A full time equivalent employee is a term used by colleges, universities and other organizations when budgeting for staff costs. Suppose the math department needs to budget for a new teacher. It can hire one full-time professor or two who each work half a year, giving the department the equivalent of a full-time employee. Other organizations use FTEs in their staff planning, but academic budgets define it a little differently.
FTE Definition, the Higher Education Version
Most industries define FTE as the total number of full time equivalent employees. Academia uses that definition, but it has a second one too: full time equivalent students. Suppose your college has 10,000 students attending full time and another 4,000 going for half the year. That translates into 12,000 FTE students. When you're budgeting resources, using the latter number tells you the college doesn't need to budget for 14,000 students each semester; the real need is smaller.
In most industries, a full time employee works year round, except for vacation and holidays. Universities often do it differently: a spring semester and a fall semester, or four quarters, with no classes or cafeteria service in the down time. When drawing up their employee budget, colleges colleges often define "full time" and full-time equivalent based on the class load.
Suppose "full time" teaching at your school is 24 credit-hours a year, or 12 each semester. A teacher who only offers 16 hours annually is just two thirds of an full time equivalent position. If your budget will cover two teachers, that could mean two full-time individuals or three 16 hour professors. Both add up to two full timers.
College teaching isn't just about the hours of instruction, though. A professor in the science department may only teach four credit-hours a semester, making them one-third of an full time equivalent employee. If they're actively involved as a department administrator, or doing research in the university laboratory, you'll have to factor that workload in. Only then will you know what percentage of FTE they really are.
The teaching staff is where academic institutions define FTE substantially differently from the rest of the business world. When budgeting for grounds maintenance, administration and cleaning staff, it's important to keep track of staff numbers, but it's not going to be that different from any other organization.
Effects of FTE
The effects of the staff budget influences other elements of school finances, such as overhead and the total benefits paid. It also affects the schools legal obligations. If your full-time equivalency is above a certain level, for instance, the school has to offer employees affordable health insurance. The budget must take that into account.
Fraser Sherman has written about every aspect of business: how to start one, how to keep one in the black, the best business structure, the details of financial statements. He's also run a couple of small businesses of his own. He lives in Durham NC with his awesome wife and two wonderful dogs. His website is frasersherman.com