Management Accounting & Analysis

UW Service and Recharge Center Guidelines

Purpose:

This document establishes the University of Washington’s guidelines for the establishment and operation of Service Centers and Recharge Centers (“centers”). These guidelines are intended to ensure compliance with applicable University, State, and Federal regulations, including Uniform Guidance requirements under 2 CFR Part 200 and, where applicable, 2 CFR § 200.468, Specialized service facilities, while promoting consistent, transparent, and equitable financial and administrative practices.

Service Center: Sells predominantly to internal users, and has more than $1,000,000 in total revenue per year OR charges more than $175,000 per year to federal grants or contracts.
Recharge Center: Sells predominantly to internal users, and has less than $1,000,000 in total revenue per year AND charges less than $175,000 per year to federal grants or contracts.

Service and Recharge Centers provide fee-based goods and/or services primarily to UW departments in support of the University’s mission of education, research, and public service. Centers may also provide goods or services to external customers when such activity is directly related to the University’s mission and complies with APS 38.14 – Sales of Goods and Services, including requirements to avoid unfair competition with the private sector.

These guidelines apply to all entities designated as Service or Recharge Centers. Requirements related to establishment, rate development, approval, and financial reporting apply specifically to these centers. Distinctions between Service Centers and Recharge Centers are noted where applicable.

Links to Reference Citations:
Code of Federal Regulations, Title 2, Part 200
Revised Code of Washington (RCW)
Service and Recharge Approval Form
Service and Recharge Forms and Templates
State of Washington Capital Asset Codes (30.50)
UW Administrative Policy Statement (APS)
UW MAA Forms and Templates
UW Record Retention Schedules
UW Research Policies (GIM)
UW Tax Office

Chapter 1 - Establishing a Center

Please use "Links to Reference Citations" found in the Purpose section to view specific references.

Internal Demand Assessment
1. A center may be established only after evaluating anticipated internal demand. The sponsoring department must demonstrate that expected usage is sufficient to support sustainable operations. The department must also confirm that no existing UW center provides a similar service or product to avoid duplication.
2. This assessment must be documented and included in the center’s rate proposal.
External Demand and Market Considerations
1. Centers that plan to serve external customers must comply with APS 38.14 Sales of Goods and Services. The rate proposal must:
  1. Describe the anticipated external customer base
  2. Document how compliance with APS 38.14 is achieved
  3. Demonstrate that services will not create unfair competition
Service and Recharge Assessment
1. Navigate to the Service and Recharge Approval Form on UW Connect and fill out the assessment for new Centers. Internal Demand Assessments and External Market Assessments can be attached to this ticket.
Initial Proposal Requirements
1. Departments must submit an initial proposal that includes:
  1. Description of goods/services provided
  2. Identification of customer base (internal and external, if applicable)
  3. Confirmation that no similar service exists
  4. Projected annual revenue and expenses
  5. Estimated units of service
  6. Proposed billing rates
  7. The salary portion of the rate proposal must include an accounting of any included salaries that exceed the National Institute of Health (NIH) salary cap. MAA-provided rate proposal templates include a worksheet to determine allowable salaries on your centers for employees who exceed the cap.
2. The MAA Recharge site provides rate template forms for addressing these requirements and developing rates

Chapter 2 - Maintaining a Center

Please use "Links to Reference Citations" found in the Purpose section to view specific references.

Rate Review and Submission - All centers must:
1. Conduct annual rate reviews to ensure rates remain accurate, compliant, and aligned with actual costs. This is a requirement set forth by UW Management Accounting and Analysis (MAA). Exceptions to this requirement can be made on a case-by-case basis - must review billing rates no less often than annually and must submit full rate proposals no less often than biennially.
2. Submit full rate proposals at least annually
  1. The rate proposals are to be submitted using the Service and Recharge Approval Form UW Connect ticket portal.
  2. These rate proposals are due 12 weeks before the current rate expires for complete MAA review. Centers operating without approved rates are no longer compliant with UW and Federal requirements.
  3. Dean approvals will be gathered as part of the Service and Recharge Approval Form UW Connect ticket portal process.
  4. Centers experiencing an unexpected change in costs may inquire about performing a mid-cycle review.
3. Submit updated proposals when significant changes occur [2 CFR 200.302(b)(7)] including:
  1. Changes in rate calculation methodology
  2. Changes in cost structure
  3. significant surplus/deficit
  4. Addition or discontinuation of services or product.
4. Centers requiring more time to complete a rate proposal beyond the rate expiration date, must request an extension through the UW Connect Service and Recharge Approval form. Centers are expected to submit rates for approval as soon as possible and may not extend their current rates beyond 1 year from the expiration date.
Approval Requirements [2 CFR 200.303]
1. All rate proposals must be approved by the department dean
2. per the GAAP internal control principle of Segregation of Duties, the preparer of a rate proposal may not also approve the rates.
3. Approval documentation must be submitted with the proposal.
  1. Service Centers:
    1. Initial proposal requires full MAA review and dean's office approval.
    2. Subsequent proposals require full MAA review and dean's office approval as well.
  2. Recharge Centers:
    1. Initial proposal requires full MAA review and dean's office approval.
    2. Subsequent proposals require dean's office approval and submission to MAA [2 CFR 200.407]
  3. Program Income Centers:
    1. MAA will be conducting annual reviews of established Program Income rate proposals as well as initial program income rate proposal. These rates should be submitted for review on the Service and Recharge UW Connect ticket portal.
4. MAA review also required for:
  1. New Rates
  2. Deficits exceeding 60-day working capital
  3. Significant operational changes
Documentation and Record Retention - All centers must:
1. Maintain complete and accurate documentation [2 CFR 200.334]
2. Comply with the UW Records Retention Schedule
3. Provide documentation upon request for audit or review

Chapter 3 - Cost Accounting and Rate Setting

Please use "Links to Reference Citations" found in the Purpose section to view specific references.

General Requirements - Centers must apply cost accounting practices consistent with:
1. GAAP (APS 38.1)
2. GASB (APS 38.1)
3. Uniform Guidance (2 CFR 200.402 - 406)
4. UW Policies (GIM 23)
Breakeven Requirement
1. Rates must be set to breakeven over a reasonable period (typically ≤ 3 years). [2 CFR 200.468(b)(2)]
2. Centers must regularly monitor financial performance to ensure that rates remain aligned with actual operating costs and do not generate material surpluses or deficits. At a minimum, Centers should compare year-to-date revenue, expenses, service volume, and account balances against the approved budget and rate assumptions. Mid-cycle rate reviews are strongly encouraged, particularly when there are significant changes in demand, staffing, operating costs, equipment needs, or other factors that may affect financial results. When monitoring identifies a projected surplus or deficit, the Center should evaluate the cause, document the analysis, and take timely corrective action, which may include adjusting rates, modifying expenses, revising service levels, or developing a plan to address the balance in a future rate cycle.
Allowable Costs - Rates may include only costs that are [2 CFR 200.403(a)-(g)]:
1. Reasonable
2. Allowable
3. Necessary for operations. Examples include:
  1. Salaries (2 CFR 200.430)
  2. Benefits (2 CFR 200.431)
  3. Operating Expenses
  4. Equipment depreciation
4. Examples of unallowable expenses:
  1. Advertising
  2. Alcoholic beverages
  3. Entertainment costs
Cost Allocation
1. Costs must be allocated using a logical and equitable methodology based on benefit received (2 CFR 200.405).
2. Centers must:
  1. Maintain documentation supporting allocation methods.
  2. Ensure allocations are consistent and defensible.
  3. Costs may not be shifted to circumvent regulations or restrictions.
Center Overhead - Costs that cannot be directly attributed to a specific good or service but are still essential to the operations of the center, these costs are typically financed by a center’s operating account and can be included in the billing rates for each service/product. These costs should be allocated in a logical manner, beneficial to the relationship of each service/product, e.g. a center’s administrative costs [2 CFR 200.413 (a), (c)].
1. Centers must be able to assign directly charged costs, including clerical and administrative salaries, "relatively easily with a high degree of accuracy".
2. A brief description of the manner in which these expenses were allocated to each of the services/products must be included in the proposal documentation.
3. Administrative and clerical salaries may be charged to a center’s operating account and included in rates if they meet the following criteria (Appendix III to Part 200, Title 2):
  1. They are necessary for the direct support of the center,
  2. They are not included in the UW's F&A rate (contact MAA F&A team, fahelp@uw.edu, for more information).
  3. A brief description of the activities is included in a center's rate proposal.
    Note: Ordinarily department-wide activities, e.g., payroll coordinator, are not included unless the activities are material.
Federal Compliance
1. The Federal Uniform Guidance defines allowable and unallowable costs for federally funded activities. Centers may not incur or recover unallowable costs through internal rates or federal funding sources. If a center incurs costs that are unallowable under 2 CFR 200.403, those costs must be covered by an alternative allowable funding source, such as surcharges charged only to external customers, an associated reserve account, or other appropriate departmental funding.
  1. Unallowable costs must be necessary and reasonable business expenses that are directly related to the center’s operations, such as advertising needed to generate external sales.
  2. Costs determined to be unallowable may not be recovered from internal users or charged to the center’s operating account. These costs must be charged to an associated reserve account or another allowable departmental funding source, as appropriate.
2. Only costs expensed to a center's operating resource may be included in the calculation of internal billing rates.
  1. Accordingly, costs not paid by the center, such as billing depreciation, rent, and operations and maintenance expenses, may not be included in internal rates.
  2. Exception: Facilities-related costs may be included in rates charged by animal care facilities when animals are generally removed from the animal research facility.
3. Costs must represent necessary and reasonable business expenses directly related to the operation of the center.
External Rates - Rates for external customers must include:
1. Full cost recovery
2. Institutional overhead (IOH)
3. Applicable taxes (2 CFR 200.470)
  1. Unrelated Business Income Tax (UBIT)
    1. UBIT is a tax that is charged on external sales that do NOT meet all of the following criteria:
      1. the activity is a trade or business,
      2. The activity is regularly carried on, and
      3. The activity is related to the University's educational mission.
    2. Please see the University Tax Office for more information.
  2. Sales Tax - May need to be collected for sales of "tangible personal property" and certain services to external users. For example, copy services are subject to sales tax.
4. Reasonable surcharge to avoid unfair competition with local businesses.
5. A mechanism for reviewing current and proposed commercial activities to ensure that activities are consistent with UW policies [RCW 28B.63.030]
Billing Principles
1. Charges must be based on:
  1. Rates approved by MAA [2 CFR 200.468(b)]
  2. Actual usage
  3. Consistent application across center users
2. Advance Billing:
  1. Is generally not permitted for internal UW customers. It is allowed for external customers.
  2. Must not result in preferential treatment or priority for external customers over internal UW customers.
  3. Service delivery order and access must remain far and unchanged, regardless of advance or arrears billing.
  4. All final charges must be reconciled using the approved rates in effect at the time of the service or product is actually provided.
3. Direct Charges:
  1. Internal charges must be based on approved billing rates that do not unfairly differentiate between:
    1. Sponsored projects
    2. Non-sponsored projects
    3. Internal University use
  2. Charges must reflect actual usage or consumption of the service or product (e.g., quantity used x billing rate).
  3. Rates must be based on actual costs, adjusted for any applicable credits (2 CFR 200.406), including:
    1. Purchase discounts, rebates, or allowances (e.g., educational discounts that are not explicitly gifts).
    2. Insurance recoveries or reimbursements for losses.
    3. Corrections for overpayments or billing errors.
    4. Adjustments based on known factors such as prior year financial results or budgeting practices.
  4. Billing must be accurate, consistent, and supported by documented costs and usage.
4. Separate Billing Rates - In most circumstances, centers must establish separate billing rates for services or products. Separate billing rates must be created when:
  1. A service or product requires significantly different resources and costs compared to others (e.g., one service costs much more per unit than another).
  2. A discount or surcharge is applied to any class of users.
  3. Sales may be made to external UW customers, meaning customers who do not pay using a UW ISD. Rates charged to external UW customers must be fully developed to recover all costs associated with providing the goods or services. These costs may include, but are not limited to, allowable and unallowable costs, building and equipment depreciation, institutional overhead, applicable sales tax, and costs supported by State or General Operating Funds. To reduce the risk of unfair competition with private enterprises, external UW customer rates may also include a reasonable surcharge that results in net revenue. Any resulting net revenue may be subject to unrelated business income tax and should be evaluated through a completed market assessment.
5. Centers must bill all customers in a consistent, accurate, and timely manner:
  1. Be timely [2 CFR 200.328(d)]
    1. Given the volume of charges to sponsored projects and the federal requirement that sponsored awards be closed within 90 days of termination, billings should generally be processed within 45 days of when services are provided.
    2. Billing should be performed monthly but no less than quarterly.
    3. Charges billed to terminated or closed sponsored projects may be disallowed and must be absorbed by the center or department using reserve funds or other non-center funding sources.
  2. Use appropriate systems:
    1. Internal Service Deliveries (ISDs) for internal.
    2. Customer Invoice (CI) for external.
  3. Follow UW receivables procedures for external customers.
Surplus, Deficit, and Working Capital
1. Centers may retain up to 60 days of operating expenses as working capital (2 CFR Appendix V, G.2)
  1. 60-Days Working Capital: The maximum reasonable operating reserve a center may maintain to support normal business operations from one billing cycle to the next. The reserve is generally calculated as no more than 60 calendar days of cash operating expenses and is intended to provide sufficient cash flow for routine expenses, not to generate excess surplus or profit.
  2. Funds or transfers (non-mandatory and voluntary) from non-Federal sources or from an existing fund balance can be used to acquire the working capital amount. Costs to accumulate working capital cannot be included in internal user rates. See (6.f) for more detail on Transfers and Reimbursements.
  3. MAA will monitor this via center quarterly financial reports.
  4. A 60-day working capital calculator is provided in all rate proposal templates
2. Excess surpluses and deficits must be incorporated into future rates.
3. Deficits must be addressed in future rate calculations or approved recovery plans.
Unrecovered Costs - Centers do not have to include costs in the rates. In the unlikely event that this occurs, the center is responsible however to find an alternate source of allowable funding for costs not included in the rates. Centers may transfer unrecovered costs:
1. Charged to the operating resource but were not intended to be recovered in current or future rates. These may be charged to allowable sources, e.g., discretionary funds.
2. From the operating account to the equipment or other reserve accounts.
  Note: Unrecovered costs must be tracked, documented and submitted to MAA on an annual basis, or when requested, so they can be excluded from F&A proposals. Prior MAA, department chair, and dean’s/VP office approval is needed for all Cost Centers that will incur center expenditures and/or fund a center's costs.

Chapter 4 - Capital Equipment, Depreciation, and Equipment Reserves

Please use "Links to Reference Citations" found in the Purpose section to view specific references.

Definition
1. Capital equipment (2 CFR 200.1 "Capital assets") is defined as tangible property with:
  1. A unit acquisition cost of $5,000 or more (subject to change per federal thresholds).
  2. A useful life greater than one year.
General Requirements
1. Capital equipment may not be expensed to a center's operating account [2 CFR 200.439(b)].
2. Capital costs may not be directly included in billing rates.
3. Only the approved annual depreciation may be included in rates, provided such depreciation is not included in the University’s Facilities and Administrative (F&A) rate proposal.
4. Contact Equipment Inventory Office (eio@uw.edu) for questions relating to asset purchase and registration.
5. Depreciation
  1. Centers may include depreciation in billing rates only when all of the following conditions are met (2 CFR 200.436(c)-(d)):
    1. The equipment is owned by the University and actively used by the center.
    2. The equipment was not purchased with federal funds (2 CFR 200.313(c)).
    3. The depreciation is not included in the University’s F&A rate.
  2. Equipment costing less than $5,000 should be expensed or charged to the operating account.
  3. Depreciation Requirements
    1. Must use the straight-line method.
    2. Must be based on the original acquisition cost.
    3. Must not exceed the asset’s useful life as defined by the Washington State Office of Financial Management (OFM) Schedule A Guidelines, Section 30.50.
    4. Must be proportional to the center's usage of the asset.
  4. Restrictions
    1. Centers may not include unrecovered depreciation from prior periods.
Equipment Reserve Accounts
1. Centers must utilize the equipment reserve resource (RS100076) for recovering depreciation.
2. Depreciation recovery, as it will posted as an expense to the operating fund (RS100073), must be transferred to the equipment reserve account at least semiannually but recommended quarterly.
  1. Centers must work with their shared environment to perform the transfer.
3. Equipment reserve funds may be used only for center-related capital expenditures.
Capital Asset Management (APS 38.5) - Centers must:
1. Maintain accurate asset records, including UW tag numbers.
2. Conduct periodic physical inventories.
3. Ensure assets are operational and necessary.
4. Leases
  1. Capital leases: Treated as capital assets and depreciated.
  2. Operating leases: May be expensed and included in rates if allowable.
  3. Annual lease reconciliations must be maintained and submitted with rate proposals.
5. Sale or Disposal of Equipment [2 CFR 200.313(e)]
  1. Proceeds must be recorded in the equipment reserve account (RS100076).
  2. Gains or losses must be reflected in the operating account (RS100073).
  3. Financial impacts must be incorporated into future rate calculations.

Chapter 5 - Administrative Requirements

Please use "Links to Reference Citations" found in the Purpose section to view specific references.

Official Financial Systems [(2 CFR 200.302(b)]
1. Workday is the official financial system of record.
2. All financial data used in rate development must reconcile to Workday
3. The asset module must be used for capital equipment tracking.
4. Payroll data must align with Workday HR/Payroll (HRP) Records.
Cost Center Structure - Centers must:
1. Maintain one dedicated Cost Center.
2. Be assigned to the Service and Recharge Alternate Cost Center Hierarchy.
3. Restrict activity to center-related operations only.
4. Approved resource worktags include:
  1. RS100073 Operations Used to record the center’s primary operating activity. This includes routine revenues and expenses related to providing goods or services, such as salaries and benefits for center personnel, supplies, purchased services, maintenance contracts, and income from sales of goods or services.
  2. RS100075 External Sales / Surcharges Used to separately record surcharge revenue charged to external customers above the cost of providing the good or service. The surcharge portion should be identified separately from the center’s operating revenue, such as through a separate line on a Workday customer invoice.
  3. RS100076 Equipment Reserve Used to hold funds reserved for equipment-related activity. This includes reserves generated from depreciation, equipment use allowance, or approved transfers from operations. Depreciation expense is posted to RS100073 and the Asset Cost Recovery should be transferred at least quarterly to RS100076 so the reserve can be used to support future equipment depreciation or equipment purchases.
5. Non-center activities (e.g., instruction, research) must be recorded in separate cost centers.
Record Keeping and Internal Controls [2 CFR 200.302(a)- (e)]
1. Centers must maintain systems and procedures to:
  1. Support rate development and financial reporting.
  2. Ensure accurate billing and cost tracking.
  3. Provide documentation for audit and compliance review.
Billing Requirements - Centers must:
1. Bill customers consistently, accurately, and timely (generally within 45 days but no less than quarterly)
2. Use internal sales documents (ISDs) for internal billing.
3. Follow UW procedures for external billing. Engage your Customer Billing Specialist to create a Customer Invoice (CI). Total Invoice Amount should include Internal and External rate, if applicable, placed on RS100073 Center Operations and RS100075 External Center Surcharge, respectively. This revenue will be subject to Internal Overhead surcharge.
  1. Submit a Cash Remittance Request with the CI# generated.
  2. Revenue can remain in RS100075 until Center deems it necessary to transfer funds to other resources.
4. Base charges on approved rates and actual usage.
Financial Reporting - All centers must:
1. Prepare quarterly financial reports [2 CFR 200.328(b)- (c)].
2. Submit reports to:
  1. department leadership
  2. Dean/VP office
  3. MAA (for both service and recharge centers)
3. Reports must summarize:
  1. Revenues
  2. Expenses
  3. Surplus/deficit position
  4. Depreciation
  5. Accrued revenues and expenses, if applicable
4. Additional reporting may be required for deficit conditions.
Transfers and Reimbursements
1. Since revenue or expenditure transfers between centers and other accounts may impact billing rate computations (including break-even), such transfers generally are not allowable (2 CFR 200.405(c)). However, if occurring to correct erroneous charges or it's a center requirement, MAA highly encourages Dean's office or VP approval justifying the transfer amount and attaching this documentation to the transaction. Except for:
  1. Institutional overhead transfers.
  2. Asset cost recovery (depreciation) transfers.
  3. Approved reimbursements for allowable center-related costs.
2. Subsidy transfers between a school/department and a Center must be approved by the Dean and MAA. See MAA for specific guidance on Subsidy Cost Transfers.
3. Reimbursements:
  1. Reimbursement for funds provided and/or center costs covered from a non-center account(s), e.g. center equipment purchased with general or departmental funds, regardless of whether there is a quid-pro-quo arrangement, e.g., free services equal to the amount of contribution, requires prior MAA approval.
  2. Non-center Cost Centers that provided money to/invested in centers can be reimbursed by receiving services from the center without charge or by charging the cost of the service/product to the center's equipment reserve account.
  3. Where the non-center Cost Center does not use the center they may charge, with prior MAA and dean’s/VP’s office approval, other costs to the centers reserve account.
  4. Complete documentation must be maintained including: a. Dollar amounts invested in the center by other account(s).
    The detailed information on how the invested funds were used e.g., purchase of equipment, salary support, application to individual rates, etc.
  5. Centers must be provide attestation that the total dollar value of the services received by the non-center account(s) did not exceed the dollar value of funds/resources invested in the center from the non-center account(s) to MAA.
    1. Centers must also impute revenue as if the reimbursement (non-center) Cost Center was actually paying for the services or products to ensure other users are not ultimately charged. Receive prior approval (MAA + Dean/VP).

Chapter 6 - Closing a Center

Please use "Links to Reference Citations" found in the Purpose section to view specific references.

Reasons for Closing a Center - Centers may be considered for closure under the following conditions:
1. Declining or insufficient user base.
2. Rising operational costs.
3. Consolidation of services across units.
4. Changes in the research funding environment.
Prerequisites for Closure
1. All Cost Center balances must be zeroed.
2. All assets must be disposed of or transferred.
3. All customer deliverables and contractual obligations must be finalized.
Key Closure Steps
1. Complete asset disposal.
  1. Dispose of center-owned assets via reassignment or sale.
  2. Coordinate with EIO for federally funded assets.
  3. Record sale proceeds in the center's equipment reserve account.
  4. Recognize gains/losses in the operating account via journal entry
2. Fulfill all customer obligations.
  1. Ensure all customer deliverables and contractual obligations are fully satisfied.
3. Reconcile financial activity.
  1. Post all allowable outstanding expenditures to the operating account.
  2. Complete all authorized journal entries, including fund transfers.
  3. Reconcile and post all customer receipts.
  4. Resolve IOH balances with the University Controller's Office if applicable.
4. Resolve all fund balances (zero out accounts).
  1. Remaining surplus after all expenses are applied (2 CFR 200.346).
    1. Must be refunded to customers.
    2. Provide dean/VP's office and MAA with allocation details for internal federal customers.
  2. Deficits
    1. Must be fully resolved using non-federal funding sources only.
5. Submit confirmation and final report to MAA and appropriate dean/VP's office.
  1. Confirmation statement verifying all obligations, deliverables, and liabilities have been resolved and recorded.
  2. Final financial report demonstrating a zero-fund balance [2 CFR 200.344(b)].
6. Obtain approval for closure from dean/VP's office and MAA.
  1. Dean/VP's office
    1. Reviews final financial report.
    2. Confirms all accounts have a zero-fund balance.
    3. Provides approval to proceed with closure.
  2. MAA
    1. Reviews financial accuracy and compliance.
    2. Confirms all balances are zero.
    3. Provides final approval.
7. Initiate closure request and deactivate cost center.
  1. Department initiates FDM request to close the center (via Foundation Data Model (FDM) Data Element Management Request Connect Form).
  2. Notify SRF Directory Admin (researchcommunity@uw.edu) to remove the center from the Shared Research Facilities Directory
  3. Cost center is inactivated after approvals are verified.
    1. A center cannot be closed if any deficit remains unresolved.

Chapter 7 - Exceptions

Please use "Links to Reference Citations" found in the Purpose section to view specific references.

Exceptions to these guidelines:
1. Must be submitted in writing
2. Require approval from MAA and the corresponding dean/VP's office.
3. Are generally temporary in nature and will not relieve the center of long-term responsibilities.

Chapter 8 - Glossary

Allowable Cost - The costs incurred to produce the products or services the service\recharge center distributes. Costs defined as unallowable by OMB Uniform Guidance, or defined as “Unallowable Costs” below, cannot be included.
Allocation - The process of charging a cost, or a group of costs, to one or more individual Cost Centers in reasonable and realistic proportion to the benefit provided or other equitable relationship. All allocation methodologies must be thoroughly documented.
Assignment - The process of distributing costs within a Service\Recharge center’s Cost Center to the various products or services provided by that budget in reasonable and realistic proportion to the benefit provided or other equitable relationship. All assignment methodologies must be thoroughly documented.
Cost Studies - The process through which user rates are determined by estimating both the quantity of products or level of services distributed or provided and the cost of producing and/or providing the products or services. Cost studies may involve the process of allocation and assignment.
Depreciation - Equipment is considered depreciable if:
1. the useful life is greater than 1 year, and
2. it is used in center activities, and
3. the cost is equal to or greater than $5,000 per individual equipment tag number (cost includes calibration, installation, freight, trade-in, and sales & excise tax), and
4. The item was not purchased with federal funds.
Equipment (capital) - Tangible property other than land, buildings, improvements other than buildings, or infrastructure with a unit cost (including ancillary costs) of $5,000 or more which is used in operations and with a useful life of more than one year.
Equipment (non-capital) - Centers can purchase non-capital equipment costing less than $5,000 on their operating budget. Centers can depreciate only capital equipment costing $5,000 or more.
External User - Any entity (person or organization) external to the University that obtains products/services from a center, whose use of these products does not directly or indirectly benefit a specific University sponsored project, function, or activity and which are not charged to a UW Cost Center.
Facilities and Administrative (F&A) Costs - F&A costs represent costs that are included in the University’s F&A rate which is negotiated with the Federal government and charged to sponsored agreements. Since these costs are recovered through the application of the F&A rate to sponsored agreements they cannot be included in a center’s recharge rates.
Generally Accepted Accounting Principles (GAAP) – Generally accepted accounting principles (GAAP) are uniform minimum standards of and guidelines to financial accounting and reporting. GAAP establishes appropriate measurement and classification criteria for financial reporting. Adherence to GAAP provides a reasonable degree of comparability among the financial reports of state and local governmental units. In accordance with RCW 43.88.037), the Office of Financial Management adopts GAAP as applicable to state governments.
Governmental Accounting Standards Board (GASB) - GASB is the source of generally accepted accounting principles (GAAP) used by state and local governments in the United States. As with most of the entities involved in creating GAAP in the United States, it is a private, non-governmental organization.
Institutional Overhead - A rate calculated by the Finance Planning and Budgeting Office to reimburse the University for costs paid centrally such as rent, light, heat, etc. It is similar to, but distinct from, facilities & administrative (F&A) costs charged to grants. Unlike F&A costs, institutional overhead is charged on revenue received from external users. Internal users are not charged institutional overhead. This represents a pass through charge for the center and the center must add institutional overhead to the rates charged to external users. The institutional overhead should be added after all surcharges have been applied. Click here to see current rates.
Internal User - Any entity (person or organization) internal to the University that obtains services/products from a center, whose use of these services/products directly or indirectly benefits a specific University sponsored project, function, or activity and which is charged to a Cost Center.
Pass-Through Activity - An activity that does not occur on a regular basis where the expenditure for a product which, for departmental convenience, is collected in one budget and then redistributed in total to one or more other budget(s). Only the invoice costs of these products are charged to other budget numbers. No additional value is added to the product.
Service/Recharge Center (Center) - A UW unit that produces, distributes, and charges another UW department/unit/activity/project for services and/or products. Services and/or products are offered on a recurring basis and are charged/sold at an established rate or price. Typically, there is value added by personnel in providing the product.
Specialized Service Facilities – Centers involving the use of highly complex or specialized equipment or processes. The costs of these facilities include their allowable direct costs and their full allocable share of F&A costs. Note, the full allocable share of F&A costs for these facilities are excluded from the UW’s negotiated F&A rate.
Surcharge - An additional amount that can be charged to non-UW external (not charging a UW Cost Center) users above the cost to provide the service. The surcharge amount is determined by the center.
Unallowable Cost - Costs that:
1. Are defined as unallowable by OMB Uniform Guidance, such as entertainment, bad debt, alcohol, and public relations;
2. Do not benefit any of the products of the center or the purpose of the budgets to be charged; and/or
3. Are included in the UW F&A rate therefore are not allowed for purposes of developing center rates.
4. Unallowable costs necessary for the operation of a center must be paid from non-operating funds of a center, e.g., depreciation recovery, surcharges to external users or other departmental funds. These costs cannot be paid from sponsored agreements.
Unrelated Business Income Tax (UBIT) – A federal tax imposed on income generated by sales by tax-exempt organizations (including the University of Washington) which constitute regularly carried on trades or businesses which are not causally related to achieving the University’s exempt purposes.
Working Capital - The maximum reasonable operating reserve a center may maintain to support normal business operations from one billing cycle to the next. The reserve is generally calculated as no more than 60 calendar days of cash operating expenses and is intended to provide sufficient cash flow for routine expenses, not to generate excess surplus or profit.