Labor Distribution Encumbrances FAQs




What are encumbrances, and what employee types are encumbered?
Encumbrances are estimates only for anticipated future payroll amounts, but may not represent the actual payroll amount that will ultimately be charged. Encumbrances are created for all salaried and goal paid employee types, based on the amount of regular salary in the HRMS Salary Administration record. The Discoverer financial reports show labor encumbrances in the “Commitment” column. Encumbrances are updated after each payroll has been processed.

How are encumbrances created?
The Integrated System creates encumbrances by searching Labor Schedules in the Labor Distribution module for a valid schedule for each employee through the minimum global default end date. It searches for schedules at the lowest level of detail in the employee labor schedule hierarchy and moves upward until a complete schedule has been identified for the encumbrance period(s). If a complete schedule is not found either at the employee level or at the Organization Default Labor Schedule level (ODLS) or combination thereof, the encumbrance will be applied to the Organization Suspense Account (OSA). Also, if there are any end dates that invalidate the schedule, this will create an encumbrance at the Suspense Account level.

What is the minimum encumbrance end date used for the fiscal year?
All salaries will be encumbered using the minimum date of 24-May-XXXX <current fiscal year>
All non-sponsored awards (those that do not start with a “G” or "Z") will have encumbrances generated to the last pay period in the fiscal year based on the payroll type.

For semi-monthly employees, encumbrances will be generated out to 09-Jun-XXXX. For biweekly paid goal payments, encumbrances will be created until the last day of the last bi-weekly payroll period that is paid in the month of June.


How are encumbrances calculated for faculty < 12 months?
Encumbrances are generated just for the months paid at a rate of 1/9 (or # of work months) of annual salary.

How are encumbrances calculated for goal pays (GTA, GRA, and Faculty Wage)?
The goal pay encumbrance amounts will be calculated using the total pay amount divided by the number of payments indicated in the employee HRMS assignment record.

How are encumbrances created with the correct expenditure type?
Encumbrances are created using the same auto-pop logic as payroll. It determines the correct expenditure type (if the labor schedule and employee attributes do not match), according to the HRMS assignment record. If the expenditure type in the employee labor schedule is incompatible with the information entered on the employee assignment, the labor encumbrance process will correct the expenditure type automatically, based on the employee HRMS assignment data. Also, if the labor is encumbered on the Org Default Labor Schedule, encumbrances will be generated using the correct expenditure type based on each individual employee's HRMS assignment data, regardless of the selection made in the Org Default schedule line. Note: encumbrances that are generated using the suspense account will continue to use the “Salary, Class Staff FT” expenditure type like payroll.

What is the encumbrance end date for non-sponsored awards?
Encumbrances are created thru the last pay period of the current fiscal year based on the type of payroll: 24-May-XXXX for the monthly payroll, 9-June-XXXX for the semi-monthly payroll, and the last biweekly payroll paid in June XXXX.


How do Sponsored Program (OSP) award (G or Z) encumbrances work?
A new field named Labor Enc End Date (LEED) has been added to the Award descriptive flex field in Grants Accounting on sponsored program awards so that the OSP Award Manager can enter an end date for labor encumbrances that coincides with the end date of the sponsor’s current funding period. This date may be earlier or later than the University’s monthly payroll fiscal year end of 24-May-XXXX, which is used as the global default encumbrance end date.
Sponsors generally only fund for a portion of the total time the award is granted. For instance, on an award that is granted from 30-Sep-04 to 31-Oct-08, the sponsor may choose to fund the award only for one fiscal year at a time. Therefore, the funding and subsequent budget that is loaded is only sufficient for expenses occurring up to 31-Oct-07. The OSP Award Manager can enter a Sponsored Award Labor Encumbrance End Date using the date: 31-Oct-07. This functionality allows for more accurate reporting, since it allows labor encumbrances to match up with the current budget loaded, rather than encumbering through the University’s current fiscal year.
Sponsored Program awards are encumbered to the earliest date of the Labor Schedule (LS), any segment of the PTAEO (PED), or the Award field (named Labor Enc. End Date [LEED]), but not less than the Global Default Encumbrance End Date (DED).


What are the dates that affect the encumbrance process?
Actually, It’s all about the dates!!!!
Labor Encumbrances will be generated to the earliest end date of:

When viewing labor encumbrances, you must understand the dates that affect the encumbrance process. If the encumbrances generated are not what you expected, you’ll need to take a look at the various end dates that affect this process.

Assuming that an employee is active and their assignment is not end-dated, labor encumbrances will be generated to the earliest of any of these dates:
The labor schedule, any segment of the PTAEO, through the end of our fiscal year for non-sponsored awards, or the new Sponsored Award labor encumbrance end date, BUT not less that the Global Default Encumbrance End date (DED).

The Global Default Encumbrance Date (DED) will still be set to equal the last monthly payroll processed in the current the fiscal year (24-May-XXXX). This date is used in situations where a labor schedule, or a segment of the PTAEO, ends before the Global Default Encumbrance End Date and the employee has active assignments that are equal to or greater than the default encumbrance end-date. Since these employees have active assignments, their labor will be encumbered on the Organization Default Labor Schedule (ODLS, (if one exists)) or the Organization Suspense Account (OSA) thru the end of the Global Encumbrance Date (DED). This provides a complete picture of the labor anticipated to be paid within the current fiscal year, although it has not been fully scheduled.

The Global Default Encumbrance End Date (DED) is set to 24-May-XXXX for all employees. However, semi-monthly employees will use an encumbrance end date of 09-Jun-XXXX. If the semi-monthly employee’s labor schedule ends prior to the 09-Jun-XXXX, encumbrances will be created using the Organizational Default Labor Schedule (ODLS, (if one exists)) or the Organization Suspense Account (OSA) until 09-Jun-XXXX.

Example 1: 12-month faculty member, paid on a non-Sponsored Program award. (Employee & Assignment active thru 24-May-2007)
LD schedule line end date: 30-Apr-2007; Global Default end date (DED): 24-May-2007; Any segment of the PTA end date (project end, task end, award end) (PED): 31-Jan-2008

In this non-sponsored program award example, if there is a valid Org Default Labor Schedule (ODLS), the encumbrance combination will be:
(LD thru 30-Apr-07 + ODLS 01-May-07 thru 24-May-07)

If the Integrated System cannot find a valid schedule that covers the periods of time through the DED, the encumbrance will be shown on the Organization Suspense Account (OSA).

In this example, if there is not a valid Org Default Labor Schedule (ODLS), the encumbrance combination will be:
(LD thru 30-Apr-07 + OSA 01-May-07 thru 24-May-07)

Example 2: 12-month faculty member, paid on a Sponsored Program award (Employee & Assignment active thru 24-May-2007)
LD schedule line end date: 30-Apr-2007; LEED: 31-Mar-2007; DED: 24-May-2007; PED PTAEO end date: 31-Jan-2008;

In this example, the LD schedule is set up with an end date of 30-Apr-07 BUT the Award Enc End Date (LEED) is earlier (31-Mar-07). IF the Organization has a valid Organization Default Labor Schedule (ODLS), the encumbrance combination will be:
(LD thru 31-Mar-2007 + OSA 01-Apr-2007 thru 30-Apr-2007 + ODLS 01-May-07 thru 24-May-07)

(The schedule entered in LD encumbers through 31-Mar-2007 because the Sponsored Award Labor Encumbrance End Date (LEED) date is the earliest end date. The Org Suspense Account (OSA) will be encumbered 01-Apr-2007 thru 30-Apr-2007 since the PTAEO (due to the LEED date) is invalid for the period of time specified in the schedule. The remaining encumbrance 01-May-2007 – 24-May-2007 (out to the minimum of the Global Default end date (DED) is applied to the Org Default Labor Schedule (ODLS.)

What reporting tools are available to view the end dates that affect the PTAEO?
There are two Discoverer reports that show you the end dates (including the Sponsored Award Labor Encumbrance end date LEED) that affect the pay distribution and encumbrances: