1.0 Policy Purpose
The purpose of this policy is to ensure compliance with legal and regulatory requirements governing Service Centers.
2.0 To Whom the Policy Applies
This policy applies to faculty, staff, and students using or involved in the operations of Service Centers that directly support the academic research mission of the University. This policy does not apply to Central Service Units such as Brown Dining Services, Copy Centers, and other operations or internal charges not directly related to research support.
3.0 Policy Statement
Service Centers are units within Brown University departments or cost centers that charge for goods or services directly supporting the academic research mission of the University and recovering costs through charges to internal and external users. The Academic Service Center Manual and any supplementary guidance are intended to support Service Centers in achieving compliance with this policy and regulatory requirements. The terms of this policy govern in the case of any inadvertent conflict between the policy and the supplementary guidance.
3.1 Compliance
As a recipient of federal funding, the University must comply with the U.S. Office of Management and Budget’s Uniform Administration Requirements, Cost Principles, and Audit Requirements for Federal Awards (2 C.F.R. §200 “Uniform Guidance”) and the Code of Federal Regulations (§200.468 “Specialized Service Facilities”).
3.2 Establishing or Closing a Service Center
Approval is required from senior leadership within the business unit before establishing, operating, or closing a Service Center. Once unit-level leadership approval has been obtained, staff will work with the Controller’s Office to submit the Brown University new Service Center Request Form to request the establishment or closure of a Service Center.
3.3 Rate Setting and Compliance
3.3.1 Break-Even Expectation
Service Centers are expected to recover no more than the aggregate allowable costs of their operations through charges to users and must develop rates so that revenues do not exceed expenses for services provided to customers. A Service Center’s surplus or deficit for a given fiscal year should not exceed 25% of annual operating expenses. Surpluses beyond the 25% range should be eliminated through rate adjustments or expense realignment.
3.3.2 Rate Submissions, Review and Approval
Each Service Center is required to document its rate calculations annually by completing the “Service Center Annual Rate Proposal Form” or by providing alternative documentation, and submitting to the Controller’s Office for review and approval. An exception to the annual submission requirement may be granted or a late submission may be approved by the Controller's Office on a case-by-case basis. Rates may be adjusted at mid-year or any other point during the year if a Service Center manager determines that they may be out of compliance with respect to break-even status without a rate adjustment. For new Service Centers and in other unusual circumstances, the break-even period may be extended beyond one year, subject to approval by the Controller’s Office.
3.4 Billing
Billing must be based upon measured and documented utilization and retained by the Service Center in compliance with the Brown University Records Policy. The documentation should include the date the service was performed (i.e., budget date) and the facility user, if applicable. It is recommended that the documentation be included on the Service Center journal entry. Billing must be done on a monthly basis. If billing is not timely, the Service Center may not be able to charge a sponsored project (FD500).
3.5 Rate Structure (Internal versus External)
3.5.1 Internal Rates
All Brown University cost centers, Hospital Affiliates of Brown University, and other entities governed by a formal internal agreement with Brown University are considered internal users and will be billed at internal rates.
3.5.2 External Rates
Organizations not defined in Section 3.5.1 are subject to an external rate. External rates are higher than internal rates and should include the University’s federally negotiated facilities and administrative (F&A) rate or the Service Center calculated F&A rate, whichever is greater. A for-profit customer may be charged a higher rate than non-profit customers.
3.6 Subsidized Users and Subsidies
Services provided to all users must be accounted for and rates must be based on allowable total costs and actual usage. If a Service Center provides services to a particular internal group of users at a subsidized rate, this subsidy cannot result in higher than actual costs for non-subsidized users.
Service Centers may be subsidized by unrestricted departmental funds to cover operating costs or deficits.
3.7 Rate Consistency
Rates may be set based on hours, units, or any other metric that is the closest approximation for utilization of resources to produce the good or service. Rates established by Service Centers must be non-discriminatory, and all users of the facility must be billed for services. Non-discriminatory means all internal users are charged at the same rate(s) for the same level of services rendered or products purchased. If a Service Center offers any discounted rates (e.g., volume discount), that rate must be available to all internal users.
4.0 Definitions
For the purpose of this policy, the terms below have the following definitions:
- Hospital Affiliates:
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Includes academic affiliates of Brown University and hospitals affiliated with Brown University, including Brown Health and Care New England.
- Service Center:
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An operation that provides goods or services in direct support of the academic research mission of the University.
5.0 Responsibilities
All individuals to whom this policy applies are responsible for becoming familiar with and following this policy. University supervisors and employees with student oversight duties are responsible for promoting the understanding of this policy and for taking appropriate steps to help ensure and enforce compliance with it.
Controller’s Office: Will maintain a current Service Center list, review the annual financial results for Service Centers including income and expenses and application of the reserves to ensure that the approved Service Center rates are calculated in accordance with this policy. The Controller’s Office will approve rates on an annual basis and maintain supporting documentation for approved rates. The Controller’s Office will review and approve forms and any supporting documentation relating to establishing or dissolving a Service Center, and oversee accounting related to Service Centers, including creation of new cost centers or other accounting Worktags used to track Service Center activity.
Controller: Will review any exceptions to the policy and use sound judgement to decide.
Division of Research: Will meet annually with the Controller’s Office to monitor compliance with this policy and timely submission of Service Center rates.
6.0 Consequences for Violating this Policy
Failure to comply with this and related policies is subject to disciplinary action, up to and including suspension without pay, or termination of employment or association with the University, in accordance with applicable (e.g., staff, faculty, student) disciplinary procedures.
Noncompliance with this policy could result in government-imposed fines or disallowed costs or reflect negatively on future grant proposals.
7.0 Related Information
Brown University is a community in which individuals are encouraged to share concerns with University leadership. Additionally, Brown’s Anonymous Reporting Hotline allows anonymous and confidential reporting on matters of concern online or by phone (877-318-9184).
The following information complements and supplements this document. The information is intended to help explain this policy and is not an all-inclusive list of policies, procedures, laws and requirements.
7.1 Related Policies
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7.2 Related Procedures
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7.4 Frequently Asked Questions
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Policy Owner and Contact(s)
Policy Owner: Vice President for Finance and Administrative Services & Chief Financial Officer and Vice President for Research
Policy Approved by: Vice President for Finance and Administrative Services & Chief Financial Officer
Contact Information:
Policy History
Policy Issue Date:
Policy Effective Date:
Policy Update/Review Summary:
Previous policy version(s) superseded by this policy:
- Academic Service Center Policy, Effective Date: May 13, 2020