Service Centers & Auxiliaries (draft)

Service Centers and Auxiliaries—sometimes called proprietary funds—are self-supporting units at the University of Oregon. Service Centers provide specialized goods or services primarily to university departments, such as IT support or research facilities. Auxiliaries, like Housing, Athletics, and University Health Services, operate more like businesses and are not directly related to the educational mission of the University. Both types aim to cover operating costs without profit, and unlike academic departments, they must use separate accounting structures to track revenues and expenses, ensuring they recover costs through fees or sales rather than state and tuition-supported general funds.

Budgeting

Service Centers and Auxiliaries take part in the university’s budgeting process and follow the requirements set by the Governmental Accounting Standards Board (GASB). Their budgets are expected to conservatively estimate income from user fees and other sources so they can cover all operating costs and maintain financial obligations. This includes setting aside funds for depreciation, bond repayment, building and equipment repair reserves, and replacing equipment, as well as addressing any prior-year cash overdrafts or negative net asset balances.

If projected income isn’t enough to meet these needs, the proposed budget must clearly identify where additional resources will come from to eliminate the shortfall. Likewise, if an auxiliary or other self-supporting activity ends the fiscal year with a cash overdraft, negative working capital, or a negative net asset balance, the unit must submit a revised plan showing how it will correct these issues.

For more information, please see the university’s policy on Finance and Business Affairs.

Building & Equipment Reserves

All self-sustaining proprietary funds – meaning Service Centers (09XXXX funds) and Auxiliary Enterprises (1XXXXX funds) – are required to accumulate sufficient reserves for the purpose of funding:

• the replacement of depreciable equipment if the capital value of assets owned by the department exceeds $150,000. Service Centers and Auxiliary Enterprises with assets valued at less than $150,000 have the option of establishing a reserve.
• the repair and alteration of buildings

Service Centers and Auxiliary Enterprises will determine the appropriate level of reserves based on a Capital Asset Management Plan prepared and updated annually. This plan will use a minimum five-year planning horizon and estimate funding needed for anticipated related expenses. Business Affairs is responsible for monitoring reserves and working with proprietary fund departments to ensure adequate reserves. The plan must be submitted to Business Affairs annually and retained for audit purposes.

For more information, please see the university’s policy on Finance and Business Affairs.

Funding Building & Equipment Reserves

To fund the reserve(s), move the amount needed from the operating fund to the building or equipment reserve fund using the general ledger account codes as follows:

Move from operations to equipment or buildings reserves:

Debit — Department operations fund — Account code F0002 
Credit — Building or equipment reserve fund — Account code E0002 

The balance in the reserve fund(s) at fiscal year-end should be adequate to meet the repair and replacement needs as detailed in the department's five-year Capital Asset Management Plan. 

Using Equipment Reserves

Equipment is purchased from the department's operating fund, not the reserve fund. If reserve money is to be used for a replacement purchase, it must be moved from the Equipment Reserve fund to Operations using new General Ledger account codes as follows:

Move from equipment reserve to operations to purchase replacement equipment:

Debit — Equipment reserve fund — Account code F0001
Credit — Department operations fund — Account code E0001

Using Building Reserves

Generally, building/IOTB repair and equipment replacement reserves may not be used for any other purpose than to repair or replace capital assets used in the operation of the related auxiliary enterprise or other self-liquidating activity.

If reserve money is to be used for a building repair or alteration, the department must send a request to move the amount from the department's Building Reserve fund to the related Building Repair fund to CPFM Design & Construction Business Operations who will approve and make the transfer. The request may be an emailed directly to rbasto@uoregon.edu or you may use the Building Reserve Fund Transfer Request form. 

Storeroom Inventories

As part of year-end procedures, all university storerooms must perform an itemized count. A member of Property Control will be in contact with all storeroom managers in May or June to schedule a time to observe inventories and ask questions about counting and valuation processes used. A final copy of the inventory is to be sent to Property Control by close of fiscal period 14.

There are two types of storerooms: organized storerooms and departmental storerooms. A perpetual inventory system for maintaining property records is required for organized storerooms and recommended for departmental storerooms. Service Centers using a periodic inventory system for departmental storerooms will still make the same year-end inventory adjustments noted below as do organized storerooms.

The accounting procedures include two year-end adjustments to be made prior to the close of the fiscal year: adjusting inventory to physical count, and adjusting the inventory reserve balance. 

Adjust Inventory to Physical Count

The physical count is then to be reconciled with the inventory balance (Account code A4002) in the Banner system. If these values agree, then no adjustment is required. If these values do not agree, then an adjustment JV to write off the difference is required. 

To adjust the inventory balance in Banner to match the physical inventory count:

Debit — Department fund — Account code A4002 — Inventory
Credit — Department index — Account code 28723 — Inventory write-off

To decrease the inventory balance, do the opposite of the above.

If you have any questions specific to Storeroom Inventories, please contact Property Control.

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