request for bids is allowable. All other advertising is unallowable.
- Alcoholic Beverages
- Alumni Activities: Costs incurred for, or in support of, alumni activities and similar services.
- Bad Debts: Any losses, whether actual or estimated, arising from uncollectible accounts and other claims, related collections costs, and related legal costs, are unallowable.
- Commencement and Convocation Costs
- Contingency Provisions: Contributions to a contingency reserve or any similar provisions made for events, the occurrence of which cannot be foretold with certainty as to time, intensity, or with an assurance of their happening.
- Defense and Prosecution of Criminal and Civil Proceedings, Claims Appeals and Patent Infringement
- Donations and Contributions
- Entertainment Costs (typically official functions): Costs of entertainment, including amusement, diversion, and social activities and any costs directly associated with such costs (such as tickets to shows or sports events, meals, lodging, rentals, transportation, and gratuities). Expenses for staff morale and performance appreciation activities per university policy are allowable.
- Executive Lobbying Costs: Costs incurred in attempting to improperly influence either directly or indirectly, an employee or officer of the executive branch of the Federal Government to give consideration or to act regarding a sponsored agreement or a regulatory matter. Improper influence means any influence that induces or tends to induce a government employee or office to give consideration or to act regarding a government-sponsored agreement or regulatory matter on any basis other than the merits of the matter.
- Fines and Penalties: Costs resulting from violations of, or failure of the institution to comply with, Federal, State, and local or foreign laws and regulations are unallowable, except when incurred as a result of compliance with specific provisions of the sponsored agreement, or instructions in writing from the authorized official of the sponsoring agency authorizing in advance such payments.
- Fund Raising
- Goods or Services for Personal Use: Costs of goods or services for personal use of the institution's employees are unallowable regardless of whether the cost is reported as taxable income to the employees.
- Housing and Personal Living Expenses: Costs of housing (e.g., depreciation, maintenance, utilities, furnishings, rent, etc.), housing allowances and personal living expenses for/of the institution's officers are unallowable regardless of whether the cost is reported as taxable income to the employees.
- Interest Costs: With the following exception -- Interest cost is allowed when paid to an external party and associated with the following assets, provided the assets are used in support of sponsored agreements, and the total cost (including depreciation, operation and maintenance, interest, etc.) does not exceed the rental cost of comparable assets in the same locality.
§ Buildings acquired or completed on or after July 1, 1982.
§ Major reconstruction and remodeling of existing buildings completed on or after July 1, 1982.
§ Acquisition or fabrication of equipment completed on or after July 1, 1982, costing $10,000 or more, if agreed to by the Federal Government.
Contact the Comptroller’s Office Financial Reporting Unit before incurring any equipment or facility interest costs. Interest cost paid to the university - such as that paid on cash deficits, on borrowings to fund equipment purchases, or on borrowings to fund facility purchase or remodeling – is unallowable.
- Losses on other sponsored agreements or contracts: Excess of costs over income under any other sponsored agreement or contract of any nature. This includes, but is not limited to, the institution's contributed portion by reason of cost-sharing agreements or any under-recoveries through negotiation of flat amounts for F&A costs.
- Memberships, Subscriptions and Professional Activity Costs:Costs of membership in any civic or community organization, country club, social or dining club.
- Promotional Items and Memorabilia: Including models, gifts, and souvenirs.
- Public Relations Costs: includes community relations and means those activities dedicated to maintaining the image of the university, or maintaining or promoting understanding and favorable relations with the community, public at large, or any segment of the public.
- Rental Costs: Costs under “less-than-arms-length” leases are allowable only up to the amount that would be allowed if the university owned the property. For this purpose, a less-than-arms-length lease is one under which one party to the lease agreement is able to control or substantially influence the actions of the other.
- Student Activity Costs: Costs incurred for intramural activities, student publications, student clubs, and other student activities.
Ph (785) 864-3066
Fax (785) 864-5829
03/12/2019: The title of VP for Administration and Finance no longer exists. Future approvals will be made by the Chief Financial Officer and Vice Provost for Finance.
07/17/2017: Policy formatting and spacing. Fixed broken links.
07/20/2016: Updated to remove gendered pronouns.
07/01/2007: First issued.