Auxiliaries/Educational Business Activities
- Introduction and Contact Information
- Establishment of an Educational Business Activity
- Change in Mission or Purpose of an Educational Business Activity
- Operation of Educational Business Activities
- Auxiliary Enterprise Review Committee
- Educational Business Activity Overhead Assessment
- Financial Reporting
- Decision Matrix for Revenue Classification
- Like most major universities, the University of Florida uses the term “educational business activities” to represent a number of revenue generating activities as listed and defined under the “Definitions” section. The classification of an activity depends on the source of revenue and its relation to the educational process and its clients. The National Association of College and University Business Officer’s (NACUBO) publication “College and University Business Administration” devotes an entire chapter (20) to a discussion of various auxiliary type activities. Also see NACUBO Advisory Report 1999-2, Accounting and Reporting for Auxiliaries. The Florida Board of Governors (BOG) Regulation 9.013 and Florida Statute 1011.47 provide additional directives regarding operation of auxiliaries. Other specific rules apply to student housing and parking services.
- Since educational business activities are primarily revenue-generating business type activities, their spending authority is controlled by available cash.
- For assistance with educational business activity related issues please contact General Accounting and Financial Reporting at 352-392-1326.
Educational Business Activity
Revenue-generating activity from the provision of goods and/or services. Such activity enhances, promotes or supports the University’s instruction, research, public service and campus support functions and other educational and support functions in order to meet the needs of students, faculty, staff and members of the public participating in University events and programs
Educational Business Activities encompass the following:
- Auxiliary Enterprise: An auxiliary enterprise is a self-supporting activity that charges students, faculty, and staff for its services. Revenues for auxiliary services should not be provided from state general revenue sources except in payment for goods and/or services (Florida Statute 1011.47 and The Florida Board of Governors Regulation 9.013).
- Auxiliary Enterprise – Other: Other Auxiliary Enterprises are activities primarily intended to furnish goods and services that are related to the higher education mission. Customers that receive these goods and services will primarily NOT be students, faculty, or staff. Entities of this type are formed to meet the geographic and public service needs of a region and generally relate to an institution’s mission of teaching, research, or public service. Examples of such an entity would be a drug testing center or a university press department. (NACUBO Advisory Report 1999-2)
- Recharge Center: A recharge center is an activity that provides a specific type of service to primarily units within the same department or college. It operates primarily for the convenience of the college or department and includes such operations as stockrooms, scientific equipment maintenance, departmental copy centers, etc.
- Service Center: A service center is an educational business activity that provides specialized services and/or products to one or more University departments. The services may range from routine to highly specialized functions. Such a service might be available from commercial sources but, for reasons of convenience, cost, regulatory compliance, quality, or fiscal control, are often provided more effectively through an on-campus unit.
- Educational Business Activities, including auxiliaries, are established and conducted pursuant to, and in accordance with an authorization and statement of purpose approved by the responsible Dean or Vice President and the Vice President and Chief Financial Officer.University Departments desiring to conduct sales* of goods or services activity on a continuous basis (expected to exceed 12 months) must obtain approval by completing the Request to Operate an Educational Business Activity – Standard form ($20,000 or Greater in Annual Revenue) or the Request to Operate an Educational Business Activity – Short form ($20,000 or Less in Annual Revenue). The following criteria will be considered when establishing new Educational Business Activities:
- The activity is deemed to be an integral part of the fulfillment of the University’s instruction, research, public service, or campus support function as supported by the responsible Dean, Director, or Vice President
- The activity provides goods or services to students, faculty, and staff that are necessary or desirable, but not readily available elsewhere in terms of cost, quality, quantity, timeliness, convenience, or other similar considerations
- The activity is performed for the primary benefit of the University Community or for supporting the University’s mission, but with sensitivity to the area community
- The activity has a sound financial plan.
- Once completed, the form (including the business plan) signed by the Department Chair, the College Business Manager, and the College Dean should be forwarded to General Accounting and Financial Reporting. The form will then be reviewed and approved by the following persons: the Accountant 3 (Auxiliary), General Accounting and Financial Reporting, and the Assistant Controller, Payroll & Tax Services. Lastly, the form will be reviewed and approved by the University Controller and Chief Financial Officer. The authorized Chartfield Liaison will then submit the a DeptID Request form for the approved Educational Business Activity. Upon completion of the form, General Accounting and Financial Reporting will establish a department ID in the appropriate series, enter a zero dollar budget to activate the chartfield string and notify the requestor. The department must provide the name of the Fiscal Officer who will be responsible for reporting and monitoring activity for the cost center.Please contact General Accounting and Financial Reporting at 392-1326 or e-mail firstname.lastname@example.org you have any questions.
* Please refer to the Decision Matrix for Revenue Classification.
- In the event that it is deemed desirable or necessary to change or modify the established mission or purpose of the educational business activity, the change or modification will need to be approved in the same manner as the establishment of a new educational business activity.
- Educational business activities are to be conducted in accordance with good business practices and with the laws, rules, regulations, and policies of the State of Florida and the University. While it is desirable that educational business activities be given the flexibility they need to effectively and efficiently operate, it is also necessary that such activities be conducted in a manner that is proper and appropriate in appearance, as well as in fact. The trading of educational business activity goods or services with vendors for other goods and services, or the purchase of giveaways or promotional items is prohibited unless approved by the Vice President and Chief Financial Officer or his designee.
- Per Federal OMB Uniform Guidance, the University does not allow depreciation to be included as part of the internal billing rate for Educational Business Activities. This regulation is to ensure that these expenses are not double counted for charges to Federal projects as depreciation expense is included as part of the Indirect Cost (IDC) rate.
- An Auxiliary Enterprise Review Committee has been established and is headed by the Vice President and Chief Financial Officer. The committee monitors the financial activities of auxiliary/educational business activity operations.
- While a primary interest of the Auxiliary Enterprise Review Committee will be the financial strength of the educational business activity, the Committee must also consider and be concerned that certain educational business activity types not accumulate excess cash or profits. This is generally a concern relative to sponsored programs and the Federal OMB Uniform Guidance costing standards where service centers and recharge centers are involved.
- Educational business activities share the funding of support unit costs incurred by the University through the allocation of the overhead assessment as part of the RCM budgeting process. The overhead assessment is adjusted annually based on the RCM calculation. A link to the RCM manual can be found here: RCM Manual
- Every educational business activity should monitor and reconcile financial activity using the Monthly Financial Reports.
- Educational business activities with annual revenue in excess of one million dollars are required to submit annual accrual information to the General Accounting Office. Other Educational Business Activities are requested to submit only annual accrual information for Receivables, if any.
- Each quarter the following supplemental information is required from the educational business activities with estimated annual revenue in excess of one million dollars:
- Accounts receivable: 30-60-90-120 day summary with detail and explanation of amounts over 120 days.