Training Materials
Encumbrance
Calculation
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.
ADDITIONAL COMMENTS FROM
PAYROLL MANAGER (Email
4/1/04)
There has been some
confusion with regard to the
differing amounts of
encumbrance release from
month to month.
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.
This additional information
is provided to explain the
differences that appear.
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