What Are Fringe Encumbrances?
Fringe encumbrances are commitments for fringe costs. Encumbered fringe reduces the amount of available budget, which makes automatic budget edits more accurate.
A fringe encumbrance rate is a percent that is used to calculate the fringe commitment based on an employee’s encumbered wages.
Fringe encumbrances are relieved when the payroll cycle is closed and labor distribution transactions are posted in Project Accounting and General Ledger.
Example
Noel is a Principal Investigator (PI) with an annual salary of $120,000. She is paid monthly through payroll, with a separate pay period for each calendar month of the year. She makes $10,000 per pay period.
She works concurrently on two grants. Grant A will pay 75 percent of her salary in 2004, and grant B will pay 25 percent. The fringe encumbrance rate for each grant is 50 percent. The following table illustrates the expected fringe encumbrance amounts for Noel for the first quarter of 2004.
| Pay Period Start Date | Pay Period End Date | Grant | Salary Encumbrance | Fringe Encumbrance |
|---|---|---|---|---|
| 01/01/2004 | 01/31/2004 | A | $7,500 | $3,750 |
| 01/01/2004 | 01/31/2004 | B | $2,500 | $1,250 |
| 02/01/2004 | 02/29/2004 | A | $7,500 | $3,750 |
| 02/01/2004 | 02/29/2004 | B | $2,500 | $1,250 |
| 03/01/2004 | 03/31/2004 | A | $7,500 | $3,750 |
| 03/01/2004 | 03/31/2004 | B | $2,500 | $1,250 |
Where Do I Set Up Fringe Encumbrance Rates?
You can set fringe encumbrance rates in three places:
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In the employee file on Grant Management (HR11.3). If fringe encumbrance rates are determined by employee (same rate across multiple grants), then you should create a default rate on HR11.3.
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In the activity file on Activity (AC10.1). If fringe encumbrance rates are determined by activity, then you can define a default activity fringe encumbrance rate on the grant activity (or one of its parent activities) on Activity (AC10.1), Award tab. When distribution lines are created on Labor Distribution Template Entry (GM10.2), any fringe encumbrance information from the activity file defaults in.
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In a labor distribution detail record on Labor Distribution Template Additional Information (GM10.3). You can define a rate or override a rate that defaults in from the activity by typing the new rates into the Fringe Encumbrance Overrides fields.