Funding and Spending: What Price Distance Education?.
This paper explains methods of handling information about real costs to develop a model that is then used to forecast future costs of specified distance education activities and to obtain funding for these activities. It is addressed to anyone concerned about acquiring and spending money in distance education--managers of systems and institutions, department heads, and people interested in the actual costs of activities. The paper takes the approach to funding distance education that involves identifying characteristics costs of distance education and funding it on the basis of costs. It explains methods of handling information about real costs, including variable and fixed costs and student numbers, to develop a model used to forecast future costs of specified distance education activities and to obtain funding for them. The procedure of building a bridge between the accounting system and funding costs analysis is described, a process that involves using allocation keys and a cost classification. (YLB) *):c****************************************** * Reproductions supplied by EDRS are the best that can be made * * from the original document. * i******************I.AA:c****.AAA****************************** 9th Annual Conference Distance Education Association of New Zealand Palmerston North College uf Education 18 20 June 1993 Funding and Spending: What Price Distance Education? Ormond Tate Director and Allan Hiiri Manager Finance and Operations The Correspondence School U.S. DEPARTMENT OF EDUCATION Office p Educationat Research and irnpronement EDUCATONAL RESOURCES INFORMATION CENTER IERICI This osd.tument *S Peen reprodoced as received born the Person or oroanizalmn onoinatirto C Minor changes have been made to improve reproduction Quality POntOInlWO opimons stereo in this docu ment do riot necessarily represent official OERI poidOn or POhCO 2 PERMISSION TO REPRODUCE THIS MATERIAL HAS BEEN GRANTED BY TO THE EDUCATIONAL RESOURCES INFORMATION CENTER (ERIC) FUNDING AND SPENDING : WHAT PRICE DISTANCE EDUCATION? Authors: Ormond Tate, Director, and Allan Hiiri. Acting Manager Finance and Operations The Correspondence School Wellington, New Zealand Introduction This paper is addressed to anyone concerned about getting and spending money in distance education, e.g. managers of systems and institutions, heads of departmentsand people interested in the actual cosis of activities. It may be of interest to governmentofficers and financial institutions concerned with allocating funds to distance education, e.g. for human resource and national development The paper follows a commonsense pragmatic approach. It is based on a two-year analysis of the costs of operating the New Zealand Correspondence School in an effort to establish an appropriate formula and process for the government to fund the school for adult continuing, secondary, primary, special and preschool distance education. It explains methods of handling information about real costs to develop a model which is then used to forecast future costs of specified distance education activities and to obtain funding for these activities. Costs and Funding Distance education is usually in the context of conventional face-to-face education and cost comparisons arise between the different forms. Governments in countries faced with meeting educational needs that outstrip resources such as buildings, equipment, number and quality of teachers, and finance are interested in both costs and quality of distance education. There are many types and forms of distance education differing in purpose, size, scope, media, entry requirements , levels and students so that it is difficult to compare costs between them or with conventional education. Articles by Snowden and Daniel, Rumble and Perraton deal with costs of distance education, mainly at tertiary level. There appears to be little information available about funding mechanisms for distance education. Possible Approaches Possible approaches to funding distance education include: Viewing distance education as an alternative method of delivering education and funding it on the same or a similar basis to conventional education, e.g. student numbers, hours, etc. As face-to-face education increasingly incorporates distance methods and blends with it, this approach eventually may be the simplest or most appropriate. Identifying characteristic costs of distance education and funding it on the basis of costs. Part of the appeal of distance education to planners is potential economies in delivering education. Governments and administrators may favour funding based on analysis of actual costs. This paper takes the second approach. It is asserted that funding for distance education should be in terms of specific services bought or of outcomes purchased by the funding agency. Two important aspects are level of funding and yearly changes in funding factors that affect funding levels. The first approach may find favour with distance educators in large institutions with
The economics of the open university revisited
Revision of earlier cost calculations for the Open University and Conventional Universities in the U.K. for 1973 confirms the findings of a significant cost advantage to the Open University. An analysis of developments at the Open University since 1973 indicates, however, that there has been little reduction in average cost in real terms and no improvement is likely on known developments to 1979. This is surprising for it might be expected that as student numbers rise average costs would fall. A more detailed analysis of the structure of Open University costs indicates why this has not happened. A major determinant of costs is the number of courses and these have continued to grow rapidly since 1973. The rate of increase of new courses has been faster than the rate of increase of new students. In effect the University has been using the economies provided by increased student numbers to increase student choice through the provision of more courses rather than reduce average cost.Average cost could be reduced whilst keeping the same number of courses by changing the components of the teaching system such as broadcasting. If such fundamental changes were not acceptable then an alternative would be to change the mix of courses between the relatively expensive science and technology areas and the cheaper arts and social science areas. A further alternative is to keep the same mix but ensure a longer life for science and technology courses.
The economics of the open university
This paper makes cost comparisons between the Open University and conventional universities in order to give some broad indication of the cost differences between the two types of institutions in teaching students and producing graduates. The paper begins by explaining the conceptual and statistical problems that arise in making comparisons of this nature and offers suggestions as to how these can be overcome. After a description of the Open University teaching system and the implications for its cost structure the paper makes four comparisons between the University and conventional universities. These are the average recurrent cost per equivalent undergraduate in which the Open University cost is little more than a quarter of conventional universities; the capital cost per student place where the Open University figure is about 6 percent of the conventional figure; the average recurrent cost per graduate which indicates that the cost at the two types of institutions would be equalised if the Open University had a drop-out rate of 85 percent; and the resource cost per equivalent undergraduate where the Open University costs are about a sixth of conventional universities.Even when allowances are made for different research proportions the Open University seems to have an advantage. The paper makes a tentative suggestion that it is not the part-time nature of the students which is important, but the method of teaching at the Open University which gives it the advantage. Because of the conceptual and statistical problems involved the paper does not provide any definite conclusions, but suggests that in a period of increasing pressure on the resources of higher education, the application of the Open University teaching methods to conventional universities should be studied.RésuméL'article procède à des comparaisons de coût entre l'Université “ouverte” et les universités traditionnelles, afin d'esquisser l'ordre de grandeur de la différence de coût entre ces deux types d'institutions en matière d'enseignement et de production des diplômés. On présente d'abord les difficultés conceptuelles et statistiques qui pèsent sur les comparaisons de ce genre et on propose quelques suggestions pour les surmenter. Après une description du système de l'Université “ouverte” ainsi que de ses conséquences financières, l'article passe en revue quatre comparaisons entre l'Université “ouverte” et les universités traditionnelles: le coût moyen par étudiant, où l'on voit que le coût est dans l'Université “ouverte” un peu moins d'un quart de ce qu'il est dans les universités traditionnelles; le coût en capital par place d'étudiant, qui fait apparaitre que le chiffre de l'Université “ouverte” représente environ 6% du chiffre habituel; le coût moyen par diplômé qui montre que le coût des deux types d'institutions seraient à égalité si l'Université “ouverte” avait un taux de déchet de 85%; enfin, le coût par étudiant undergraduate, où les coûts de l'Université “ouverte” représentent environ un sixième de ceux des universités traditionnelles.Même si l'on tient compte de la part différente de la recherche dans les deux cas, l'Université “ouverte” semble présenter des avantages. L'article suggère que ce n'est pas tant la caractéristique d'étudiant à temps partiel qui est déterminante que la méthode d'enseignement propre à l'Université “ouverte.” En raison des ambiguités conceptuelles et statistiques qui s'attachent à ce genre de comparaisons, l'article ne propose pas de conclusion catégorique mais suggère que, dans la période de difficultés financières où se trouve l'enseignement supérieur, l'introduction des méthodes d'enseignement de l'Université “ouverte” dans les universités traditionnelles devrait faire l'objet d'études.