FN - Nightly Encumbrance Process

GENERAL DESCRIPTION:

The University of Wisconsin calculates encumbrances using either the fiscal year encumbrances process (UW_ENCAN) or the nightly encumbrances process (UW_ENCNT). The fiscal year encumbrances process creates the baseline encumbrance data for the entire fiscal year; whereas the nightly encumbrances process reverses the original calculation and recalculates the encumbrance with the updated data. Specific changes will trigger a recalculation.

PROCESS CONSIDERATIONS:
  • The Nightly Encumbrance process allocates transactions that are without funding sources or adequate funding to the suspense combination code


  • If an active employee's encumbrance balance is not correct or doesn't exist, see FN - Encumbrance Maintenance - Balance Not Correct or Doesn't Exist for additional information

  • If an employee termination is entered in Job Data retroactively, the encumbrance balance should zero out as expected

    • If the termination is future dated, the termination entry will trigger an encumbrance recalculation that will be liquidated by the employee's final paycheck(s); in this scenario, there is a possibility of a small amount still encumbered after the final paycheck liquidation

    • See FN - Simple Encumbrance Maintenance - Close out for additional information

  • Employees on an unpaid Leave of Absence (LOA) are encumbered; the encumbrance will not liquidate while on LOA, but balances will recalculate upon the employees return from LOA in Job Data.


A. Nightly Encumbrance Process Overview

  • Part of a Batch Process

    • Scheduled and run through Tivoli, a job scheduling software; this process is very rarely run ad hoc

    • The Nightly Finance Batch Job Stream includes additional jobs (UW_ENCNT, PAYGL03G and Journal Mods); these additional jobs have run controls that are date specific and, as such, if the process is manually run it cannot be run the same day as part of the scheduled batch job stream.
    • The Nightly Finance Batch Job Stream, which includes encumbrances, will be run six nights per week; it will NOT run on Saturday nights. Nights where an additional Finance Batch Job Stream is run will also include the Nightly Finance Batch Job Stream.

  • Estimates earnings from the run control specified date to the earlier of the end of the appointment or end of the fiscal year

  • Uses funding information from the DEPT_BUDGET and DEPT_BUDGET_ERN Tables to determine funding sources for earnings

  • Recalculations are triggered by changes to the Job, Funding, Budgeting, Department or Position are calculated at night. As such, changes to a Job, Funding, Budgeting, Department or Position will only be reflected after a nightly calculation

  • Centralizes the encumbrance calculation, liquidation and reversals - whereas most triggers are from decentralized user driven events. In essence, encumbrances are now a centralized process that runs based on events triggered by a decentralized user group

  • As more than one user likely has access to many of these employee characteristics, the encumbered value may change if another users makes a change to the Job, Funding, Budgeting, Department or Position
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B. Encumbrance Triggers

  • Records that are going to be recalculated in the next nightly encumbrance calculation are identifiable in the Encumbrance Trigger (ENCUMB_TRIGGER) table. The following changes will initiate an encumbrance recalculation:

    • A position data change impacts the encumbrance calculation for the incumbents

    • Department funding information is inserted, deleted, or corrected for an entity, and the changes affect the encumbrance calculation for all incumbents that belong to it and don't have appointment or position-level funding assigned

    • Any related funding changes that impact

    • Checking or unchecking the Encumbrance Override indicator on the employee's Job Data record

    • Changing the assigned encumbrance Session field on the employee's Job Data record

    • Job data records are added, corrected, inserted, or deleted

    • Encumbrance default information is inserted, deleted, or corrected for an entity on the Encumbrance Definition page and the changes affect the pre-encumbrance calculations for all entities that belong to it
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C. Encumbrance Exceptions

  • Employees with a Pay Basis of Summer Session will NOT be encumbered

  • Employees with Empl Class of either SH (Student Hourly) or CL (University Staff Temporary Employment {TE}) are NOT encumbered

  • Employees with Pay Group of NON are NOT encumbered

  • Furloughs are NOT incorporated in the calculation or liquidation of an encumbrance

  • Not all Campuses / Divisions or Departments use encumbrances

    • UWOSH, UWEAU and various Divisions at different Business Units have opted not to encumber as of the "go-live" date of April 18, 2011.

  • Employee Records where the FTE (full time equivalent) is less than 0.10 (Standard Hours less than 4.0) will have the Encumbrance Override indicator automatically checked; when checked, the employee's earnings will NOT be encumbered

    • If the employee later experiences an FTE change in Job Data to 0.10 FTE or above, encumbrance calculations will not resume until the beginning of the next fiscal year for that Empl Rcd

    • Note: The Encumbrance Override indicator is located on the employee's Job Data record. (Menu navigation: Workforce Administration > Job Information > Job Data, Job Information tab).
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D. Encumbrance Calculations Not Uniform

  • Encumbrance Calculations are not uniform; just as the underlying data points will vary from employee to employee, the calculation used to calculate the encumbrance will vary based on Employee Class and Compensation (Comp) Frequency

    • Only Regular Pay is encumbered

    • Liquidations are determined by Earnings Code assigned

    • Lump Sum, Additional Pay, Piece Work and other Non-Regular Pay Payments are NOT encumbered

    • Employees working only during the academic year will encumber based on different begin and end dates at different campuses

      • These dates are defined in the employee's Job Data record > UW Custom tab > Encumbrances section

    • Different Employee Classes will encumber based on different dates (See table below).
    Empl Class Session Comp Frequency Approx. Days
    University Staff (Classified Employees) CE H 364
    Faculty/Academic Staff/Limited Appointment (FA/AS/LI) (Unclassified) Employees FY M 365
    FA/AS/LI (Unclassified) Employees AY 9M 273


    E. How to Manually Calculate Encumbrances

    1. Obtain the following information from Job Data and Budget Funding Data Entry, using the following HRS navigation paths:
    • Workforce Administration > Job Data
        • FTE:  Job Information tab, Standard Hours section
        • Pay Basis: Job Information tab, Job Information section
        • Compensation Rate: Compensation tab, Compensation section
    • Set Up HCM > Product Related > Commitment Accounting > Budget Information > Budget Funding Data Entry
        • Review funding string
    2. Determine how many calendar days remain to be paid in the current fiscal year for the employees Pay Group.
    • Start counting the number of calendar days remaining in the fiscal year from the day after the most recent pay period end date.  This is found in HRS on the “Review Paycheck” page, searching for Empl ID and selecting the most recent paycheck.

    • Payroll for North America > Payroll Processing USA > Produce Payroll > Review Paycheck
    Review Paycheck
    • A-Basis end date is always June 30.
        • In the above A-Basis employee example, there would be 212 days remaining in the fiscal year (31-Dec. + 31-Jan. + 28-Feb. + 31-Mar. + 30-Apr. + 31-May + 30-June) = 212.
        • There are a total of 365 days in an A-Basis year.
    • C-Basis end dates vary by institution and year, ranging from approximately May 17 through June 5.
        • Academic year calendars for all institutions can be found here:  https://uwservice.wisc.edu/calendars-schedules/academic-payroll/; click on the institution and year; scroll to the bottom of the page and note the last day in the bottom row of dates for that institutions end date. 
        • There are a total of 273 days in a C-Basis year.
    • H-Basis end dates will vary by fiscal year, ranging from approximately June 24 through July 6.
    3. Encumbrance Calculation Formula for A-Basis (monthly) employees:
      A-Basis Calculation
      Example:  A .50 FTE A-Basis employee with a monthly compensation rate of $9,427.25 charged 75% to 101-030500-1 and 25% to 101-481505-2 with 259 remaining calendar days would calculate encumbrance as:
      A-Basis example 1

      A-Basis example 2
      Note: for Calendar Days Remaining in FY, if calculating encumbrance effective 10/15/20XX, there are 259 calendar days through 6/30/20XX.
      4. Encumbrance Calculation Formula for C-Basis (academic) employees:
      C-Basis Calculation
      Example:  A .50 FTE C-Basis employee with a monthly compensation rate of $5,370.55 charged 75% to 101-030500-1 and 25% to 101-481505-2 with 144 remaining calendar days would calculate encumbrance as:
      C-Basis example 1
      C-Basis example 2
      Note: for Calendar Days Remaining in FY, if calculating encumbrance effective 1/1/20XX, there are 144 calendar days through the end of the academic year ending on 5/24/20XX (academic end dates vary by institution).
      5. Encumbrance Calculation Formula for H-Basis (hourly) employees:
      H-Basis Calculation
      Example:  An H-Basis employee with 32 standard hours and an hourly compensation rate of $20.4350 charged 75% to 101-030500-1 and 25% to 101-481505-2 with 257 remaining calendar days would calculate encumbrance as:
      H-Basis example 1

      H-Basis example 2
      Note: for Calendar Days Remaining in FY, if calculating encumbrance effective 10/15/20XX, there are 257 calendar days through the end of the last day of the pay period in fiscal year on 6/28/20XX.
      6. HRS encumbrance calculation formulas vs. user expectations.
      HRS calculates encumbrances using a formula different from most user’s expectations, which may be addressed as Service Center resources become available.

      Example:  A 1.00 FTE A-Basis employee with a monthly compensation rate of $5,000.00 charged 100% to UWSYS-136-601000-1 would have encumbrance calculated as follows as of 7/31:

      HRS Balance - {[1.00 FTE X ( ($5,000.00 *12)/365 )] x 334} x 100% Funding = $54,904.11

      Actual Balance - At the end of July, the employee was only paid $5,000.00, resulting in an encumbrance balance of $55,000 ($60,000 annual encumbrance - $5,000 of actual pay).

      Difference between Actual ($55,000.00) and HRS ($54,904.11) balances = $95.89.  Throughout the year, the difference between Actual and HRS will change based on the number of days remaining (instead of months remaining).


      ADDITIONAL RESOURCES:

      Related KBs





      Keywords:Encumbrances, PAYGL03, PAYGL03G, Suspense Combination Codes, Triggers, Department Budget Actuals, PSPENNHT, PSPNANN, UW_ENCAN, EN_CNT, Encumbrance Override   Doc ID:17154
      Owner:Tami E.Group:Human Resource System (HRS)
      Created:2011-03-02 19:00 CDTUpdated:2018-05-02 14:41 CDT
      Sites:Human Resource System (HRS)
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