Michigan Virtual School Costs

The initial $15 million appropriation for MVS in 2000 makes it difficult to determine the school’s operating costs in its first few years, since the operations were subsidized by initial appropriation. However, it is clear that MVS has gradually reduced its reliance on the appropriation, suggesting that the school has begun to create economies of scale.

The largest portion of MVS’ start-up costs was course and content licensing fees, which consumed more than $4.4 million — a total of almost 43 percent of MVS’ budget — in its first two years of operation. Additionally, MVS spent a combined $1.2 million on professional development, product development and website development during that period. MVS spent more than $10.3 million in total in fiscal years 2001 and 2002.[*]

These expenditures, however, decreased over time. The total two-year cost of product development declined by 78 percent between fiscal years 2001-2002 and fiscal years 2004-2005.[40] During the same period, the total two-year cost of fees for course and content licensing fell by 63 percent.[41] Website development costs nearly vanished.[42]

As noted above, MVS’ charges per semester range between $89 for Internet-based courses and $449 for remote teacher online Advanced Placement courses. These fees are partially subsidized by state appropriations. Altogether, including state subsidies, MVS says that the average operating cost per semester-long course in 2008-2009 was about $390.43 Based on this figure, a full year of six courses per semester would cost taxpayers $4,680 per pupil. This annual estimate represents meaningful educational costs — not just those for elective courses like digital photography — since MVS offers nearly every course that high school students must take in order to graduate.[†] For the 2009-2010 school year, Michigan’s minimum foundation allowance — the minimum amount of per-pupil money that a Michigan school district could receive through the state — was $7,162,44 53 percent more than what an estimated full course load would cost at MVS.

[*] “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/mibZT. In MVS’ first two years, it completely subsidized the cost of its online courses for K-12 schools. Ibid., 5.

[†] “Michigan Merit Curriculum High School Graduation Requirements” (Michigan Department of Education, 2010), 1, goo.gl/QkMXK (accessed Jan. 24, 2011); “MVS Course Catalog” (Michigan Virtual University, 2009), goo.gl/ndE7k (accessed Jan. 24, 2011). MVS’ current course offerings appear to allow a student to complete all of the requirements of the Michigan Merit Curriculum except for the “physical education and health” and the “visual, performing and applied arts” requirements. The fee that MVS charges for its Michigan Merit Curriculum courses is $275 per semester — mid-range for MVS course fees in general.

[40] “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/6Qqhd.

[41] Ibid., 6-7.

[42] Ibid., 6.

[43] Dan Schultz, telephone correspondence with Michael Van Beek, Feb. 18, 2010.

[44] “Effective Foundation Allowance Changes since Proposal A” (Michigan Senate Fiscal Agency, 2010), goo.gl/wHV8k (accessed July 15, 2010).