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<div><b>From:</b> "Ratje, Jeffrey M - (jmratje)" <<a href="mailto:jmratje@email.arizona.edu">jmratje@email.arizona.edu</a>><br>
<b>Date:</b> June 29, 2016 at 3:13:51 PM CDT<br>
<b>To:</b> "'<a href="mailto:calsbusofficers@list.arizona.edu">calsbusofficers@list.arizona.edu</a>'" <<a href="mailto:calsbusofficers@list.arizona.edu">calsbusofficers@list.arizona.edu</a>>, "Bradley, Gregory A - (gabrad)" <<a href="mailto:gabrad@ag.arizona.edu">gabrad@ag.arizona.edu</a>>,
"Hernandez, Bert - (farmm1)" <<a href="mailto:bert@ag.arizona.edu">bert@ag.Arizona.EDU</a>>, "Husman, Stephen H - (husmans)" <<a href="mailto:Husman@ag.arizona.edu">Husman@ag.arizona.edu</a>>, "Main, Greg - (gmain)" <<a href="mailto:gmain@cals.arizona.edu">gmain@cals.arizona.edu</a>>,
"Norton, Elbert R - (rnorton)" <<a href="mailto:rnorton@cals.arizona.edu">rnorton@cals.arizona.edu</a>>, "Rahr, Matt - (rahr)" <<a href="mailto:rahr@ag.arizona.edu">rahr@ag.arizona.edu</a>>, "Schafer, David W - (dschafer)" <<a href="mailto:dschafer@ag.arizona.edu">dschafer@ag.arizona.edu</a>>,
"Siegwarth, Mark D - (mds2)" <<a href="mailto:MSiegwar@cals.arizona.edu">MSiegwar@cals.arizona.edu</a>>, "Silvertooth, Jeffrey C - (silverto)" <<a href="mailto:Silver@ag.arizona.edu">Silver@ag.arizona.edu</a>>, "Mcclaran, Mitchel P - (mcclaran)" <<a href="mailto:mcclaran@email.arizona.edu">mcclaran@email.arizona.edu</a>>,
"Chorover, Jon - (chorover)" <<a href="mailto:chorover@email.arizona.edu">chorover@email.arizona.edu</a>>, "Farrell-Poe, Kathryn L - (kittfp)" <<a href="mailto:kittfp@email.arizona.edu">kittfp@email.arizona.edu</a>>, "Going, Scott B - (going)" <<a href="mailto:going@email.arizona.edu">going@email.arizona.edu</a>>,
"Hawley, Jana - (hawleyj)" <<a href="mailto:hawleyj@email.arizona.edu">hawleyj@email.arizona.edu</a>>, "Marsh, Stuart E - (smarsh)" <<a href="mailto:smarsh@email.arizona.edu">smarsh@email.arizona.edu</a>>, "Schumaker, Karen S - (schumake)" <<a href="mailto:schumake@email.arizona.edu">schumake@email.arizona.edu</a>>,
"Tabashnik, Bruce E - (tabashnb)" <<a href="mailto:BruceT@cals.arizona.edu">BruceT@cals.arizona.edu</a>>, "Thompson, Gary D - (gdthomps)" <<a href="mailto:GaryT@ag.arizona.edu">GaryT@ag.arizona.edu</a>>, "Torres, Robert Matthew - (rtorres1)" <<a href="mailto:rtorres1@email.arizona.edu">rtorres1@email.arizona.edu</a>>,
"Wright, Andre-Denis Girard - (adwright)" <<a href="mailto:adwright@email.arizona.edu">adwright@email.arizona.edu</a>>, "Antin, Parker B - (pba)" <<a href="mailto:pba@email.arizona.edu">pba@email.arizona.edu</a>>, "Burgess, Shane C - (shaneburgess)" <<a href="mailto:sburgess@cals.arizona.edu">sburgess@cals.arizona.edu</a>>,
"Staten, Michael E - (statenm)" <<a href="mailto:statenm@email.arizona.edu">statenm@email.arizona.edu</a>><br>
<b>Cc:</b> "Oden, Belinda K - (belindaoden)" <<a href="mailto:belindaoden@email.arizona.edu">belindaoden@email.arizona.edu</a>>, "Prado, Adriana E - (adri82)" <<a href="mailto:adri82@email.arizona.edu">adri82@email.arizona.edu</a>>, "Silvain, Lynda A - (slynda)"
<<a href="mailto:slynda@email.arizona.edu">slynda@email.arizona.edu</a>><br>
<b>Subject:</b> <b>FW: Thoughts on service provision in units</b><br>
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<p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Garamond",serif">Dean Burgess suggested I share the email below with you. This email is responding to a practice change in the University regarding fee for service activities. Contract & Research
Support Program (CRSP) has been instructed not to sign service agreements/contracts unless the service has undergone an approved rate study or unless the agreement includes the university’s IDC rate. This issue has caused delays for several labs in CALS.<o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Garamond",serif"><o:p> </o:p></span></p>
<p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Garamond",serif">Sangita Pawar and my office have been enlisted at various times by CALS’ faculty to mediate with CRSP. Denise Dellinger of FSO is on a working group including the VPR’s Office,
CRSP, and FSO regarding a possible policy change. <o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Garamond",serif"><o:p> </o:p></span></p>
<p class="MsoNormal"><b><span style="font-size:12.0pt;font-family:"Garamond",serif">Per
<a href="http://policy.fso.arizona.edu/fsm/1800/1810">Financial Policy 18.10</a>, units that engage in fee for service activities should undergo a rate study if they charge any grants and contract accounts. Activities that solely do business with non-UA customers
(external customers), I recommend responding once we have clear guidance based on the issues raised below.</span></b><span style="font-size:12.0pt;font-family:"Garamond",serif"> When in doubt, please work with your unit business officer first.
<o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Garamond",serif"><o:p> </o:p></span></p>
<p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Garamond",serif">The CALS Rate & Review Team is available as well (Lynda Silvain and Adriana Prado). Given the limited resources at units, the college, and at FSO, it will be a challenge to address
all accounts that require a rate study in short order. <o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Garamond",serif"><o:p> </o:p></span></p>
<p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Garamond",serif">This information should be used to inform, not cause alarm.<o:p></o:p></span></p>
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<p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Times New Roman",serif"><o:p> </o:p></span></p>
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<p class="MsoNormal" style="margin-bottom:12.0pt"><span style="font-size:12.0pt;font-family:"Times New Roman",serif">Jeffrey Ratje<br>
<br>
-------- Original message --------<br>
From: "Ratje, Jeffrey M - (jmratje)" <<a href="mailto:jmratje@email.arizona.edu">jmratje@email.arizona.edu</a>>
<br>
Date: 6/29/16 11:19 AM (GMT-07:00) <br>
To: "Dellinger, Denise A - (dellinge)" <<a href="mailto:dellinge@email.arizona.edu">dellinge@email.arizona.edu</a>>
<br>
Cc: "Antin, Parker B - (pba)" <<a href="mailto:pba@email.arizona.edu">pba@email.arizona.edu</a>>, "Pawar, Sangita C - (sangita)" <<a href="mailto:sangita@email.arizona.edu">sangita@email.arizona.edu</a>>, "Oden, Belinda K - (belindaoden)" <<a href="mailto:belindaoden@email.arizona.edu">belindaoden@email.arizona.edu</a>>,
"Prado, Adriana E - (adri82)" <<a href="mailto:adri82@email.arizona.edu">adri82@email.arizona.edu</a>>, "Silvain, Lynda A - (slynda)" <<a href="mailto:slynda@email.arizona.edu">slynda@email.arizona.edu</a>>
<br>
Subject: Thoughts on service provision in units <o:p></o:p></span></p>
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<p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Garamond",serif">Denise,</span><o:p></o:p></p>
<p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Garamond",serif"> </span><o:p></o:p></p>
<p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Garamond",serif">Per our phone conversation Monday, I’m writing to share my thoughts about the pending policy on sales and service activities. While there is no doubt that the UA undercollects
on its true costs of business, a policy that doesn’t recognize the importance of this revenue source to units and the university will do as much harm as undercollecting.
</span><o:p></o:p></p>
<p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Garamond",serif"> </span><o:p></o:p></p>
<p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Garamond",serif">Clearly my comments are limited to service activities selling to external entities. Internal activities should be under the rate study umbrella. CALS has 77 accounts that have
solely done business externally over the last three years. I also admit that I am not aware of the full slate of central admin concerns.
</span><o:p></o:p></p>
<p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Garamond",serif"> </span><o:p></o:p></p>
<p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Garamond",serif">After speaking with many faculty members and unit heads within CALS, I encourage you to take into account the following concerns before making a decision.</span><o:p></o:p></p>
<p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Garamond",serif"> </span><o:p></o:p></p>
<p class="MsoListParagraph" style="margin-left:.5in;text-indent:-.25in">1.<span style="font-size:7.0pt;font-family:"Times New Roman",serif">
</span>Units and colleges pay for the subsidization of service activities now. The financial harm from undercollecting is connected to the unit that makes the decision to undercollect through the subsidy costs it bears. If units are to be empowered to be
entrepreneurial as RCM and other initiatives suggest, units and colleges must be allowed to make decisions. Some of these decisions may be viewed centrally as mistakes; however, units are in the best position to assess how to spend their resources.<o:p></o:p></p>
<p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Garamond",serif"> </span><o:p></o:p></p>
<p class="MsoListParagraph" style="margin-left:.5in;text-indent:-.25in">2.<span style="font-size:7.0pt;font-family:"Times New Roman",serif">
</span>Requiring external-only service activities to undergo a rate study is unnecessary per my understanding of Uniform Guidance and burdensome on the entire system from unit to FSO. If it is not required, why would we self-inflict this? A prescriptive policy
that burdens the system further is likely to not be implementable.<o:p></o:p></p>
<p class="MsoListParagraph"> <o:p></o:p></p>
<p class="MsoListParagraph" style="margin-left:.5in;text-indent:-.25in">3.<span style="font-size:7.0pt;font-family:"Times New Roman",serif">
</span>Charging 53.5% IDC on top of actual costs will price most of the service activities in CALS out of the market. Most of these activities are not unique or novel. There are competitors at other universities or in the private sector. The activities employ
dozens of employees in CALS alone. If they are uncompetitive on price, these jobs will be eliminated, and along with it the economic impact that those jobs contribute to the UA.<o:p></o:p></p>
<p class="MsoListParagraph"> <o:p></o:p></p>
<p class="MsoListParagraph" style="margin-left:.5in;text-indent:-.25in">4.<span style="font-size:7.0pt;font-family:"Times New Roman",serif">
</span>Given the scope and financial importance of these service activities, there is a financial incentive to maintain the revenue stream by individual labs, faculty, or groups. A policy that fails to recognize this importance will encourage employees to
seek circumvention.<o:p></o:p></p>
<p class="MsoListParagraph"> <o:p></o:p></p>
<p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Garamond",serif">Having said this, are there problems with the current service activities? Yes. Units must recognize and be aware of the subsidy they are investing in activities. This can and
should be encouraged through “management-level rate studies.” My team and I have been working with units on these for more than a year to ensure unit leadership is aware of their subsidy contributions. In most cases, these have encouraged units to increase
the price to recover more costs, but still remain in the price market. To me, this is a management issue, not a compliance issue.</span><o:p></o:p></p>
<p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Garamond",serif"> </span><o:p></o:p></p>
<p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Garamond",serif">Another concern is the “squirreling away” of resources these activities can generate. Arguments for this are to pay for expensive equipment and service contracts not easily purchased
otherwise. CALS continues to push for greater use of common core facilities. However, the requirement that colleges invest a portion of their non-allocated revenues to support the multi-year salary increase is a step in the right direction to liberate these
funds. Again, I view this as a management issue that deans and unit heads must be charged with solving. I know in CALS we have been working on these unallocated balances intently over the last year.</span><o:p></o:p></p>
<p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Garamond",serif"> </span><o:p></o:p></p>
<p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Garamond",serif">My thoughts are surely junior to the concerns of everyone on your review team. Humbly, I encourage the group deciding the matter to first visit with faculty and tour some of the
labs or groups that will be affected. Discuss with them the concerns you have and build a bridge before setting a new policy or protocol. Central to many of their concerns is a clear determination on what is service provision as opposed to research. The
change in practice we’ve recently been responding to with CRSP has revolved around this very issue. Is there room for service provision at the UA that is not labeled as novel research activities?</span><o:p></o:p></p>
<p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Garamond",serif"> </span><o:p></o:p></p>
<p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Garamond",serif">Thank you for your consideration.</span><o:p></o:p></p>
<p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Garamond",serif"> </span><o:p></o:p></p>
<p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Garamond",serif">Jeffrey Ratje</span><o:p></o:p></p>
<p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Garamond",serif">Associate Dean, Finance and Administration
<span style="color:#44546A">|</span> Treasurer, Arizona Experiment Station</span><o:p></o:p></p>
<p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Garamond",serif">College of Agriculture and Life Sciences (CALS)
<span style="color:#44546A">|</span> The University of Arizona</span><o:p></o:p></p>
<p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Garamond",serif">PO Box 210036, Forbes Building, Rm 314C</span><o:p></o:p></p>
<p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Garamond",serif">1140 E. So. Campus Drive
<span style="color:#44546A">| </span>Tucson, AZ 85721</span><o:p></o:p></p>
<p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Garamond",serif">Phone: (520) 621-1468
<span style="color:#44546A">| </span>Fax: (520) 621-8558</span><o:p></o:p></p>
<p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Garamond",serif"> </span><o:p></o:p></p>
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