Financial Administration

Auxiliary Enterprises Support Services Chargebacks (F42)

Updated: January 20, 2009


  1. BACKGROUND

    Historically, the responsibility for the direct program costs of the auxiliaries has been clearly understood to be the responsibility of the auxiliaries, and those costs have been separately identified in the accounting and budget systems. However, the accounting and budgeting of support services, and the responsibility for the cost of those services, have not been as clear. The purpose of this paper is to establish that auxiliary enterprises have a fiscal responsibility for the cost of support services, and to provide policy guidance and detailed instructions for assigning such costs. Appendix 1 identifies the auxiliary programs to which the policies apply, and the criteria for making program assignments; Appendix 2 identifies the support services provided by administrative units; Appendix 3 identifies the support services provided by physical plant units; and Appendix 4 provides the instructions for making charges for services received.

    Auxiliary enterprises are defined by the University of Wisconsin System (UW-System) and the National Association of College and University Business Officers (NACUBO) as programs that "...furnish services directly or indirectly to students, faculty, or staff, and charge fees related to, but not necessarily equal to, the cost of services. Traditionally, these services have encompassed food services, student housing, and college stores..." User fees (e.g., room, board and parking) and/or a cash/credit sales (e.g., gate receipts, and bookstore sales) are primary revenue sources. Program costs (e.g., residence hall staff, food supplies, and other items for resale), and costs to support programs (e.g., payroll, building maintenance and accounting services) are the primary uses to which the funds are applied.

    Auxiliaries are expected to provide quality services to students at rates competitive with the private sector, to maintain adequate but not excessive reserves, and to satisfy expectations of ongoing fiscal solvency. However unlike the private sector, auxiliaries are also expected to use a portion of its resources for the broader purposes of the institution. (As NACUBO explains, auxiliaries are not to be "... regarded merely as service activities or as businesses, but as active expressions of an institution...", and as such offer services and facilities that are used to assist in the educational and social development of students.) Auxiliaries have, for the most part, sufficient resources to serve these broader purposes, but careful monitoring is needed to insure that the cumulative affect of increased charges (e.g., municipal services and support services), the broadened use of auxiliary funds and recent reserve reductions not jeopardize the financial solvency of those programs.

  2. ADMINISTRATIVE AND PHYSICAL PLANT SUPPORT SERVICES

    Administrative support services, within the revised UW-System Chart of Accounts, are assigned to the budget activity, Institutional Support and physical plant services to the Physical Plant activity. Executive management (e.g., chancellors and assistant chancellors), fiscal operations (e.g., accounting and bursar), general administration and logistical services (e.g., personnel, purchasing and stores), administrative computing, and public relations/development are assigned to the institutional support activity, see Appendix 2 for a more detailed explanation. The administration of physical plant, building maintenance, custodial services, utilities and grounds maintenance are all part of physical plant support services, see Appendix 3 for a more detailed explanation.

    UW-System Policy:

    The auxiliaries shall be charged for administrative and physical plant support services when those services provide a direct benefit to the auxiliaries (e.g., payroll services, building maintenance, and heating fuels); not charged for institutional oversight functions (e.g. chancellor, vice chancellor and assistant chancellors); and limited to the services and costs prescribed in this paper. Where an office/officer provides direct services and oversight functions, a pro-ration of costs shall be made, with the auxiliary chargeback limited to payment for direct services.

  3. AUXILIARIES

    For purposes of this paper, the NACUBO definition for auxiliaries is used to make program assignments. Where the assignment is not clearly established, a review was made of the purposes for which the program exists, the revenue sources used to support the program, and the facility within which the program is housed. The primary consideration was purpose, with facilities and revenue sources secondary to purpose. Auxiliary programs include: food services, bookstores and other retail sales, parking and housing, see Appendix 1 for explanations.

    NACUBO defines auxiliary enterprises as programs that "...furnish services directly or indirectly to students, faculty, or staff, and charge fees related to, but not necessarily equal to, the cost of services. Traditionally, these services have encompassed food services, student housing, and college stores. On many campuses, services have expanded to include faculty dining, confectionery shops, ice cream parlors, vending machines, day-care centers, bus service, skating rinks, guest houses, athletic concessions, golf courses, ski lodges, bicycle shops, and others. The distinguishing characteristic of most auxiliary enterprises is that they are managed essentially as self-supporting activities, although sometimes a portion of student fees or other support is allocated to assist these activities...", College and University Business Administration. (The UW-System defines "student fees" to be segregated student fees).

    College and University Business Administration also states that "Intercollegiate athletics and student health services should be included in this category if they are essentially self-supporting. Hospitals, although they may serve students, faculty, or staff, are separately classified because of their relative financial significance to the total budget of an institution. Services provided by auxiliary operations are important elements in support of an institution's educational program. Some auxiliaries, such as golf courses or concessions at athletic and cultural events, may incidentally serve the public. Auxiliary enterprises should contribute to and relate directly to the mission, goals, and objectives of a college or university. They should not be regarded merely as service activities or as businesses, but as active expressions of an institution, reflecting its history, style, and relation to its various constituencies. Such enterprises should reflect the quality of service that a college or university desires for its students, faculty, staff, alumni, and the public..."

    Statutory reference is made to auxiliary enterprises in section 20.285(1)(h) Wis. Stats. The UW-System (UWS) and the Department of Administration (DOA) have established a funding designation (Fund 128), and an activity designation (08) for budget development and control purposes. Appendix 1 identifies programs assigned to Fund 128, makes distinctions between auxiliary and non-auxiliary programs within Fund 128, and explains the reasons for those distinctions.

    An issue separate from, but related to, charging auxiliaries for support services is the policy to not charge university offices and departments for the use of student union/center and residence hall space. Meeting rooms are available to departments at no cost to encourage interaction between students, faculty and staff and is an acknowledgement of the broader purposes for which those facilities were constructed.

    UW-System Policy:

    1. Programs designated auxiliary in Appendix 1 shall be subject to charges for institutional support and physical plant services.

    2. Programs designated non-auxiliary student services in Appendix 1 shall be subject to the policies applied to student service programs in FAP - Student Services Funding (G15).

    3. Programs designated non-auxiliary service departments, and programs assigned to academic and/or academic support activities in Appendix 1 shall not be subject to the charge for institutional support and physical plant costs.

    4. Institution departments shall not be charged for facility use; students shall not be assessed the cost of making facility space available; and as a means to recover costs, a credit may be allowed as an offset to centralized service charges (costs must be documented).

  4. CHARGING FOR CENTRALIZED SERVICE COSTS

    1. Institutional Support

      The intent of the policy is to insure a fair assessment for institutional support services provided and received, and to minimize changes to organization structures and accounting practices. Charges to the auxiliaries shall be made using either the costing methodology in Appendix 4, or methodologies specific to an institution.

      Institution specific methodologies are as follows: UW-Madison provides many institutional support services from within the auxiliary organization itself (budgetarily, assigning support staff to auxiliaries); UW-Milwaukee has a centralized administrative service unit which is responsible for providing accounting, accounts payable and accounts receivable services on a charge for services basis (budgetarily, assigning staff to this administrative service unit, and receiving funds to support the unit by charging users for services); other institutions, consolidate organizationally all administrative duties for the institution, with the auxiliaries paying a portion of the administrative costs (as a chargeback or as direct budget support).

      UW-System Policy:

      Institutional support shall be charged to the auxiliaries using either the costing methodology in Appendix 4, and/or institution-specific costing methodologies.

      Appendix 4 is an adaptation of the Federal Indirect Cost Recovery (FICR) policies for reimbursing universities for indirect costs incurred, and is available for use by all institutions. Institution-specific methodologies are acceptable only where it can be demonstrated that the charge more accurately reflects the cost of services provided. Institution-specific methodologies must be approved in advance by System Administration.

    2. Physical Plant

      FAP - Physical Plant Services Chargebacks (F25) provides the policies and procedures to be used in charging auxiliaries for physical plant services. Those services include: administration, building maintenance, custodial maintenance (most institutions provide for this service with auxiliary staff), utilities, grounds maintenance, and major repairs and renovations. FAP - Physical Plant Services Chargebacks (F25) will be revised to add administrative services as chargeable services. Grounds maintenance will continue to be excluded because such maintenance is primarily for the overall campus benefit and the personal safety of students, faculty, and staff.

      UW-System Policy:

      1. A surcharge for physical plant administration will be added to labor rates used to charge for auxiliary enterprises, i.e., total administrative costs excluding capital as a percent of total physical plant salaries and fringe benefits. Institution specific methodologies may be used on the condition the results are essentially the same.

        Physical plant administration costs are not included in the basic labor rate because the costs to General Purpose Revenues (GPR) funded departments would increase and cause duplicate charges to federal grants.

      2. Basic grounds maintenance services will be excluded from chargebacks, with charges limited to direct services such as snow removal from parking lots and specific requests for additional service.

  5. RELATED POLICIES

    1. FAP - Physical Plant Services Chargebacks (F25) (A provision to require that a surcharge for physical plant administration costs be added to the labor rates)

    2. FAP - Student Services Funding (G15) (The programs in that Appendix 1are identified as student service programs, and are not presently included in FAP - Student Services Funding (G15), would need to be added to that policy paper)

    3. FAP - Segregated University Fees (F50) This policy prohibits charging segregated fee programs for security and business services. The policy paper is restricted to non-segregated fee programs.




APPENDIX 1
University of Wisconsin System
Auxiliary and Non-Auxiliary Assignments
  1. Program/Activity Assignments

    When assigning programs (e.g., residence halls and student health) to activities (e.g., auxiliary enterprises and student services), program purpose, funding source and facility type are the factors used. It is the intent of this paper to make program purpose the primary criteria, to limit funding sources to user fees and cash/credit sales, and to reflect the multiple uses of facilities in assignments. This emphasis on defining auxiliary programs by program purpose is now reflected in the revised Uniform Chart of Accounts, and the assignment of programs to auxiliaries or non-auxiliaries is consistent with that revision.

    Revenue source will continue to be important since a distinction must be made for programs supported from user fees and cash/credit sales, which are auxiliary, and other Fund 128 revenues which are not. Facility type also continues to be important because of the multiple use of facilities, and that auxiliaries are responsible for the facilities they use (e.g., all student unions/centers have food service operations which are user fee supported programs and therefore an auxiliary; however, some unions/centers also provide space for the student newspaper and any number of student activity programs which are supported primarily from an allocation of segregated fee revenues and therefore not an auxiliary).

  2. Statutory Assignments

    Historically, funding source has been the sole basis for making statutory assignments to auxiliaries in s. 20.285(1)(h) Wis. Stats. As a result, most programs that are assigned by fund source to Fund 128 were in the past also assigned to auxiliaries as an activity. The problem in making program assignments on the basis of broadly defined and inclusive revenue types (or in the case of facilities, simply assigning all programs housed in one facility to auxiliaries), is that the purpose for which the the program exists may be ignored. For example, programs such as the student newspaper and health care were assigned to auxiliaries even though the purposes are more aligned with programs assigned to student services.

  3. Auxiliaries

    Auxiliary programs are distinct from other programs by conditions unique to auxiliaries: funding source (i.e., self-supporting operations that charge a fee directly related to, although not necessarily equal to, the cost of the goods or services); institutional purpose (i.e., furnish goods and/or services that assist in the educational, social and physical development of students); relationship to general public (i.e., may occasionally serve the non-university community); and similarity to private sector (i.e., goods and services furnished by auxiliary programs could be provided by private commercial enterprises).

    The following programs accounted for in Fund 128, Activity 8 have been assigned to auxiliaries:

    • Food Services
    • Bookstore Sales
    • Retail Sales (merchandise and services that are not directly related to instruction, research or public service)
    • Parking Services
    • Housing Services

  4. Non-Auxiliaries

    Non-auxiliary programs differ in purpose, policy and (for the most part) funding source from auxiliaries. For example, segregated fee programs receive a budget allocation, are not self-supporting operations that charge a fee directly related to the cost of goods or services provided, and are often instructional and/or student service in purpose. Non-auxiliaries, for purposes of this paper, are defined as programs more appropriately assigned to other activities (e.g., student services, instruction, and academic support); or programs created to improve cost efficiencies, service and accountability (e.g., service organizations such as copy centers).

    FAP - Student Services Funding (G15), identifies student service programs and the funding policies associated with each. Service departments are operations that service other departments and are supported from user charges for services provided; most instruction and instructionally related programs are funded by GPR/Fee funds, and only occasionally may segregated fees be used for select purposes (e.g., when GPR/Fees are not adequate or when the use of GPR/Fees would not be appropriate).

    1. Student Service Programs

      Student service programs provide intellectual, cultural, and social development opportunities outside the formal instruction program, and have as primary purposes to provide for the emotional and physical well-being of students. These activities range from services that assist students to progress toward graduation (e.g., financial aids, placement and counseling) to those that provide for and encourage student life and interests (e.g., cultural events, intramurals, and student organizations).

      NACUBO defines student services to include: "...cultural events, student newspapers, intramural athletics, student organizations, intercollegiate athletics (if the program is operated as an integral part of the department of physical education and not as an essentially self-supporting activity), counseling and career guidance..., student aid administration, and student health service (if not operated as an essentially self-supporting activity)."

      The student service programs described below are assigned to the non-auxiliaries.

      1. Child Care Services

        Child care services are provided to enhance opportunities for students with young children to enroll in, and pursue, degree programs at UW institutions. The Board of Regents have directed that "top quality, low cost child care and extended child care services, preferably campus based, are (made) available to the children of students..." Although child care centers are funded, in large part, by user fees, the directive permits the use of a segregated fee allocation to assist in insuring low cost, quality services. A lack of adequate, low cost child care has been shown to be a serious barrier for many non-traditional students desiring a university education, and this policy is responsive to that need.

        In addition, child care services are integral to degree programs such as early childhood education, providing students opportunities to observe and gain clinical experience. FAP - Child Care Centers (G38) authorizes the use of GPR/Fees for this purpose by recognizing these services are integral to the academic program when used as educational centers, or as laboratories and opportunities for student practicums. Also, s.36.25(26) Wis. Stats. includes permissive language to allow two-year center campuses to establish a child care facility and use GPR/Fee funds to support it. FAP - Child Care Centers (G38) identifies and explains the program and funding policies governing child care centers.

      2. Student Health Care Services

        Health care services are intended to assist students to better understand health care needs, and to provide a reasonable level of service to meet those needs. Services range from minimal emergency and referral assistance to varying degrees of health care. Institutions are expected, at a minimum, to provide ambulatory care, promote good health through health education programs, and serve students and the public at large by taking on the role of a public health agency (e.g., communicable disease surveillance, community agency liaison, and environmental health services).

        The goals and objectives stated in the UW-System basic health module, Section II, summarizes health care as a requirement of the institutions to be "...concerned about support of the educational mission of the University by aiding students so there is as little hindrance as possible due to illness, both physical and emotional, and injury." It also states that in this effort student health services will provide responsive medicine, preventive medicine, counseling (or referral for counseling), environmental surveillance, and health education.

        Student health services are not intended to be operated as self-supporting, fee for service programs. Instead the Board of Regents has authorized the use of GPO support for physical facilities, maintenance, and utilities, and segregated fee support for direct program service costs.

      3. Intercollegiate Athletics

        Intercollegiate athletics provide athletes with opportunities to use and demonstrate athletic skill, and allows large numbers of students to participate by their attendance at sporting events. In addition, intercollegiate programs provide participation in activities which in a sense is an extension of, and complimentary to, the intramural and physical education programs of the institution.

      4. Student Services--Union/Centers

        The primary purposes of non-retail (and select retail activities) housed in union/centers shall be to provide educational, recreational and cultural opportunities, and as such are categorized student services. An allocation may be made where union/center functions support both auxiliary and student service activities (an auditable methodology must be used).

      5. Student Services--Housing

        University housing provides counselling, educational,recreational, and cultural opportunities and as such are categorized as student services. An allocation may be made where housing functions support both auxiliary and student service activities (an auditable methodology must be used).

    2. Service Departments

      Internal service departments, central stores (Fund 129) and other revolving account activities (fleet, copy centers) are created primarily to service university programs, accumulate funds for asset replacement, and facilitate the operation of a chargeback system for direct service costs. All direct costs, including accumulations for asset replacement, are recovered from sales to university departments or sales to students of instructionally related materials. These services provide essential support to academic departments.

    3. Instruction and Related Programs

      Programs related to instruction, research, and public service are directly related to the primary mission of the University. These activities include library and media services, special course fees collected for materials, field trips and overseas programs, textbook services, technology transfer activities, and the family practice clinics. The strong relationship to the primary mission dictates that these activities be excluded from assessment for centralized services.




APPENDIX 2
University of Wisconsin System
Institutional Support Functional Definition
Uniform Chart of Accounts

This category shall include: central executive-level activities concerned with management and long-range planning of the entire institution; fiscal operations; administrative data processing; space management; employee personnel and records; logistical activities that provide procurement, storerooms, safety, security, printing and transportation services; support services to faculty and staff when not operated as auxiliary enterprises; and activities concerned with community and alumni relations.

This category includes the following subcategories:

Executive Management. Includes expenditures for all central, executive-level activities concerned with management and long-range planning for the entire institution (as distinct from planning and management for any one program within the institution). Chancellors, Vice Chancellors, Assistant Chancellors and their staff and support costs shall be included under the Executive Management sub-activity. The institution's chief facilities planning executive and related clerical support costs should be included under Executive Management but staff and support costs for facilities planning are included under the Physical Plant Administration sub-activity of Physical Plant. The Board of Regents, Faculty Senate, the Secretary of the Faculty/University and legal services are also included under Executive Management.

Fiscal Operations. Includes expenditures for operations related to fiscal control and investments. It includes the accounting office, budget, bursar, and internal and external audits.

General Administration and Logistical Services. Includes expenditures for activities related to general administrative operations and services (with the exception of fiscal operations and administrative data processing). Included in this subcategory are personnel administration and payroll, space management, risk management, purchasing and maintenance of supplies and materials, institutional research, campus-wide communication and transportation services and protective services (safety and security). Also included, subject to the chargeback and cost distribution instructions provided in the Uniform Chart of Accounts are telephone, fleet operations, general stores, duplicating, printing shops, mail and postage.

Administrative Computing Support. Subject to the chargeback and cost distribution instructions provided in the Uniform Chart of Accounts, includes expenditures for computer services that provide support for institution-wide administrative functions (i.e., the other sub-activities of Institutional Support).

Public Relations/Development. Includes expenditures for activities to maintain relations with the community, alumni, or other constituents and to conduct activities related to institution-wide development and fund raising.




APPENDIX 3

University of Wisconsin System
Physical Plant--Functional Definition
Uniform Chart of Accounts

This category shall include all current operating funds for the operation and maintenance of physical plant, net of amounts charged to auxiliary enterprises, hospitals, and independent operations. It does not include expenditures made from the institutional plant fund accounts. It includes all expenditures for operations established to provide services and maintenance related to grounds and facilities. Also included are utilities, fire protection, property insurance, and similar items.

This category includes the following categories:

Physical Plant Administration. Includes expenditures for administrative activities that directly support physical plant operations. Activities related to the development of plans for plant expansion or modifications, as well as plans for new construction, including capital budget, should also be included in this sub-activity. However, costs for the institution's chief facilities planning executive and related clerical support costs should be included under the Executive Management sub-activity of Institutional Support.

Building Maintenance. Includes expenditures for activities related to routine repair and maintenance of buildings and other structures, including both normally recurring repairs and preventive maintenance.

Custodial Services. Includes expenditures related to custodial services in buildings.

Utilities. Includes expenditures related to heating, cooling, light and power, gas, water, and other utilities necessary for the operation of the physical plant.

Grounds Maintenance. Includes expenditures related to the operation and maintenance of landscape and grounds.

Major Repairs and Renovations. Includes expenditures related to major repairs and renovations. Minor repairs should be classified in the sub-activity "Building Maintenance."




APPENDIX 4

Methodology for Charging
Institutional Support Costs to Auxiliaries
(Click here for Example)
  1. INTRODUCTION:

    The UW-System will charge institutional support services to the auxiliaries using a modified form of the federal methodology for reimbursing universities for indirect costs. The methodology is a somewhat complex process of gathering actual cost data, establishing institutional support cost pools, calculating auxiliary specific rates, and applying those rates to cost pools by auxiliary (detailed explanation provided below). The purpose of the modification is to recognize differing organization structures (for providing services), differing operating practices (for charging services to the auxiliaries), and the need to avoid costly and disruptive changes in organizations and/or operating practices.

    Essentially, the modification makes allowance for those institutional support services charged directly to the auxiliaries as a direct charge for specific services received, and/or for support services carried out by auxiliary staff. The adjustment is made by selecting from one of five prescribed percentages (the selected percent is intended to represent the level of service closest to the actual service received). For example, if all accounting services are performed by the central business office and specific services are not direct charged, accounting costs are included in the methodology as a 100% cost recovery item; if, however, auxiliary staff performs the accounting service or if accounting services are direct charged as a fee for services provided, accounting is included as a 0% cost recovery item.

    The primary features of the methodology are shown below. Section II provides detailed instructions, and Example #1 provides a simulation of the methodology.

    • Yearend expenditures from the most recent UWS Financial Report (not operating budget expenditures) are used to calculate the assessment.

    • All institutional support services other than executive management, and all costs other than capital, are charged to the auxiliaries.

    • One of five percentages is chosen to reflect: the level of support services received; the level of service provided from within the auxiliary organization; and/or the amount paid by the auxiliaries for specific services received.

    • Institutional support costs are divided by a salary, wage and fringe benefit distribution base to arrive at the rate for chargeback. Separate rates are computed for each auxiliary.

    • The charge is computed at by applying the rate to the direct salary, wage and fringe benefit costs of the auxiliary receiving the service.

  2. METHODOLOGY:

    1. Establish an indirect cost pool consisting of institutional support expenditures (exclusive of capital).

      1. Using the Unit, Division, Department, Sub-department (UDDS) designation, assign each institutional support cost to one of the following cost groupings.

        (Appendix 2):

        1. Executive management
        2. Fiscal operations
        3. General administration and logistical services
        4. Administrative computing
        5. Public relations/development

        Institutional support service costs are separately identified in the accounting records in Activity (01); if similar costs are assigned to Activity (08), Auxiliaries, those costs must be added and included here.

        Using expenditures from the most recent yearend financial report, accumulate General Program Operation (GPO funds 101, 102, 103, 104, and 150) salaries, wages and fringe benefits [Ex.1 - $1,568,477], and operating expenses (travel, services and supplies) for each institutional support service. If auxiliaries provide 128 funds separate from the charges computed using this methodology, the amount should be added to GPO support here, and removed as a credit against the charge in Section G.

      2. Assign a percentage (from the options below) to represent the level of institutional support services received as a centrally provided service, and the proportion of expenditures to be charged back to the auxiliaries in Appendix 1.

        Chargeback costs are not to include institutional support services performed by auxiliary staff, or services direct charged to the auxiliaries. Percentage assignments of less than 100% reflect services provided from within the auxiliary organization, services that are paid for as a charge for specific services received, or services that are available to the auxiliaries but not used. Institutions will report all exceptions to centrally provided services to System Administration.

        If an executive oversight function (which is not charged to the auxiliaries) is combined organizationally with a support service function (which is charged to the auxiliaries), the support service must be separately identified and an appropriate charge made to the auxiliaries for services received. For example, if the institution's budget function is part of the vice-chancellor's office and that office provides budget services to the auxiliaries, the cost associated with providing that service must be identified and charged.

        The following five percentage groups are used to determine the level of a particular service provided to each auxiliary:

        1. 100% - The entire service is provided to the auxiliary by the centralized unit. The auxiliary does not perform any part of the service nor does it pay for the service through a direct charge.

        2. 75% - Most of the service is provided centrally. The auxiliary either pays for or maintains some staff to perform minor related functions and/or keep independent records that support the main service.

        3. 50% - the auxiliary employs sufficient staff to perform services to the same extent as those provided by the centralized service. These services, in addition to those provided centrally, can also be direct charged to the auxiliary.

        4. 25% - Most of the service is performed by the auxiliary either by its own staff or by contracting for the service. For the most part, the auxiliary operates the service independently with centralized involvement being maintained primarily for regulatory purposes.

        5. 0% - very little or no service is provided to the auxiliary by the centralized unit. The auxiliary operates the service operation independently, pays directly for all of the services, or has no need for the services. Reports between the auxiliary and the central unit may be exchanged for regulatory and informational purposes only.

      3. Multiply the GPO expenses, for each institutional support service listed in A.1., by the applicable percentage determined in A.2. for each auxiliary to arrive at the amounts representing the cost pools. [Ex.1 - Vice Chancellor - Budget Office - $77,000 x Residence Halls 25% = $19,250]

        The cost pool amounts [Example 1, Residence Halls - $621,300] are used to reflect proportionate levels of support received by an auxiliary, and not to reflect actual institutional support costs assigned to the auxiliaries. For each auxiliary, the cost pool is divided by the institutional distribution base, to arrive at the institution-wide rate applicable to a particular auxiliary. Applying the rate to the auxiliary's salaries and fringe benefits base produces the costs to be assigned to an auxiliary.

    2. Accumulate the GPO salaries, wages and fringe benefits for Physical Plant (see reference in paragraph D.). [Ex.1 - Physical Plant - $1,805,821]

    3. Accumulate the total amount (all fund sources) of salaries, wages and fringe benefits for the institution.[Ex.1 - $21,148,973]

    4. Establish a salary, wages and fringe benefit distribution base by deducting from the total of salaries and fringe benefits established in C. the amount of salaries, wages and fringe benefits included in A.1. and B.
      [Ex.1 - $21,148,973 - 3,374,298 = $17,774,675]. For costing purposes, institutional support and physical plant are indirect costs as opposed to the direct costs in the distribution base. Institutional support is not applicable to itself (A.1.) or to physical plant costs (B.).

    5. Calculate the rate for each auxiliary by totaling the respective service amounts determined in A.3. and dividing that total by the distribution base determined in D.
      [Ex.1 - Residence Halls - $621,300 - 17,774,675 = 3.50%]

    6. For each auxiliary, apply the calculated rate to the auxiliary's direct salaries and fringe benefits to determine the charge for institutional support services. When auxiliary programs are combined with student service programs (e.g., programs housed in student centers/unions) apply the rate only to the auxiliary portion of salaries and fringe benefits.

    7. If a Fund 128 allocation is made to Activity 01, institutional support services, for centralized services (included in A.1.), a credit for that amount shall be made to the charge computed in F.