Chargeback Workshop Chargeback When one University unit provides

Chargeback Workshop

Chargeback When one University unit provides goods or services to another University unit and seeks to recover the costs of those goods or services.

SUNY Policy Title: Fees, Rentals, and Other Charges Document Number: 7804 1. Authority: B. Campus President or Designee a. The Campus President or Designee has general authority to set the following types of fees: xxii. Internal Campus Charges

SUNY Policy (Continued) Campus Authorized Fee Definitions: The Board of Trustees have authorized campus Presidents, or their designees, to establish certain fees without approval by the Chancellor or Designee. Each of these fees must follow applicable guidelines and the requirements of State Finance Law, Education Law, and should only be established when appropriate campus specific guidelines and policies are put in place. These guidelines and policies should be clearly posted and shared with System Administration’s Office of Finance and Business along with notification that such fees and charges are being imposed. Fees and charges of this nature include: Service Charges e. Internal Campus Charges i. Campuses may establish reasonable charges for services provided by one campus unit or department to another campus unit or department

Binghamton University Policy Applies to all chargebacks conducted at the University including IFR, Research Foundation, and Binghamton University Foundation Costing Principles Code of Federal Regulations Title 2 Part 200 Practices for estimating, accumulating and reporting costs must be consistent Each cost may only be allocated once Unallowable costs may not be included in rates A consistent time period must be used for cost estimation, accumulation, and reporting Federal grants must be charged the lowest rates Must be charged directly to all users with no discrimination between federally and non-federally supported activities

Binghamton University Policy (Continued) General Policies Rates are designed to recover direct costs of providing a good or service Rates are based on a reasonable estimate of the cost to provide the good or service for one year and the projected number of billing units for one year A Chargeback Rate Development Worksheet must be prepared for each requested rate and submitted with supporting documentation The Chargeback Committee will review and approve all chargebacks Separate accounts or sub-accounts should be utilized to isolate chargeback activity Charges must be billed within 30 days following the month the service is completed External rates must be at least the rate charged to internal users plus overhead charges

Binghamton University Policy (Continued) General Policies (Continued) Payments may be made with expenditure transfers or cash/check/credit card Excess chargeback revenue may not be transferred to another account Chargebacks may be subsidized in an effort to reduce rates, however deficits created by subsidies may not be considered to raise future rates The Chairperson of the Chargeback Committee is responsible for maintaining all documentation for audit purposes in accordance with record retention policies

Binghamton University Policy (Continued) Rate Development Cost Identification – include all costs, using actuals where possible and estimating where necessary Variable Billing Rates All internal users must be charged the same rate. Internal users include: Binghamton University, Research Foundation, Binghamton Foundation External users may be charged higher rates, but must be charged at least the internal rate plus 13% overhead Alternate pricing structures based on time of day or volume are acceptable as long as the allocation basis is strong, does not discriminate among users, and does seek to recover more than the cost of providing the good or service

Binghamton University Policy (Continued) Rate Development (Continued) Cost Allocation Three main categories: Personnel Supplies and Materials Depreciation Account surplus or deficit Each good or service must have separate, identifiable rate relative to the costs associated with providing the good or service

Binghamton University Policy (Continued) Rate Development (Continued) Equipment Costs The cost of equipment should be recovered by assigning a depreciation rate over the estimated useful life Equipment purchased through federally funded sponsored programs may not be included Inventory If a product inventory is kept, appropriate records must be maintained

Binghamton University Policy (Continued) Rate Review, Notification, and Monitoring Chargeback Rate Development Worksheets should be submitted to the Chargeback Committee Chairperson 30 days to approve Current rates are available on the Business Affairs website Only approved rates may be charged Biennial reviews will be completed to determine if revenue and expense activity are appropriate, monitor surplus and deficit accumulation, and determine the adequacy of the operation’s record keeping practices

Rate Development Worksheet Form 1 Personnel List all staff by position title Include full annual salary Select account type Note: If the account type is different than the account of the chargeback, it may not be appropriate to include in rate development Adjust the percent of effort based on the amount of time the position dedicates to the activity in the chargeback Adjust the expense subtotal by any subsidies to reduce the cost

Rate Development Worksheet (Continued) Form 1 (Continued) Other Than Personal Services List any other supplies and expenses Include any equipment that does not qualify for depreciation Note: Equipment included may only be considered one time unless there is ongoing cost associated Adjust the expense amount by any subsidies Depreciation List all equipment that meets the minimum dollar threshold to be depreciated Must include the asset number, month and year purchased, initial cost, and estimated useful life Adjust the allowable depreciation by any subsidies

Rate Development Worksheet (Continued) Form 2 Many of the cells in Form 2 are prepopulated with formulas that will carry information over from Form 1 Part 1, Line 6: Adjust for any surplus or deficit currently in the account Part 2: specify the units, such as hours, miles, tests Part 2, Lines 8 -12: Estimate the usage by entity based on specified units Part 2, Line 16: Propose an external rate External rate can be market rate Must be equal to or greater than the internal rate plus overhead (Calculated in Part 2, Line 15)

Rate Development Worksheet (Continued) Background Complete all information in boxes shaded blue Annual revenue is an estimate If this amount is nominal, consider providing the good or service at no cost Select the fund for operations such that the chargeback will be administered by the entity that owns the equipment Sign or add digital signatures Submit to Chargeback Committee Chairperson

Billing Approve Rates (IFR) Internal process Monitor all usage and obtain an internal account from user Send chargeback template to business@binghamton. edu This process can only be used to pay from a Binghamton University IFR/DIFR/SUTRA/State Purpose account External process Department generates invoice Send cash/checks to Student Accounts for deposit and receipt processing Credit card payments may or may not automatically generate a receipt, please work with the Business Affairs Office to determine the correct process Monitor account in BI and Revenue Web Application for proper revenue posting

Monitoring Account Balances in BI Should trend toward $0 ending cash balance Revenue is from external billing Use Summary by Detailed Object to view Recharges Negative expenditure balance is from internal billing