1 SHEEO Summer 2004 Financing Online Education: Building Sustainable Enterprises Laura M. King Vice Chancellor of Finance Minnesota State Colleges and Universities

2 15 member Board of Trustees appointed by the Governor 7 universities and 25 colleges 137,000 FYE, 250,000 annual students, 150,000 non credit students, 16,000 employees 27% enrollment increase physical locations across the state

3 Expectations of Higher Education in Mn Contain costs Absorb inflationary pressures Increase output Be innovative Internally fund escalating demand for online

4 MnSCU Online Activity Term includes full and partial on line delivery 900%+ growth in past three years 27,800 registrations sold in FY credit based e learning courses 500 non credit courses

5 Integrated Governance Created Mn Online Council in 2001 – chancellor’s office and institutional leaders Council advises Sr Vice Chancellor/Cabinet/Chancellor Coordinates with presidential leadership council of 32 presidents No separate legal authority

6 Integrated Governance 3 year finance plan established Sr. Vice Chancellor, on behalf of the Council granted accreditation powers in 2003 In –house review teams trained and at work Uniform pricing, quality assurance and program coordination system wide

7 MN Online Central and Core Services Virtual library and faculty training centers Degree and Course alignment tools E-folio and electronic career assistance Electronic transfer index

8 Cost Management for Online Enterprises Who should be the benchmark? Private online providers? Public online providers? What to measure? Real costs (fixed and variable) Innovation Resources for reinvestment How to measure it? Number of new programs? Number of new student segments?

9 Policy Implications Robustness of reinvestment choice Scalability Repurpose ability Centralized vs. decentralized services System approach Non-redundancy of services Management of scarce resources Private-sector partnerships Joint risk-sharing Investment capital

10 MN Online Cost Categories Design & Development Delivery Assessment Reinvestment

11 MN Online Cost Categories Reinvestment Costs Course/Program Redesign Repurposing curriculum into similar market segments Curriculum Management Process Engaging Partners

12 MN Online Fiscal Model Blended Approach - % of operations is funded through a central source - % of operations is funded through assessing user fees

13 MN Online Funding Model FY05 - FY09 Year 1: Revenues derived from students, campus allocations, grants, internal partnerships, and external contracts for services Year 2: Revenues from students and campuses fixed to Year 1, increased internal support, and expanding external contract dollars Year 3: Revenues = Expenses Year 4: Residual cash targeted to reinvestment strategies Year 5: Sustainable growth from revenues, cost management, and reinvestment strategies

14 MN Online in 2004 All 32 Minnesota State Colleges and Universities offer courses online Approximately 18,065 students took at least 1 internet course Minnesota State Colleges and Universities had served 45,074 online students A 62% increase of credits for online courses over FY03 FYEs at 4,215 for an increase of 1,620 over 2003 (June 2004) The largest age group for enrolling in online courses was 21-25

Outlook Maximize power of the system through designing & implementing an integrated student academic and administration service and usability Develop a Marketing Plan for internal & external customers Develop a comprehensive approach to assessment based on a continuous improvement model Ensure financial viability of Minnesota Online & supporting projects/efforts

16 Challenges in Sight Widely divergent course development investment rates Variable tuition rates Program/course quality assurance Course management support Program development alignment/sharing across institutions