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POLICY

Recharge Center Policy

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It is the policy of New York University (NYU, “the University”) that billing rates for recharge centers must be designed to recover no more than the costs (direct and indirect) of the goods or services being provided.

Purpose of this Policy

The purpose of this policy is to provide a framework for the fiscal operations of University recharge centers that will ensure compliance with accounting principles and government regulations. Recharge Centers are Departmental Operations that provide goods or services to internal users and recover their operating costs through a user fee.

Section J.47 of the Federal Office of Budget and Management (OMB) Circular A-21 (http://www.whitehouse.gov/omb/circulars/a021/a21_2004.html) deals specifically with recharge centers.)

The section is explicit in two concepts:
• Recipients of Federal funds are not to recover more than cost; and
• They are not to discriminate in the price of services charged to government users and to nongovernment users.

Although there may be variation in size, complexity and services provided by recharge centers, they should maintain

Scope of this Policy

This policy is applicable to all recharge centers that are established for the main purpose of providing services to internal departments. This policy is applicable to all schools, departments, units and personnel of the University involved in managing sponsored awards including contracts. This policy is not applicable to auxiliary operations, which provide services to students and faculty members as individuals.

Procedures for Implementation

a. Criteria for a Recharge Center

i. Billing rates or fees must be designed to recover no more than the costs of the goods or services being provided.

The departments that recharge costs must develop cost data supporting the unit costs charged. The rate should be developed based on direct costs (operating costs) and allocable indirect costs (e.g., depreciation of equipment, exclusive of Federally funded equipment) as applicable.

Recharge rates are generally calculated based on budgeted projections of operating expenses and projected volume of the services or products to be provided. The goal of the recharge operation is to calculate a rate that revenues reasonably offset expenses. “Operating at break-even” means there is no significant profit or loss as a result of charging users for the services provided in any particular period and no profit or loss over a biannual period.

Although recharge operations target break-even through budgeting, and rate setting, it is seldom that expenses exactly match revenues. NYU has defined a break-even policy that a recharge center’s surplus or deficit for a certain fiscal year should not exceed 10% of annual operating expenses, computed as of the final closing of the books on August 31. At the end of a fiscal year, if a recharge center has an actual operating surplus or deficit within +/- 10% break-even range, the profit or loss must be factored into the following year’s rate calculations. For those recharge centers created for academic purposes which receive subsidies from the University, see Section d. Documentation for Subsidized Recharge Centers.

ii. The unit cost must be consistently applied to all users, irrespective of funding source, and charges must be allocated to users based on actual use.

Recharge centers must develop and maintain a method of accurately tracking units of output. Units of output, or usage, must be tracked and billed to all users. It is unacceptable for any user to receive services at a discount or reduced fee. Further, as units of output are used in determining the appropriate billing rate, the method of tracking the units must become part of the documentation necessary to support the rate(s) structure.

The concept of nondiscrimination, however, does not preclude the institution from charging external users higher rates for services in order to recover overhead costs. These surcharges should be excluded from the calculation of the break-even analysis.

iii. Recharge to a sponsored project or other funding source may be applied only when there is a direct relationship to the project being charged.

When there is a clear cause/benefit relationship to the funding source, it should be charged directly to that funding source. When there is not a direct benefit, the expense may not be directly charged. Instead, alternate funding sources, such as a departmental project, should cover the costs. For more information regarding charges to sponsored projects, refer to the
Costing Policy.

iv. Only costs that are allowable and allocable expenses (i.e., “recoverable costs’) should be charged to a recharge center project and included in the rate calculation. 

Typical recoverable costs include salaries, wages, fringe benefits, materials and supplies, travel, and service and maintenance agreements. Refer to the NYU Policy, Accounting for Unallowable Costs, including Appendix A, Identifying Unallowable Costs.

CONTINUES...CLICK HERE FOR ENTIRE POLICY PDF

Notes
  1. Dates of official enactment and amendments:
  2. History: blank
  3. Cross References: blank

About This Policy

Effective Date: September 01, 2013
Supersedes: N/A
Issuing Authority: Sponsored Programs Administration
Responsible Officer: Assistant Vice President for Post-Award Administration

Federal Regulations


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Sponsored Programs Administration Post-Award Handbook

NYU Approach and application of this policy, related resources and more available in the Handbook.
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