The Consultants recommend that:
The Commonwealth of Virginia form an Authority, hereinafter called Virginia Educational Ventures, for the express purpose of identifying unmet need for higher education in Virginia and incenting the development of online programmatic responses.
We strongly recommend that Virginia Educational Ventures support programs rather than courses. Each program, whether terminating in a degree or certification of some sort, should be offered by an institution as a coherent curricula, designed and evaluated by the faculty of the offering institution or by a consortia of institutions that has carefully determined responsibility and accountability for these academic functions.
Here are three examples of how the process might work.
One can easily envision similar RFPs issued to address workforce training issues that result in certification, new online degree programs in business, teacher re-certification or information technology or even RFPs designed to upgrade the connectivity of Virginia citizens to permit them to take better advantage of online education opportunities.
We recommend that Virginia's institutions (public and private) should have a right of first refusal, that is, Virginia's institutions, alone or in consortia, would have an exclusive opportunity to respond to each RFP. If no institution responds or if the responses received are judged to be inadequate, Virginia Educational Ventures would then issue the RFP to public and private providers located outside of the Commonwealth. This provision insures that Virginia's institutions have the first opportunity to respond affirmatively to identified state needs, but in the event that they are unable or unwilling to do so, Virginia Educational Ventures will ensure that those needs are met.
We also recommend that Virginia Educational Ventures employ a more innovative RFP solicitation process than simply posting a document and receiving responses. Despite the fact that a number of the Commonwealth's institutions have substantial experience in distance learning, the general level of understanding regarding online education among all institutions is, in our opinion, relatively low. As part of the goal of building capacity for all of Virginia's institutions to participate in the emerging world of Internet-based education, we suggest that the RFP process would include a significant educational component to "educate" existing institutions as to what is possible in this new world.
We strongly recommend that a part of the RFP process consist of one or two workshops whose purpose would be to train prospective applicants how to develop and deliver high quality, cost-effective online programs. Virginia Educational Ventures might issue an RFP for consultants with experience in designing such programs to run these workshops.
In general, we would expect that Virginia Educational Ventures would have a bias toward programs that offer maximum flexibility for students. Consequently, RFPs would consist of more than a simple request for a program to meet an identified need. They would outline a number of requirements that must be met, both those derived from demand study data as well as a number of generic requirements that promote maximum flexibility for students.
Using an RFP that would be issued for an online academic program as an example, such requirements might include planning statements that address the following:
Admission and Transfer. Proposals must include a clear statement of admissions requirements and requisites for transfer students. In general, we would expect that Virginia Educational Ventures would have a bias toward programs that transfer all credits with passing grades of C or better awarded by accredited institutions.
Assessment. Proposals must include an assessment plan that describes how the institution or consortia will evaluate the effectiveness of the program in meeting its stated goals. In general, we would expect that Virginia Educational Ventures would have a bias toward programs that reflect an understanding of how assessment can be used to foster continuous improvement in the ongoing development and delivery of online programs.
Cost Effectiveness. Proposals must include a business plan that demonstrates the program's cost effectiveness and that it can be self-sustaining in the future. In general, we would expect that Virginia Educational Ventures would have a bias toward programs that reflect an understanding about the cost of the program's design, including both human and technological components, in relation to the identified student demand.
Marketing. Proposals must include a marketing plan that is compatible with Virginia Educational Venture's overall marketing plan but includes specific activities to promote the particular program. In general, we would expect that Virginia Educational Ventures would have a bias toward marketing strategies that exhibit a sophisticated understanding of how to reach potential online students and a realistically funded effort.
Student Services. Proposals must include a student services plan that addresses how the institutions will deal with admissions, registration, billing, financial aid, advising, tutoring, grading, library, placement, counseling, information technology, degree audits, and transcripts. In general, we would expect that Virginia Educational Ventures would have a bias toward programs that deliver student services via the Web via a kind of "one-stop shopping" approach, thereby increasing access to information and timely response times.
Technology. Proposals must include a technology plan that addresses both provider and consumer access to technologies. In general, we would expect that Virginia Educational Ventures would have a bias toward programs that are web-based, asynchronous and highly interactive.
Just as students are beginning to expect "better, cheaper, faster" delivery of student services, so too are they beginning to want their academic experiences to have some of the same characteristics. Adult students, with their primary emphasis on professional advancement, want learning that is as close to "just-in-time" as they can get. Yet almost all four-year institutions still follow a traditional term-based calendar, even for their online courses. A very small number of institutions have begun to respond to students' desire for greater flexibility either by starting each of its online courses every two weeks regardless of the number of students enrolled in a course (Rio Salado College) or by using a cohort model in which a course begins whenever between 8 and 13 students are ready to start (University of Phoenix). In each case, no student who wants to take a course ever has to wait more than two weeks to begin collegiate study. In keeping with our bias toward maximum flexibility for students, we recommend that Virginia Educational Ventures encourage and favor program designs that embody these new approaches to enrollment.
It seems likely that programs supported by Virginia Educational Ventures will include a business plan that makes the ongoing delivery of the program self-supporting. For degree programs, some of that self-support may actually come in the form of tuition subsidy by the Commonwealth, just as it does for programs delivered on campus. Consistent with prevailing attitudes regarding state support for non-degree programs or certifications, self-sufficiency may or may not include a state subsidy, but might include a subsidy from employers whose businesses benefit from the workforce training provided.
The purpose of the seed money or venture capital from Virginia Educational Ventures is to overcome the up-front, start-up costs of developing the online program. As noted previously, institutions of higher education typically don't have research or development funds that are used to initiate new programs. As almost the entire operating cost of a program is reflected in the faculty employed to teach in it and the staff to support it, traditional, on-campus programs have very little start-up costs, just very high, continuing operating costs. Venture capital from Virginia Educational Ventures will be used to help construct a viable business plan which includes identifying costs and revenue sources, provide initial outlays for marketing the program, and help defray the initial costs of developing the technology, both software and hardware, to deliver the program.
The provision of seed money for programs identified by Virginia Educational Ventures is critical to its success and marks a major difference between this organization and those that only identify educational needs. Indeed, the heart of this enterprise is in uncovering need and matching that need with a provider to meet the need. We believe that the significant educational resources of the Commonwealth can be deployed to meet most of the learning requirements of the Commonwealth's citizens.
Virginia Educational Ventures will help identify potential partners (from the private sector, from the philanthropic community and from state and federal agencies) to share the development costs associated with new educational initiatives. For example, the U.S. Department of Education has occasionally funded teacher education programs; the private sector has funded a significant number of online learning initiatives; similarly some private foundations have funded distributed learning efforts. Commonwealth sources will be the primary sources of funding. Educational initiatives must often be seen as new businesses; their success is not automatic: unlike the field of dreams, 'building' them does not ensure 'they' will come. A major function of Virginia Educational Ventures is to help manage the business of learning by identifying educational needs, locating funding and matching the needs with providers that can succeed educationally and financially.
As we expect much of the focus of Virginia Educational Ventures programs to be on the non-traditional student, we expect that some of the business community in Virginia will find certain workforce development programs sufficiently valuable to their business interests so as to be convinced of the value of helping to support those programs. Currently, and particularly so in high tech industries, workforce re-skilling is a continuing problem. To the extent that such businesses must provide compensated time-off and time-away from site for employees to re-skill, the impact on the corporate bottom line is significant. Time and place independent learning opportunities have the potential to provide significant savings for these industries.
Local communities, desirous of attracting specific industries to locate in their region, may find the capability to rapidly train the local workforce in the needs of that industry just as an attractive draw as offering special tax relief. Localities hard hit by the out-migration of major business enterprises (particularly a current problem in Southside Virginia) may find the capability to quickly re-train segments of the laid-off workforce for new employment a welcome buffer to declining tax revenues and burgeoning unemployment rolls. There will be many situations in which both local and state government will find supporting workforce training programs has a positive effect on both their revenue and costs.
Virginia Educational Ventures would not offer any programmatic student services itself. Rather, it would rely on each campus offering a program to provide the student and administrative services required by distant learners. Its student support services role would be limited to disseminating program information and publicizing programs that are available.
Potential students will need to be made aware of a new, one-stop way to secure information about online learning opportunities. Potential program development partners will need to be made aware of the existence of a new catalyst for online program development. Consequently, Virginia Educational Ventures would focus its efforts in raising awareness of its existence and its processes for program development, undertaking the following activities:
Consistent with our view that Virginia Educational Ventures should support programs rather than courses, we believe that Virginia's "portal" should focus on a catalog of programs, leading to degrees or certifications, that are available online. The purpose of the portal would be to help the citizen of the Commonwealth locate programs of study that can be undertaken relatively unrestricted by time or locale and connect with institutions offering programs of interest to them. The process of application, acceptance, registration, etc. would be carried out by the institution that supports the program.
The design and operation of such a portal—sort of a union catalog of programs offered in the Commonwealth—is a task that anyone of a number of the Commonwealth's institutions could perform. One of the first RFP solicitations of Virginia Educational Ventures might be for just such a service. Perceived as a program rather than course catalog—one that provides descriptions and transfer to other portal mechanisms—the cost to develop and maintain it should be quite small. As such, we would expect the portal to list and "point to" programs offered by Virginia's private colleges and proprietary schools, as well as out-of-state providers who offer online programs in which Virginia citizens are likely to be interested.
The cycle of project efforts will include identifying and establishing a need or a demand for a particular program or project, quantifying that need in order to write an RFP that is attractive to providers and to funding sources, issuing the RFP and awarding a contract, and assessing the effectiveness of the program to determine if the original demand has been met. If the program misses the mark in some significant respect, Virginia Educational Ventures must find ways to encourage the provider to modify the offering to accomplish its purposes.
This focus on assessment is not intended to interfere with the provider's mechanism for faculty and course evaluation. With programs the responsibility of the offering institution, the responsibility for assessment is appropriately lodged in the institution and its faculty. Virginia Educational Ventures will be interested in the assessment and evaluation of program goals and objectives; the provider will be concerned with the achieving those goals and objectives.
Particularly in the early life of Virginia Educational Ventures we recommend that the Authority employ the service of contractors to assist in evaluating the level of success achieved by the successful RFP respondent. A "post mortem" of program development and operation should provide several useful pieces of data for planning new programs, not the least of which is the opportunity to avoid replicating past mistakes. We envision the RFP process to be a learning as well as a service opportunity for Virginia's publicly supported institutions of higher education.
The creation of "virtual universities" is occurring in many states and regions of the country. The consultants believe that whatever real successes they may evidence to date are due more to limited expectations than the merits of the idea of creating virtual institutions of higher education de novo. It seems a better idea to utilize the well established, mature educational infrastructure already existing in Virginia than to attempt to create a new competitor that would have to replicate the infrastructure already extant in the Commonwealth's institutions of higher learning.
It is clear, however, that something akin to mission myopia on the part of the Commonwealth's institutions of higher education contributes to the existence of educationally underserved constituencies. This situation is exacerbated in periods of fiscal stress such as the institutions have faced in the past several years. While the State Council of Higher Education is charged with providing coordination, including program approval, it seems a bit of a stretch to suggest that the State Council should attempt to dictate which programs which institutions should develop to serve which constituencies. Rather than the "stick" of program approval wielded by the State Council, we believe a "carrot", in the form of seed money, strategically distributed by a new entity is the best approach to servicing these unmet educational needs.
The proposed Virginia Educational Ventures should have a close working relationship with the State Council of Higher Education for Virginia. The activities proposed for Virginia Educational Ventures seem most appropriately to be separate from the coordination role of the State Council. However, the Authority is one mechanism to cause to exist programmatic initiatives that are perceived to be desirable by the State Council. We envision a close, but informal, working relationship between Virginia Educational Ventures and the State Council of Higher Education for Virginia.
Similarly, the activities and function of Virginia Educational Ventures do not seem to fit well with those of the Office of the Secretary of Education. This Secretariat would, of course, have more than a passing interest in the activities and success of Virginia Educational Ventures but seems an inappropriate place in which to house it.
Some might suggest that because of the short term (at least in state governance terms) nature of Virginia Educational Ventures, its function could be performed consortially by some or all of Virginia's public institutions of higher education. To do so would, however, ignore the advocacy role that Virginia Educational Ventures must play for currently underserved or potential educational constituencies. It would also create a level of undesirable and unneeded tension and conflict of interest between institutions who would be both the recipients and the grantors of venture capital.
The required independence, both politically and from conventional state purchasing process, suggests a separate state agency. In Virginia, it appears that the most appropriate form would be that of an Authority, similar to the Roanoke Higher Education Authority.
Virginia Educational Ventures would require a charter that did not inhibit having favored respondents to RFPs, that permitted broad revenue sharing arrangements between institutions and private sector partners, that allowed for sole-source contracting with outsourcers who might be contracted with to evaluate RFP responses, to provide consultation to award recipient institutions on strategies to design cost effective programs, new assessment processes or articulation agreements extending beyond the Commonwealth.
It is not the consultants' perception that Virginia Educational Ventures would become an established feature of the Virginia higher education landscape. Rather, it might operate over the next decade, providing the seed money for institutions to begin the process of meeting the demands of the new economy student. As such, it would be appropriate that the charter of the Authority contain a "sunset" clause, or in some other fashion, after a number of years, undergo rigorous scrutiny in terms of its need and desirability for continuance.
Virginia Educational Ventures should be organized along the lines of an educational institution with a President and a Board of Trustees or Visitors. The Board might contain both legislative and gubernatorial appointees in addition to ex-officio positions for one or more representatives from the public, and possibly the private, institutions of higher education in Virginia. It might be appropriate for the State Council of Higher Education for Virginia to fill an ex-officio position as well.
As the "clients" of Virginia Educational Ventures will be Virginia's institutions of higher education and the long term benefits of its activities will accrue to Virginia's students, it seems appropriate that the Authority have an academic organizational and governance structure. Certainly the characteristics and skill set of the President are those that one would look for in the president of an academic organization.
Absent a well compensated Board of Trustees, which we do not recommend, the President of Virginia Educational Ventures will require a knowledge of the operation and philosophy of institutions of higher education, significant familiarity with the technology and delivery of online learning, and an ability to persuasively interact with business community of the Commonwealth. The Board should be selected so as to assist the President with this multi-faceted set of demands—complementing his or her weaknesses with strengths of their own. We recommend that, in addition to the representatives of affected constituencies enumerated above, that one or more individuals with detailed knowledge of educational technology and online learning be named to the Board.
The President of Virginia Educational Ventures may find compelling reasons to establish other, ad hoc advisory committees that might assist in developing and/or evaluating responses to RFPs issued by the Authority. It may be necessary or desirable for the President to employ the services of consultants, well versed in online learning, to assist in the development and/or evaluation of RFPs. An organization such as the Electronic Campus of Virginia might serve as an additional advisory group to provide guidance and direction to the mission of the Authority.
The role of the trustees would be to approve grants to institutions who have responded to Authority issued RFPs, employ and evaluate the President of Virginia Educational Ventures, observe and track the unmet educational needs of the citizens of the Commonwealth, monitor the success of Authority funded programs, and generally be responsible for the fiscal integrity of the organization.
Staffing the proposed Virginia Educational Ventures is critical to its success. The size of the staff must be quite small, no more than 2 or 3, with a commitment to remain small. The issue here is to ensure that funds allocated to the Authority reach the institutions of higher education without significant deductions for overhead at the Authority level.
In addition to the usual administrative activities (payroll, accounting, purchasing, etc.), most of which should probably be outsourced where possible, Virginia Educational Ventures will need to prepare Requests For Proposals and evaluate the responses. These are two activities that should not be outsourced to the institutions of higher education but may be activities that are, in full or partially, outsourced to contractors with expertise in writing RFPs and evaluating the responses. It would appear more important for the staff to understand the underlying educational issues than to have extensive experience in crafting and evaluating RFPs. The size of the staff would be commensurate with the volume of RFP activity. In the very early existence of Virginia Educational Ventures the staff might consist of only the President and an administrative assistant. As the volume of activity increased, one or two more staff members with a good understanding of higher education might be added.
The role of the President of the Authority will be crucial to the success of Virginia Educational Ventures. Someone focused on organizing and managing a staff will take the strategy in the wrong direction. The President must be able to understand the nature of the underserved constituencies in the Commonwealth, convince the Legislature, the Administration and the State Council of Higher Education for Virginia of the worth of various projects and be able to work with institutional presidents and their designated staffs to create innovative and cost effective responses to RFPs and to ensure that the target constituencies are well served. The President of the Authority would need to be a knowledgeable catalyst for collaboration. Additionally, the President would need to understand how to involve the private sector, philanthropic organizations and other governmental agencies when and where appropriate.
We gave some thought to the nature of the job of the President and the type of person who might be most successful. The types of persons who might be most appropriate would include retired legislators with good knowledge of higher education, retired senior executives of colleges and universities, individuals with experience at philanthropic foundations or even people with experience in institutional development.
The virtual environment makes possible—indeed, drives toward—new systems of organization. Traditional business models—those that are vertically integrated and self-sufficient—are becoming obsolete. New business models are more strategic. They identify and focus on a small number of core competencies, on the two or three things that the organization does better than any other organization in the world, and they outsource noncore competencies to a flexible network of service providers. Thus, modern organizations are composed of a small set of core competencies combined with sophisticated processes and skills aimed at integrating the services of outside organizations into the work of the core organization.
An organization's core competencies are those services, products, or other deliverables that create value and that differentiate it from its competition. In higher education, core competencies are teaching, research, and public service. No one would contend that food service, housekeeping, and bookstore management are core competencies. These functions are commonly outsourced, and some institutions are beginning to outsource facilities management and information technology functions as well. Colleges and universities may well follow the example of business and also consider outsourcing "customer-contact" activities, including registration and financial-aid services. Why, for example, does every institution in a multicampus state system need its own staff for these services?
What are the core competencies of Virginia Educational Ventures?
The result of this work over many programs will be to increase the capacity of Virginia institutions to serve the citizens of the Commonwealth. The intent of Virginia Educational Ventures must be to find ways of funding needed educational programs and delivering those programs at a distance to citizens who cannot come to the campuses of the institutions. Happily, the Commonwealth is blessed with strong colleges and universities, educational resources that can be marshalled to use the new technologies to reach broader markets than the students who do come to the campuses. Through careful planning and the initiation of sound business plans built around those new technologies, Virginia Educational Ventures can aid the Commonwealth in growing the capacity of Virginia institutions to serve Virginians.
Funding Virginia Educational Ventures might best be viewed in terms of who benefits. Certainly, citizens of the Commonwealth who utilize new learning opportunities should be expected to pay for those services. Currently, the Commonwealth subsidizes tuition income to bring total revenue somewhere into parity with total institutional costs to create and deliver those learning opportunities. There seems to be no compelling reason to change that process for degree programs. It is also true that the Commonwealth benefits (however indirectly) from a better educated workforce. Workforce training programs are most commonly paid for by the student or some combination of the student and his or her employer. It seems appropriate that the Commonwealth, through the budget process, provide funding to Virginia Educational Ventures to be the venture capital that is ultimately utilized by institutions of higher education to design new and innovative programs to address the educationally underserved communities of interest in the Commonwealth, whether they be degree or certification programs.
From time to time, it might be expected that identifiable segments of the business and industrial community in Virginia would directly benefit from some new educational offering. In those cases, it would not be unreasonable to create a public/private partnership to develop the venture capital to design and deliver that educational offering. One can imagine potential programs of sufficient innovation and/or scalabilty that would attract the interest of philanthropic organizations or federal government agencies. In such cases, seed money or venture capital could be the joint responsibility of the state government and the external agency.
There are alternatives or supplements to legislative funding. For example, a fee could be required of every student registering for a distance learning course from a Virginia institution. These fees would be deposited to the seed money account of Virginia Educational Ventures. Providing seed funding under this alternative would shift the burden from the taxpayer to the consumer. That might an appropriate step, given the target population of non-traditional students. A fee of $25 would raise $250,000 for every 10,000 registrations. Given the current rate of growth in distance learning programs, such a fee would quickly support a major portion of the efforts of Virginia Educational Ventures. Alternately, this per capita "tax" could be a part of the business plan generated in response to Virginia Educational Ventures RFPs. In either case, care would be required not to make these online offering unattractive in price as compared to campus-based alternatives.
As the bulk of the funding will pass through Virginia Educational Ventures to the institutions of higher education, some may view this as "feeding the horses in order to feed the sparrows." However, Virginia Educational Ventures will assume the role of advocate for the educationally underserved communities in Virginia—an advocacy not currently vested in any governmental or higher education organization.
It would not be the intent of Virginia Educational Ventures to fund the entire development and delivery costs of new educational initiatives. Rather, the Authority would provide venture capital to assist the institutions to
While the biennial portfolio of projects of the Authority might be well in excess of a million dollars, the venture capital flowing to each of the institutional initiatives would more likely be measured in the hundreds of thousands of dollars. Suffice it to say that each project will be quite different, ranging in size and scope of community served, having differing intentions and aspirations, sometimes delivering a short course of study leading to some form of certification, sometimes representing a full course of study leading to a degree.
The cost to design, develop, advertise and deploy a feature length motion picture is in the tens of millions of dollars. The cost to develop a college level textbook may be in the tens or hundreds of thousands of dollars. The cost to design and deliver compelling learning environments to be delivered at a distance is somewhere between these two numbers. More traditional learning venues delivered synchronously over television in fixed classrooms are relatively less expensive to design but expensive to deliver because of their labor intensiveness. Web-based, highly interactive learning environments that are received asynchronously are considerably more expensive to design, but less expensive to deliver due to their lesser labor intensiveness. In simplistic terms, for the former case the product is re-designed each time it is delivered, in the latter it is designed once.
Online programs can be inexpensively designed featuring little more interactivity than chat rooms and email. They can be designed to envelope the learner in an immersive, dynamic, multi-media environment—but not inexpensively. There will be occasions where one end of this design continuum will appear more cost effective than the other. In general, we would expect that Virginia Educational Ventures would have a bias toward programs with characteristics of the latter—web-based, asynchronous and highly interactive. One time, few repetitions programs will be attractive using the former technology. Programs with very long shelf lives and large enrollments will be attractive using the latter technology. In either case, there is a strong technology component associated with the delivery. And, in either case, the venture capital necessary to initiate a program is likely to be measured in the hundreds of thousands of dollars.
The costs to begin Virginia Educational Ventures are minimal, amounting to little more than office space and equipment. An operating budget of $1.5 million per year should be sufficient to pay for staff and services and still provide in excess of $1 million per year in seed money to begin addressing Virginia's educationally underserved communities.