Recharge and Related Issues

Basic Core Financial Structure

University Rules for Recharge Operations

Incongruities

Dan PinkelNovember 6, 2007

Platonic Form of Core Metabolism

Mo

ney

Services

Core

Investigator

Simplistic Core Metabolism

Mo

ney

Services

Core

Investigator

Rat

es

SubsidiesPlanned

Emergency

EquipmentDonorsGrants

Funding

Approximate Core Metabolism

Ord

ers

Services

Core

InvestigatorUCSF

External

Rat

es

SubsidiesPlanned

EmergencyFor all users

Targeted users

EquipmentDonorsGrants

(special rates)

Funding

Mo

ney

Realistic Core Metabolism

Ord

ers

Services

Core

InvestigatorUCSF

External

Rat

es

SubsidiesPlanned

EmergencyFor all users

Targeted users

EquipmentDonorsGrants

(special rates)

Funding

Money?Billing

UCSF Accounting

Of Course There are Rules

http://www.finance2.ucsf.eduhttp://www.finance2.ucsf.edu/budres/policies/policies.html#recharge

Basic Operating Principles I

Cores are not businesses and should not compete supplying commercially available services.

Rules compliant with Federal Guidelines (OMB Circular A-21) since most of core income is from Federal sources.

Guiding concept – charges to a Federal project for a service must reflect ONLY the costs of providing that service. Therefore:

Rates can’t allow generation of “profits”, even to enhance core functions (buy widgets to provide new services), since funding was not approved for those future purposes. (Depreciation on equipment can be charged if it was purchased with non-Federal funds.)

Conversely a core should not run a deficit unless the “sponsor” of the core is happy to cover it.

Basic Operating Principles II

UCSF has established a rate approval process, and requires rates to be published.

Rate changes need to be approved prior to institution.

Rates are Direct Cost charges and do not incur indirect costs.

All UCSF investigators must be charged the same rate for the same service.

External users can be charged whatever rate can be agreed upon, as long as it is sufficient to cover the costs of performing the service – e.g. at least as much as internal users. Need signed agreements concerning liability and IP, and perhaps tax forms.

External users pay an overhead charge, currently 22%, which goes directly to UCSF central.

Core can put the “excess” fees received from external users in a discretionary account that must be used for core purposes.

Accounting is Required

Requirements depend on magnitude of yearly budget (under $50K, $50K to $500k, above $500K).

Justify Core expenses and revenue for a given year.

Protect the Core from whimsical actions of UCSF accounting system.

Setting Rates Required Guessing Utilization and Expenses for the Coming Year

Setting Rates Required Guessing Utilization and Expenses for the Coming Year

Work

Mo

ney

Cost

Incom

e

Fixed CostsMinimal Staff

Service Contracts

Profit

Loss

UCSF concerned reduce rates next year

Sponsor concerned increase rates next year

more subsidy

UCSF Rules May Need Adjustment to Meet Needs of Campus-Wide Coordination

Sources of subsidies may mandate restriction of rate reductions to users in certain areas of work, e.g. Cancer Center Support Grant requires its subsidy be directed to investigators pursuing cancer research.

Investigators that provide equipment (e.g. write shared instrument grants) should get consideration on rates.