Procedures for Interinstitutional Transactions

Original Issuance Date: September 1, 2022
Last Revision Date: November 11, 2022

1. Purpose of Procedures

This procedure defines how University of Wisconsin (UW) System employees are to account for interinstitutional financial transactions and/or when making payments for personal services involving an individual who holds a concurrent appointment at another UW institution.

2. Responsible UW System Officer

Senior Associate Vice President for Finance

3. Definitions

Interinstitutional Transaction: A transaction between two or more UW institutions that requires financial transfers and/or payments between them. These are divided into six broad categories:

Category A: Payments for personal services involving an individual with a concurrent appointment at another UW institution.
Category B: Transfers of extramural funds from one UW System institution to another.
Category C: Budget reallocations between UW institutions.
Category D: Payments for specialized or technical services and/or materials received from another UW institution.
Category E: Payment for travel expenses of a staff member of another UW institution.
Category F: Continuing education workshops, etc., provided by UW departments which are targeted for the general public.

4. Procedures

A. Category A: Payment for Personal Services

Situations involving the employment of a university staff employee by two institutions require coordination between the Human Resource offices of each institution and should be handled on a case-by-case basis (e.g., represented staff may have contractual provisions, the Fair Labor Standards Act (FLSA) may impose overtime obligations, interchange reporting to the Department of Employment Relations (DER) may apply, etc.). The following procedures apply to situations where one UW institution (Institution B) wants to either employ or purchase the services of an individual who is a faculty, academic staff, or limited appointee employee of another UW institution (Institution A). The procedures described below are presented as a decision tree in Attachment A.

If the services to be provided fall within the scope of the individual’s employment at Institution A (part-of-load), an interinstitutional transfer of funds should be made: Institution B (Buyer) prepares an Inter-Institutional Agreement Form (see Attachment C) and, if both institutions approve, the buying institution processes the Inter-Institutional Agreement Form (IIA) to transfer the funds from Institution B (Buyer) to Institution A (Seller) as reimbursement for the employee’s services. The buying institution will process all IIA expenditures as direct charges through an interunit journal (IUJ). Institutions that wish to encumber the agreement amount will be responsible for liquidating the encumbrance.
If the services provided are outside the scope of the individual’s employment at Institution A, completion of an Inter-Institutional Agreement Form is not required and Institution B payrolls the employee directly.1. If the individual’s combined appointments (at Institution A and Institution B) will not exceed 100% employment: Institution B (Buyer) establishes a separate appointment with an appropriate title and payrolls the employee directly on payroll.2. If the payment exceeds $1,000 and either the individual is employed 100% at Institution A or the combined appointments (at all UW institutions, including Institution A and Institution B) will exceed 100%: Institution B (Buyer) prepares the Inter-Institutional Employment Overload Request Form for Faculty/Academic Staff/Limited Appointee Employees (Attachment B) and, if both institutions approve, Institution B (Buyer) establishes a separate appointment with an appropriate title and payrolls the employee directly on payroll.3. If the payment is $1,000 or less and either the individual is employed 100% at Institution A or the combined appointments (at all UW institutions, including Institution A and Institution B) will exceed 100%: Institution B (Buyer) establishes a separate appointment with an appropriate title and payrolls the employee directly on payroll; an Inter-Institutional Employment Overload Request Form is not required because of the size of the payment.

In situations where Institution B payrolls an individual directly, an I-9 must be completed and retained for the required period of time by the hiring department at Institution B.

Effective July 1, 2013, Wis. Stat. § 16.417(2)(f) states that the $12,000 overload cap does not apply to individuals employed by the UW System but only with respect to compensation received within the system. The $12,000 cap continues to apply for compensation earned by a UW System employee at any other state agency, although it does not apply to compensation earned at private organizations.

Overload compensation received from within the UW System may not exceed the higher of either 20 percent of the employee’s academic (c-basis/9 month) or annual (a-basis/12 month) salary or $18,000 unless the chancellor or designee determines that good cause exists to exceed this threshold and issues an exception in writing.

B. Category B: Transfer of Extramural Funds

The method of accounting for transfers of extramural funds depends upon whether the transfer is related to joint participation in a sponsored project or whether the transfer is simply payment for goods/services that one institution has provided another. Typically, joint participation in a sponsored project will be evidenced by a formal grant proposal on which both institutions are named (and of which both institutions have foreknowledge).

In the case of transfers related to joint projects:

Both institutions should establish a 144 account or a 133 account as appropriate;
The institution named as the primary recipient is responsible for reporting to the granting agency the full amount received and disbursed under the grant and for reporting the full amount of the award to the Board of Regents;
The primary recipient shall reimburse the secondary institution’s indirect costs at the lower of the rate received by the primary recipient or at the negotiated rate of the secondary institution;
To ensure that revenues and expenditures are not double counted with respect to the UW System as a whole, account code 3910 should normally be used to account for transfers between institutions. However, by mutual agreement, transfers may also be made on revenue account code 9968. Revenue transfers of Federal funds may be made on account code 9230 and non-Federal funds may use account code 9500. Regardless of which method is used, it is essential that both institutions use the same account code so that the offsetting amounts can be identified.
An “Agreement to Transfer Extramural Funds Between UW Institutions” (Attachment D) should be completed.

When one institution is simply purchasing services from another institution, the selling institution will not set up a 144 or 133 account and there will normally be no pass-through of indirect cost reimbursement. The selling institution should account for the receipt as a sale or sales credit in accordance with SYS 320, Internal Services Chargebacks depending on the appropriation from which services are being provided. This will ensure that there is no double counting of revenues and expenditures with respect to the UW System as a whole except as appropriate under generally accepted accounting principles for colleges and universities.

Normally the distinction between joint participation in a sponsored project and a sales transaction should be clear. In all cases, the nature of the agreement and not the amount involved should be the determining factor. However, in cases where the distinction may not be clear, the amount involved may be a weighing factor as follows:

Agreements involving more than $5,000 should be examined with particular care to ensure that joint projects are not inadvertently treated as sales and that the administrative requirements imposed by the extramural sponsor are met by all parties to the agreement.
If the amount of the agreement is less than $5,000, the additional administrative cost associated with administering joint projects may weight the classification decision in favor of a sales treatment.

C. Category C: Budget Reallocations Between Institutions

Budget reallocations between institutions are handled as budget transfer transactions and need to be coordinated with the UW System Controller’s Office. A Budget Transfer form must be processed. See SYS 308, Budget Transfers for additional information.

D. Category D: Supplies and Services

For one-time, predetermined costs, the selling institution should submit an invoice to the buying institution including the funding string to remit payment to. The buying institution secures the necessary internal approvals, codes the invoice, processes the payment through the IUJ process.

Note: For recording transactions under all of the above options, the buying institution should use account code 2650 “Services Internal – State & University” unless there is a specific account code (i.e., account code 2600 “Data Processing Services-State & University Departments”) that applies. The selling institution should generally code the credit as account code 9050 “Sales Credit-Internal.” Departments that expect to provide significant services to other departments should budget for internal sales credits.

E. Category E: Travel Reimbursement

When one institution is reimbursing the staff member of another institution for travel-related expenses incurred on behalf of the buying institution, the staff member should submit a Travel Expense Report form directly to the buying institution. If there is payment for services, it is a Category E transaction.

F. Category F: Training Programs

When contracting for an in-service training program, etc., with a department that primarily provides continuing education programs for the general public, the “buying” department should record the transaction using account code 2650. The selling department may record the transaction using revenue account code 9160 “Fees-Continuing Education – Informal Instruction.”