3 Reasons to Forget About FTE Part 2

In the first post on this topic, I shared how I believe it may be time to stop using FTE as a metric because it doesn’t serve institutions well when it comes to planning. In this post we are going to look at a few of my thoughts related to finding better metrics.

Total Active Students

First, I believe it is important to track total active students. This number is slightly different than total headcount. I define an “active student” as anyone that has taken a course at any point during the last academic year, including summer and “inter-terms” like a J-term (courses between the fall and spring or fall and winter terms). I refer to these students as active students because they could, in theory, register for another course without having to go through the application process again. A student could take a course in the fall term, another in the following summer term, and then another in the following spring term. She would be an active student, but depending upon when the “snapshot” of enrollment is taken she may or may not be included.

By using total active students we are able to get a complete picture of the number of students enrolled in a given year. That is the number we should be using during our planning processes. For instance, Northern Seminary has 370 active students. However, in any given term we may only have 220 enrolled students. If we built our plans around the 220 students we would not build enough capacity to serve 370 students. One should ask, then, how does the difference between total active students and students enrolled in a term impact budgeting, course scheduling, and staffing plans. We must move to the next suggestion for part of the answer.

Total credit hours and hours per active students

We need to track total credit hours and hours per active student in order to design our processes, systems, and curriculum. Like total active students, total credit hours should be calculated for the entire academic year, including summer. It is the total number of hours taken across all programs. That number can be used to create hours per active student. With total active students and total hours per student, we have the beginnings of great metrics for institutional planning. What is missing? That’s correct, monetary figures.

Net Tuition and Expenses

Finally, we need to compare total active students and credit hours to net tuition and expenses. What is the net tuition per active student and expense per active student? [Sooner or later I will write something about the concept of “direct” net tuition, but we are going to leave that out for right now. It would be another ratio to track. I know – you can’t wait for such an exciting post!]

Net tuition per active student will give us an idea of the level of tuition revenue we can expect to receive from an active student while expenses per active student is a good indication of how we are administering theological education. Obviously, the most important numbers are going to be trends. How are these figures trending over time? What would be ideal for your institution? Do you need to increase net tuition per active student? Decrease expenses per active student? Both? The answer to these questions is going to be impacted by your individual context.

Drill Down

While there is power in tracking these numbers for the institution as a whole, part of the beauty of them is that they can be applied across programs, schools within an institution, or locations. For instance, at Northern Seminary we have three degree programs and a number of certificate programs. The formula stays the same, but the numbers change drastically by program. For instance, our net tuition per active student is higher in the MDiv and DMin programs than it is in the certificate programs. However, our expenses can be lower with the certificate students. It is important to understand each program and how they come together to make the whole.

How to Use the Data

I believe that all metrics should drive you to some sort of action. If the metric doesn’t directly relate to an action that can be taken, then it may not be worth tracking. Sometimes we must track things simply for informational purposes, but actionable data is my gold standard. So what actions can be taken by tracking these numbers versus tracking FTE?

System/Process Design

We must create sustainable systems and processes based on our number of total active students. Total active students is a better indicator of workload than is FTE. Therefore, if we see the number of total active students increasing while our finances are remaining relatively flat that means we are going to need to find a way for the same amount of staff and faculty to serve an increasing number of students (this is the effect of the part-time-ization of theological education). We need to take action related to our systems and processes. How are they enabling or hindering sustainable and scalable growth?

Curriculum Design

Total credit hours per active student can give insight into how the average student is progressing through specific degrees or programs. This could impact how courses are designed, when they are scheduled, how programs are developed and much more.

Budgeting

Expenses and net tuition per active student can influence the budgeting process by giving a clearer picture of the cost to educate a student, especially when we drill down to specific degrees or programs. How can these numbers impact resource allocation?

Trip Wire Creation

When creating strategic plans, it can be useful to create “trip wires” in the plan. A “trip wire” is a specific event which triggers a change. For instance, if the strategic plan calls for a specified number of total active students by a certain date, administrators can use that number as a trip wire, or a trigger for a decision. Often times, schools use fall enrollment as such a trigger. I would simply advocate for enhancing that practice by looking at total active students rather than fall enrollment.

No “Right” Answer

In the end, there is no right answer. FTE, Headcount, Total Active students, and many more metrics have their advantages and disadvantages. I advocate for total active students and the related metrics I listed above because I believe they are more useful in my context. My challenge for you is to find what is useful in your context. What can you take from these past two blog posts? What can you leave behind? At the end of the day, you need enrollment metrics that are objective, tied to specific actions, and capable of being tied directly to actual students, revenue and expense calculations, and graduation rates.

I would love to hear your thoughts! If you want to support something I said or disagree with me, please post something in the comments below. Together I think we might be able to come up with something quite good.