Managing Your Accounts and Funds

Self-Supporting Activity

What is a Self-supporting Activity?

A self-supporting activity is one that is funded entirely by those who purchase the goods or services offered. The department estimates the activity’s projected expenses and then proposes a rate to charge customers to cover those expenses.

How do I Know if my Situation Qualifies as Self-supporting?

Your activity must meet these conditions:

  • A product or service is provided, for a fee, by campus units/departments to other units/departments or to non-university parties
  • The product or service is offered on an ongoing basis (one time services require a business contract or sponsored program contract, if it is research)
  • The revenue collected must be sufficient to cover all costs
  • The offered service is necessary to advance the educational, research, or public service functions of the university

If your activity does not meet the above conditions, it is not self-supporting. Exceptions should be discussed with General Accounting to ensure the appropriate classification.

Does the Activity Have to be Authorized?

All income brought into the university has to be authorized. The activity and the rate(s) charged for self-supporting activities that are sold only to external (non-UC) customers must be approved by the department’s Dean’s or Vice Chancellor’s office. If the good or service is provided internally (recharged), or both internally and externally, the guidelines provided in PPM 340 must be followed.

What are Some Examples of Self-supporting Activities?

Reprographics provides copy service to campus departments. The rates they charge are enough to cover the expenses of providing those copies. The Crocker Nuclear Lab and the Primate Center are examples of units that provide services to both recharge (internal) and external customers.

What is the NUD and How Does that Affect my Self-supporting Activity?

The Non University Deferential (NUD) is the administrative cost associated with producing the self-supporting activity. When calculating the cost to charge customers, determine all of the direct costs associated with the activity. Only the direct cost is charged internally because contract and grant accounts will pay indirect costs associated with the goods and services provided as part of their agreement. The full NUD is charged to external customers to ensure that they are paying their share of the indirect costs. Normally, in a rate, the NUD is not separated from the cost per item/service (as it is in contract and grant agreements).

How Does the NUD Affect my Accounts?

The NUD process is managed by the Budget and Institutional Analysis Division and will post to the ledger on a quarterly basis. The NUD portion (determined by the Assessment Type) of the total income collected for that quarter will be calculated and your income will be debited (reduced) by that amount using object code 0066 - NUD ASSESSMENT. If the account has the full NUD Assessment Type, the department portion of the NUD will be returned (credited) to the same account using object code 0068 - CAMPUS ASSESSMENT.

If your rate includes an approved markup, the amount of that income associated with the markup must be recorded using object code 006M and is excluded from the NUD calculation. A markup can only be added if the rate is using the full NUD.

My Situation Qualifies as Self-supporting. What Happens Next?

Complete the following steps:

  1. Establish a rate (learn how)
  2. Get the fund and account set up
    • Contact General Accounting with the documented approval of the activity and the rate. General Accounting will assign a UC fund, establish the unexpended balance account, create the provision for allocation account and, if needed, establish reserve funds.
    • Create an account using a Kuali Account (ACCT) document

On the document, fill in the assessment type (NUD), rate name and dates, whether the rate has depreciation or reserves associated with it, the income authority and the income type. (Assessments Explained - PDF)

  1. Create a  Budget Adjustment (BA) document to establish the annual operating budget
  2. Create a Current Budget Adjustment (CB) document to manage the current year’s operations

How Do I Manage my Self-supporting Activity?

Make sure that only expenses necessary to provide the good or service are posted to the account(s), particularly the salaries that were included in the rate.

At the middle of the fiscal year (i.e., around January), use Decision Support (DS) query Annual Summary by Object Group (210). This report indicates the percent available or spent and provides projections to year end. You can also run DS query Statement of Operations (193) which shows a summary of revenues and recharges (income) as well as expenses for the fund.

If the activity has more revenue or more expenses than expected, then find out why.

Possible issues with more revenue than expected:

  • rate had depreciation or reserve for improvement but it was not set up by General Accounting;
  • all expenses associated with the activity are not being posted to the account.

Possible issues with more expenses than expected:

  • estimated cost to provide good/service much lower than actual;
  • expenses not associated with the approved rate are posting to the account.

Possibly use the General Funds to SSF comparison (slide 94)

What Documents are Used for Self-supporting Activities?

Recharging - When recharging, the method depends on whether you are recharging another UC Davis department or another UC campus. The KFS Internal Billing (IB) document is:

  • used for recharging other UC Davis departments for goods provided or services rendered according to a valid, committee-approved rate for an ongoing activity (see PPM 340 for details)

If you are recharging another UC campus, complete the form for the Intercampus Charge/Order. The form and instructions are available on our Forms page.

If you are recharging a large number of accounts (i.e., more than 100), you can use a Direct Feed (PPM 340-20).

External revenue - You can provide goods or services to external customers and receive payment either at the point of sale or by invoicing for the goods and services by creating a receivable for the money owed.

  • Point Of Sale (POS) is either cash, check or credit cards taken at the time of sale – The KFS Cash Receipt (CR) or Credit Card Receipt (CCR) document is used.
  • You can create an invoice and the associated receivable in Banner or KFS (see Accounts Receivable). Remember, you are granting credit to your customers when you provide the goods/services and invoice them instead of collecting the money immediately.

What Happens at Fiscal Close?

At fiscal year end, the balances in your accounts do NOT carry forward into the next year. The net of the year’s revenues and expenses (total in the Expenditure column for the fund) is carried forward in the unexpended (fund) balance account (UB). The budget for your fund is reappropriated to the unexpended balance (UB) and provision for allocation (PR) accounts. Your department must then reappropriate the balance in the provision account into your operational accounts prior to spending. You can view the balances at year end using DS query Balance Summary (1) or Sub Fund Summary by Consolidation (55) and run it by the UC Fund number.

In July, the base budget will post as the current budget for the new year. The amount in the provision for allocation account (PR) is the accumulated net earnings (credit) or deficit (OD) for the fund/activity.

Resource

Budget and Institutional Analysis website

Supplemental content

Accounting & Financial Reporting Menu