PeopleSoft calculates encumbrance based on a daily rate for the employee for the remaining fiscal year.

Encumbrance release is calculated following every pay period for the employee paygroups included in that payroll only.

The following are the formulas for calculating encumbrance for Bi-weekly and Monthly employees:

Monthly
Salary X 12 /365 = Daily rate X # of days left in the fiscal year


Bi-Weekly
Standard hours X Hourly rate X 52 Weeks / 365 Days X the number of days left for the fiscal year.

If there is a termination row to the position for an employee, the encumbrance will stop at that point.

If there is a new funding row on the department budget table to a new cost center on a given date, the encumbrance will follow those dates to the particular cost centers involved.

If the encumbrances for bi-weekly employees, (particularly student employees) is too high, check the standard hours on the job data panel for those employees to verify that their standard hours and FTE are showing correctly. If adjustments need to be made, contact the HR department for assistance.

The reason that the actuals and encumbrance amounts will not equal the final budget amount for monthly employees on the BOB report is because we pay monthly employees the same amount regardless of how many days are in any given month. When the encumbrance release is calculated, it only releases the encumbrance for the number of days in the current month, so the encumbrance release will vary. The actuals will not include longevity paid from the state account. Local account longevity will appear on a separate line on the BOB report for the cost center.

Explanation of how encumbrance and encumbrance release works.
Each pay period, the Payroll office runs the encumbrance process to calculate the new encumbrance from the first day of the next pay period through the end of the fiscal year unless a termination row exists on the job data panel. The encumbrance process calculates the standard hours per week times the hourly rate on the compensation panel times the number of days remaining in the fiscal year or through the termination date. This calculation will include the longevity if it is paid locally. When the release process runs, it takes the newly encumbered amount, compares it to the last encumbered amount and releases the difference.

Explanation of why the encumbrance relief amounts are different.
This is a sample example to illustrate: At the beginning of the fiscal year, an employee was paid at one rate and their longevity was paid at one rate. On January 1, the employee received their merit and ATB raises and also had a longevity pay increase. When the new calculation occurred, it calculated the new encumbrance which was significantly higher than the last encumbered amount. It relieved the difference between the new encumbrance and the old encumbrance, this caused the release to be less.

Actual expenditures and the newly encumbered amounts should be reconciled. The open commitments should be verified, not the encumbrance release.