Home Purchasing Home Regulated Materials Surcharge Issues Q & A Surcharge Item List	Surcharge FAQ This site was developed to answer questions about the surcharge process for regulated materials at Iowa State University. Please click on the question list below to link to the appropriate answer. Why is there a surcharge on certain items acquired by the university? How will the surcharge be calculated? What items are subject to the surcharge? Are all types of purchases subject to the surcharge? How will surcharges be applied to contract order items? How will surcharges be applied to items purchased on individual purchase orders? How will I know that a surcharge will be applied to my purchase order? Where will I see the surcharge on a voucher? How will I recognize the voucher’s surcharge in the university’s accounting system? Will the surcharge appear on the purchasing card reallocation screen? How are the surcharges applied to Purchasing Card transactions? How will I recognize the purchasing card’s surcharge in the university accounting system? How will surcharges on computers, peripherals, and related items be applied? Will there be an encumbrance for surcharges? Are there applicable limits to the surcharge? Why is there a surcharge on certain items acquired by the university? Local, state and federal regulations mandate the proper handling and disposal of many types of materials purchased and used by ISU. Typical examples of the most common hazardous materials include, but are not limited to, research chemicals, radioactive materials and biohazardous agents and toxins. Many of these materials possess dangerous properties with the potential to cause serious harm to human health and the environment if not properly handled. Other less obvious products, such as arts supplies, batteries, electronic equipment, computer hardware and peripherals, laboratory equipment, medical supplies, petroleum products, etc., are regulated at disposal, are used with regulated materials, or incur costs through site management or cleanup of spills and leaks. The University’s responsibility to properly handle these materials and address these situations is coordinated by Environmental Health and Safety staff. As the use and subsequent quantity of hazardous waste materials have increased over the past two decades, the capability of ISU’s existing waste handling facilities to properly house these materials has been exceeded. The State Fire Marshal’s Office has deemed that the current building fails to meet building safety codes that allow for the proper storage, handling and treatment of the hazardous wastes that move through the facility. The Fire Marshal’s Office has indicated that the University needs to provide a new facility with the necessary health and safety features to properly handle regulated materials. Construction of a new regulated materials handling facility, which will be located North of campus near the Administrative Services Building, will begin this Spring with scheduled completion by Summer, 2005. The new facility will meet regulatory requirements, address the growth of the number of materials that are now regulated, ensure the health and safety of ISU personnel providing the proper management of these regulated materials, and prevent environmental pollution. Additionally, to streamline the management of these materials, as well as take advantage of the efficiencies of operating out of a single building, other EH&S operations will also be housed in this new facility. The cost of constructing, equipping and operating such a facility cannot be completely covered by central resources. The financing plan approved by the President’s Cabinet and submitted to the Board of Regents called for implementing a cost-recovery mechanism to offset part of the facility cost. For EH&S regulated materials services, a point-of-service fee is neither feasible nor advisable. Imposing fees at the time of disposal could potentially invite inappropriate or dangerous disposal methods in order to avoid the fees. For this reason, the university has elected to impose a surcharge on regulated materials at the point of purchase. Effective with purchases initiated after July 1, 2004, a 5% surcharge will be imposed on purchases of products that require the most oversight. For items requiring less oversight, a 1.75% surcharge will be charged. Through June 30, 2006, transactions paid entirely with research grants and other sponsored funding will be exempted from the surcharge. Where split funding occurs, surcharges will be adjusted accordingly. This exemption expires July 1, 2006.(top) How will the surcharge be calculated? The surcharge will appear as a separate charge added to the acquisition cost. It will apply to all items or transactions identified as being subject to the surcharge. (top) What items are subject to the surcharge? Items that are subject to the surcharge include art supplies, automotive parts and supplies, some audio/video equipment, batteries, biological supplies, cleaning supplies, chemicals, computer hardware and peripherals, drugs and pharmaceuticals, certain electrical parts, fertilizers, laboratory gases, laboratory equipment , medical supplies, paint, petroleum products, photo equipment, film processing supplies, radioactive materials, tires, veterinary equipment and supplies, water softening and water conditioning chemicals, and X-ray film processing supplies. For a complete list of the product codes that are surchargeable, click here (top) Are all types of purchases subject to the surcharge? Yes, all purchases will be charged at either the 1.75% or 5.00% rate when they represent any of the identified categories. The charge will apply to purchases made with intramurals, purchase orders, contract orders, blanket orders, and purchasing cards. (top) How will surcharges be applied to contract order items? Contract orders are generally written to cover a specific product, service, or group of like products, such as laboratory chemicals, petroleum products, etc. The entire contract order will be assigned one product code. If the applicable product code reflects a surcharge category of items, all releases against the contract order will have the surcharge applied. (top) How will surcharges be applied to items purchased on individual purchase orders? Each line item of the purchase order will have an applicable product code assigned. When the applicable product code is one of those identified for surcharge, the surcharge will be added when payment is made. The fund account(s) assigned by order line item will be prorated to fund the surcharge. (top) How will I know that a surcharge will be applied to my purchase order? Surcharge items classed as “supplies” will be identified by an asterisk (*) appearing in the left-hand column of the purchase order, adjacent to the item number. Similarly, items classed as equipment will appear with an E* designation. If an asterisk appears, the surcharge will be applied when payment is made. (top) Where will I see the surcharge on a voucher? A column labeled “SURCHARGE” has been added to the right of the existing amount column in the fund-acct/class summary section of the voucher. The prorated amount of the surcharge will appear in that column for those accounts paying for items subject to the surcharge. Contract orders with no funds designated and written using all 9’s, will have blank lines printed with the total surcharge amount shown. Departments will need to complete the blank lines and assign both the applicable fund-account(s) and dollar amounts to pay the surcharge. (top) How will I recognize the voucher’s surcharge in the university’s accounting system? The surcharge will be a separate intramural transaction with the same date and reference number as the voucher transaction. Its description will be “REGULATED MATL. SURCHARGE” and it will have a class code of 678 00. (top) Will the surcharge appear on the purchasing card reallocation screen? When a surcharge applies, the words “REGULATED MATERIAL SURCHARGE” will appear in yellow in the upper right area of the purchasing card System’s reallocation screen. This means the entire transaction and all charges on that screen will be subject to the surcharge. Through June 30, 2006, transactions paid entirely with research grants and other sponsored funding will be exempted from the surcharge. Where split funding occurs, surcharges will be adjusted according to the funding source. (top) How are the surcharges applied to Purchasing Card transactions? Purchasing card transactions are charged based on the Merchant commodity Code (MCC code) of the vendor and not what is purchased from the vendor. The MCC code is a general category of goods or services that the vendor provides. Surcharges on purchasing card transactions will be determined by the Merchant Commodity Code (MCC) initially assigned by the vendor's bank. If the supplier has an MCC that is associated with a surcharge category, the transaction will be surcharged regardless of the item(s) purchased. This MCC code cannot be modified by ISU. (top) How will I recognize the purchasing card’s surcharge in the university accounting system? The surcharge will be a separate intramural transaction with the same date and reference number as the purchasing card expense transaction. The description will be “REGULATED MATL. SURCHARGE” and it will have a class code of 678 00. The purchase order field on the FM screens and the Departmental Statement will contain “**-PCARD-RM” (top) How will surcharges on computers, peripherals, and related items be applied? Surcharges will be applied to computer related items, except software and warranties, whenever written on a purchase order to AIT, ATS, or external suppliers. It will also be applied to transactions handled as intramural transactions with AIT, ATS or University Book Store. (top) Will there be an encumbrance for surcharges? No, the surcharge will not be included as part of an encumbrance. The surcharge amount will appear on payment vouchers and purchasing card reconciliation screens. In addition, the surcharge amount will appear on both the Financial Management (FM) system and departmental statements after payment is made. (top) Are there applicable limits to the surcharge? The surcharge will be applied up to a maximum surcharge of $1500 for capital equipment (class code 711-00) items purchased on any one purchase order. If multiple equipment items appear on any one requisition, the requisition may be split into multiple orders and the $1,500 surcharge cap would apply to each order. All payments made against purchasing cards, contract orders, and blanket orders that are subject to the surcharge will be charged at the appropriate 1.75% or 5.00% level, without an applicable cap. (top)
Purchasing Department, purchasing@iastate.edu Copyright© 2002, Iowa State University, all rights reserved Revised 03/18/2005 8:45 AM