Review of the Nightly Encumbrance Process in HRS

Overview

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.

Salaried Bi-WeeklyProcess Considerations:

You may click on the links below to navigate directly to a section: 

A. Nightly Encumbrance Process Overview

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B. Encumbrance Triggers

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C. Encumbrance Exceptions

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D. Encumbrance Calculations Not Uniform

Empl ClassSessionComp FrequencyApprox. Days
University StaffCEH364
Faculty/Academic Staff/Limited Appointment (FA/AS/LI) Employees (Salaried Bi-Weekly )FYB364
Faculty/Academic Staff/Limited Appointment (FA/AS/LI) Employees (Bi-Weekly)FYH364
FA/AS/LI Employees (Salaried 9 Month Bi-Weekly )AY9B273
FA/AS/LI Employees (Bi-Weekly)AYH273

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
    • Comp Rate:  Compensation tab, Pay Components section

Review FTE

Comp Rate Versus Compensation Rate

Funding Percent

  • Set Up HCM > Product Related > Commitment Accounting > Budget Information > Budget Funding Data Entry
  • Accessible from the Finance WorkCenter found at Payroll for North America>Payroll Distribution>Commitment Accounting USA>UW Finance WorkCenter. For more information about the WorkCenter, see KB Setting Up a WorkCenter in HRS.
    • 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

    • BAR & BAF, Salaried Bi-Weekly ( formerly A-Basis) and H-Basis end dates will vary by fiscal year, ranging from approximately June 18th through June 29th .
    • In the above BAR Paygroup employee example, there would be 212 days remaining in the fiscal year (31 -Aug. + 30-Sep. + 31-Oct. + 30-Nov. + 31-Dec. + 31-Jan. + 28-Feb. + 31-Mar. + 30-Apr. + 31-May + 19-June) = 322.
    • There are a total of 364 days in an A-Basis year.
    • Salaried 9 Month Bi-Weekly  (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.
    • Payroll calendar:  https://uwservice.wisc.edu/calendars-schedules/; the H-Basis end date for fiscal year 2022 is June 18, 2022.
    • There are a total of 364 days in an H-Basis year.
3a. Encumbrance Calculation Formula for Salaried Bi-Weekly (A-Basis monthly) employees

                      Equation using Compensation Rate 

{[(Compensation Rate * 26)/364] * Calendar Days Remaining in FY} * % Funding

Compensation Rate EquationCompensation Rate Equation

                        Equation using Comp Rate

{[FTE * (Comp Rate )/364] * Calendar Days Remaining in FY} * % Funding

Comp Rate Equation

Example: A.50 FTE A-Basis employee with a monthly comp rate of $113,127 and a compensation rate of $2175.52 charges 75% to 101-030500-1 and 25% to 101-481505-2 with 322 remaining calendar days would calculate encumbrance as:

          COMP RATE

{[.5 * (113,127.00 )/364] * 322} * .75 = 37,424.89

{[.5 * (113,127.00 )/364] * 322} * .25 = 12,474.96

         COMPENSATION RATE

{[(2,175.52 * 26 )/364] * 322} * .75 = 37,424.89

{[(2,175.52 * 26 )/364] * 322} * .25 = 12,474.96

Note: for Calendar Days Remaining in FY, if calculating encumbrance effective 08/01/21, there are 322 calendar days through 6/19/2022.

3b. Encumbrance Calculation Formula for A-Basis (Bi-weekly)employees:

{[(Comp Rate * Std Hrs * 52 Wks)/364] * Calendar Days Remaining in FY} * % Funding

Example:  An A-Basis (bi-weekly) employee with 20 standard hours and a compensation rate of $35.00 charges 75% to 101-030500-1 and 25% to 101-481505-2 with 259 remaining calendar days would calculate encumbrance as:

{[($35.00 * 20 Hrs * 52 Wks)/364] * 259} * 75% = 19425.00

{[($35.00 * 20 Hrs * 52 Wks)/364] * 259} * 25% = 6475.00

Note: for Calendar Days Remaining in FY, if calculating encumbrance effective 10/15/20XX, there are 259 calendar days through 6/30/20XX.

4a. Encumbrance Calculation Formula for C-Basis (academic)employees:

          {[(Compensation Rate * 19.5)/273] * Calendar Days Remaining in FY} * % Funding{[FTE * (Comp Rate /273)] * Calendar Days Remaining in FY} * % Funding                    

Example: A .50 FTE C-Basis employee with a monthly compensation rate of $5,370.55 charges 75% to 101-030500-1 and 25% to 101-481505-2 with 144 remaining calendar days would calculate encumbrance as:

{[(4,205.13 * 19.5)/273] * 144} * 75% = 32,439.56

{[(4,205.13 * 19.5)/273] * 144} * 25% = 10,813.75

{[1 * (82,000 /273)] * 144} * 75% = 32,439.56

 {[1 * (82,000 /273)] * 144} * 25% = 10,813.75

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).

4b. Encumbrance Calculation Formula for C-Basis (hourly)employees:

             {(Compensation Rate * Std Hrs * 39 Wks)/273 * Calendar Days Remaining in FY} * % Funding Dist

Example:  A C-Basis (hourly) employee with 20 standard hours and a compensation rate of $35.00 charges 75% to 101-030500-1 and 25% to 101-481505-2 with 144 remaining calendar days would calculate encumbrance as:

             {(35.00 * 20 * 39)/273 * 144 } * 0.75 = 10,800.00

             {(35.00 * 20 * 39)/273 * 144 } * 0.25 = 3,600.00

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:

                         {(Compensation Rate * Std Hrs * 52 Wks)/364 * Calendar Days Remaining in FY} * % Funding Dist

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:

             {(20.4350 * 20 * 32)/364* 257} * 0.75 = 18,006.15

              {(20.4350 * 20 * 32)/364* 257} * 0.25 = 6,002.05

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).


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