Recharge Centers Policies and Procedures

Revised 4/7/99

Table of Contents

1.0 Overview

These policies and procedures provide a framework for the fiscal operations of recharge centers functioning under the auspices of the Medical University of South Carolina to ensure compliance with federal cost principles, consistency in accounting and costing practices, and flexibility to meet the needs of different operations. These guidelines address those practices and provide examples of billing rate structures and the steps involved in building such rates.

The University must comply with the Federal Government's Office of Management and Budget (OMB) Circular A-21, Cost Principles for Educational Institutions, and Cost Accounting Standards, as it pertains to service centers in section J. 44. Compliance with A-21 is implicit in this guideline.

The University's exposure from noncompliance with federal regulations may involve reimbursement to the government as well as adverse publicity which could harm future award applications. The purpose of this guideline is to provide guidance to recharge centers regarding rate development and center management to ensure nondiscriminatory charging of materials or services.

2.0 Recharge Center Definition

2.1 Characteristics

1) Resides within an academic department
2) Low-Volume
            a) Below cut-off for service center ($25,000 in revenue),
            b) Small number of customers,
            c) Normally materials or services, but not both.
3) Operating costs are supported by recharges to the departments or specific activity receiving the service.
4) Recharge center rates are developed based on incurred costs and will therefore produce a break-even cash flow over time.

2.2 Oversight

1) Should be registered centrally,
2) Charge out method should be approved centrally, but annual approval of  rates is not required.

3.0 Rate Components

3.1 Direct Personnel

1) The salary, wages, and fringe benefits of all personnel directly related to recharge center activity should be included in the rate calculation and charged to the recharge center's operating account. If an individual works on more than one activity, the costs associated with that individual should allocated to the activities based on the proportional benefit.  This proportional benefit may be determined by effort reporting, a periodic time sheet, or by a time study. 
2) Recharge Center Director: The salary and fringe benefits of the director should be charged to the recharge center's operating account commensurate to the effort provided for the administration and management of the center to ensure quality control and scientific integrity.

3.2 Administrative Staff

The salary, wages, and fringe benefits of administrative staff in direct support or management of a recharge center should be included in the rate calculation and charged to the recharge center's operating account. Administration costs benefiting more than one activity should be allocated to the benefiting services on a reasonable basis.

3.3 Materials and Supplies

The costs of materials and supplies needed to operate a recharge center should be included in the rate calculation. If inventory is accumulated in a particular year, the recharge center should not include the costs of accumulated inventory in its rates. The recharge center may maintain significant inventory in a separate inventory UDAK.

3.4 Other Expenses

Other operating expenses to be included in recharge center rates are rental and service contracts, equipment operating leases, and professional services.

3.5 Capital Equipment and Assets

1) Basic Guidelines:
Capital equipment (See MUSC Policy on Capitalization and Depreciation of Property, Plant, and Equipment) and  capital leases include items with a purchase price over $5,000 (effective March 25, 1999). Capital equipment for recharge centers may be provided from various sources such as departmental funds and federal or other grants. Federal guidelines do not allow for recovery of the purchase cost of capital equipment or the depreciation expense made by federal funds through recharge center rates; however, the federal guidelines do allow for recovery of depreciation associated with capital equipment purchased by non-federal funds.

Additionally, it is critical to identify capital equipment utilized by a recharge center in order to avoid recovery of depreciation or purchase cost through both direct charges to federal grants and through the indirect cost recovery charged to federal grants. This identification should be recorded in the University's Fixed Asset System.

2) Policy:
Annual depreciation on the non-federally purchased equipment (inclusive of mandatory cost sharing) will be calculated on a straight-line basis using the useful life as determined by the Fixed Assets Accounting Department of MUSC Finance and will be utilized in the recharge rate development for the year. The depreciation cost for the year will be charged to the recharge center operating account at a minimum on a quarterly basis and preferably on a monthly basis.

3) Federally Funded Equipment Purchases:
It should be noted that if the equipment was purchased through an active federal grant or award, any recovery or revenue may need to be applied as program revenue to the grant account. Please contact the MUSC Office of Research and Sponsored Programs.

4) Donated Equipment:
If a department has donated equipment to support a recharge center in exchange for an offset for a discounted rate for departmental use of the facility, the depreciation of the donated equipment should the included in the annual depreciation cost. The rate calculation should be made including and excluding the annual depreciation expense of the donated equipment. The donating department is then charged the rate excluding the depreciation expense and the deprecation expense charged to the recharge center's operating account is reduced based on the department's activity. For example:

Rate with donated equipment = $5.00 per sample
Rate without donated equipment = $4.75 per sample

When the donating department is charged for services, the charge would be calculated and posted as follows:

		Account
IntraInstitutional Revenues	5.00	406XX
Depreciation Expense - Donated Equipment	(0.25)	506XXTotal
Total Invoice	4.75	(1)

(1) Amount expensed by receiving department; for example, 22020A000 5020X.

At year end, the Depreciation Expense - Donated Equipment will be used to adjust the Depreciation Expense charged to the recharge center's operating account and collected by the recharge center's plant asset account.

It should be noted that the donated equipment should be identified with the recharge center on the University's Fixed Assets records in order to avoid inclusion in the depreciation of general purpose equipment in the University's Facilities and Administrative (indirect) cost rate.

3.6 Operation & Maintenance and Utility Costs

Recharge centers may or may not be required to recover these costs based on University policy. Determination will be made during annual review of recharge center activity by Grants and Contracts Accounting.  See Item 2.2. Above.  If the costs are not included in the recharge center rates, the University will recover the costs through the Facilities and Administration (indirect) cost rate.

3.7 Unallowable Costs

Unallowable costs must be excluded from the internal user rate calculation. These costs include: bad debt expense, interest, alcohol, and many advertising activities. A complete listing of unallowable costs from OMB Circular A-21 (Section J) may be obtained directly from the OMB Website http://www.whitehouse.gov/WH/EOP/omb.