Understand adjustment calculations

Use this reference to explain how a pay adjustment rule changes calculated FTE, pay rate, or annual cost. The same rule methods apply in labor budget and actual compensation, while each area has its own dates, coverage, and applied adjustments.

Before you begin

Reading this guide requires no organization permission. In FTE Tree, you need the viewing permission for the financial area and every included department. Changing rules requires the Manage labor budgets permission for All departments; applying them requires the matching financial management permission.

See Roles and permissions for access requirements and department coverage.

Choose what the adjustment changes

Every rule changes one part of the calculation.

Use Projected FTE when additional or reduced capacity should appear in the calculated FTE. Use Pay rate for a rate-based policy such as a percentage premium. Use Annual cost only for a stipend, allowance, benefit estimate, agency cost, or other amount that should not change the rate or FTE.

For example, a 12% Projected FTE adjustment changes 10.0000 calculated FTE to 11.2000 FTE. A 12% Annual cost only adjustment leaves the result at 10.0000 FTE while increasing annual cost by 12%. The cost may be similar, but the staffing meaning is different.

Choose how the value is calculated

Each target supports four methods.

The three targets and four methods produce 12 possible calculation types. FTE Tree always completes the stages in this order:

1. Projected FTE
2. Pay rate
3. Annual cost only

Within each stage, fixed amounts included in the percentage basis come first, followed by non-compounding percentages, compounding percentages, and fixed amounts after percentages.

Labor budget and actual compensation adjustments share that sequence, including adjustments with different coverage. Coverage determines whether a fixed monetary amount scales with FTE or applies once. It does not give percentage rules a separate starting value. A fixed Projected FTE change uses FTE units: adding 0.1000 to 0.5000 produces 0.6000 calculated FTE. See Actual compensation adjustments for assignment coverage examples.

Order within type then controls the sequence among rules that have the same target and method. It is especially important for compounding percentages because a later rule uses the running value produced by earlier rules. It does not move a rule between the three stages or between calculation methods.

Follow the calculation with an example

Suppose an annual-cost stage starts at $100 and has these rules in order:

1. $10 fixed amount included in the percentage basis
2. 10% of starting value
3. $5 fixed amount after percentages

The result is:

($100 + $10) + (10% × $110) + $5 = $126

Two non-compounding 10% adjustments on a $100 starting value produce $120 because both use $100. Two compounding 10% adjustments produce $121 because the second uses the $110 running value.

On adjustment rule forms, enter percentage points: 5 for 5%, not 0.05. CSV imports use the decimal rate specified by the template, such as 0.05 for 5%; see Prepare an import. Positive values increase the selected stage and negative values reduce it. An individual percentage cannot be less than -100%.

Reductions and the zero minimum

Within each calculation, FTE Tree keeps FTE, pay rates, and annual costs at or above zero. It combines fixed amounts included in the percentage basis, then applies the zero minimum before calculating percentages. It applies the minimum again after the combined non-compounding percentages, after each rounded compounding percentage, and after the fixed amounts that follow percentages. Labor budget calculation details identify reductions beyond the available amount. A limited reduction does not carry forward to another period.

Use a negative adjustment for a reduction. Pay rates and total FTE must remain zero or above. To end an assignment or a rate, set its end date instead of entering a negative amount.

Entered FTE and the combined adjusted FTE use four decimal places. Pages show FTE decimals according to the organization’s FTE decimal display setting, and exported files include four decimals. Pay-rate calculations round the resulting hourly or annual rate, then calculate the adjustment’s change from that result. The next compounding rule uses the rounded running rate.

Hourly rounding example

An hourly rate of $27.1234 with a 10% increase becomes $29.83574 before rounding. FTE Tree rounds the adjusted hourly rate to $29.8357, then multiplies by the organization’s 2,080 annual hours per FTE. The full-time annual amount is $62,058.26. An annual rate or annual-cost amount uses cents. A halfway value rounds away from zero.

The resulting rate also determines rounding for reductions. An hourly rate of $0.0001 reduced by 50% becomes $0.00005, which rounds to $0.0001. At 2,080 hours and 1.0000 FTE, that remains $0.21 annually.

Different coverage and rate rounding

When a base rate and a fixed pay-rate amount use the same FTE coverage, FTE Tree combines them before rounding the adjusted rate. When their coverage differs, it rounds each resulting rate separately before applying its coverage and adding the costs.

For example, an annual rate of $0.01 at 3.0000 FTE has a $0.01 fixed annual pay-rate increase included before a 50% increase. If the fixed increase applies once, the two resulting rates each round to $0.02: $0.02 × 3 + $0.02 = $0.08. If the fixed increase also scales with 3.0000 FTE, the combined rate becomes $0.02 × 1.5 = $0.03, giving $0.03 × 3 = $0.09.

Fractional FTE example

A $100.01 annual allowance scaled by 0.3333 FTE contributes $33.33. With a $60,000 full-time annual rate, the base is $19,998.00 and the total is $20,031.33. Enter the allowance in cents; FTE Tree rounds the calculated contribution after applying FTE.

Check coverage in the financial area

Coverage determines whether a fixed monetary amount scales with FTE or contributes once. It does not change the unit of a fixed Projected FTE adjustment or give percentages a separate starting value.

See the worked examples in Apply labor budget adjustments and Apply actual compensation adjustments. Use Forecast results to distinguish planned staffing, Budget capacity and compensation.

Understand the actual compensation calculation

FTE Tree calculates each assignment in three stages:

1. Apply Projected FTE adjustments to the FTE used in the calculation.
2. Apply Pay rate adjustments using the compensation record’s hourly or annual basis, then annualize the adjusted rate.
3. Multiply the adjusted annualized rate by the adjusted calculation FTE, then apply Annual cost only adjustments.

The starting amount depends on the compensation record:

For a $60,000 annual salary and 0.8000 assignment FTE, the base annual cost is $48,000. A 5% pay-rate adjustment changes the annual salary to $63,000 and the assignment result to $50,400.

Assignment FTE and contracted pay

A full-time annual salary rate of $60,000 applies to a 0.5000 FTE assignment. A fixed Projected FTE increase of 0.1000 changes the calculation to 0.6000 FTE, producing $36,000 under either coverage choice. The recorded assignment remains 0.5000 FTE.

Contracted annual pay already describes the assignment’s total pay. If that total is $60,000 at 0.5000 FTE, the same increase to 0.6000 FTE produces $60,000 × (0.6000 ÷ 0.5000) = $72,000. An assignment with zero recorded FTE needs an explicit pay rate or corrected setup before an increase can be calculated; FTE Tree cannot derive the rate from a zero-FTE contract.

The employee must still be available and have a status that counts as active. For an eligible employee at zero FTE, an unchanged $60,000 contracted annual total remains $60,000. Missing employee pay appears as setup work. An inactive or unavailable employee does not become eligible because of a pay or FTE adjustment.

Fixed annual-cost allowances with scaled coverage use the recorded assignment FTE. Fixed pay-rate amounts with scaled coverage follow the FTE used for the calculation. For a $60,000 full-time annual salary at 0.5000 FTE increased to 0.7500 FTE, the salary becomes $45,000. A $2,000 annual-cost allowance adds $2,000 × 0.5000 = $1,000, giving $46,000. A $2,000 annual pay-rate increase instead adds $2,000 × 0.7500 = $1,500, giving $46,500.

Follow a complete worked example

An employee has:

• a $32 hourly rate;
• 2,080 annual hours per FTE;
• a 0.7500 FTE assignment; and
• a Night work schedule.

Two applied adjustments match:

1. a 10% Pay rate night premium that scales with assignment FTE; and
2. a $1,200 Annual cost only equipment allowance that applies once per assignment.

The base annual cost is:

$32 × 2,080 × 0.7500 = $49,920

The night premium changes the hourly rate:

$32 × 1.10 = $35.20

The adjusted rate produces:

$35.20 × 2,080 × 0.7500 = $54,912

The equipment allowance applies once:

$54,912 + $1,200 = $56,112 final annual cost

The contributor details should therefore show $49,920 base annual cost, $6,192 total adjustment impact, and $56,112 annual cost.

If the employee moves from the Night schedule to a nonmatching schedule on October 1, the premium no longer matches beginning October 1. The equipment allowance continues only if its own scope and eligibility still match.