DATE OF LAST REVISION:
To establish a policy for the rational, fair and efficient cost recovery of selected Information Technology services.
This policy applies to all University employees, including those on the regional campuses and associated units.
There is little precedent at
the university for tracking IT spending, and few explicit lines for IT within
departmental and unit budgets.
It has become imperative that all universities have an understanding of the need, costs, current funding methods, and replacement cycles for equipment, software and technical support. This information can assist the university as it sets IT priorities in future budget cycles, and can help the campus plan for the technological developments of the coming years. Because many IT costs are not captured by traditional accounting methods, a process for gathering those costs must be multi-faceted. Some aspects overlap, but do so with the objective of getting a more thorough understanding of IT costs and funding.
Regardless of how they are budgeted, IT costs must be paid. Most schools offer some computing services at no cost to the individual or unit and some that are charged back to users and units. Levying fees to users on an individual or departmental basis may yield a different demand and expectation of IT services than when costs are borne by a central budget. Quantity and quality, degree of centralization, and administrative complexity of services are major variables in determining funding. These issues are specifically illustrated through a case study of the formulation of a new budget and cost accounting model for core IT resources.
Central funding, typically for some service considered basic and crucial to an institution, can lead service consumers to think a service is “free.” When a service should be centrally or non-centrally funded is a complex issue that depends on an institution’s history and culture, as well as economic factors and the service in question. Moving from central to non central funding may be seen by some as unfair cost shifting. A centrally funded service at least has the appearance to individuals of being “free.” If central funding is decreased or removed and chargeback begins, then something that was at least “free” suddenly must be paid for by individual or departmental funds, even if absolute costs to the institution decrease. The Higher Education Policy Commission has continued to push many statewide and campus financial decisions to be based on “free market economy forces”.
This policy governs cost
accounting standards and institutional charge backs for selected
This policy defines the
services targeted for cost recovery, the cost recovery process, and the rate
setting methodology. Where costs can be
specifically identified as belonging to an organization those costs will be
billed directly to the organization.
However, where total costs need to be allocated by some method a charge
unit will be chosen, a rate established and the costs allocated to an
organization based on the number of units “owned” by the organization. The current price list is published on the
Cost recovery services include:
Calculation of rates:
Where a specific invoice cannot be mapped to a department for payment, the calculation of rates to provide for general cost recovery will involve the following steps:
and annual review (by financial affairs) of costs allocated to the
2) Identify a charge unit, i.e., phone set, workstation, network port, etc (Units).
3) Inventory and verify counts and ownership of charge units (Total Count).
4) Set rate so that the recovery is sufficient to cover costs (Rate).
5) Total Recovery = Total Count of Units X Rate and should slightly exceed Total Costs.
RESPONSIBILITY FOR IMPLEMENTATION
Vice President for
RESPONSIBILITY FOR INTERPRETATION
The responsibility for Interpretation of this policy
resides with the Vice President for