| Title: |
Service Center Policy |
| Policy Owner: |
Accounting Office – Office of Cost Analysis |
| Applies to: |
All University Workforce Members |
| Campus Applicability: |
All UConn Campuses, except UConn Health |
| Approval Date: |
April 30, 2026 |
| Effective Date: |
April 30, 2026 |
| For More Information, Contact: |
Associate Controller & Director of Accounting |
| Contact Information: |
accountingoffice@uconn.edu |
| Official Website: |
https://accounting.controller.uconn.edu/ |
BACKGROUND
The University of Connecticut must comply with the U.S. Office of Management and Budget (OMB) Uniform Guidance (2 CFR Part 200), which governs administrative requirements, cost principles, and audit requirements for federal awards.
Under 2 CFR 200.468, Service Center charges must:
- Be based on actual usage;
- Not discriminate between federally and non‑federally funded programs; and
- Be designed to recover no more than the aggregate cost of providing services over a reasonable period.
Non‑compliance may result in federal reimbursement obligations and penalties.
PURPOSE
To define requirements for the establishment, operation, oversight, and financial management of University Service Centers and ensure compliance with OMB Uniform Guidance, federal cost principles, and University Policy while promoting equitable and consistent rate-setting practices, and ensuring charges to federally sponsored projects reflect only allowable and allocable costs.
APPLIES TO
Workforce Members who establish, manage, oversee, or utilize Service Centers that provide goods or services to internal University users. It also applies to all Service Centers that charge federally sponsored projects, other restricted funds, or institutional accounts.
DEFINITIONS
Service and Recharge Centers (“Service Centers”): Institutional units established for the purpose of providing goods and services to university departments, and only incidentally to customers outside the university, for a fee. Service and Recharge Centers offer goods and services that are unique, contribute to the mission of the University, require special control, are subject to federal and/or state regulations, or are not readily available from external sources. Goods and services are provided using approved billing rates, and on a regular and continuing basis.
The University operates three types of Service and Recharge Centers (collectively called Service Centers):
- Department Recharge Center: A facility or departmental unit that provides services to sponsored programs and generates less than $25,000 in annual revenue and/or incurs less than $100,000 in annual expenditures.
- Service Center: A facility that provides goods and services on a continuing basis to the University community and charges users a predetermined and approved billing rate to recover the annual cost of operations. Service centers pertain to units that generate $25,000 or more in annual revenue and/or incur $100,000 or more in annual expenditures, but do not meet the criteria of a Specialized Service Facility.
- Specialized Service Facility (SSF): A large service center that provides unique, complex, or specialized services and has combined annual direct operating and internal overhead costs of $1,000,000 or more.
Sponsored Projects: Activities funded by an external sponsor, such as a federal or state agency, foundation, or other non University entity, under a formal award (grant, contract, or cooperative agreement) that obligates the University to conduct a defined scope of work and comply with specific terms and conditions.
Allowable Costs: Costs that meet the requirements of 2 CFR Part 200, including being reasonable, allocable, consistently treated, and not specifically identified as unallowable.
Governmental Cost Accounting Standards (CAS): standards and rules administered by the federal government for use in achieving uniformity and consistency under federal contracts.
POLICY STATEMENT
The University of Connecticut shall establish, operate, and manage Service Centers in compliance with the Uniform Guidance.
The Office of Cost Analysis (OCA), a unit within the University’s Accounting Office, is responsible for ensuring that the establishment of and the rates charged by University Service Centers are in accordance with the Uniform Guidance. The OCA reviews the rates charged by Service Centers, and ensures that the rates are consistent with good business practice and comply with all applicable regulatory and legal requirements, including those outlined in the Uniform Guidance and the Governmental Cost Accounting Standards (CAS). The OCA will ensure that federally sponsored projects are not charged a rate that is higher than any other internal users for the same goods or services under similar circumstances. External rates include indirect costs or overhead, whereas internal rates include only direct costs. Departments operating Service Centers must have the Center and the rates used by the Center, approved by the Manager of OCA in advance of commencing operations.
Service Centers must maintain sufficient documentation to support rate calculations, cost components, and usage bases. Documentation must be retained in accordance with university record retention requirements and applicable federal regulations.
Establishment of Service Centers
Service Centers are created to improve operational efficiency, reduce duplication, and offer specialized services. Departments must use existing Service Centers where available before establishing new ones. A written proposal must be submitted and approved by the sponsoring Department Head which includes:
- Service description,
- Justification,
- Comparison to external providers,
- Cost, revenue projections, and utilization estimates.
Funding Requirements
Funds must be secured prior to beginning operations, including:
- Equipment,
- Inventory,
- Working capital.
Foundation funds may be used only if unrestricted or expressly allowed and compliant with federal cost principles. Sponsored award funds may not be used to establish Service Centers.
Rate Setting Standards and Costs
Rates must:
- Recover total operating costs;
- Be based on actual usage;
- Ensure equitable charges to all University users;
- Be billed uniformly and in a timely manner (at least once monthly)
- Not exceed the cost of operations,
- Exclude unallowable costs,
- Be reviewed at least biennially by the Department and the OCA,
- External user rates may include overhead and indirect costs.
Costs must be reasonable, allocable, and allowable under Uniform Guidance. Allowable costs include salaries, fringe benefits, depreciation (non‑federally funded equipment), supplies, maintenance, and allowable overhead.
Unallowable costs include, but are not limited to: advertising, alcohol, bad debts, donations, entertainment, fundraising, and public relations.
Billing
Service Centers must operate and bill consistently within the University fiscal year and maintain complete documentation supporting billings. Billing must occur at least monthly using approved rates. Prepayment for services and advance billing is prohibited.
Closing a Service Center
Written notification must be sent to the Department Head and Office of Cost Analysis within 90 days.
The final fund balance must be brought to zero. Departments must fund any deficit; federal grants must be refunded for surplus balances. The service center account must be formally closed in KFS.
ENFORCEMENT
Operating units that process internal charges for goods and services are subject to government regulations concerning service centers.
Service center violations under 2 CFR 200 (Uniform Guidance) can subject organizations to significant federal penalties, including disallowed costs, suspension, or debarment. Non-compliant, profit-making, or discriminatory fee structures against federal awards may lead to government-imposed fines, audit findings, or repayment of funds.
Violations of this policy and any related procedures may result in appropriate disciplinary measures in accordance with University By-Laws, General Rules of Conduct for All University Employees, applicable collective bargaining agreements, and the University of Connecticut Student Code.
PROCEDURES/FORMS
Procedures and forms related to this policy are maintained separately by the Office of Cost Analysis. Refer to Establishment and Financial Management of Service Centers and UConn Service Centers Checklist posted in the Accounting website.
UConn Service Centers Checklist
Establishment and Financial Management of Service Centers
REFERENCES
2 CFR Part 200 – Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards eCFR :: 2 CFR Part 200 — Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards
POLICY HISTORY
Policy Created: December 26, 2014
Revisions:
Review and editorial revisions August 27, 2021
April 30, 2026 (Approved by the University Senior Policy Council and President)