Research Topic

Service Centers


Criteria to Establish an Internal Service Center

Departments and researchers use a variety of products and/or services to perform their activities or projects. Sometimes these products or services are not readily available from external sources, or cannot be obtained conveniently and efficiently. Therefore, the institution may need to establish service centers to provide these products and services. When these products or services are provided within the U of I System these units function as non-profit businesses, also called service centers.


  • machine shops
  • microscopy facilities
  • visualization laboratory
  • carpool
  • chemical analysis lab
  • sediment analysis lab
  • research resource lab
  • animal research lab
  • toxicology research lab

Banner fund type 3E Service Centers are established to:

  • Provide a good/service (or) groups of goods/services on a recurring basis.
  • Provide goods/services primarily to internal customers within the University of Illinois System.
  • Recover the costs of providing the good/service through charges or fees to users.
  • Add value such as assigned staff and supplies necessary to provide the good/service.

Internal vs External Users

Internal users of service centers are those users whose ultimate source of funds is within the University of Illinois System, or whose funds flow through the U of I System (i.e., sponsored programs). These include academic, research, administrative and auxiliary areas which purchase services to support their work at the system. Federal grants and contracts administered by the universities are considered internal customers.

External users are organizations or individuals whose ultimate source of funds is outside of the U of I System. External users include students and any members of faculty or staff acting in a personal capacity, and the general public. Affiliated hospitals or other universities are considered external users unless the System has subcontracted with them as part of a grant or contract or the System has entered into a formal written agreement (i.e. testing agreements, facilities use agreements, etc.). Although service activities are established principally to serve the internal users, services are occasionally requested by external entities.

Service Rates

Resources and Training

Resource Description
Service Rate Database Resource for finding, adding, and maintaining service rates across campus.
Service Rate Database Tutorial Job aid with instructions for using the Service Rate Database.
Service Activities Resource Page System Government Costing page with information related to the criteria to establish a service center, rate calculation requirements, identifying proper expenses to be included in a rate calculation, and usage base. Includes job aids, tools, and templates to assist with rate calculation.



What are allowable expenses that I should include when calculating a service rate?

Typical normal operating expenses are:

  • Salaries and wages (base salary) of individuals providing the service, producing the goods, or those administering the service center. Including raises if anticipated for upcoming year and vacant positions to be filled in the immediate future.
  • Materials and supplies.
  • Maintenance and repair of equipment assigned to the service activity.
  • Full cost of “non-capitalized” equipment in year incurred.
  • Annual depreciation expense of “capitalized” equipment.
  • Service Contracts (e.g. maintenance agreement).
  • Professional Services.
  • Special conferences or training included related travel, etc., must be specifically related to the operation of the service center.
  • Inventory-related costs where applicable (cost of goods sold).
  • Over- or under-recovery of the service activity adjusted fund balance.

*Note: in order to include expenses in a rate calculation, the expenses must be directly charged to the Banner fund type 3E self-supporting fund.

How do I determine the "base" for my rate?

Service center managers must track actual usage in order to determine compliant service rates. All users or usage base (internal and external) must be included in the base whether charged or not.

What are standard measures for applying my service rate?

These can very by service, but examples include:

  • Per Hour
  • Per Copy
  • Per Test
  • Per Mile
How often am I required to calculate and review my rate?

Formal rate calculations must be performed at least once every two years and rates adjusted accordingly.

  • An annual review of the rate by the department is considered best practice.
  • In addition, between typical rate calculation time frames, if there is a significant change in user base or costs to provide the services, you should re-calculate rates and implement new rates as soon as possible. This ensures users are being billed fairly for the services/goods they are receiving and that the service center is not incurring an unexpected large surplus or deficit.
Are there standard templates available to assist me in calculating rates?

Yes, rate calculation templates can be located on the OBFS Service Activities Resource Page.


Related Documents and Resources

Related FAQs