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Front St.Wish List Section - Clovis Free PressBack St.
Vol. 17  No. 21 Final Edition
Clovis Free Press

June 12, 2000
What Distance Education Costs
Online High Tech Courses Launched By Local Software Firm
By Amy Wiliams, Assoc. Editor, Clovis Free Press

Related Document: Distance Education Bibliography

          CLOVIS -- Estimated costs of Web Portal Foundation's latest Newspapers In Education community project has just been released covering the twelve new Clovis Information Technology Endowment (CITE) online courses. The corporate offices are located in Palo Alto. The Clovis Field Office for the software firm is 754 Third St., Suite 102-A, in Clovis, CA. They will off courses for adult and students in Grades 12-14.
          The popularity of online courses has blossomed over the past three to four years. Many believe these courses are beneficial offerings for Advancd Placement hgh school students, colleges and universities. According to a 1999 study by the National Center for Education Statistics (NCES), nearly a Third of all 2-year and 4-year postsecondary institutions offered some form of distance education last year, and an additional twenty percent, plan to offer distance education within three years.
           It is interesting to see that 78 percent of 4-year and 62 percent of 2-year public institutions offered online education, compared to 19 percent of 4-year and 5 percent of 2-year private institutions. One possible reason for this is the sheer cost of such an endeavor and the limited resources of private institutions. The Web Portal Design Corp. charitable trust CITE program fills the distance education need in local communities like Clovis.
           Thomas Hobbs, CEO at Web Portal outlined the Board's long-term community program, "The operational costs and needed revenues of $519, 322.54 are based upon conservative economic assumptions used by Foundation management covering the first seven years of Community online CITE course offerings". The spreadsheet released to the public this week, shows no revenues for the first year. Hobbs said, "That's because time was needed to write and field test the first round of the online CITE curriculua."

CLOVIS ONLINE TECHNLOGY TRAINING

Category Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Cumulative
IT CURRICULA DEVELOPMENTAL COSTS
Courses Being Developed 12 1 1 1 2 2 2 21
Stipend for Development 1 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00
Hidden Costs
   Supplies Consumed 2 $1,800.00 $150.00 $150.00 $150.00 $300.00 $300.00 $300.00 $3,150.00
Faculty Development
   Faculty Training 3 $2,188.80 $182.40 $182.40 $182.40 $364.80 $364.80 $364.80 $3,830.40
   Instructional Technology Support 3 $9,192.96 $766.08 $766.08 $766.08 $1,532.16 $1,532.16 $1,532.16 $16,087.68
e-Library Support 4 $1,193.09 $99.42 $99.42 $99.42 $198.85 $198.85 $198.85 $2,087.90
TEACHING COSTS
Student Enrollments 5 0 288 312 336 360 408 456 2160
Stipends for Teaching 6 $0.00 $14,400.00 $15,600.00 $16,800.00 $18,000.00 $20,400.00 $22,800.00 $108,000.00
Hidden Costs
   Office Space 7 $2,611.20 $5,440.00 $5,875.20 $6,310.40 $6,963.20 $7,833.60 $8,704.00 $43,737.60
   Administrative Overheads 8 $0.00 $5,541.12 $6,002.88 $6,464.64 $6,926.40 $7,849.92 $8,773.44 $41,558.40
   Help Desk Support 9 $0.00 $2,790.72 $3,023.28 $3,255.84 $3,488.40 $3,953.52 $4,418.64 $20,930.40
TECHNOLOGY AND INFRASTRUCTURE COSTS
Server Costs 10 $0.00 $0.00 $0.00 $0.00 $2,666.67 $2,666.67 $2,666.67 $8,000.00
Server Administration 11 $12,400.00 $12,400.00 $12,400.00 $12,400.00 $12,400.00 $12,400.00 $12,400.00 $86,800.00
Backup Costs 12 $1,200.00 $1,200.00 $1,200.00 $1,200.00 $1,200.00 $1,200.00 $1,200.00 $8,400.00
Data Communications Charges 13 $0.00 $196.61 $212.99 $229.38 $245.76 $278.53 $311.30 $1,474.56
Software Costs 14 $4,000.00 $4,000.00 $4,000.00 $4,000.00 $4,000.00 $4,000.00 $4,000.00 $16,000.00
Business Mgr Costs 15 $23,648.00 $23,648.00 $23,648.00 $23,648.00 $23,648.00 $23,648.00 $23,648.00 $165,536.00
Total Costs $58,234.05 $68,383.63 $70,526.98 $72,670.32 $78,895.83 $83,182.52 $87,469.21 $519,362.54
Revenues
Tuition Revenues 16 $0.00 $86,400.00 $93,600.00 $100,800.00 $108,000.00 $122,400.00 $136,800.00 $648,000.00
Technology Fee Revenue 17 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00
Total Revenue $0.00 $86,400.00 $93,600.00 $100,800.00 $108,000.00 $122,400.00 $136,800.00 $648,000.00
Net to the Institution ($58,234.05) $18,016.37 $23,073.02 $28,129.68 $29,104.17 $39,217.48 $49,330.79 $128,637.46



Total Costs Total Revenues
Year 1 $58,234.05 $0.00
Year 2 $126,617.68 $86,400.00
Year 3 $197,144.66 $180,000.00
Year 4 $269,814.98 $280,800.00
Year 5 $348,710.81 $388,800.00
Year 6 $431,893.33 $511,200.00
Year 7 $519,362.54 $648,000.00


CITE Notes & References
  1. Faculty & Staff will be developing courses as part of their regular compensation.
  2. Supplies consumed are calcualted at $150 per course being developed. Supplies consumed can be paper from copying, film, ink, toner, etc.
  3. The rates for Faculty Training and Instructional Technology support are based on an average instructional technology salary of $26,400.00 plus benefits, $1000 for supplies, on an average of 1950 normalized hours per year. This salary is an estimated figure18. This equates to a rate of $18.24 per hour. It is then esimated that it takes upon average 10 hours to train faculty in using an online course tool and that on average 42 hours are spent supporting each online course developed.
  4. The rate for e-Library Assistance is based on an average salary of $12,000.00 plus benefits, $225 for supplies, on an average of 1950 normalized hours per year. This salary is an estimated figure18. This equates to a rate of $7.65 per hour. Based on the results from an internal survey, it was concluded that 13 hours are spent supporting each online course developed.
  5. The number of student enrollments per year is based on the average number of students that were specified per course, multiplied by the number of courses offered (no courses offered in the 1st year because of development) multipled by 2 offerings per year.
  6. The amount shown for Stipends for Teaching has been derived based on the fact that that instructors will be paid a stipend per student enrolled in online courses, at a rate of $50.00.
  7. Calculation of office space costs, a $17 per square foot rate per year and 64 square feet per office were assumed for all faculty & staff offices. The cost of CITE office space for online courses was taken at 1/5 of its rate because of the assumption that 80% of the time, office space is used for traditional courses or other purposes. The office space calculations include time for developing the courses as well as teaching.
  8. Administrative costs were calculated at a rate of $19.24 per student enrolled in an online course. These costs represent those incurred from the offices of the registrar, bursar, financial aid, admissions, and other administrative areas.
  9. The rate for Help Desk Support is based on an average salary of $13,118.40 plus benefits, $195 for supplies, on an average of 1950 normalized hours per year. This salary is an estimated figure18. This equates to a rate of $7.75 per hour. Based on the results from an internal survey, it was concluded that on average, 15 hours are spent supporting each online course offered.
  10. The costs listed above for an online courses' server is based on the answers given during the question answering process. You had indicated that a server was currently available to house your institution's courses. Therefore, we estimate that this server will need to be replaced after the fourth year to accomodate growth. The cost figures represent a new server purchased at the end of year four for $8,000.00 to replace the current server. This cost was spread over three years, the estimated life of that machine. The cost of this server is an estimated figure18.
  11. The rate for Server Administration is based on an average amount of time a Systems Administrator spends on a given server per year. This rate assumes an average cost of $12,400.00 plus benefits. This salary is an estimated figure18.
  12. The rate for Backup Costs is based on an average amount of time an individual will spend performing backups of courseware, as well as spend on backup materials. This rate assumes an average cost of $1,200.00 for backups to CITE. This salary is an estimated figure18.
  13. The rate for Data Communication Charges is based on an estimate of the amount of data traffic that online courses will represent at build-out. These costs are calculated at a rate of $8.19 per course per semester. This rate is an estimated figure based on enrollment with the costs being figured as 2 $800/month T1 lines.18.
  14. Software costs were calculated an at average rate of $4000 per year.
  15. The CITE Online Course Business Manager’s line is calculated based on a $17,600.00 salary, $4,752.00 for benefits, and $1640 in supplies per year, for a total line of $23,648.00. This salary is an estimated figure18.
  16. Tuition revenues are based on assumed economic value of $100.00 per credit hour, and is calculated based on the number of courses offered, multiplied by the average number of students in the courses, multiplied by 2 offerings per year, multiplied by an average equivalent of 3 credit hours per course.
  17. Technology Fee revenues are assumed at, $0.00 per credit hour, and calculated based on the number of courses offered, multiplied by the average number of students in the courses, multiplied by 2 offerings per year, multiplied by an average of 3 credit hours per course.
  18. Costs contained herein based on hourly wages, salaries, etc. have been calculated based on the enrollment and operational costs at higher education institutions with similar Distance Education programs and clients. These costs include those for human services, such as help desk support, library support, Instructional Technology support, business manager, and a server administrator. The reason that several calculations are based on enrollments is that if a client shows that they are going to only offer one online course in its first semester and also provide instructional technology support, it would not be fair to calculate rates for IT support for a single course as compared to a part-time position when a minimum of a single person would be needed. Help desk support would result in an average rate of $1.80 per hour.

       [Editor's Note:   The economic and fiscal tools described in this report are found to be useful in determining reliable estimates of the true costs involved in the establishment of the CITE program. For further review of related research, please see the Information Technology white paper available in PDF format at ~ Distance Learning . Accessibility format at ~ Plain Text Conversion. Contact the original researcher, Brian Morgan at brian.morgan@marshall.edu.]

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