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KFS Account# XT999999 My department has entered into an arrangement with a local municipality to perform a study focused on revitalization of the Main Street Corridor. This is the first time we've been asked to do something like this and it is very likely, based on the time requirements and available faculty time, that we will not do this again. We anticipate the following: Faculty Person 1 Annual Salary Annual Fringes Hours on project Project travel costs Project supplies & 3rd party printing services Total indirect department administrative burden (Note: this is a department of 10 full time faculty) 1) 2) 3) 4)

Should I establish a billing rate for this service? If # 1 is yes, what type of billing rate should I use? If # 1 is yes, what should my billing rate be? What account do I charge these project costs to?

100,000 31,587 300 200 150 85,000

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Pretty simple, right?

Well, maybe not yet….

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Why does it matter? Campus and Grant rates are held to more restrictive rules. You can’t make a profit on these rates but you can profit from Off Campus/External customers!

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Tip: Sub accounting or setting up new accounts for various

Key Federal Compliance Requirements • • • • • •

Rates should recover no more than the cost of the good or service. Rates must break-even over time, not necessarily each year. Rates cannot discriminate between users, especially federal users. Surplus from one service center cannot be used to fund unrelated activities, including another service center. Must maintain a published price list. Equipment use (depreciation) may be included in the rate, so long as the equipment is purchased from the revolving account (not General or Federal). • Equipment costs must be spread over the useful life (instead of one year) if cost is greater than $5,000. Common Examples of Unallowable Costs • • • • • •

Alcoholic Beverage (2 CFR 200.423) Bad Debt (2 CFR 200.426) Contingency Provisions (Reserves) (2 CFR 200.433) greater than 10% working capital (MSU Billing Rate Policy) Entertainment (2 CFR 200.438) Fines and Penalties (2 CFR 200.441) Interest (2 CFR 200.449)

Note: Transfers should not be used in calculating rate unless actual costs can be easily verified.

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Annual Estimated Costs + or (Direct and Indirect)

Prior Period Cumulative Carry Forward (Deficit)

Expected Units of Activity (“per”)

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Community Development 102 (30 people)

Community  Development 101 (50 people) • • • •

Community Development 103 (20 people)

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Direct Costs

Direct Costs 50%

Direct Costs 30%

Indirect Costs • • • •

20%

Hint: People-hours are a good, flexible NCI unit of measure!

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Note: 100% effort is approx. 1600 billable hours due to admin time, vacations, etc.

KFS Account# XT999999 My department has entered into an arrangement with a local municipality to perform a study focused on revitalization of the Main Street Corridor. This is the first time we've been asked to do something like this and it is very likely, because of the visibility that this will provide MSU and the anticipated demand, that we will do this again. We anticipate the following: Faculty Person 1 Annual Salary Annual Fringes Hours on project Project travel costs Project supplies & 3rd party printing services Total indirect department administrative burden (Note: this is a department of 10 full time faculty) 1) 2) 3) 4)

Should I establish a billing rate for this service? If # 1 is yes, what type of billing rate should I use? If # 1 is yes, what should my billing rate be? What account do I charge these project costs to?

100,000 31,587 300 200 150 85,000

KFS Account# XT999999 My department has entered into an arrangement with a local municipality to perform a study focused on revitalization of the Main Street Corridor. This is the first time we've been asked to do something like this and it is very likely, based on the time requirements and available faculty time, that we will not do this again. We anticipate the following: Faculty Person 1 Annual Salary Annual Fringes Hours on project Project travel costs Project supplies & 3rd party printing services Total indirect department administrative burden (Note: this is a department of 10 full time faculty) 1) 2) 3) 4)

Should I establish a billing rate for this service? If # 1 is yes, what type of billing rate should I use? If # 1 is yes, what should my billing rate be? What account do I charge these project costs to?

Faculty Person 1 Billable Hours Total hours Paid Holidays Annual Vacation Leave Annual Sick Leave Annual Professional Development Leave Administrative Duties related to service center Total billable hours

100,000 31,587

(C5+C6)/C33 =

77.04156909

C10/C8 = C11/C8 =

0.666666667 0.5

85000/(C33*10) =

4.976580796

cost per hour admin fee for external users fee per hour expected recovery

83.18481655 2% 84.84851288 25454.55386

300 200 150 85,000 Yes hourly 84.85 per hr XT999999

2080 72 144 48 96 12 1708

(40 hr work week 52 weeks per year) (9 days *8 hours) (1.5 days per month * 12 months) (.5 days per month * 12 months) (1 day per month * 12 months) (1 hr per month)

Note: had we used 2080 hours in calculating the above rates, the end fee per hour would have been $69.89. If there were actually 300 hours put into the project as estimated, using the 2080 hours would have shorted the service center $ 4,488.60.

KFS Account# XT999999 My department has completed the Main Street Revitalization Corridor Study described above and it has been a smashing success. The municipality followed my study recommendation to a "T" and has experienced a complete rebirth of its Main Street business corridor... business is booming and tax dollars coming from this area have increased 10 fold. Everyone is thrilled and I have won the accolades of the influential leaders of this community. As a result, there are 5 different communities that want to contract with my department to put on a seminar for a total of 50 leaders to teach them what I know. We will be entering into an arrangement with these local municipalities to put on a 2 day seminar in their community where a faculty member will be leading a seminar on revitalization of the Main Street Corridor. We fully expect this to be a high demanded service for years to come. Faculty Person 1 Annual Salary Annual Fringes Hours out of my schedule for teaching seminars Course travel costs for all 5 seminars Course materials for all 5 seminars Total indirect department administrative burden (Note: this is a department of 10 full time faculty) 1) 2) 3) 4)

Should I establish a billing rate for this service? If # 1 is yes, what type of billing rate should I use? If # 1 is yes, what should my billing rate be? What account do I charge these project costs to?

150,000 41,162 80 200 150 85,000

KFS Account# XT999999

My department has completed the Main Street Revitalization Corridor Study described above and it has been a smashing success. The municipality followed my study recommendation to a "T" and has experienced a complete rebirth of its Main Street business corridor... business is booming and tax dollars coming from this area have increased 10 fold. Everyone is thrilled and I have won the accolades of the influential leaders of this community. As a result, there are 5 different communities that want to contract with my department to put on a seminar for a total of 50 leaders to teach them what I know. We will be entering into an arrangement with these local municipalities to put on a 2 day seminar in their community where a faculty member will be leading a seminar on revitalization of the Main Street Corridor. We fully expect this to be a high demanded service for years to come. Faculty Person 1 Annual Salary Annual Fringes Hours out of my schedule for teaching seminars Course travel costs for all 5 seminars Course materials for all 5 seminars Total indirect department administrative burden (Note: this is a department of 10 full time faculty) 1) 2) 3) 4)

Should I establish a billing rate for this service? If # 1 is yes, what type of billing rate should I use? If # 1 is yes, what should my billing rate be? What account do I charge these project costs to?

150,000 41,162 80 200 150 85,000

(C6+C7)/C35*C9 = 8953.723653 = =

200 150

C14/10*(80/C35) = 398.1264637

Yes per seminar $1,979.18 XT999999 cost per participant 194.0370023 admin fee for external users 2% minimum fee per student 197.9177424 cost per seminar 1940.370023 admin fee for external users 2% minimum fee per seminar 1979.177424

Faculty Person 1 Billable Hours Total hours Paid Holidays Annual Vacation Leave Annual Sick Leave Annual Professional Development Leave Administrative Duties related to service center Total billable hours

2080 72 144 48 96 12 1708

(40 hr work week 52 weeks per year) (9 days *8 hours) (1.5 days per month * 12 months) (.5 days per month * 12 months) (1 day per month * 12 months) (1 hr per month)

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Avoid being on “the list” by sending in updated rates on time.

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Hint: Using the provided templates or something similar to calculate rates expedites the process for you and us!    

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 At the recommendation of its auditors, the University has taken a more aggressive stance on service center rates to proactively ensure compliance with federal regulations and to ensure that service center rates are aligned with University Policy. This has become a federal audit topic the University wants to stay on top of.

 If you have been using a revolving account to track costs, start there as that gives you historical actual costs. Next step is to consider the product or services provided and make a list of what goes into providing the services on a per unit basis. If you do not have historical cost information readily available, estimate the cost for each item on your list. Have someone familiar with the product or service review your listed cost on an overall basis to see if they can come up with something you’ve missed. Once you are confident you’ve identified all costs related to the product or service being provided, follow slides 1121 on how to calculate a the costs that go into the rate(s).

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Uniform Guidance says that one service center cannot subsidize another but rates within a service center may. While this may be true, if a service center cannot articulate the basis for its published individual rates, it needs to go through the exercise of determining what true rates are.

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Start with estimating costs for each service center rate. Then begin to track the costs either in separate XT/DS/DN account or by using subaccounts. Then when you renew your rates, you’ll have all the information you need.  Be conservative and realistic. Compare volume you are thinking about to resources you have available to provide the services. If the service is being made available to make use of equipment down time instead of being driven by demand, consider a survey of likely customers to assess their needs.

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Determine if you should be offering the service in the first place if your costs are higher than other providers on the open market. Look to see if there efficiencies that can be found in your list of costs. If this is a service to make use of under-utilized equipment and your costs are still too high to be competitive, check with the Department/College leadership wanting to make the service available to see if they are willing to subsidize your costs to make your service center financially viable. If there are faculty or student experience opportunities or public awareness benefits from providing the service at a subsidized rate, it might make sense.

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Sometimes, to be a full service solution for users, a Department or College may chose to subsidize their rates to keep users on campus or for the benefits that might result from extra equipment utilization. It may be more efficient, if that is not a concern, to source the service to another service center on campus. You might attempt to negotiate a priority processing or pickup/delivery as a perk of transferring the volume of service from your Department/College. You may even be able to sell equipment that you have been using to the Department/College you transfer your volume to.

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Yes, but please be aware of political concerns that Departmental/ College leadership might have though. Goal is to offer a quality service at a reasonable price and not to drive other service centers out of business.  No. However, if you move the FTE spent providing the service to your revolving account so that costs can be tracked as part of the service center, than you may.

 Yes, as long as the FTE allocated to the revolving account that costs are recorded in is equal to or greater than the FTE used to develop the rate. Only documentable and reasonable costs should be allocated to the revolving account though. 

Yes, costs of individuals previously being funded with a grant or other source that begin contributing to the service being provided can be estimated in your rate proposal. It is critical, however, that you actually change the new/reassigned individual to be expensed to the revolving account once they start in that role.

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Effort reporting certifications are sent out by CGA each September and March. Be certain changes to effort are reported on those certifications when they are returned to CGA. If you see a difference, notate that change for Financial Analysis in your rate proposal so that both Financial Analysis and CGA can be aware of the difference when reviewing your proposed rates.

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Reasonable replacement costs/usage fees can be considered for approval by CGA when equipment’s remaining useful life warrants doing so. Typically, the equipment’s primary purpose is connected to instruction or research and service center opportunity ONLY exists in the equipment’s down time. In such a situation, the Department or College would typically plan to cover cost of replacement and not expect that user fees would pay for replacement. CGA will evaluate all major equipment costs being included in service center rates on a case by case basis.

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You can submit a new rate proposal that includes the unforeseen costs prior to the minimum two year renewal requirement, or you can wait until the renewal is due and use the look-back process to true-up and recoup the cost in a revised rate. Making the adjustment sooner rather than later results in a more consistent rate if you expect any significant change in usage or costs from expectations on which your rates were set.

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As noted in slide 24, a 10% working capital reserve is allowed. If concern would be greater than 10% of regular annual cost, we can consider the specific details of those on an individual basis. 

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Correct. In order to do this, simply add XT /DS/DN accounts as necessary or begin using subaccounts to be able to track costs.