Rate Development FAQ

 

1      Which units must obtain approved rates?

All auxiliary units must go through a rate development process.

2      When does the annual rate review process begin?

Each summer, AED selects units for a comprehensive review of their rates to be implemented the following July.  Selections are made on a rolling basis.  Units may submit a Rate Review Request to be included in the next cycle of comprehensive rate reviews or for an ad hoc rate review of a subset of goods/services.  To be eligible for an ad hoc rate review, units must have had a comprehensive review within the last 2 years.

3      How long does the rate development process take?

Rate development takes about 6 – 8 weeks depending on the unit’s availability to work collaboratively with AED to develop the rates.

4      What are the rate development steps

  1. AED provides the unit with a customized Rate Development Excel workbook (see generic sample here).
  2. Unit updates the workbook by adding/editing goods/services, usage quantities, expense allocations and comparison market rates.
  3. AED reviews the edits and provides feedback to the unit for further edits until the rates comply with rate-setting guidelines.
  4. AED approves the rates and then notifies the unit of the rate changes, if any.
  5. Unit implements the approved rates starting July 1 of the next fiscal year.

5      What are the rate-setting guidelines?

  • Rates for External users (i.e., customers not paying through a university source of funds) should reflect current market rates for similar goods(s) and/or service(s) and must, at a minimum, cover a pro-rata share of all costs incurred by FIU for providing the good or service.
  • Rates for Internal users (i.e., other FIU Departments) should not exceed the pro rata share of reasonable, necessary costs incurred by the unit in providing the goods or services. Such costs must be supported by adequate documentation that the cost was or will be incurred.
  • Special rates for other customer types, if any, are based on market rates and may be discounted so long as a tie to mission for the customer type is documented and the discounted rate is not less than the Internal Rate.
  • Volume discounts are permissible so long as the discount and eligibility criteria are published, the discount is applied to all eligible customers equally and the discounted rate is not less than the Internal Rate.

6      What records should units keep?

  • A log of the quantity of goods/services provided, the fees paid (if any) and the customer type (e.g., External or Internal).
  • All revenues and expenses related to the sale of goods/services must be recorded in a dedicated auxiliary activity number.