AD15 Fees and Rates for Facilities and Services (Formerly Fees and Charges for Facilities and Services)
Policy Status:Under Review>
Subject Matter Expert:
Policy Steward:Vice President for Administration>
- General Provisions
- Approval of Fees and Rates
- Collection of Fees and Rates
- Further Information
To state the University's policy with respect to the approval and application of fees and rates for use of, or patronage of, certain University facilities and services. This includes fees and rates charged to other University departments (internal rates), as well as to external customers.
This policy does not apply to the following:
- Student tuition or fees charged to the student account (assessed to students at the University, college, department or major level) see Policy BT06.
- Fund-raising or development events conducted by the University see Policy FN10.
- Donor levels approved through Development which grant access to programs or certain levels of benefits.
- Continuing Education non-credit course fees this authority is delegated to the Directors of Continuing Education at each campus location.
- Long-term lease/rental fees these must be approved through the Property Steering Committee (Senior VP for Finance & Business).
- Intercollegiate Athletic (ICA) Varsity Athletic events.
- Center or Industry membership programs – see RAG05 - Establishing Research Institutes, Consortia, and Centers (Formerly RAG18).
Thus, fees and rates coming under the scope of this policy would include (but not be limited to) such activities as:
- The use of sports facilities - including golf courses, tennis facilities, natatorium, ice pavilion, etc.
- All non-ICA athletic events for which admission is charged, regardless of where the fee income flows [fee still must be approved even if admission price goes to Associated Student Activities (ASA), the Student Government Association (SGA) or the Graduate Student Association (GSA)].
- All cultural and entertainment events for which admission is charged, except those sponsored by ASA, the SGA and the GSA.
- Use of buildings, auditoriums, conference facilities, special rooms, etc, including related equipment.
- Special fees, such as penalty fees for returned checks, vehicle registrations, traffic violations penalties, etc.
Please note that certain fees are controlled by Central Offices (i.e. the returned check fee) and should be consistently applied across the University.
- Space rates charged for placing advertisements in University publications, including student newspapers if subsidized by the University.
- Student fees for specific courses related to field trips, supplies or knowledge materials (textbooks, CD-ROMs, course packets), unless the charge to students is based strictly on cost recovery (students charged exact amount incurred by department).
- Services provided by Auxiliary and Business Services units with the exception of menu prices and hotel rates for Housing & Food Services and Penn State Hospitality Services and concessions for Bryce Jordan Center and Intercollegiate Athletics.
- Services provided to other departments such as copy or printing services, if the unit providing the services is operating as a full-cost recovery operation. This would also include any such services offered to external customers, even if on an irregular basis.
- Rates established by recharge or service centers, such as lab or research equipment facilities, where all users are direct charged for the use of the services offered. These centers may operate as either general fund operations, or University Services/Auxiliary Enterprises.
Funds derived from the charging of fees or rates must be accounted for as income(as opposed to credit to expense) and must be credited to the account to which the related expenses are charged.
Fees or rates may not be established solely for the purpose of generating discretionary departmental income, especially if the department is funded to provide the activity or service at no or reduced cost. Fees or rates should be established only for units established as income generating by nature, or in other situations considered appropriate by the Financial Officer.
Policy FN14 prohibits services to an outside audience (non-University related or commercial), unless the service is commercially unavailable within the region of a campus and has the prior written approval of the Corporate Controller. In such a case the unit must provide clear rationale why the University should be providing this service to the commercial sector. In general, services being provided which are also provided commercially must be fully-costed, including the application of fringe and overhead. Auxiliary Enterprise units are exempt from this prohibition for purposes of this policy. Units operating as University Services or through general funds can obtain permission through the fee and rate submission process by identifying rates to be charged to non-University-related or commercial enterprises. In those cases, comparable market data for rates charged by others may be required.
Certain cost-recovery fees, such as for centralized copy or fax services for a campus or department or charges to external not-for-profit groups for direct costs of providing security, do not require approval under this policy if the same rate fee is charged consistently to all units and the unit recovering the costs is not a full-cost recovery operation. The recovery of these charges fees should be accounted for as credit to expense rather than income.
In cases where these cost-recovery fees will be applied to contracts or grants, prior approval of the rate is NOT required provided that the cost is charged based on actual costs incurred. However, the following must be considered:
- Costs that would normally be considered an indirect cost, such as copying, printing, telephone, courier services, and mailing costs – would not be permitted to be charged as direct costs on a sponsored award unless the award is considered a major program or a cost justification form has been approved. See Cost Accounting FAQs for more detail.
- For recharge centers that are recovering full costs, these costs can be billed at the actual cost rate, but it must be noted in all rate submissions that these costs will be billed based on actual costs as invoiced from vendor.
The department/unit will be responsible for retaining and providing invoices, etc and user logs to substantiate the rates applied to contracts or grants upon request from authorized University personnel or external auditors.
There are two types of fees/rates that require approval:
- Fees for University services, activities, facilities or events. Fees are often not cost-based and may not necessarily have any associated costs, such as library fines. Fees may also be based on market pricing. Fees which are not developed on a full cost basis are not approved for use with governmental entities, especially as charges to federally sponsored grants and contracts.
- Recharge rates, which must be approved for all University-related services that charge federal grants and contracts. These rates must be approved to assure that the cost basis used to develop the fee rate is appropriate and that the federal government will be not overcharged for the services provided. If income exceeds expenses in any one year, the fee must be adjusted the following year to allow the federal government to recover the excess (i.e. cost basis must be lowered).
Both new fees/rates and revisions to established fees/rates must be approved by the Corporate Controllers Office, except as noted below.
Limited Delegation of Approval Authority:
Financial Officers have the authority to approve fees and rates in the following situations:
- Admission fees for cultural and entertainment events (such as theatrical productions) if the fee will be $50 or less (excludes SGA and ASA events).
- Fees for student field trips based strictly on recovery of direct costs, such as reimbursement for transportation costs or admission fees.
- Pass-through fees, for items such as insurance or supplies, where the costs are passed directly to the customer based on the exact price paid to the supplier.
- Recharge center rates changes of 10% or less in rates (on average based on the requested rate) can be approved by the Financial Officer; however, if the rate analysis is complex or complicated, such as a change in methodology used to calculate the rate, the Financial Officer has the discretion to refer the fee approval to Cost Analysis.
Copies of fee or rate approvals granted by the Financial Officers must be sent to the Corporate Controller's Office (or Controller's Office for the College of Medicine).
Contracts for artistic or other events that set the admission fee as a condition of the contract do not require a separate submission of a request for fee approval. Approval of the contract by the Controller's Office will also be approval of the fees established in the contract.
The unit requesting approval must complete the form Submission of Proposal for New or Existing Fees, and prepare all supporting documentation as listed. If the fee or rate may be charged to federal or federal flow-through sponsored awards or directly to governmental entities as external customers, then the form must indicate that the fee or rate will apply to the federal government, and a full-costing model will need to be used to develop the fee or rate.
Recharge rates and rates charged to sponsored programs will require more detail than fees, especially in providing detail as to the cost basis used to calculate the fee. Those submitting rates must provide adequate documentation to meet the audit standards of the federal government. The Financial Officer and Cost Analysis may request more detail to document or justify a cost change or element based on auditor expectations, requirements or guidelines.
All fees and rates must be submitted in an Excel spreadsheet, which will be returned to the unit that submitted the fees or rates as an official read-only copy and as a modifiable working copy.
The request for fee/rate approval must be approved by the Budget Executive and the Financial Officer. Upon review and approval, unless the Financial Officer has limited authority to approve as previously noted, the Financial Officer will forward the request for fee/rate approval to the Corporate Controllers Office for approval as follows:
- All recharge rates which include direct and indirect costs being charged to federal grants and contracts, must be initially reviewed and approved by Cost Analysis, with final approval by the Corporate Controller's Office. College of Medicine rates should be sent to the Associate Controller for the College of Medicine. Revisions to current rates may be approved by the Financial Officer if under 10% (on average), otherwise these must also be submitted to Cost Analysis. These rates will remain in effect until new rates are approved; however certain specialized service rates (see note below) require biennial approval, even if the rates do not change. The Cost Analysis office can provide assistance in developing such rates.
- Specialized Service Centers are specially designated recharge centers. These are defined by federal policy, 2 CFR part 220, ''Cost Principles for Educational Institutions (OMB Circular A–21) Appendix A, Section J.47 and based on these definitions, the University has designated certain recharge centers as Specialized Service Centers, including all Animal Facilities and the Materials Characterization Lab.
- Rates can remain the same year after year. However, all recharge centers must perform an ANNUAL review to determine if the rates in place are resulting in under or over recovery of costs.
- If upon conducting the annual review, a recharge center determines that the current rates resulted in over recovery of costs, then the rates need to be adjusted to reflect not only current costing structure but also adjustments to resolve the over recovery. The center would follow the process described above to submit new rates.
- If a recharge center determines that the current rates are under recovering – which means that the rates are being subsidized – the center can either adjust rates to more fully recover cost (and submit for approval as detailed above), or can maintain the same rates. However, any funds used to provide the subsidy must be identified to Cost Analysis so these funds can be eliminated from the cost pools used to calculate the F&A rate.
The unit is responsible for reviewing rates, and if no fee adjustments are required, providing a statement certifying to the Financial Officer that the rates in place are appropriate with a copy provided to Cost Analysis. The unit is responsible for maintaining records of the annual review.
- All other fees (not recharge rates) must be reviewed and approved by Cost Analysis, with final approval by the Corporate Controller's Office (except for the College of Medicine which is reviewed and approved by the Associate Controller of the College of Medicine). These fees will be approved for an indefinite time but must be resubmitted if the fees change (increase or decrease) or if the costs underlying the fee structure change substantially.
Units should plan in advance for obtaining fee/rate approvals.
While specific timelines cannot be set based on workload changes throughout the year, units should allow for more time for approval of new or complex fees or rates.
Units may request that fees or rates be established for use both at University Park and campus locations, including providing a range of fees (fee will range from $5 to $10). If the fee or rate is approved for all locations, a campus does not need to separately request approval for the fee. However, if a campus determines that it wishes to charge a fee or rate different than the one approved, it must be submitted for approval.
When fees/rates are approved by the Corporate Controllers Office, the Financial Officer will receive the approval notice and should maintain files for all currently approved fees and rates, as well as a history file for previous fees. The history file must be retained for seven years. Units submitting rates must retain records to support the approved rates and the costs used to develop those rates. Cost Analysis will maintain a record of all officially approved rates.
All fees and rates approved through this policy must be consistently applied to all entities receiving the goods or service. The unit may not waive, reduce or increase established and approved fees or rates for any reason, unless a list of approved waivers and those authorized to exercise these waivers are included as part of the fee/rate approval request. The Corporate Controller's Office may also grant waivers or exceptions to charging established fees or rates on a case-by-case(non-continuing) basis, with adequate documentation of the situation requiring the adjustment or waiver.
Income collected through the fees or rates must be properly reported and accounted for in the authorized University account. The income must be credited to the same account to which the expenses of the operation are charged. Fees or rates collected for services provided through a general fund operation must be accounted for in a general fund account. Financial Officers should be consulted on how to properly account for income generated by fees or rates. In some cases, it may be appropriate for fees or rates to be managed as credit to expense; but these need to be approved through the Financial Officer. Refer to the following Policies for information regarding the reporting and accounting of fees:
If the Financial Officer discovers that a unit is collecting income or crediting expense based on an unapproved fee or rate, the Financial Officer must consult with theCorporate Controllers Office. Actions may include loss of all income collected through the unapproved fee or a requirement to refund all such income to the parties from whom it was collected.
For questions, additional detail, or to request changes to this policy, please contact the Office of the Corporate Controller.
Most Recent Changes:
- March 8, 2016 - Editorial change- correction of the last bullet in the PURPOSE section (reference to RAG18 changed to RAG05 in conjunction with changes to the Research Administration section).
Revision History (and effective dates):
- September 12, 2013 - Editorial change- addition of policy steward information, in the event that there are questions or requests for changes to the policy.
- August 2, 2011 - Major changes made throughout the entire policy to reflect current operations with respect to the scope, general provisions and approvals of fees and rates charged for the use / patronage of certain University facilities and services.
- January 29, 2008 - Editorial changes made to "Approval Process" and "Collection of Fees" sectons; Assistant Controller references changed to 'Corporate Controller's Office.'
- April 1, 2004 - Complete rewrite of policy.
- July 8, 1994 - Added "Other non-student related fees and charges" to scope of policy.
- July 18, 1986 - Added "space rates charged for placing advertisements in University publication" to list of sample charges covered by policy. Changed "University Controller" to "Corporate Controller."
- November 20, 1984 - Added "Graduate Student Government" to list of sample charges covered by policy."
- July 23, 1984 - Added "use of University Park Airport facilities" and "vehicle registrations" to list of sample charges covered by policy. Also, minor editorial changes.
- January 18, 1984 - Added "Scope" and "Approval of News or Revised Fees and Charges" sections to policy. Deleted "Course Fees," "Breakage," and "Supplies and Equipment" sections from policy.
- October 15, 1981 - Added cross-reference to Policy BT06 for information on student fees.
- September 25, 1981 - Changed "Controller" to "Vice President/Controller."
- August 1, 1978 - New policy.
Date Approved:August 1, 2011>
Date Published:August 2, 2011>