Why is the adjustment to the personnel encumbrance different than the payroll amount?
Encumbrances are estimated costs for personnel, whereas the payroll amount is the actual expense by pay period. Encumbrances are calculated based on the assignment to and funding of positions with variables such as start and end dates, salary amount and funding organization(s). Changes to any of these variables affect the encumbrances, which project personnel expenses from the current period through the end of the year, while the payroll reflects a single pay period. For instance, if your personnel budget is $120,000 and your bi-monthly payroll is $5,000, in most cases your encumbrance adjustment would be a credit of $5,000. But let’s say you had an employee earning $24,000 a year terminate 3 months into the fiscal year. First, as your payroll drops to $4,000 per pay period, so would your encumbrance adjustment. In addition, the portion of the terminated employee’s salary that reflects what they would have been paid for the rest of the year ($18,000) would be a reduction to the encumbr
