University of California Davis Self-Supporting Recharge Operations - Introduction
A self-supporting recharge operation is one that is funded entirely by those who purchase the goods or services offered. Recharge operations must function like a non-profit business and collect revenues sufficient to cover all costs. Services offered are rate-based and must be necessary to advance the educational, research, patient care or public service functions of the university. Recharge operation activities may involve internal recharge (when one department provides a good or service to another department), external billing (when the University provides a good or service to an external entity), or a combination of both. The establishment of recharge operations and activities are governed by UC Davis Policy and Procedure Manual, Chapter 340, Section 25.
Contents
Criteria
In order to qualify as a self-supporting recharge operation you must meet these conditions:
- There must be a sound business case supporting the need for the recharge operation to exist that coincides with the University’s mission of teaching, research, patient care, or public service, and where services to university customers will not be impaired.
- A product or service is provided, for a fee, by campus units/departments to other units/departments or to non-university parties.
- Direct costs (labor hours, supplies, materials, etc.) required to perform the service can be clearly defined and exceed $50,000 annually.
- The product or service is offered on an ongoing basis:
- Demand for Services/Goods is projected to last for a minimum of 2 years
- Services/Goods are provided throughout the year
- Services/Goods are provided to multiple customers
- The revenue collected must be sufficient to cover all costs.
If your activity does not meet all of the above criteria, alternative processes are available to recover the cost of services provided (see below). If your department would like to request an exception to operate as a recharge operation you should provide documentation stating which criteria cannot be met and outline the need to operate as a self-supporting recharge operation to your Dean, for consideration and consultation with the Vice Chancellor (VC)/Business & Institutional Analysis (BIA)/Costing Policy & Analysis (CP&A).
Classification
Self-supporting, rate-based recharge operations are classified as one of the following:
- Sales and Services of Educational Activity: Activities that are revenue producing operations within an academic unit in connection with the training of students or support of research activities. Examples include the Crocker Nuclear Lab and the Primate Center. Revenue for these activities report under the CoA Fund 12100, Natural Account 775000 (410000 for external), as well as the assigned GL or PPM Project using Purpose code of 44 (45 for AES Research).
- Other Self-Supporting Service Activity: Activities that are rate-based operations which do not fall naturally into any of the other classifications. Revenue for these activities report under the CoA Fund 12100, Natural Account 775000 (410000 for external), as well as the assigned GL or PPM Project using Purpose code of 72.
Other common self-supporting activities that are not covered under UC Davis Policy and Procedure Manual, Chapter 340, Section 25 are as follows:
- Auxiliary Enterprise: Provides non-instructional support to students, faculty and staff. These activities are primarily external revenue producing operations. Revenue for these activities report under the CoA Fund 12100, Natural Account 775000 (410000 for external), as well as the assigned GL or PPM Project using Purpose code of 76.
- Teaching Hospital: Revenue producing activities operated by teaching hospitals that support the clinical teaching and research programs. Revenue for these activities report under the CoA Fund 12100, Natural Account 775000 (410000 for external), as well as the assigned GL or PPM Project using Purpose code of 42.
- Other Activities: Other sources include income sources which do not fall naturally into any of the other classifications. Primarily sales and services from non-academic departments. These other revenues are not rate-based but should be self-supporting and not carry any deficits. Revenue for these activities report under the CoA Fund 12101, Natural Account 775000 (410000 for external), as well as the assigned GL or PPM Project using Purpose code of 72.
For more information on non-rate based activities please refer to the Non-Rate Based Self-Supporting Activites website.
Examples
An example of a self-supporting recharge activity would be Reprographics providing copy services to campus departments. The rates they charge are enough to cover the expenses of providing those copies. The Crocker Nuclear Lab and the Primate Center are examples of recharge operations that provide services to both recharge (internal) and external customers.
Alternative Options
Below is a list of alternative processes available for activities which do not meet the minimum criteria stated above. These processes should be used for one-time quotes, internal direct cost agreements or memorandum of understanding (MOU).
Recharge/Internal Bill
- Intermittent/infrequent, direct charges can be made via a Manual Journal for UCD Expense Transfers.
- Natural Income Account 775000 (UCD Recharge Revenue)
- Natural Expense Account 770007 (DCA Recharge Expense)
- Fund 12101 (Sales and Services Non-Rate Activities)
- Project "0000000000" (No associated GL or PPM Project)
IOC/UC Bill - Utilize the Intercampus Order/Charge (IOC) document.
- Intermittent/infrequent, direct charges:
- Natural Income Account 775000 (UCD Recharge Revenue)
- Natural Expense Account 770007 (DCA Recharge Expense)
- Fund 12101 (Sales and Services Non-Rate Activities)
- Project "0000000000" (No associated GL or PPM Project)
External Bill/Customer Invoice - This process falls under PPM 340-09, Sales of University Goods and Service to Non-University Users.
- Individual billing under $500 and total annual billing NTE $5K:
- Individual billing over $500 and total annual billing between $5K - $50K:
- Department completes a Revenue Agreement.
- Department completes a Revenue Agreement Invoice.
- Departments should utilize the following CoA Segments for all external, non-rate based activity:
- Natural Account 410000 (External Sales and Services Revenues)
- Fund 12101 (Sales and Services Non-Rate Activities)
- Project "0000000000" (No associated GL or PPM Project)