What is a salary encumbrance?
A salary encumbrance is a reservation of available funds, based upon expected salary expenses. The process of
committing funds to pay for the expected expenses is referred to as an “encumbering”. The main reason we encumber
funds is to insure funds are available for future expenses. Encumbrances are a tool to be used for budget planning.
The calculation of an encumbrance is complex and involves several of the PeopleSoft modules. Encumbrances are
calculated per position and assigned a specified funding source(s). If a position is funded by more than one funding
source in a fiscal year, the encumbrance will follow the funding source.
How encumbrances will be calculated in UT Share:
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The baseline encumbrance in UTShare is calculated on the number of days in a fiscal year, the number of days
for an active contract or assignment, or a project end date, whichever comes first. PeopleSoft calculates the
baseline encumbrance amount based on a daily rate for the employee. After each pay cycle, the payroll
expenses will reduce the encumbrance for that month. Encumbrances will calculate nightly in UT Share.
Hourly payroll expense will not be encumbered in UT Share.
Formulas for calculating salary and additional pay encumbrance:
Monthly Salaried Employees:
Daily Rate = Annual Salary / 365 days
Projected Encumbrance (i.e. remaining encumbrance) = Daily rate X number of days left in the fiscal year or
project end date for grants if the date is before the end of the fiscal year.
Faculty paid via contract pay:
Daily Rate = Contract Rate / Calendar Days in Contract
Projected Encumbrance = Daily Rate X Calendar Days in Contract
If the contract pay amount is changed during the current contract term, the contract amount and contract
encumbrance will be recalculated based on the number of days left in contract period.
Important Reminders about the Encumbrance Calculations:
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Termination of the employee from a position will liquidate the remaining encumbrance.
Funding for encumbrances match the funding for positions on the departmental budget table. If a change is
made to the funding source of a position, the funding source for the encumbrance will also change.
Encumbrance calculations are based on the number calendar days in a fiscal year or contract.
UTShare users with the following access levels: Level V, Level V-Reconciler, Level III and Level IIIReconciler will have access to the following Encumbrance Reports
UTShare Navigation: UTZ Customizations, Commitment Accounting, Reports:
Payroll Liquidation
Encumbrance Details by Employee ID /Salary
Budget Actuals to Encumbrance Detail
Please call the Budget Office at 2-5500 if you have additional questions regarding salary encumbrances in UT Share.