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Chargeback Forms and Information

Chargeback Rate Development Worksheet( .xls, 35.5 KB)

Chargeback Policy

A chargeback occurs when one University unit provides a good or service to another University unit and seeks to recover the cost of the good or service. This document describes the policies and procedures for establishing chargeback rates at Binghamton University (University). It’s primary objective is to establish a University approved review and approval process that ensures users pay only their appropriate share of actual chargeback costs and that proper records are available to support the chargeback rate.

The process applies to all chargebacks conducted at the University including the State, Income Fund Reimbursable (IFR), Dormitory Income Fund (DIFR), SUTRA, Research Foundation (RF) and Binghamton University Foundation, Inc (BUF).

I. Costing Principles:

It is important that chargeback rates be established in accordance with applicable costing regulations. The primary guideline for educational institution rate setting is found in OMB Circular A-21, Principles for Determining Costs Applicable to Grants, Contracts and Other Agreements With Educational Institutions and the Cost Accounting Standards (CAS) Board. Basically these guidelines require that chargeback rates must conform to the following standards:

Chargebacks for goods and services must be charged directly to all users with no discrimination between federally and non-federally supported activities.

II. General Policies:

  1. Billing rates are designed to recover the direct operating costs of providing the good and service.  No costs other than those incurred to provide the good or service may be included in the billing rates charged to campus units.
  2. Billing rates are based on a reasonable estimate of the cost of providing the good or service for a year and the projected number of billing units for a year. Actual costs and usage should be reviewed for reasonableness by the chargeback operation at least annually and adjusted as necessary.  Although it is not expected that the billing rates will be exactly equal to the cost of providing the services during any one fiscal year the rate should be reviewed by the chargeback operation annually to ensure consistency with the long-term plan to operate on a break-even basis.
  3. A Chargeback Rate Development Worksheet (Chargeback Worksheet) will be prepared for each rate being requested.  Supporting materials should be attached to the Worksheet as needed to support or explain the items presented.  Where a chargeback operation provides different types of goods or services or a variable rate structure, a separate Chargeback Worksheet must be developed for each type.
  4. A Chargeback Rate Review Team (Chargeback Team) will be composed of a representative from each Vice President area and chaired by a person assigned by the Associate Vice President for Business Affairs. The Chargeback Team will review the purpose of the chargeback program and evaluate the reasonableness of the rate support information.  The Team will review and recommend final approval of chargeback rates and appropriate chargeback account to the Associate Vice President for Business Affairs.
  5. A separate account must be established in the University, RF or BUF accounting system for each chargeback operation.  All cost components identified in the Chargeback Worksheet (personnel, fringe benefits, campus overhead and other than personal service expenses) will be charged directly to the assigned chargeback account.  Likewise, costs not identified in the Chargeback Worksheet cannot be charged to the account.  Accumulating chargeback cost information in this manner will provide information to support rate accuracy, allow for accurate monitoring of surpluses and deficits and provide managers with accurate information relating to their chargeback operations.
  6. Charges are to be levied no later than 30 days following the month in which the service is completed.  If not billed within that period, the billed unit can reject the charge.  Departments who believe they have been charged amounts other than those approved for the good or service can contact the Business Affairs Office to verify that charges are appropriate.  Errors in billings will be adjusted as necessary.
  7. If a chargeback operation provides services to individuals or organizations outside the University, the billing rates charged may be higher but cannot be lower than those charged to internal users plus overhead charges.  Revenue from outside parties may have sales tax and Unrelated Business Income Tax (UBIT) implications and may require a separate account.  Questions regarding sales taxes and UBIT and the need for a separate account should be directed to the Business Affairs Office.
  8. All intrafund charges (for example IFR to IFR) will be done by transferring expenses between accounts (expenditure transfers).  All interfund charges will be done through the respective fund payment processes.  The following chart illustrates the prescribed chargeback process for each type of fund.  Avoidance of the assessment of campus overhead will not be sufficient reason to deviate from the established campus payment process.

    This table contains details of chargeback, expenditure transfer and cash payments related to Binghamton University
    ChargebackExpenditure Transfer Cash Payments
  9. It is not appropriate to transfer chargeback operation revenues to other accounts to support unrelated activities.  If funds have accumulated in a chargeback operation account because of prior or current year surpluses, an adjustment to future rates is necessary.
  10. In some instances, a chargeback operation may elect to subsidize its goods or services by charging rates that are lower than actual cost.  Chargeback operation deficits caused by intentional subsidies may not be carried forward as adjustments to future billing rates.  The amount and funding source of subsidies must be identified in the Chargeback Worksheet.
  11. Auditable financial, statistical and other records related to chargeback operations are the responsibility of the chargeback team chairman and must be retained for three years from the end of the fiscal year to which the records relate.  Records are subject to audit by federal and other sponsors as well as internal and external auditors and University administrators.

 III. Rate Development:

A. Cost Identification

B. Variable Billing Rates

C. Cost Allocation

D. Equipment Costs Included in Billing Rates

E. Inventory Accounts for Products Held for Sale

IV. Rate Review, Notification and Monitoring:

Completed Chargeback Worksheets should be submitted to the Chargeback Team through that area’s Vice President appointed representative.  Thirty days should be afforded the Chargeback Team to complete its analysis of the proposal.  In addition, all approved rates will be posted on the Business Affairs website 30 days before they are effective.  Chargeback areas should provide adequate lead-time to receive Review Team approval and posting of the rate.  It is strongly recommended that chargeback areas recommend adjustments before the annual budget development process so operations can properly budget for any changes in chargeback rates.

The Business Affairs Office will maintain a web site that will contain all proposed and approved University chargeback rates.  Chargeback units may only charge internal users the rates approved for providing the good and service.

The Business Affairs Office will do periodic reviews of the financial records of chargeback operations focusing on the appropriateness of revenue and expense activity, surplus and deficits accumulation, and the adequacy of the chargeback operation’s record keeping practices.

Questions and concerns related to the campus chargeback process and procedure should be directed to the Business Affairs Office.

VI. Definitions:

Billing Rate: The amount charged to a user for a unit of service.  Billing rates are usually computed by dividing the total annual costs of the chargeback operation by the total annual number of billing units expected to be provided to users of the service.

Billing Unit: The unit of service provided by a chargeback operation.  Examples of billing units include hours of service, animal care days, tests performed or machine time used.

Campus Overhead: An assessment to chargeback operations and other activities to support the administrative and support functions of the campus.

Chargeback: Financial transaction to charge for a good or service.

Chargeback Operation: An organizational unit that provides a good or service and charges for the good or service.

Chargeback Team: Individuals identified by the vice presidents to review and recommend chargeback rates to the Associate Vice President for Business Affairs for approval and implementation.

Deficit: The amount by which costs of providing a good or service exceed the revenue generated during a fiscal year.

Direct Operating Costs: Costs that can be specifically identified with a good or service provided by a chargeback operation.  These costs include the salaries, wages and fringe benefits of University faculty and staff directly involved in providing the good or service (i.e: materials and supplies, services, equipment rental or depreciation).

Equipment: An item of tangible property having a useful life exceeding one year and an acquisition cost as specified in Exhibit 2.

Fiscal Year: The 12-month period used for accounting purposes (July 1 to June 30).

Fringe Benefits: An assessment for costs associated with most personal and temporary service positions.

Internal User: A customer that will pay for the good or service through a State, IFR, DIFR, SUTRA, RF or BUF account.

Subsidy: Subsidized costs are identified as expenses that will be incurred by the chargeback operation but will not be recouped through the chargeback mechanism.  The chargeback operation or University administration may choose to subsidize a service by paying a portion of its costs from another funding source.

Surplus: The amount by which revenue generated exceeds the cost of providing the good or service during a fiscal year.

Unallowable Costs: Costs that may not be charged as part of a chargeback fee. Examples of unallowable costs are provided in Exhibit 1.

Exhibit 1: Examples of Unallowable Costs

This list is based on the Federal Office of Management and Budget (OMB) (Circular A-21). The list is not all-inclusive and failure to mention a particular item of cost does not imply the cost is allowable or unallowable.

Exhibit 2: Equipment Useful Life

Depreciation provides a method to recognize that the value of an item of equipment is consumed over an extended period of time, typically several years. This period is called the useful life of the asset. The following asset categories and useful lives are for use for chargeback operation equipment.

Equipment Designation:

Asset Description Recovery Period in Years --Useful Years

Annual Depreciation is determined by dividing the cost of the asset by the number of useful years indicated above.


  1. This is a general guideline table.  Exceptions will require written justification for an alternative recovery period.  The justification should be submitted with the Chargeback Worksheet
  2. Salvage value shall not be considered to calculate depreciation.
  3. Once the recovery period has been set and depreciation has begun, it cannot be changed.
  4. No depreciation is allowed on assets that have outlived their depreciable life (recovery period).
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Last Updated: 7/20/15