Cost Recovery Funds

Per the Integrated CSU Administrative Manual (ICSUAM) on Cost Allocation/Reimbursement, it is the policy of the California State University (CSU) to recover both direct and indirect costs incurred in providing services, products, and facilities to other funds within the university or between the CSU, auxiliary organizations, and external parties. Recovery of direct costs must be based on actual costs incurred. Recovery of indirect costs must be based on an allocation plan. The campus cost recovery plan addressing direct and indirect costs is approved annually by the campus Chief Financial Officer (CFO).

Cost Recoveries (Chargebacks) from Internal University Departments (Funds in the 77xxx series)

Chargebacks have been used as a way for a department to collect funds from other department(s) for the services they provided. Effective in 2018/19, select 77xxx funds have been closed and were folded into 70000 or another trust fund based on the type of activity.  Affected units have already been notified. Effective 2019/20, 77013 no longer exists - please use Fund 70000. Other 77xxx funds are used for services such as: 

If your department needs to collect funds from multiple departments (including auxiliary organizations), please complete the Journal Upload Entry Request (xls) and send the request to the Accountant responsible for processing chargebacks in Accounting Services.

For services provided to outside customers such as a sorority/fraternity or the City of San Jose, an invoice will need to be issued by Accounting Services. To request an invoice to the outside customer, complete the Billing Request to Outside Customers (xls) and return it to Accounting Services.

Cost Recoveries from Outside Organizations (Funds in the 78005-78009 series)

Effective FY 2019/20, all cost recovery activity from auxiliaries should be directed to Fund 70000 rather than a separate cost recovery fund.  Finance is in the process of completing the close out, and Fund 70000 should be used immediately to record cost recovery revenues from auxiliaries.  Project codes should continue to be used. 

Fund Fund Description New Fund Organization Billed Project Code Prefix Cost Recovery Account
78005 Cost Recovery - RF 70000 Research Foundation F 580095
78006 Cost Recovery - TF 70000 Tower Foundation T 580095
78007 Cost Recovery - SU 70000 Student Union SU 580095
78008 Cost Recovery - SS 70000 Spartan Shops SS 580095
78009 Cost Recovery - AS 70000 Associated Students AS 580095

 

How should departments process Cost Recovery for auxiliary activities?

Departments should immediately begin processing Cost Recovery activities in Fund 70000 and reference the appropriate auxiliary project codes such as for Research Foundation or Tower Foundation.  Similar to the Cost Recovery funds, transactions with a reimbursable project code will trigger invoicing at the end of the month.

Departments incurring an expense that was to be reimbursed by an auxiliary organization must use one of the funds list above and the appropriate project ID. When billed, revenue will be credited in the same fund to the cost recovery account shown above.

How will the close out affect my department?

Finance and Business Services is reviewing fund balances by department within the 78005-78009 Cost Recovery Funds and will transfer them to Fund 70000.  The transferred funds will appear in account 570000 within the corresponding department.

Additionally, Cost Recovery Funds (78005-78009) have been removed from FTS so they cannot be selected in Requisition, Vouchers, Transfers, Travel and HR Expense Adjustment requests. Please use Fund 70000 with a reimbursable Project code (e.g., prefix F and T) for purchases you are making on behalf of the auxiliary. If you do not include a reimbursable Project code in the transaction, the expense will not be invoiced at the end of the month.

For example, if a department purchases $300 in furniture and half of the expense is to be reimbursed by Research Foundation, then expense will be charged as follows: 

  • 660003-70000-1234 for $150
  • 660003-70000-1234-F3412346789 for $150  *This portion will be invoiced at the end of the month. Offset when invoice is issued will be found in Account 580095. The Project code is the auxiliary account number with a letter prefix.

Important:  Whenever possible, expenses that will be charged 100% to an auxiliary organization should be paid directly via that organization's procurement system, rather than being paid by the university and coded for reimbursement as described above.

How are cost recovery expenses invoiced? 

At the end of the month, Accounting Services runs the reimbursed billing process in CFS that issues invoices for any expenses posted to an Expense Account (6xxxxx), in Fund 70000 and with a reimbursable Project code in a specific month. The issuance of the bill will create a credit in the Revenue Account 580095. For example: 

  • Expense is in 660003-70000-1234-F3412346789 for $200.
  • When invoice is issued, credit will appear in 580095-70000-1234-F3412346789 for $200.

What Project codes are invoiced?

Project codes with the prefixes AS, F, SS, SU, and T are invoiced to the auxiliaries each month in the auto-billing process.

If you have any questions, please contact FinanceConnect at financeconnect@sjsu.edu or 4-1558. 

Is the RTA chargeback process impacted?

No, this process stays the same except for the fund number.  

Due to the Operating Fund compensation pool implementation in FY 2018/19, previously used project number 99999 (Faculty Release Time/Do Not Bill) in employee profiles is no longer the mechanism to process a faculty release time appointment (RTA).  Instead, the Foundation initiates the RTA form and routes it to Accounting Services once fully approved. This signed RTA serves as an invoice request that will be used to generate the reimbursement. Once generated, two credits will post to the receiving department:  One will post to account code 601817 to reflect the academic salary reimbursement, and the other will post to 603810 to reflect the associated benefit reimbursement. Further information and an example of the RTA process can be found here

Are there departmental action items in the financial systems?

Yes, departments are responsible for updating the fund number for all transactions (expense transfers, budget transfers, PMAFs, change orders, invoicing, etc.), such as: 

  • Requisitions or Direct Payment Vouchers in Financial Transaction Services for expenses to partially reimbursed by an auxiliary organization.
  • Expense Journals or Interdepartmental Expense Transfers in Financial Transaction Services reclassifying an expense to a project with one of the above prefixes.

 

All Other Cost Recovery Funds 

All other cost recovery funds will remain in place or have already been closed out with campus partners.  Some common cost recovery funds for FD&O, IT Services, MLK, Financial Aid, and Capital Project Management will remain in place until further notice.  Please contact either the Office of Budget and Financial Management or Accounting Services

For cost recoveries from other CSU Campuses, including the Chancellor's Office, see Cost Recovery from Other CSU Campuses.

 

All other cost recovery funds will remain in place or have already been closed out with campus partners.  Some common cost recovery funds for FD&O, IT Services, MLK, Financial Aid, and Capital Project Management will remain in place until further notice.  Please contact either the Office of Budget and Financial Management or Accounting Services

 

For cost recoveries from other CSU Campuses, including the Chancellor's Office, see Cost Recovery from Other CSU Campuses.