MAXIMUS Higher Education Practice. Denver, CO; Charlotte, NC; Columbus, OH; Phoenix, AZ; Charlottesville, VA; Bluffton, SC; Colorado Springs, CO

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1 Service Centers the Basics Caroline Beeman, MS, CRA Senior Manager April 26, MAXIMUS Higher Education Practice Headquartered in Northbrook, IL o Satellite Offices in: Denver, CO; Charlotte, NC; Columbus, OH; Phoenix, AZ; Charlottesville, VA; Bluffton, SC; Colorado Springs, CO Backed by a $2.0 billion multinational corporation o Gives our practice unparalleled financial stability and the resources to invest in developing expertise in Federal regulations and guidance like 2 CFR Part 200 A CPE credit certificate (for 1 hour CPE) is available for a small administrative fee of $20 2 1

2 MAXIMUS Higher Education Practice Serves over 150 colleges, universities, and university hospitals in 49 states plus universities in Puerto Rico and the US Virgin Islands o 90 of top 100 research institutions o Ranging from <$1M to >$1B in research 3 F&A and Other Rate Consulting Services F&A Cost Rate Proposal Preparation (Long and Short Form) and Negotiation (DHHS CAS & ONR/DCAA) Space Surveys/Reviews Fringe Benefit Rates Federal Disclosure Statement (DS 2) and Direct Costing Policy Service Centers and/or Recharge Centers Rates and Policies F&A Software Comprehensive Rate Information System o Over 150 universities use CRIS WebSpace Space Utilization Software o Over 50 universities use WebSpace 4 2

3 MAXIMUS Products and Services Grant Management Compliance and Internal Controls Effort Reporting Consulting and Software Uniform Guidance Diagnostic High Level Review Federal Compliance/Risk Assessment (C/RA) In-depth Review Grant Management Help Desk Services Online Grant Management Training and Onsite Faculty Training Learning Management and Continuing Education Software Research Operational Reviews Business Process Review and Improvement Policy and Procedure Assistance Transition Staffing Audit Response Assistance Export Control Compliance And more 5 Agenda Definitions Rate Setting General Principles Equipment External Users Other Rate Setting Considerations Rate Setting Example Space and Billing Considerations Past Audit Findings 6 3

4 Federal Definition Described in the DS-2, Part III, item as Service Centers Departments or functional units which perform specific technical or administrative services for the benefit of other units within a reporting unit. 7 University-specific Definition Define in University Policy An operating unit within the University that: Provides a good/service or groups of goods/services Operates on a recurring basis Is primarily for users within the University Recovers the costs of providing the good/service through charges to users Meets a specified dollar threshold of either revenue or expense University Policies 8 4

5 Types of Service Centers Types of Service Centers Specialized Service Facility (Direct + Indirect = Fully loaded costs) e.g., Solar farm, wind tunnel University-wide Service/Recharge Center (Managed by Central e.g., Facility Management) Department Recharge Center (Operated by a department e.g., Machine shop) Pass Through Operations (Incurs costs and passes only those costs along to customers) Core Facilities (Shared resources with a research aim) e.g., Genomics 9 Per FAQs for Costing of NIH-Funded Core Facilities For purposes of these FAQ s Core facilities Are centralized shared research resources Provide access to instruments, technologies, services as well as expert consultation Typically are a discrete unit May have dedicated personnel, equipment and space Generally recover costs through user fees charged to investigator s funds (often NIH / other Fed grants) Notice Number: NOT-OD

6 Process for Establishing a Service Center Establish responsibility for approval Develop a standard form or format Purpose of center / how it support the University mission Services or products now and anticipate in the future Competition - similar services/products in area Customer base and mix (How much federal, external?) Capital equipment/resources needed Start up funding needs and source Deficit funding source Detailed operating budget Separate account/project 11 Rate Setting Principles Actual cost is the most the rate is allowed to recover Retain documentation of the rate calculation Rates must be reviewed and approved on a regular basis Regular basis means no less than every other year, i.e. biannually Rates must be adjusted when incoming funds exceed expenses (surplus balance) or else refunds must be issued Guidance is different for external users 12 6

7 Developing the Rate It s just a fraction, right? Cost / Usage = Rate 13 General Costing Principles Costs of providing services must be: Allowable Allocable Consistently applied Reasonable Unallowable costs Refer to 2 CFR, Part 200 Uniform Guidance, Subpart E - Cost Principles, Sections Cost/Usage = Rate 14 7

8 Develop the Budget Generally these costs include: Salaries and Wages Fringe Benefits Supplies and Materials Subcontractors and Other Outside Services Repairs and Maintenance, including service contracts Carry-Forward Surplus or Deficit Cost in our equation Cost/Usage = Rate 15 Usage Must be a Measurable Unit The measurable unit must allocate costs equitably among all users Examples: Page Test Slide Sequence Cup Labor hour Machine hour CPU Unit Per Rack Slot per Month Cost /Usage = Rate 16 8

9 Equipment F&A (Facilities & Administrative) type costs may be allowable in rates, in some cases Examples: Allowable Depreciation for Non-Federal equipment Equipment service contract (usually O&M) Only if NOT included in F&A rate calculation Can NOT include depreciation for portion of equipment purchased by Federal funds 17 Equipment Can include Federal depreciation in non-federal rates Equipment replacement but only non-federal users External users Non-federal internal users?? Maintain meticulous, current depreciation records Exclude from depreciation in F&A rate calculation Clearly identify Federally-funded depreciation to exclude from both F&A rate calculation and center federal rate 18 9

10 External Users Different rules than for Federal and Internal Users The use of market prices may be appropriate Charges may include F&A plus fee in excess of costs This additional income is not used in the calculation of surplus/deficit balance Caution - Recoveries in excess of full cost might be Program Income 19 Reserve Accounts Used to retain balances and record transactions that don t directly affect the rate Recovered depreciation Equipment replacement fee Fee in excess of cost charged to external users Depending on your policy, could be F&A Not used in the calculation of surplus/deficit at year end 20 10

11 Working Capital Funds that are accumulated in excess of actual cost in order to fund operating expenditures Service center surplus fund should not exceed 60 days working capital Annual budget divided by 6 or Annual revenue divided by 6 or Annual expenses divided by 6 2 months/12 months = 1/6 21 Subsidies Service centers have the option of not including all costs in the rates Any partial subsidy of a center needs to be identified as an unallowable cost for F&A rate calculation purposes Subsidy could be included as part of the budget Subsidy could be deficit absorbed at the end of the year If formally committed (e.g. in NIH core proposal) this is voluntary committed cost share 22 11

12 Differential Pricing Allowable for large quantity purchases, highvolume usage, off-peak usage, etc. Multiple rates for same service allowed only when such rates are: Properly established Consistent with federal cost principles Made available to federal users Rate schedule may NOT cap charges at a certain dollar amount per month 23 Sales Tax & UBIT Sales tax must be collected in certain circumstances for some types of sales to external users Unrelated Business Income Tax (UBIT) is charged on revenue that does not meet certain prescribed exemptions Discuss tax implication with the appropriate office(s) at your institution 24 12

13 NIH + University Funds to Support a Core Total Allowable Direct Cost $110,000 NIH Direct Funding to Core $ 60,000 Institution's Funding to Core $ 10,000 Net Recoverable Cost $ 40,000 Number of service units 1,000 Net cost/unit $40 (Federal Rate) 100 External User units $110,000 1,000 = $110 plus F&A at 50% $110 + $55 = $165 External User rate $ Space Service center space must be identified and designated as such during the space survey for F&A Proposal purposes Space which is occupied by service center equipment must be designated as service center space, not department space Service center space should be treated as Other Institutional Activities (OIA) for F&A rate calculation 26 13

14 Billing Service centers must bill their users in a timely manner based on actual usage Recommend monthly billing Bills must include sufficient detail to identify The services provided The actual usage The rate used to calculate the charges The time period 27 Billing Usage logs are recommended Usage logs should track: Account/project number or user Service performed or product sold Rate charged Date Data is useful for Generating bills Usage estimates for future rate calculations 28 14

15 OIG Audit Summary Report of Audits of Recharge Centers at 12 Universities Billing rates were not adjusted for accumulated surplus and deficit fund balances Included duplicate or unallowable costs in the calculation of billing rates Included recharge costs in the calculation of indirect cost rates Used funds of recharge center account for unrelated purposes Billed some users at reduced rates 29 DOJ - University in New England $2.5 Million Whistleblower; False Claims Investigation Settlement Specialized Service Centers: Overstated anticipated expenses, overcharged the government and billed for items not covered by the grants Billing Rates: Failure to revise and appropriately set its rate structure resulted in submission of numerous false claims Newsday, January 9, 2006 ( Associated Press); Hartford Current, January 10,

16 Service Center Charges Not Allowable July 2012 The animal facility computed rates by averaging rates that other universities charged The University did not perform biennial reviews to adjust the rates based on actual costs The telecommunications center did not charge based on actual usage of the service provided Furthermore, it charged administrative fees that were not part of the aggregate cost of providing the service Originally $5.8 million findings, eventually reduced 31 Closing Comments For a handout of today s slides use the link that is on the evaluation page when you exit the webinar A CPE credit certificate (for 1 hour CPE) is available for a small administrative fee of $20 Please submit any questions through the evaluation and we will you with a response 32 16

17 Upcoming Training Webinar Schedule CRIS Reporting: Understanding Your Data - May 18, 2:00 p.m. EDT Federal Funding an Grant Management Workshop June 23-34, 2016 at the University of Colorado Anshutz Medical Campus MAXIMUS CTAT Leadership Showcase June 23-34, 2016 at the University of Colorado Anshutz Medical Campus Hands-on training in person! CRIS University May 17 May 19, MAXIMUS Federal Funding and Grant Management Workshop MAXIMUS will offer the workshop Federal Awards, Strings and Financial Compliance on June 23-34, 2016 at the University of Colorado Anshutz Medical Campus. This workshop will improve the skills, competencies and capabilities of individuals charged with financial management of federal awards. This intensive, 1 ½ day workshop is designed to help individuals get it right with financial grant management from start to finish, including: budgeting, spending, invoicing, reporting and award closeout. Led by award management professionals Kris Rhodes and Doyle Smith of MAXIMUS, who together have decades of federal award financial management experience, the workshop takes you from the challenges of proposal budgeting, managing the award, and closing it out, covering each step in detail. To learn more or to register, please visit our website:

18 MAXIMUS-CTAT Leadership Showcase The MAXIMUS Higher Education Practice, in collaboration with Coaching Training and Transformation (CTAT) LLC, is excited to present its Leadership Development Showcase on June 23-34, 2016 at the University of Colorado Anschutz Medical Campus. This 1½day workshop is designed to give you a taste of the very best to-build leadership skills in an environment that is both stimulating and empowering. The workshop s five modules address: 1. How to Effectively Develop Your Leaders and Teams, 2. Assessing Strengths to Create a High Performance Team, 3. Raising the Bar to Achieve Maximum Team Effectiveness and Results, 4. Effective Tools to Coach Your Team, and 5. Managing a Multi-Generational Workforce. To learn more or to register, please visit our website: 35 Thank You for Attending Caroline Beeman Senior Manager