Procedure: 403-Revenue Producing Activities

Establishing an RPA

  1. Background
  2. Procedures
  3. Funding Source
  4. Questionnaire
  5. Budget
  6. FTE Requests
  7. RPA Approval Process
  8. Regent Policy on Competition with the Private Sector

Background

An RPA is established when revenue is generated from a fee charged for the sale of products owned by the university or services performed by university employees or for admission to an event. If the revenue is from admission to an event, the event must be UW-sponsored or cosponsored and be promoted that way. All RPA must relate to the mission of the UW (instruction, research, or public service). The revenue may be from internal or external customers. Following are examples of various UW-Madison sales activities:

  • Sales of publications and journals,
  • Copy center operations for departmental sales,
  • Printing services offered by various UW departments,
  • Specialized goods or services produced by departments and sold to non-UW users,
  • Sales of research by-products, including reports,
  • Conferences and workshops sponsored by the University,
  • Computer services for departmental research staff.

It is not necessary to establish an RPA if revenue generated is less than $25,000 per year unless the Dean’s office has set a lower revenue threshold. Revenue from these small operations may be deposited as sales credits (SFS account code 9050 for internal revenue; account code 9051 for external revenue) to the funding source for the related expenditures. Revenue should not be deposited as vendor refunds to expenditure class codes.

Procedures to Establish a Revenue Producing Activity

To establish a new Revenue Producing Activity account in fund 101, fund 128 or fund 136:

The RPA questionnaire, Budget Adjustment Request form and the FTE Request form may be found on the Forms page of the Accounting Services Web site, http://www.bussvc.wisc.edu/acct/forms.html.

If the activity is to be established on fund 133 or fund 144, contact the Office of Research and Sponsored Programs for assistance.

Funding Source

Fund 101

Fund 101 (GPR -- General Program Revenue) is used whenever the RPA meets all the following criteria:

  1. The activity is related to a department’s operating budget;
  2. It can be operated within one fiscal year (that is, there is no significant accounts receivable or inventory at the end of the year);
  3. Only non-salary expenditures will be recovered by the RPA; and
  4. Annual revenue will be less than $25,000.

Receipts cannot be deposited to fund 101; however, sales credits are recorded directly to fund 101 as negative expenditures. Interest is not earned on positive balances in the account or charged on deficits. Fund 101 is established for the state fiscal year only; thus, money collected in one fiscal year by the RPA cannot be used in a different fiscal year. Any deficits in the account must be resolved by the end of the fiscal year with the Dean’s office.

Fund 128

Fund 128 (PR - Program Revenue) is designated specifically for auxiliary enterprises but is also widely used for other RPAs but is also used for other RPAs in some divisions.

Some or all of the following conditions must be met to establish a fund 128 RPA account:

  • Inventories of significant value exist at the end of the fiscal year.
  • Accounts receivable are significant and overlap fiscal years.
  • Revenue is collected in one fiscal year but expenses are paid out in the next.
  • Expenses are incurred in one fiscal year but revenue is received in the next.
  • The operation involves non-federally funded equipment and the depreciation for that equipment is included in the rates that are charged to users.

Cash surpluses from one fiscal year will carry over to the next fiscal year; deficits also carry over from year to year. Fringe benefits are paid by fund 128 accounts. Interest is earned on positive cash balances and charged on deficits.

Study Abroad Programs under the Office of International Students and Programs (Division 10) must be established on fund 128 (per UW System Financial Policy & Procedure Paper #45 ).

RPA's in the following divisions cannot be established on fund 128, except with specific approval from the Office of Auxiliary Operations Analysis: 07, 12, 17, 19, 27, 34, 40, 45, 48, 49, 53, 54, 55, 56, 63, 87, & 93.

 

Fund 136

Fund 136 (PR - program revenue) can be used for RPAs.

Some or all of the following conditions must be met to establish a fund 136 RPA:

  • Inventories of significant value exist at the end of the fiscal year.
  • Accounts receivable are significant and overlap fiscal years.
  • Revenue is collected in one fiscal year but expenses are paid out in the next.
  • Expenses are incurred in one fiscal year but revenue is received in the next.
  • The operation involves non-federally funded equipment and the depreciation for that equipment is included in the rates that are charged to users.

Cash surpluses from one fiscal year will carry over to the next fiscal year; deficits also carry over from year to year. Fringe benefits are paid by fund 136 accounts. Interest is not earned on positive balances in the account or charged on deficits.

All Non-credit Outreach Education (i.e., educational conferences, workshops or short courses) must be established on fund 136, activity 5. The conference, workshop or short course must be UW-sponsored or cosponsored. An outreach account may be established for a one-time activity or it may be ongoing. Accounts for Non-credit Outreach Education are established through the Office of Auxiliary Operations Analysis.

Funds 133 or 144

If an RPA is related to a project that is funded by a grant or contract, the Office of Research and Sponsored Programs should be contacted before any RPA account is established. The Office of Research and Sponsored Programs will help the department determine if the revenue producing activity should be incorporated into the fund/account for the contract or grant or if a separate account should be established in another fund.

Completing an RPA Questionnaire

By completing the RPA Questionnaire, the department provides much of the information needed by the Dean’s Office to complete the approval process and establish the RPA. The RPA Questionnaire is available on the Forms page within the Accounting Services Web site. A detailed set of instructions for each question is also available at the above Web site.

Create a Budget

When a new RPA is requested, an initial budget must be created, using the Budget Adjustment Request (BAR) form. This form should be attached to the RPA Questionnaire when it is sent to the Dean’s Office for approval. The BAR form and instructions are available from your Dean’s Office or on the Forms page within the Accounting Services Web site.

FTE Request

When establishing a new RPA, the department must determine whether new permanent positions will be needed. New RPAs will not automatically be given new FTEs. The Vice Chancellor for Administration controls FTEs at the campus level and monitors authorized position levels, filled position levels and vacancies through the Office of Budget, Planning and Analysis (OBPA).

Departments requiring additional FTEs should complete the Request for the Program and Segregated Revenue Positions form and a narrative providing a position justification and send to the Dean’s Office along with the RPA Questionnaire.

Planning for FTEs should take place in the annual budget process although requests for new FTEs can be made once the fiscal year has begun. OBPA processes requests quarterly, except in unusual or emergency circumstances.

RPA Approval Process

The approval process begins with the completion of the RPA questionnaire by the department. The department then attaches a completed Budget Adjustment Request (BAR) form, all rate calculation documentation and position request forms (if appropriate) to the questionnaire, and forwards all documents to the Dean’s Office.

The Divisional Business Representative (DBR) reviews the questionnaire and rate schedules, and assigns a fund, UDDS and activity code. The DBR completes the UDDS Action Request form, signs the cover page of the questionnaire and the BAR. The DBR must determine that the new RPA is appropriate, i.e., related to the mission of the University; that rates have been calculated correctly; that the UW System Policy on Competition with the Private Sector has been considered; and must agree with any new positions being requested. The DBR sends position request forms to OBPA, Room 100 Bascom Hall. UDDS Action Request forms are sent to Accounting Services, 21 N Park St., Suite 6101, Madison, WI 53715-1218.

As part of the approval process the DBR must review the RPA request for the following conditions:

  • Revenue is expected to be greater than $25,000 per year.
  • External accounts receivable are expected to exist at the end of the fiscal year.
  • Inventories of supplies and/or materials for resale are expected to exceed $100,000 at the end of the fiscal year.
  • Unearned revenue is expected to exceed $5,000 at the end of the fiscal year.
  • Unrelated business taxable income (UBTI) is expected to be generated.

If any of these conditions exist, a copy of the questionnaire and all attachments should be forwarded to 21 N Park St., Suite 6101, Madison, WI 53715-1218.

Depending on the fund assigned to the RPA, the DBR then sends a copy of the questionnaire and attachments to the following:

  • Funds 128 & 136 - Auxiliary Operations Analysis, Room 100 Bascom Hall.
  • Fund 101 - send BAR or budget transfer form to OBPA, Madison Budget Office, 100 Bascom Hall.

The last step of the approval process is to send notice of approval to the department, including special instructions, such as handling of sales and year-end financial reporting (accounts receivable, unearned revenue and inventory.)

Regent Policy on Competition with the Private Sector

In recent years, concerns have grown nationwide that products and services offered by non-profit organizations, especially publicly funded institutions such as the UW System campuses, are competing unfairly with similar products and services offered by private businesses. Because of these concerns the UW Board of Regents has adopted Policy 89-1, “Competition With The Private Sector.”

Because of this policy, a review committee has been established to advise on issues of competition. This committee includes representatives of the private sector and general public as well as the University. All major new competitive activities should be referred to the committee as well as any ongoing activities whose appropriateness or pricing has been questioned. The responsibilities of the committee are defined in the section of the policy titled "Protocol for Monitoring Institutional Competitive Activities". If your division receives a complaint from a private business regarding unfair competition, or if you are considering a major new competitive activity, call the Assistant Vice Chancellor for Business Services at 262-0063.

Criteria that should be used to decide whether or not an activity is appropriate for the University to be involved in is defined in the section of the policy titled "Criteria For Judging the Appropriateness of Competitive Activities".

If the proposed activity is sale of classroom materials, such as handouts, consult UW System General Administrative Policy Paper #29 to determine whether students may be charged in addition to tuition and fees.

Procedure: 403-Revenue Producing Activities