Tuesday, November 27, 2012

Online Instruction, Budget Transparency, and the Cost of Education

For the last ten years, UC-AFT has been fighting a battle with the University of California over budget transparency. One of our main concerns has been how much it actually costs to educate each individual undergraduate student and how much funding does each student generate in state and tuition dollars. So far the Office of the President has refused to make these calculations because they do not think you can or should separate teaching from research and administration, and even though the new rebenching funding model does try to account for the different costs structures related to undergraduate vs, graduate vs. professional education, the university still insists that it would be too costly and time-consuming to really determine the cost of educating different types of students. However, the push for online education should motivate UCOP to change its strategy because the Regents and the state are under the false impression that distance education can solve the university’s fiscal problems.

The main reason why the Regents and the governor are misguided is because they do not know that the highly-impacted, lower-division courses that UC wants to move online may be the only thing that really generates a profit for the university. For example, in looking at my first- and second-year students’ transcripts at UCLA, I calculated the average, yearly direct instructional cost for a typical lower-division undergraduate student. I found that since students in their first two years at UCLA tend to take 8 large courses (averaging 200 students) and 2 small classes (averaging 25 students) each year, and half of these courses are taught by lecturers, the total direct instructional cost per year is $1,950 (an if we add 20% for benefits, it costs $2,340). (UC brings in $16,000 per undergrad student in combined tuition and state funds).

Here is how I made this calculation: since the average full-time lecturer salary is currently $60,000 and the full load is 8 courses, each of the courses cost $7,500. If a lower-division student takes four large lecture classes (averaging 200 students) with a lecturer, the cost per student for each course is $37.50. In the case of senate faculty teaching lower-division lecture classes making $100,000 for four courses a year, the cost for the four large lecture classes is $500 per student. If we then do the same calculation for small classes of 25 students, the cost for a course taught by a lecturer is $300 and the course taught by a senate faculty member is $1,000.

One can argue with this methodology, but what should be absolutely clear is that it is virtually impossible for the online program to deliver education for less money. Although the Regents and the Governor bemoan the fact that universities have failed to follow other “industries” by reducing costs through technology, what they do not see is that costs have been reduced by the use of large classes and non-tenured faculty. However, UCOP does not want to make this argument because its entire budgetary structure is based on half-truths and abstract calculations.

Making matters worse is the fact that the UC has already spent a lot of money on the online pilot program, and studies have shown that universities constantly under-estimate the real costs of distance education. For example, in his article “The Costs and Costing of Online Learning,”, Greville Rumble looks at the actual costs of using online courses at research universities. His main finding is that previous research on this topic failed to take into account all of the related expenses: “One of the problems with many of the studies now available is that they report the broad results, not the detail. It is therefore difficult to know what has been included and what excluded, and so whether the costings undertaken are comprehensive. Experience suggests, however, that all figures need to be treated with care. What does seem clear is that the costs of developing a course are being pushed up—and significantly so whenever media are used in a sophisticated way. If so, and if cost efficiency is an important consideration, then savings may need to be looked for in delivery.” Rumble here argues that one of the main cost drivers in online courses is the development of the class material.

In fact, his research shows that if universities want to produce a high-quality educational experience, they have to spend a great deal of money: “The high costs of developing internet courses are confirmed by Saba, who suggests that commercial software companies developing courses for online instruction or publishers are spending at least $500,000 to fully develop a multimedia course.” It is important to note that when universities present the cost of new online programs, they usually do not account for the initial costs of course development.

Rumble also believes that although these new programs are often used to save labor costs and faculty time, the opposite often happens: “A high proportion of the costs of developing materials is labor costs. All the research shows that it takes more academic time to develop media that will occupy a student for one hour, than it takes to develop a one-hour lecture—although how much more time is difficult to quantify. Sparkes reckoned that it took from 2 to 10 hours to prepare a lecture, from 1 to 10 hours to prepare a small group session, and from 3 to 10 hours to prepare a video-tape lecture; however, it took at least 50 to 100 academic hours to prepare a teaching text, 100 hours to prepare a television broadcast, 200 hours to develop computer-aided learning, and 300 hours to develop interactive materials—to which in all cases one needed to add the time of technical support staff.” There are thus a lot of hidden costs involved in developing online courses, and these expenses rarely show up in presentations on the cost-effectiveness of computer-mediated education.

Universities also sometimes underestimate the expenses related to delivering online courses: “In general none of the studies undertaken to date adequately factor in the costs of overheads. Although, the costs of putting in equipment directly associated with the projects (e.g., servers) are usually taken into account, as are the costs of software licenses, college operating budgets do not usually reflect the full costs of maintaining networked services.” It turns out that it is very hard to calculate the total cost of software licenses, network maintenance, and equipment for online programs, so universities simply make a guess and present it as a fact.

Furthermore, universities have a hard time predicting the number of staff and administrators they will need for a new online program: “Much depends on the context—the time spent agreeing that a group of enthusiasts can develop a project will be very different to that required to change an institution’s direction. Indeed, developing an IT [information technology] strategy is likely to be expensive.” One thing that we can be sure of is that the use of online courses drives up the cost of administration and staff while further squeezing instructional budgets. I hope to make this argument to the Regents and Governor Brown to show them the folly of the online fiscal panacea.

Thursday, November 15, 2012

The UC Regents, Governor Brown, and the Online Hail Mary

During the most recent UC Regents meeting, one theme that continued to raise its ugly head was the specter of online education as the great economic cure for all that ails the university. The UCLA Faculty Association blog gives the following summary: “Regents chair Lansing pushed for more progress on online education. Others, including Lt. Gov. Newsom, were also impatient about UC progress on online education. One of the student reps was not so convinced that online education was quite the panacea that some Regents seemed to think . . . Governor Brown reflected on the discussion of online education. Tradition is a Good Thing but UC might be going the way of the Post Office and print newspapers in the face of digital developments. The proposed UC budget would increase by 9% and unless there are tuition increases the state can’t afford such projections. UC has to assume budget squeezes and find new ways to deliver services. Maybe this is more threatening than when the Regents faced Angela Davis teaching on a campus. Why can’t the Regents have experts come and talk about such matters at the next meeting? Lansing agreed to that idea and it was ordered. Lt. Gov. Newsom (if I recognized his voice) seemed to want to help design the session. Provost Dorr was criticized for not moving the online matter along faster. Chancellor Birgeneau of Berkeley said that in fact we are well engaged in online education and that the Regents seem unaware of it. (“We are leading the world.”) Gov. Brown pointed out that the Berkeley examples are not for credit. There was back and forth about what was for credit and what wasn’t. It was decided that the presentation for the next meeting will also include what UC is doing now on online education.” So it looks like the next Regents meeting will contain a presentation and discussion of the current state of the online project and what we can expect in the future for UC digital education.

This push to solve the university’s funding problems through online education needs to be put in a broader context. Recently we have witnessed many of the most elite universities in the United States jumping onto the MOOC (massive open online courses) bandwagon, and we need to ask, why are they doing this? After all, schools like Stanford, MIT, and Harvard are defined by their selectivity and high costs, and so it seems strange that they would want to promote a form of education that is open to the masses for little if any cost. Perhaps, these institutions just feel that more people in the world should be exposed to their expert knowledge, or maybe they are following the new media business model of built it, let them use it, and then charge them once they become hooked.

I would like to pose a more critical and realistic interpretation: elite universities are promoting online education, which will lead other schools to commit financial and educational suicide. To be clear, I am not arguing that this plan is an intentional plot or conspiracy; rather, following the law of unintended consequences, many good intentions can result in a destruction of the common good. Call it the inverted invisible hand: universities and individual faculty members want to do good by making their intellectual property available for free, but the end social result is that the business model for higher education is destroyed.

Just as local newspapers have been undermined by Craigslist and the music industry has been devastated by Napster and iTunes, higher education may be heading down the path of economic self-destruction. By embracing low-cost, high-access instruction, non-elite schools will lose their competitive advantage; moreover, the idea that the masses can be taught online, while the elites continue to receive valued credentials from residential institutions may result in the formation of a digital ghetto for the majority of non-wealthy Americans.

My first piece of evidence of how online education leads to institutional suicide can be found in a recent Chronicle of Higher Education article aptly entitled, “UC Online Strives to Compete in an Era of Free Courses.” In discussing how the University of California system is failing at its attempt to develop an online educational strategy, we are informed that, “Online education was going to revolutionize the University of California system, drawing thousands to the selective institution's online courses and bringing in new revenue to help allay budget cuts. That was the pitch for UC Online, started two years ago with the belief that millions in seed money could easily be raised from foundations or other private sources to get the bold effort off the ground. But UC Online now appears to be struggling, even as other highly selective colleges rush to offer their courses online at no charge (and, unlike the University of California, with no credit).” In the case of the UC system, the move to online courses was seen as a way of dealing with devastating state budget cuts, but after pouring several millions of dollars into this project, the system has still not found a way to cash in on its digital panacea.

Not only has the UC system failed to make money on its online initiative, but we learn that they have actually lost millions: “University of California officials failed to rustle up those private donations and were forced to take out a $6.9-million loan from the system's Office of the President last year to prop up the effort, with strong opposition from faculty members who did not want university money used for the project.” Like so many other institutions of higher education, the faculty are here pitted against an administration that is spending millions on an online initiative while traditional courses are being eliminated and class sizes are being expanded. Instead of using scarce resources to improve the quality of undergraduate instruction, the UC is trying to get non-university students to take expensive online courses: “It needs to attract at least 3,000 non-UC students this year and add 1,000 more each year until it reaches 7,000 non-UC students to pay back its loan on time, said DoQuyen Tran-Taylor, project manager for UC Online.” In other words, as UC students pay more for less education, non-UC students are being recruited to repay the debt of a struggling online project.

The Chronicle points out that one reason why the UC initiative may be failing is that it cannot compete with the elite universities, which are giving their courses away for free: “The pivotal question is whether people will choose to shell out money for UC Online courses rather than for already-established online programs or one of the many free online courses, known as massive open online courses, or MOOC's, offered by a growing number of well-known colleges.” It appears that the answer to this question is that elite universities have successfully used MOOC’s to undermine the competition and prevent cash-strapped public schools from reaping the benefits of the digital gold rush.

Once again, I do not think that this is an intentional strategy, but it reflects the inability of some higher education institutions to consider the total ecology of their economies. Although the UC thought that private high-tech donors would seed their online program, the reality is that the big money has moved to private online ventures: “UC Online has raised only $748,000 in private financing for the project—through a Next Generation Learning Challenges grant by the Gates foundation and the William and Flora Hewlett Foundation. Private companies leading free online-education efforts, meanwhile, have been raking in investment cash. Coursera, for instance, boasts more than $22-million from investors.” In this new form of privatization, private companies are funneling their money to private institutions because they see a much higher potential for large profits; meanwhile, public institutions are scrambling to find ways to monetize their online programs.

Returning to the University of California, we discover that as private seed money is drying up, the costs of developing an online program continue to escalate: “UC Online spent $4.6-million on developing the project in the 2011-12 academic year, and expects to spend about $7-million this year in additional development and marketing efforts, said Shelly Meron, a University of California spokeswoman. An 18-month contract with the course-management software company Blackboard took up a significant portion of that spending—$4.3-million . . .” Thus, at the same moment that the university is facing reduced state funding and swelling enrollments, money that could be used to hire more teachers or house more classes is being sent to a private company to develop online course infrastructure. One has to wonder why the UC system could not have developed its own open source course programs and why the administration is bent on pursuing this high-cost strategy.

On a positive note, the MOOC revolution may force universities to determine what value they actually deliver to students. Instead of joining a race to the bottom, universities like the UC system should defend the importance of the residential educational experience. Not only do students on our campuses learn how to live on their own and navigate through competing social interests, but universities remain one of the few places where our citizens can engage in deep and important conversations concerning the most important aspects of their lives. In contrast to online courses, university classes force students to encounter new ideas and people; however, universities often undermine this experience by not providing a high-quality learning experience. The solution, then, is not to turn to a lower form of social interaction and instruction; instead our universities have to prove their worth by recommitting themselves to undergraduate education.

In short, instead of shifting their resources and attention to a fantasized digital cure, our universities need to focus on providing high-quality instruction to undergraduates. Furthermore, in place of building new entertainment centers and food courts for students, universities should hire more full-time faculty to provide effective in-person learning environments. A real race to the top would mean that we start to engage students in a meaningful life offline and online. As the elite private universities tell the masses that they can settle for an inferior educational experience, our public universities must push for high-quality higher education for all.

Wednesday, November 7, 2012

We Won the Battle, Now the War

As Democrats celebrate their hard-earned victories, now is not the time to let down our guard. In the next couple of weeks, there will be tremendous pressure for President Obama to sign a very bad deal. He will be told that the only way he can avoid extending the Bush Tax cuts for the wealthy is if he agrees to severe cuts to social security, Medicaid, and Medicare. He will also be pressured to reduce the scheduled cuts to the defense budget, and thus, he will be asked to repeat Bill Clinton’s famous triangulation that brought us welfare reform, Wall Street deregulation, and NAFTA.

President Obama has already shown that he would go for the “Grand Bargain,” and after his electoral victory, he may sign off on a deal that will accomplish some of the most desired goals of the Republican party. To fight this quick move to the Right, go to: