To: MOU Leads
Finance and HR TIPs
University Business Managers
HR Officers and Secondary Contacts
Research Administrators Support Group
From: Dennis Press, University Controller
Date: November 10, 2014
A communication dated Oct. 2, 2014, and located at https://ccinfo.unc.edu/wp-content/uploads/sites/219/2014/10/Salary-Encumbrance-Update.pdf notified you of a delay of 4- 6 weeks in recording encumbrances for salary and benefits. As a result, reports have not shown labor encumbrances, so “budget balance available” (BBA) in the system has not been accurate.
The delay was necessary to avoid two issues:
- Employee salaries with multiple funding sources that included an expiring funding source such as a grant would allocate the grant’s encumbrance for the expired portion of the fiscal year among the other funding sources. The grant’s encumbrance for the expired portion of the fiscal year would post to the home department’s suspense account.
- When encumbrances for salary funding sources that expire during the fiscal year post to the home department’s suspense account which are in F&A Funds, the BBA in F&A Funds will be understated and could impact the ability to spend.
A plan to program and test the necessary modifications to accurately record labor encumbrances was developed and is ready for implementation. The following processes A through C will occur on or before Nov. 11, 2014:
- Salary encumbrances will be posted for the period Nov. 1, 2014, through June 30, 2015. Encumbrances for an expiring grant will post to the home department’s suspense account for the expired portion of the fiscal year. The prorated encumbrance for November through June is calculated based on the daily rate of the total salary multiplied by the number of calendar days remaining in the year from Nov. 1, 2014. This results in encumbrances slightly less than when calculated using whole months. Due to a system limitation, this calculation had to be used for encumbrances for both biweekly and monthly employees. The encumbrance goes through June 30, 2015, for both monthly and biweekly, including state funded biweekly employees. The encumbrance calculation will use the funding end date in lieu of June 30, 2015, where applicable, for example OSR Project IDs.
- A GL allocations process will post reversing entries to offset amounts that post to the home department’s suspense account due to expiring grants. This action will prevent an overstated commitment against the BBA for F&A Funds.
- Encumbrances for fringe benefits will be posted for the period Nov. 1, 2014 – June 30, 2015.
- Beginning with Payrolls paid in November 2014, the Commitment Accounting processes will include salary and benefits encumbrance liquidations and updates.
- The processes described in A and B will generate a high volume of offsetting transactions to the home department’s suspense account for expiring grants. Therefore, InfoPorte reports will exclude these offsetting transactions and show only the results.
Other considerations regarding salary encumbrances are:
- The annual encumbrances are based on having a recorded plan for each appointment and position for the entire fiscal year. For employees funded by chartfield strings with a funding end date, a new row was inserted into the Department Budget Table to fund the employee from the home department’s suspense chartfield string effective the first day after the funding end date. For this reason, departments will now see future dated funding grids that include a row funded by suspense on any funding swaps initiated on employees that are funded by chartfield strings that have a funding end date.
- Funding end dates that occurred during the July 1, 2014 – Sept. 30, 2014 timeframe were not addressed by the suspense chartfield string. Employees funded by a chartfield string with a funding end date within that timeframe will see charges redistributed across the other existing fund sources. A funding swap will need to be submitted to move the employee from the expired funding. After the funding swap is completed and is picked up by the next payroll distribution, the encumbrances will adjust to be more in line with the funding sources.