How are salary encumbrances calculated?
Here are two examples: Mary is an employee who is paid monthly and makes $48,000 each year. At the beginning of each fiscal year an encumbrance is created for her total salary. At the end of each month her encumbrance is reduced by 1/12th of her annual salary or $4,000. Bob is an employee who is paid biweekly and budgeted to earn $52,000 each year. At the end of each two week pay cycle his encumbrance is reduced by 1/26th of his annual salary or $2,000. The encumbrance does not take into account the hours that Bob actually worked (i.e. overtime) but rather just the hours that were originally scheduled. Note: Furloughs are not incorporated in the calculation or liquidation of an encumbrance.
