Fee-For-Service Practices & Policies
Fees-for-Service are charges for goods and services to both internal and external customers. This web page provides information regarding fee-for-service practices and policies.
The following information pertains to ISA charging rates for FY18. This year's submission deadline is March 30, 2017. The risk-based rules for ISA activities, implemented effective July 1, 2014, will continue to apply.
Two rate sheets are available:
For FY18, all units with internal sales activities in the Medium or High Risk categories were required to submit rates. Starting in FY18, owners of Medium Risk FOPPS who do not want to change their rates will only need to submit rates every other year, as allowed by OMB Circular A-21. If you wish to change your rates, you should prepare and submit the new rates by March 30. For simplicity, the campus organizational structure has been split so that certain units should submit rates effective in even years, and the remaining units should submit rates effective in odd years. The remaining units should submit rates effective in odd years. This breaks down as follows:
High Risk Units - Annual Rate Submission
Rates for all High Risk FOPPS are due on an annual basis, regardless of unit. You should prepare your rates according to the March 30, 2017 deadline. The rules for High Risk ISAs also require you to convene a Rate Review Committee, information on which can be found below. FY18 Planning Parameters, including preliminary benefits rates submitted to DHHS on December 31, 2015, can be found HERE.
FY18 Program List with Risk
File below contains all ISAs for which all rates are expected for FY18.
If you have questions, please contact us at firstname.lastname@example.org.
The term Fee-for-Service applies to any activity in which a campus department sells a good or service for a fee. The customers may be either external or internal to the University. Fees-for-Service are distinct from student fees in that they are typically directly charged upon delivery of the good or service and are ancillary to the University’s instructional mission. For more information on student fees, click here.
Sales of goods and services to units within the university system. All entities with a speedtype (other than Fund 80) are internal units. This activity is collectively known as Interdepartmental Sales and Services, and units that engage in these sales are known as Internal Sales Activities (ISA).
Sales of goods and services to units and individuals external to the university system. This includes faculty, staff and students acting in a private capacity.
There is an identifiable exchange of goods or services between the selling unit and the customer. The payment and the goods or services received are of essentially equal value.
Internal Sales Activity (ISA)
Any business line that includes interdepartmental sales and services. The activity is typically the sale of a specific good or service often, though not always, recorded within a single speedtype. A department may engage in multiple internal sales activities.
The central review group for interdepartmental sales and services, comprised of members of Budget, Fiscal Planning, and Analysis (BFPA) and Campus Controller's Office (CCO). Point Control can be contacted at InternalSales@colorado.edu.
Campus units may earn revenues by selling goods and services to entities outside of the University. These revenues will typically be recorded as Auxiliary Operating Revenues, Sales and Services of Educational Activities (SSEA) revenues, Rental Income, or Miscellaneous Revenues. The appropriate recording of these revenues in the finance system will, in part, depend on the nature of the unit raising the revenues. For example, officially designated Auxiliary Enterprises will typically use the Auxiliary Operating Revenue account codes, regardless of the customer, while Internal Service Centers (ISCs) can only use the Miscellaneous Revenue account codes for external sales.
A policy on external sales is forthcoming. Contact the Office of Industry Collaboration for assistance in handling external sales.
When operating your business be aware of the Fund type, especially if your business charges both internal and external customers. If your business does both types of business, please refer to the Fund Decision tree for best fund placement.
For more information on charging external customers, see the CCO website for the following topics:
Some campus units may generate revenues by selling to both internal and external customers. The external customers must be charged a rate equal to or higher than that of the internal customers. This is because federal costing standards require that federal contracts and grants be charged the best price and CU-Boulder policy is for internal charge rates to be non-discriminatory (i.e., all internal users should be charged the same rate).
ISAs are generally expected to operate on a break-even basis, and therefore should maintain fund balances equal to no more than 60 days of working capital, per federal regulations for higher education costing practices and principles (in particular, OMB Circular A-87). Profits from external customers do not factor into this calculation, but may be used to buy down rates for internal customers or for other approved activities.
When recording revenues from both internal and external customers, ISAs should use the Miscellaneous Revenue account codes for the external revenue and the Internal Service Center or ID revenue account codes for the internal revenue.
ISAs are operated as essentially self-funded business units. Their business activity consists of interdepartmental sales, and may also include inventory for resale and occasional sales to the general public. ISAs must follow the appropriate internal controls for cash, inventory, and accounts receivable as prescribed in the respective chapters of The Guide, and in compliance with government regulations.
Because sales to internal customers can include charges to federal contracts and grants, they are subject to both departmental and central oversight. All units engaging in internal sales activity must prepare charge rates in accordance with appropriate federal costing and accounting standards. The level of oversight increases as the risk involved in the activity increases, as defined by dollar volume and charging to federal contracts and grants (see risk framework below).
General Guidelines for Internal Sales
Guidelines and policies for units charging internal customers are established based on risk level. Two main variables are considered to establish risk: (1) volume of internal revenues and (2) charging to federal contracts and grants. The decision tree below shows the breakdown between low, medium and high risk units:
The grid below outlines the requirements for ISAs depending on their level of risk.
Guidelines for Low Risk Units:
No rate submission is required for ISAs with less than $10,000 annual internal revenue. However, these units should still prepare rates and manage their sales in accordance with all appropriate costing standards and generally accepted accounting principles, and be prepared to provide documentation about rate calculations upon request.
If the nature of the ISA’s business or charging methodology changes, it is good practice to inform Point Control in order to ensure continued compliance.
Guidelines for Medium Risk Units:
Medium Risk ISAs should calculate and submit rates at least every other year in accordance with the review cycle developed by Point Control. A rate sheet containing all necessary elements for a proper rate calculation can be found here. However, ISAs may submit their own rate calculation worksheets, as long as they contain all of the following elements:
Guidelines for High Risk Units:
High Risk ISAs are required to submit rate calculations on an annual basis. These units should develop their rates using the same standards and criteria listed for medium risk units above. We have also decided to suspend the requirement for a rate review committee for this cycle. We will still be happy to meet with you, however, should you have questions or wish to seek guidance regarding your rate development.
I. Projected annual cost
Projected Annual cost may include:
Background information about benefits and GAIR can be found at the CCO Cost Allocation page.
II. Charge unit and estimated sales volume
Charge unit may be based on a service provided, an hourly rate, per item, or some other measure. An estimate of annual unit sold is needed for the per unit calculation.
III. Calculate rate based on total annual cost and estimated units sold
Unit rate is simply equal to the annual projected cost, divided by the estimated number of annual units sold. Other considerations include reserves (working capital) and fund balance. Reserves are added to annual costs and must not exceed 60 days’ worth of cash needed for operations. Fund balance is also added to expenses to recapture losses or excess collections from previous years.
IV. Rate determination annual timeline:
If an internal sale is occurring in a fund not listed above, contact your area accountant.
Internal expenses should be recorded in the buying department's FOPPS in an ID expense account code, except for sales from Internal Service Centers (Fund 28 or 20 with and EPC 2100) and Auxiliary Enterprises (Fund 20 with EPC 2000). For Internal Service Center and Auxiliary Enterprise internal sales, the purchasing FOPPS will record expense in an expense account as if the purchase had been made from an outside vendor.
Each of the account code ranges above include individual account codes to be used for specific purposes. A full listing of account codes can be found here (Chartfields & Attributes tab). Please note that there are specific revenue account codes for charges to contracts and grants, including a new account code in the ID revenue account code range.
For questions about whether a transaction qualifies as exchange, or about which is the best method for moving funding, contact InternalSales@colorado.edu.