UC Santa Barbara Policy 6000
Policies
Issuing Unit: Administrative & Auxiliary Services Date: September 1, 1981
ESTABLISHMENT AND REVIEW OF AUXILIARY ENTERPRISES
I. REFERENCES:
A. President Saxon to Chancellors and Members, President's
Administrative Council, letter dated April 6, 1981, Policy on
Establishment and Review of Auxiliary Enterprises.
B. Accounting Manual Policy A-783-1, Auxiliary Enterprises.
C. University of California Planning and Budget Manual, Operating
Budget Amendments, Chapter 4010, VI.B.4. and VIII.B.4.
D. University of California Business and Finance Bulletin A-47
Revised, University Direct Costing Policy.
E. University of California Business and Finance Bulletin, BUS-72.
Establishment and Review of Auxiliary Enterprises.
II. POLICY:
As the number and variety of University-sponsored business
activities serving students, staff, and faculty have increased in
recent years, questions have been raised regarding the extent and
appropriateness of the University's involvement in commercial-type
activities, especially when such activities may compete with nearby
off-campus enterprises operated within the private sector. This
policy has been developed to provide a uniform basis for evaluating
existing and proposed University auxiliary enterprises and for
explaining their purposes to the public.
It is applicable to all auxiliary enterprises operated by the
University, or by organized groups affiliated with the University
which are authorized to operate auxiliary enterprises. Service
activities (including computer centers) operated by the University
which primarily provide goods and services to University departments
and whose costs are primarily recharged to departmental budgets, are
excluded from the scope of this policy. Academic support units and
the incidental sales and services income of academic units also are
excluded from this policy.
A. CHARACTERISTICS OF AN AUXILIARY ENTERPRISE
Auxiliary enterprises are self-supporting activities which
provide non-instructional support in the form of goods and
services to students, faculty, and staff upon payment of a
specific user charge or fee which is at least equal to the full
direct and indirect cost of providing the goods and service.
The general public may be served only incidentally by these
enterprises. Examples of auxiliary enterprises are housing
operations, non-housing food service operations, parking
operations, bookstores, student centers/unions, and child-care
centers. Any accumulated surplus produced by the auxiliary
enterprise, other than bonded indentured activities, after all
the needs of the activity have been met is used for University
purposes in accordance with University policies or pursuant to
any implementing guidelines established by the Chancellor.
B. RATIONALE FOR ESTABLISHMENT AND OPERATION OF UNIVERSITY
AUXILIARY ENTERPRISES
1. Need and Cost-Effectiveness
The need for certain goods and services shall be
identified which, if provided at a reasonable cost and at
a convenient location, would enhance and support the
University's instructional, research, or public service
programs. The plan to provide these goods or services
through a University-operated or affiliated auxiliary
enterprise shall take into account the availability, the
price, and the quality of any such goods or services
offered by the local business community. When such goods
or services are reasonably available under more favorable
commercial terms and conditions, the determining factor in
the decision to operate the particular auxiliary
enterprise must be the demonstration of the greater
benefit which would accrue to the instructional, research,
or public service programs of the campus from University
operation.
2. Direct and Indirect Costs
Auxiliary enterprises bear all direct costs and, to the
extent required, bear a full share of their own costs of
utilities, custodian services, and other maintenance and
business services. On an exceptional basis, chancellors
have the authority to subsidize from the University
Registration Fee or other non-State revenue sources,
student/ASUC-operated enterprises and/or childcare centers
if the operation of the enterprise requires subsidy.
3. Clientele
Auxiliary enterprise operations shall be conducted in a
manner to serve primarily University students, faculty,
and staff and such operations should only incidentally
serve members of the general public. Bookstores and
snackbars are examples of activities directed primarily
towards the University's educational community, but which
also may serve the surrounding community.
C. CRITERIA FOR ESTABLISHMENT OF NEW AUXILIARY ENTERPRISES
A new auxiliary enterprise can be established by a campus only
upon written determination of need by the Chancellor after
examination of at least the following criteria:
1. The need for the proposed auxiliary enterprise, the type
or types of goods and services to be provided, the primary
clientele to be served, and the methods of customer
solicitation to be used;
2. The availability of the intended goods and services in the
local business community;
3. The costs and benefits of providing the intended goods and
services by the University rather than by the local
business community, including a comparison of price and
quality;
4. The proposed budgets, operating statements, and balance
sheets for the first three years, including funding
source(s) required to establish the auxiliary enterprise
and to enable its continued operation on a self-supporting
basis; and the proposed pricing policies; and
5. All other factors at the campus which are pertinent to the
establishment and operation of the proposed auxiliary
enterprise.
After the decision is made to start a new auxiliary enterprise,
the enterprise shall be formally established in accordance with
the provisions of the Planning and Budget Manual, Operating
Budget Amendments, Chapter 4010, VII.B.4. and VIII.B.4.
Documentation sustaining the determination of need shall be
available as requested for review by Systemwide Administration.
D. REQUIREMENT FOR REVIEW OF EXISTING AUXILIARY ENTERPRISES
All existing campus auxiliary enterprises shall be reviewed
periodically by each Chancellor, but not less frequently than
once every five years, to assure that each enterprise continues
to serve an important University need, is cost-effective
considering business community alternatives, and serves the
University community as its primary clientele. Each evaluation
shall result in a written report which justified the decision
by the Chancellor to continue or discontinue the enterprise.
Documentation of this decision shall be available as requested
for review by Systemwide Administration.
Please direct questions about these policies to Meta.Clow@vcadmin.ucsb.edu. For questions or comments regarding the format of the above information, please contact webcontact@ucsbuxa.ucsb.edu.
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Last Modified By: EBH, 7/09/98