Recharge Operations

What is a Recharge?

A recharge is an internal unit that charges an approved rate/fee directly related to the recovery of the cost of the goods or services provided. Recharge activities must be cost-based and supported by annual budget plans.

Recharge operations are shared resources that provide access to instruments, technologies, expert consultation, and other services to scientific and clinical investigators, other University personnel, and the general public who may be served incidentally by the operation. Cost Analysis monitors recharges to make sure they comply with Federal regulations, approves recharge rates and provides other support and guidance. Comprehensive additional information aboutrecharge operations is below.

Policy

Recharge Operations are governed by University Policy 1005. This policy was updated effective February 2023.

Procedure Manual

All recharge operations must comply with federal regulations even if they do not directly charge federal awards. The guidelines provided in the procedure manual are based on federal and University of Chicago policy and proven best practices from similar institutions subject to 2 CFR Chapter II, Part 200, et al.

The overall purpose of this procedure manual is to:

Provide support to recharges outlined in the University Policy 1005.
Provide guidance on how to properly establish, manage, and close recharge operations in accordance with federal regulations and University policies.
Provide detailed information for developing and implementing rates for sales activities provided by the recharge.

The manual also contains detailed information about frequently asked questions concerning allowable/unallowable costs, billing, internal vs. external customers, subsidies, and proper accounting methods, plus other topics that are important to effectively manage a recharge operation.

Recharge financial and operational managers are responsible for thoroughly reviewing the recharge manual and becoming familiar with all the policies and procedures. Questions regarding any content in the manual should be directed to the Financial Services recharge group. Training is also available upon request.

Recharge Operation Procedure Manual

Annual Recharge Rate Review

In an effort to enhance University compliance surrounding recharge operations, Financial Services has developed uniform recharge forms to ensure that the required information is obtained and documented.

The Recharge Operation Rate Template must be completed annually for each active recharge operation. The template is due by May 15 of each year to ensure that proposed rates are reviewed and approved by Financial Services by June 30.

Recharge Operations may not use recharge rates beginning on July 1 that have not been approved by Financial Services.

Please Note:

Annual recharge rates submitted after the established deadline are not guaranteed to be reviewed and approved in time to go into effect by the beginning of the applicable fiscal year(July 1).

Approval from Financial Services is required, even if the rates remain unchanged from the previous year.

Recharge Operation Rate Template (Contact Financial Services)
Process Map Annual Recharge Rate Proposal Review

Pass Through Recharge

The Pass Through Confirmation Form must be completed annually by recharge operations designated as a pass-through. A pass-through provides goods and/or services to the University community, and the charge is equal to the purchase price with no mark-up for administrative or other recharge expenses. The pass-through purchases the goods/services from a vendor and then recharges users.

Pass Through Confirmation Form

Open New Recharge

Considering the potential financial risk and substantial compliance implications linked to Recharge Operations, it is essential to have thorough documentation and a formal approval process. The proposal should substantiate the business need for the service, outline the necessary resources, and detail the plan for a compliant operation.

Recharge Operations are established for activities that intend to function on an ongoing basis and to recover no more than their cost of operations over this period. There are defining factors and specific criteria that must be met in order to open a new recharge operation. The following should be considered prior to establishing a new recharge operation:

Service is not available elsewhere on campus.
Service is identifiable as opposed to general.
Separate costs and budgets can be clearly defined.
Need for this service is long-term.
Service is provided for or subsidized by a federal award.
Providing services to non-federal users may also require a recharge operation to be established.
Most of the users will be internal with possible incidental external usage.

Please review the process map by clicking the link below, which shows the general flow of establishing a new recharge from the initial idea to final approval.

Process Map for Establishing a New Recharge Operation

To begin the process to open a new recharge operation, all requests must be initiated by completing the University Internal Supplier Request Form in ServiceNow.

Once the request has been received by Financial Services, it will be evaluated to determine if the department meets the minimum requirements to proceed with setting up a new recharge operation.

If so, the requestor will be contacted to complete the following required documents:

New Recharge Operation Request Form
New Recharge Operation Rate Template

Both forms must be sent to Financial Services for review and approval before the department begins providing services and/or products to users.

Please note:

Requests to establish a new recharge operation should be sent to Financial Services at least 30 days prior to starting a new recharge.
There should be no recharge activity (providing services/goods and/or charging users) prior to receiving approval from Financial Services.
All new recharge requests must have divisional approval prior to submitting the proposal packet to Financial Services for review.
External Sales—Recharges are primarily established for the benefit of internal users, with external usage being incidental. If services and/or products will be offered exclusively to external users, it should be set up as a service agreement rather than a recharge operation. Please contact the Office of Legal Counsel to set up a service agreement and to receive permission to sell to external users only.

Close Existing Recharge

If it is decided that an approved recharge operation will close and cease service activity, you must notify your divisional office and send a completed Recharge Operation Closure Form to Financial Services via email within 10 days of the decision. The recharge should also make every effort to notify its customers in advance after the decision to cease operation. The following information must be provided in the closure request:

The date the recharge operation will cease operations.
The intended disposition procedures associated with any inventory (e.g. sale, write-off due to obsolescence, etc.).
An estimate on the collectability of the outstanding receivables.
The balance in the depreciation recovery account, if applicable.
The final deficit/surplus fund balance of the recharge operation.

Deficit fund balances must be funded by the sponsoring unit via a non-mandatory transfer or a recharge operation may use its depreciation recovery account to offset an operational deficit. The balance of the depreciation recovery account after covering the deficit may be retained by the recharge with Budget Office approval.

Surplus fund balances over one (1) months operational expenses, generally, must be returned to users, however an analysis should be performed to determine the cause of the surplus balance (i.e. rates set higher than cost or over-subsidizing) and the appropriate disposition method.

A recharge operation is not formally closed until all required information is received, reviewed, and approved by Financial Services.

Recharge Operation Closure Form

Adjust Rates Mid-Year

There are instances when a recharge operation determines the need to adjust approved rates during the fiscal year based on changes in projected costs or usage that causes the fund balance to exceed the acceptable tolerance levels. When this happens, the recharge must submit a completed Recharge Operation Mid-Year Rate Adjustment Request Form to Financial Services for review and approval.

The recharge must also submit a revised version of the last approved recharge rate calculation template showing the adjusted rates and any other affected information for each tab.

Rate adjustments must be approved in advance by Financial Services.

Recharge Operation Mid-Year Rate Adjustment Request Form

Training and FAQs

This section contains a link to a training module covering a high-level recharge operations overview as well as answers to the most frequently asked questions (FAQs) asked about recharge operations. The training module will provide guidance to those involved in the management of recharge operations at the University of Chicago. It is designed to introduce basic recharge concepts and policies that govern recharge activities. Topics covered include rate development, the rate review and approval process, and guidelines and requirements for successful recharge management.

Individualized training for new or existing recharges are available upon request. Contact us to schedule training if you have questions about any of the following topics:

Establishing a new recharge operation
Closing an existing recharge
How to use the rate calculation template
Rate calculation methodology
Purchasing recharge equipment
Billing procedures
Compliance issues
Or any other recharge topic that we can help you understand better

Recharge Operations Training

FAQs

Contacts

Submit forms, questions and training requests to recharges@uchicago.edu.