503.0 Designated Operating Funds

DESIGNATED OPERATING FUNDS: Designated operations (fund type 12, fund level 1 roll-up 050000) account for self-sustaining activities related to instruction, community education, public service and student aid activities.  The following functions are included:  

  • Instruction (field trips; international education) - non-credit
  • Community Education (non-credit conferences, workshops, seminars, etc., sponsored by Continuing Education)
  • Public Service (non-instructional services to the general public or outside groups such as: non-credit short courses, workshops, seminars, conferences, and camps; testing and consulting services; special interest publications; theater and music activities; etc.)
  • Scholarships (financial aid funds generated from fund raising activities accounted for in designated operating funds)

Designated Operating funds are accounted for in the Other Funds Non-Limited category of the legislative budget. 

FUND BALANCE STANDARDS- LOWER LIMIT:  Any negative fund balance as of June 30, must be eliminated by providing adequate funding to the designated operating fund by the responsible department or from other Education and General Funds expense accounts.

EXCEPTIONS: Exceptions for situations where the department believes it is more appropriate to require the designated operating fund to eliminate its deficit through future year operations, or where the deficit condition is a normal timing difference relating to its operating calendar will be approved by the Vice President for Finance and Administration or designee, and documentation justifying the exception will be retained for audit. 

INDIRECT COSTS TO BE ALLOCATED: By definition designated operating funds are self-sustaining, generating sufficient operating revenues to cover operating expenses, including direct expenses and the allocable portion of indirect costs borne by other units of the university.

Allocation of indirect costs should be based on a process that is reasonable relative to the activity and the related costs. PSU will determine and document the rationale for allocating or not allocating indirect costs to each series of designated operating funds, and develop methodologies for allocating indirect cots.

For additional information for allocating indirect costs, please see the procedures manual.

INDIRECT COST RECOVERY LIMITATION: Indirect cost recovery rates are limited to no more than the full costs (direct costs and indirect costs) of the activity being allocated.


  • Each designated operating fund should be allocated its computed share of indirect costs.
  • Indirect costs to a designated operating fund are considered expenses, and are recorded as an expense in the designated operating funds. The account code(s) must be specific to indirect cost charges and not confused with other types of expenses such as salaries and wages, OPE, other services and supplies, etc.
  • Indirect costs to designated operating funds should be recorded at least quarterly.
  • The recovery of the indirect costs should be recorded in the budgeted operating funds (fund type 11).
  • The recovery of indirect costs is considered a reduction of expense and not revenue 

For more information, please see the procedures manual.