Under University of Illinois System policy and federal regulations, all expenses included in service activity rates must be necessary, reasonable, and directly related to services provided to customers. While this standard sounds straightforward, it can feel subjective in practice.
A cost is necessary if it is required to operate the service center and deliver the specific services customers pay for. A cost is reasonable if a prudent person would expect to incur the cost at a similar level, given the nature and volume of the services. Finally, a cost is directly related if it has a clear, causal relationship primarily to the service provided.
A cost does not directly benefit customers if it:
- Serves departmental administrative or strategic development purposes
- Supports activities unrelated to customer‑requested services
- Reflects effort or training beyond what is needed to operate the service
For example, you may have a meal with other researchers where topics related to your service are discussed, but internal customers (which may include sponsored projects) should not pay for that meal through service rates. While the discussion may feel related, the cost is not necessary for operating the service and should be charged to unrestricted departmental funds.
Travel to train staff on new techniques for equipment used in a service center may be reasonable to include in service rates. However, travel for a staff member to attend a general academic conference serves a broader purpose and should not be charged to a service center fund.
As a guiding principle, when your unit is the customer of a service, you would not want to be charged for more than what you requested. Apply that same standard when determining which costs to include in your service rates.
Contact and Additional Information
See allowable and unallowable costs for more guidance. If you have questions, please search for the appropriate contact on the System Government Costing “Who to Ask" page.
