Financial Administration

Financial Management of Auxiliary Operations (F43) - Attachment 2

Revised: June 18, 1999


UW SYSTEM POLICY ON COMPETITION WITH THE PRIVATE SECTOR: PRICING POLICIES

Products or services offered by the UW System institutions shall normally be priced to recover, at a minimum, all costs related to producing the product or service, including all applicable direct and indirect costs as determined by basic cost accounting principles. Exceptions to full cost recovery pricing are permitted (or are required) under the following circumstances:

  • If the activity is integral to the fulfillment of the institution's instructional, research or public service missions, prices may be established at less than full cost recovery upon approval of the chancellor;
  • If underutilized University facilities are made available for non-University events primarily for the benefit of the private sector or the community, prices may be set below full cost recovery;
  • If underutilized University facilities are made available for non-University events primarily for fund-raising purposes, prices may be set to include a profit above the full recovery of costs;
  • If products and services are offered for the convenience of students, faculty, staff or participants in University activities, prices must be set so as to be competitive with private sector prices, unless a higher price is required to ensure full cost recovery.

In addition, if subsidized pricing is mandated or permitted by federal law or state statute, prices should be set accordingly.

For any new activity presented to the competition review committee, full documentation of costs and pricing determinations must be included. The committee will review the pricing structure for compliance with the above criteria, taking into consideration the impact of the competition with the private sector.

For purposes of implementing these pricing policies, direct costs include, but are not limited to, all salaries, fringe benefits, supplies, and capital directly attributable to the sale of the product or service. Indirect costs include, but are not limited to, depreciation, utilities, municipal services charges, interest, support services, custodial services, etc. allocable to the sale of the product or service. As an alternative to calculating indirect costs for individual sales operations, the federal indirect cost rate may be used.