Financial Considerations

Components of Costs in Rate: All costs, subsidies, and revenue relating to a service center must be accounted for within the general ledger. Separate Accounting: All Academic Service Centers are required to maintain Brown general ledger account codes (“worktags” in the Workday financial system) that are sufficiently segregated and detailed to facilitate the financial reviews required by this policy.  


Rate Development and Break-even Considerations

An Academic Service Center must develop rates so that revenues do not exceed expenses for services provided to customers. An Academic Service Center's surplus or deficit for a given fiscal year should not exceed 25% of annual operating expenses. Academic Service Centers may be subsidized by departmental funds. A mid-year review is strongly recommended. To the extent that there is a deficit for the fiscal year, the rates should be increased in subsequent years to reduce the carried forward deficit balance over a period of time. To the extent that there is a surplus of 25% or less the surplus may remain in the Academic Service Center. Surpluses beyond the 25% range should be eliminated through rate adjustments or expense realignment. When it appears that the operating results will exceed the 25% break-even range at fiscal year-end, the service center should adjust its rates.  


Non-discriminatory Rates

An Academic Service Center must charge all internal users at the same rate for the same level of services or products purchased in the same circumstances. The use of special rates, such as for high volume work or off-hour usage, is allowed, but the special rates must be equally available to all users. External users, however, may be charged a higher rate that includes the facilities and administrative costs of the Academic Service Center. Additionally, commercial customers may be charged rates above the total direct and indirect costs. Funds generated by incremental charges to external customers must be used exclusively to support the Academic Service Center. No funds can be transferred outside the service center.  


Pricing for Multiple Services

An Academic Service Center is required to document the rate calculation for each type of service it provides. Academic Service Centers with multiple services must ensure that there is no cross subsidization between user groups. Combining the results of various services is not acceptable if the mix of users for each service is different.  


Service Center Annual Rate Proposal Form

Each Academic Service Center is required to document its rate calculations annually by completing the “Service Center Annual Rate Proposal Form” or by providing alternative documentation. The purpose of the form is to document the use of the general ledger and provide the information used in rate calculations (anticipated volume, expenses, inclusion of carry forward balances). This information will be reviewed and utilized by individuals outside the Academic Service Centers, including the department financial managers and the Controller’s Office.  


Billing Procedures

Billing must be based upon measured and documented utilization. All billing must be processed on a timely basis at established Academic Service Center rates. Academic Service Centers should provide appropriate invoicing documentation. All invoices must include the name of the services/goods provided (e.g., genetic sequencing or glass washing), - the number of units (e.g., pounds, hours, # of items), and the amount charged per unit. The Academic Service Center is responsible for the proper use of the Workday worktags related to the recording of revenue and expenses.
  • Billing cannot occur until the goods or services have been rendered
  • Each Academic Service Center must bill twelve months of activity within a fiscal year, and billing should be performed monthly
  • Academic Service Center revenues from internal users must be recorded using the Ledger Account LA68000: Internal Services and Spend Category Internal Billing (9800). The journal source Service Center Billing should be used for internal billing.
  • Revenues from external customers must be recorded in Ledger Account LA40600: Other Income and Sales Item Service Center Sales.


Mid-year Review

The local level managing units are responsible for evaluating their financial performance throughout the year; at least one interim rate review should be performed during each fiscal year. Rates may be adjusted at mid-year or at any other points during the year if the Academic Service Center determines that they will be out of compliance with respect to break-even status without a rate adjustment. Proper documentation is required for rate adjustments.  


Designated Fund Transfers

Academic Service Centers may not transfer balances out of the Academic Service Center’s Cost Center. Surpluses or deficits must be carried forward to the following fiscal year through a designated fund transfer within the Academic Service Center Cost Center. The operating surplus/deficit should be included in calculating subsequent years’ rates and break-even position.  


Record Retention

Academic Service Centers must retain financial documentation. For additional information, see the Great Lakes Record Retention Schedule.