The University of Texas Health Science Center at Houston (“UTHealth”) encourages the development of collaborative relationships among faculty around research and academic interests related to the missions of UTHealth. To that end, UTHealth enables academic departments, schools, and the university itself to establish research service centers (“RSC”) for specific purposes in pursuit of our missions.
This section sets forth the policies governing the development and administration of RSCs. The policies have been developed to ensure compliance with the Federal cost principles for educational institutions contained in OMB Circular A-21 and UTHealth HOOP Policies. Full text of this policy is available for download. A checklist and instructions for completing Service Center Business plans is also available for your convenience.
a. Qualifying Criteria for Research Service Center
- RSC must provide goods or services for a fee on a continuing basis to internal users and may provide services to external users to a lesser extent.
- RSC annual operating revenues must be at least $30,000, but no more than $1million.
- A RSC with annual operating revenue that exceeds $1 million would be called a Specialized Service Facility (SSF) and may require its business plan approved by the UTHealth federal cognizant agency in addition to local requirements. SSF proposals require review and approval by OARA and FBS.
- A RSC is required to recover its annual operating costs when setting recharge fees on a break-even basis over a long period of time defined as two (2) fiscal years.
- The Dean of the School or Chair/Director of the Department/Institute in which the RSC is established must designate appropriate funds each fiscal year to pay for annual operating losses and unallowable costs.
- A business plan that includes a current budget with a two year forecast and a list of users and/or proposed users (as appropriate) must be submitted to the UTHealth Executive Vice President for Academic & Research Affairs and the Senior Vice President, Finance and Business Services for initial establishment. An updated business plan including the previous fiscal year history, current fiscal year projection and a two (2) year forecast must be provided during the annual budget process in a timeframe defined by Budget and Financial Reporting and/or related school whichever being the sooner date.
b. Research Service Center Pricing
- Internal Users - A RSC must not discriminate against any internal group of RSC users. A RSC must charge all internal users 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 or core lab work, is allowed but they must be equally available to all users who meet the criteria. Pricing at the internal rate may be used for users of other academic institutions, provided that a formal, executed agreement exists between UTHealth and the other institution(s).
- External Users – The RSC must charge a higher rate than that charged to internal users for similar services.
- Billing & Rates – The RSC bills its users by invoicing a charge (rate) for goods or services furnished from one UTHealth operating unit to another UTHealth operating unit or external customer. The charge is minimally composed of all related direct costs (may also include depreciation for capital equipment utilized) and, where appropriate, related indirect costs and mark-ups for the goods or services sold. All users of the RSC must be billed for services.
- Subsidized Users – All users must be billed at the full rate (internal or external) for services received. If the user has a subsidy available to pay for received services, the subsidy will only be allowed from non-federal and non-RSC fund.
c. Use of RSC Surplus. The first claim on any fiscal year surplus is to:
- Maintain a working capital reserve in its designated fund equal to the total expenses for the two highest operating months of the previous fiscal year.
- Pay off all prior year losses.
- Fund the RSC equipment depreciation for the fiscal year that will be deposited into a RSC equipment replacement fund.
- Use the remaining balance to adjust rates for internal users.
d. Closing of RSC
After two fiscal years of operation, a RSC that has not generated at least $30,000 of annual revenue or does not operate consistently in compliance with UT Heath RSC policy may be closed after a review by the OARA and the related school Dean.
Service Center (RSC)
A RSC is an organizational unit within an academic department, institute/center, school, or UTHealth administration that provides research related services or products to users principally within the UTHealth community. A RSC recovers the cost of its operation through charges to its users. The costs of providing the services or products are charged to users on a “rate” basis.
Specialized Service Facility (SSF)
OMB circulating A-21 Section J.47 defines “specialized service facilities” as “institutional services involving the use of highly complex or specialized facilities…” UTHealth has further defined a Specialized Services Facility (SSF) as one which must have annual revenue of at least one million dollars.
Federal sponsors often provide funding to support “core labs” from center, core, and program project grants. Core support from federal sponsors may require the RSC (which contains the core lab) to charge a different set of rates to certain internal users.
An auxiliary activity is a self-supporting entity that exists principally to furnish goods or services to students, alumni, or faculty and staff acting in a personal capacity. They charge a fee for the use of these goods or services (e.g. Housing and Dining Services). Auxiliary services are NOT subject to this RSC policy.
Internal users are our primary RSC customers. Internal users are from UTHealth academic and administrative schools, departments, and institutes who purchase the RSC services or products to support their work.
An external user is an entity or person over whom UTHealth has no fiduciary responsibility regardless of the user’s relation to our academic mission. Examples of external entities include but are not limited to:
- Affiliated entities such as organizations within the Texas Medical Center.
- Commercial entities such as drug or other for-profit companies.
- Non-affiliated not-for-profit organizations such as other hospitals, other universities, or governments agencies.
- Faculty, Staff, or Students acting in a personal capacity (versus in their student or employee role within the University).
a. Business Plan Review
An RSC business plan review will be done by the OARA at least bi-annually. If an RSC adds additional services not listed in the original business plan, the RSC Director will submit a revised business plan for review and approval. Each RSC will establish an Oversight Committee (to include major users of the RSC) to oversee the management of the RSC and to address issues of service quality; Oversight Committee’s must meet annually to discuss pricing and changes in services.
b. Financial Compliance (Direct Costs)
All direct costs related to a RSC must reside in the RSC fund and should be included in the rate calculation. These costs include:
- Salaries and Wages – The salaries and wages of all personnel directly related to the RSC. If an individual works on more than one activity, the salary costs should be allocated to the activities based on the percent of effort that is dedicated to each activity.
- Fringe Benefits – Fringe benefits related to all personnel that are charged to the RSC.
- Materials and Supplies – The costs of materials and supplies needed to operate a RSC. If inventory is accumulated in a particular year, the RSC should not include the costs of accumulated inventory in its rates.
- Other Expense – Other operating expenses to be included in RSC rates may include non-capital equipment, rental and maintenance contracts, equipment operating leases, and purchased services (e.g. consultants).
- Unallowable Costs – Unallowable costs must be excluded from the internal user rate calculation. Such expenses (e.g., bad debt expenses, alcohol, etc.) may be recovered only through charges to external users, or funded by non-RSC funds.
c. Financial Compliance (Indirect Costs)
- Capital Equipment Depreciation
Capital equipment is defined as an item with a purchase price over $5,000 and a useful life of over one-year. The purchase costs of a capital item may not be recovered through RSC rates; however, the depreciation associated with the asset may be recovered in the RSC rates. Each RSC that uses capital equipment in the production of a service must include equipment depreciation in its rates.
- Other Indirect Costs – Facilities and administrative indirect costs are not assigned to RSCs and are not expected to be recovered in the rates.
d. Audit and Record Retention
Service Centers are subject to periodic review by the UTHealth Audit & Advisory Services department and by external federal auditors to evaluate compliance with established UTHealth policies and accounting practices.
Therefore, RSC activities must be adequately documented and records maintained to support all revenues and expenditures as well as compliance with applicable regulations. All financial and compliance documents should be retained for seven years.