Revised: July 1, 2003

I. Background

This paper uses and is consistent with the policies and program definitions of UW System Administrative Policy 316 (SYS 316), Auxiliary Enterprises Support Services Chargebacks, the limits placed on the uses of segregated fees set forth in UW System Administrative Policy 820 (SYS 820), Segregated University Fees, and the activity definitions and assignments in the UW System Uniform Chart of Accounts.

The purpose of this paper is to: (1) confirm that auxiliary enterprises are expected to pay for fuels/utilities consumed by auxiliary programs; (2) identify the programs and facilities that are included and excluded from such charges; (3) provide systemwide guidance in determining and assigning costs; and (4) establish internal audit requirements to show compliance.

II. Constraints

A. Statutory Provisions

Section 20.285(1)(c), Wis. Stats., is the sum-certain appropriation assigned to the UW System for most fuels and utilities. Funding sources are General Purpose Revenues (GPR) and student fees. Section 20.285(1)(h) is the Program Revenue (PR) appropriation assigned to auxiliary enterprises. The primary revenue sources are charges to students, faculty and staff for services and the sale of merchandise. Fuel and utility expenditures (e.g., natural gas and electricity) charged to PR programs/facilities are to be the same as the fuels and utilities charged to (1)(c) for GPR programs/facilities.

B. Policy Papers

The purpose of SYS 316Auxiliary Enterprises Support Services Chargebacks is to establish “…auxiliary enterprises have a fiscal responsibility for the cost of support services, and to provide policy guidance and detailed instructions in assigning such costs.” Further, the policy states: “auxiliaries shall be charged for…physical plant services when the services provide a direct benefit to the auxiliaries (e.g., …building maintenance and heating fuels)…and limited to services and costs prescribed in this paper…Auxiliary enterprises are defined…as programs that…charge fees related to, but not necessarily equal to, the cost of services…these services encompass food services, student housing, and college stores. User fees (e.g., room, board and parking) and sales (e.g., bookstore) are the primary revenue sources….”

The constraints placed on the use of segregated university fees (SUF), and the purposes to which the revenues may be used are stated in SYS 820Segregated University Fees. “…SUF may only be used to support student services activities as defined by the UW System Uniform Chart of Accounts…and shall not be…charged for…normal campuswide activities and functions that serve the entire institution, such as campuswide, centrally-provided physical plant…support.” The SUF is distinguished from a user fee in that it is a fee charged to all students.

III. System Policy and Program/Cost Assessments

A. System Policy

Fuel and utility costs associated with facilities, or portions of facilities, designated as auxiliary enterprises shall be the responsibility of the auxiliaries; auxiliary enterprise assignments are to be in agreement with SYS 316, Auxiliary Enterprises Support Services Chargebacks and the UW System Uniform Chart of Accounts.

B. Program Assessments

Fuel and utility costs shall be assessed to residence halls, food commons, auxiliary space in student centers/unions (e.g., food producing/serving/dining areas), other retail space (e.g., bookstores), auxiliary use of nonauxiliary facilities if costs are more than incidental, and entities external to the UW System (e.g., sales to local hospital).

C. Cost Assessments

Assessments shall be the cost of fuels and utilities consumed, and charged to the auxiliary receiving the service. Facilities exclusively auxiliary shall be assessed full costs, and facilities that are auxiliary and nonauxiliary in purpose shall be assessed proportionately. The basis shall be metered consumption, or auxiliary space to total space if metered consumption is not available. Full costs of production, to include utilities, fuel, labor, expendables and a maintenance factor, should be charged to entities external to the UW System and to non-State-owned entities.

D. Energy Conservation

All institutions shall implement those energy conservation measures jointly recommended by the UW System Physical Plant Directors and agreed upon by the Chancellors.

IV. Programs and Exemptions for Nonauxiliary Use

A. System Policy

Fuel and utility costs for facilities, or portions of facilities, serving nonauxiliary purposes shall be paid from Fund 109, with the purpose almost always being student services as defined in SYS 316Auxiliary Enterprises Support Services Chargebacks and the Uniform Chart of Accounts. Institutions are expected to maintain sufficient documentation to substantiate auxiliary/nonauxiliary distributions.

B. Residence Life

Residence life facilities are almost always auxiliary in purpose, and assessed full fuel/utility costs. Exemptions are allowed for nonauxiliary use if: (1) space is assigned and restricted to a specific nonauxiliary use, and (2) services provided in the space are available without additional cost in other facilities to students not living in residence halls (e.g., counseling similar to what is available in the counseling center).

C. Food Commons

Contract dining facilities are auxiliary in purpose when used for dining; at times, such facilities may also be used for nonauxiliary purposes (e.g., a dining hall used for faculty/student meetings, or a place for students to study and socialize). Institutions may prorate a portion of the fuel/utility cost to nonauxiliaries, but must: (1) limit the proration to the hours the facility is open for use; (2) recognize the principal use of the space is assigned a greater cost (i.e., dining is clearly the principal use and therefore assigned a larger proportion of the cost irrespective of time/space used for other purposes); and (3) have documentation to substantiate the assignments.

D. Student Centers/Unions

Student centers/unions provide substantial space to both student services and auxiliary enterprises; fuel/utility charges are expected to reflect these purposes. Auxiliaries are assessed full cost (e.g., food preparation/serving areas and retail space); student service programs are exempt from charge (e.g., meeting rooms, student government offices, student organization offices, student newspaper offices and student lounges); and shared space is assessed proportionately (e.g., a bowling alley supported in part by user fees but also used for instruction, or dining areas where the space is also used for lounging, socializing, studying and “carry-in” food). Common space (e.g., offices, hallways, stairwells, restrooms, mechanical rooms and elevators) is assessed proportionately if such space is more than incidental and clearly supports auxiliary space.

Notwithstanding the provisions of this section or of section VI, effective July 1, 2003, a minimum of 30% of the utility costs of the student center shall be charged to program revenue sources.

E. Parking

The lighting of lots and ramps is a protection and security responsibility and therefore exempt from utility charges. The parking auxiliary does not have primary responsibility for the safety of students and staff.

V. Determining and Assigning Costs

A. System Policy

Criteria to assign and prorate costs shall be purpose of use, time of use, and auxiliary space to total space. Facilities exclusively auxiliary in purpose are assessed full fuel/utility costs; facilities that are part auxiliary and part nonauxiliary are to prorate costs. Institutions are not permitted to assess the s. 20.285(1)(c) fuel/utility appropriation in lieu of charges for other services rendered, and time prorations are to be limited to the hours a building is open for use (e.g., if a building is in use 15 hours a day, then 15 hours should be the basis used to allocate costs, not 24 hours).

B. Fuel and Utility Assessments

Metered kilowatt hour consumption shall be used to assign electricity costs. If separate meter readings are not available, the charge shall be based on the proportion of auxiliary space to total space; the charge shall also recognize type of use (e.g., kitchens consume more electricity than offices). Fuel/steam costs shall be charged using metered consumption and/or the proportion of auxiliary space to total space. Sewer and water shall be charged using metered consumption, and the relationship of auxiliary space to total space. High use areas may use dedicated submetering.

IV. Exceptions and Compliance

A. Exceptions

Additional exemptions may be allowed where demonstrated need exists, but only with advanced approval of the UW System Vice President for Finance. The basic criteria shall be: programs designated as auxiliary by SYS 316Auxiliary Enterprises Support Services Chargebacks are charged for fuels and utilities; programs funded by a combination of user and segregated fees are to prorate the charge; programs and support services funded by segregated fees are nonauxiliary in purpose, and therefore exempt from charge; and programs/facilities designated student services by SYS 316, Auxiliary Enterprises Support Services Chargebacks are exempt from charge (e.g., health services). Refer to Section I of SYS 316, Auxiliary Enterprises Support Services Chargebacks Appendix 1, Program/Activity Assignments, for additional explanation.

B. Compliance

Institutions are expected to review and periodically confirm compliance, substantiate the validity of charges to the auxiliaries, substantiate the validity of exemptions for nonauxiliaries and adhere to cost accounting principles in the assignment of costs. Documentation to support these reports should be filed at a location determined by the institution and should be audited periodically by the institution internal auditor.