Early Cost Estimates

At first blush, compared to conventional brick-and-mortar districts that pay for athletics, food and transportation services, the operating and capital costs of running multiple facilities, and a host of other student support services, most virtual learning programs seem like they could save taxpayers a slew of money. Full-time online programs, for example, wouldn’t require large buildings or extensive student support services. Based on these assumptions, it would be easy to conclude that most virtual learning programs would deliver the same level of instruction for a fraction of the cost.

Some early attempts to gauge the costs of virtual learning, however, suggested that the price for online learning would be fairly similar to that of brick-and-mortar education. In 2006, Augenblick, Palaich and Associates Inc., a private education research and consulting firm, put together a panel of school officials and experts to estimate the costs of virtual schools. A follow-up report, prepared for the BellSouth Foundation (now the AT&T Foundation), the charitable arm of the former telecommunications company, outlined the cost estimates identified by these experts, including those associated with instructional personnel, management, course development, technology personnel, equipment and networking, and facilities acquisition and maintenance. In the end, the study’s experts estimated that a full-time virtual program’s operating costs were likely to be between $7,200 and $8,300 per full-time student after initial start-up costs of $1.6 million were met.[9]

The $7,200 to $8,300 estimated per-pupil operating cost for virtual programs was lower than the U.S. average per-pupil operating cost of $9,145 in 2005-2006 for conventional public schools. Nevertheless, the $8,300 upper estimate was higher than the average per-pupil operating expenditures in 18 states.[10] APA ultimately concluded that excluding transportation and capital expenses, “The operating costs of online programs are about the same as the operating costs of a regular brick-and-mortar school.”[11]

In the same year, the Southern Regional Education Board, a nonprofit organization collectively led by governors from 16 Southern states, developed a cost-estimating formula for state virtual schools, such as Florida Virtual School, that offer supplemental courses to a school’s existing curricula. The formula took into consideration the fact that these virtual schools do not need to invest in a large physical plant to host students and can forgo the costs of transportation, food services, libraries, athletic facilities and other items associated with conventional brick-and-mortar schools that grant diplomas. However, virtual schools do bear higher costs for such things as computers, software, telecommunication services, technical support and employee training. In the end, the SREB projected initial per-pupil costs for virtual schools similar to those of brick-and-mortar schools, although it did suggest that virtual schools could save taxpayers money over time.[12]

Early analyses of the costs of online programs in Michigan seemed to confirm the findings of these two 2006 studies. Dansville Schools, a small district just southeast of the Lansing, began offering students online courses in 1999 through a private company in Massachusetts named Virtual High School. At first, the fees for the virtual classes were entirely subsidized by a U.S. Department of Education Technology Innovation Challenge Grant, but once Virtual High School had to start charging Dansville Schools fees for the courses, the district realized no fiscal benefits from the program.[13]

In 2002, Dansville signed up for the then-newly formed Michigan Virtual School. MVS, whose fees were subsidized by annual state appropriations, charged 50 percent less than Virtual High School in Massachusetts,[14] but the district was still unable to save money with the courses. Mike Simeck, Dansville’s superintendent at the time, stated, “Our experience with [online programs] is that there’s no way to get it to scale for us that would make it a cost saver.”[15]

Other case studies of different virtual learning programs produced findings similar to those in Dansville. The Consortium for School Networking, a professional association of school technology employees, conducted a case study in 2007 of a single-district virtual program in a Wisconsin school district of 5,000 students. The results showed that the district failed to realize any savings from this program.[16]

These failed initial attempts to reduce costs through virtual learning may have contributed to some school officials’ skepticism about this proposition. In a survey conducted by the Sloan Consortium of school administrators, nearly 50 percent of the respondents cited course development costs and funding mechanisms as likely obstacles to providing more online opportunities to students.[17]

[9] Amy Berk Anderson, John   Augenblick, and Dale DeCesare, “Costs and Funding of Virtual Schools” (APA Consulting, 2006), 12, http://www.inacol. org/research/docs/Costs&Funding.pdf (accessed Jan. 11, 2011).

[10] “Table 184: Total and Current Expenditures Per Pupil in Fall Enrollment in Public Elementary and Secondary Education, by Function and State or Jurisdiction: 2005-06,” (National Center for Education Statistics, 2009), http://nces.ed.gov/programs/digest/d09/tables/dt09_184.asp.

[11] Anderson, Augenblick, and DeCesare, “Costs and Funding of Virtual Schools” (APA Consulting, 2006), 4-5, http://www.inacol.org/ research/docs/Costs&Funding.pdf (accessed Jan. 11, 2011).

[12] “Cost Guidelines for State Virtual Schools” (Southern Regional Education Board, 2006), 4-10, http://publications.sreb.org/2006/06T03_ Virtual_School_Costs.pdf (accessed Jan. 24, 2011).

[13] Brett Schaeffer, “Virtual savings? Online courses bring better access but little impact on the bottom line,” School Administrator(2004) goo.gl/Bwa0c (accessed Jan. 9, 2011).

[14] “Report to the Michigan Department of Education on the Development and Growth of the Michigan Virtual High School, 1999-2005” (Michigan Virtual University, 2005), 6, goo.gl/ygGm9 (accessed Jan. 26, 2011).

[15] Brett Schaeffer, “Virtual Savings? Online Courses Bring Better Access but Little Impact on the Bottom Line,” School Administrator (2004): 1-2 goo.gl/3QliC (accessed Jan. 9, 2011).

[16] Katie Ash, “Experts Debate Cost Savings of Virtual Ed.,” Education Week 28, no. 25 (2009), http://www.edweek.org/ew/articles/ 2009/03/18/25online.h28.html (accessed Jan. 26, 2011).

[17] Anthony G. Picciano and Jeff Seaman, “K-12 Online Learning: A 2008 Follow-up of the Survey of U.S. School District Administrators” (The Sloan Consortium, 2009), 13-14, http://www.sloanconsortium.org/ publications/survey/pdf/k-12_online_learning_2008.pdf (accessed Jan. 24, 2011).