Costing and learner support

1. Costing and learner support The analysis of costs and its implications for supporting the learner Thomas Hülsmann Workshop at the Central Chinese Radio and Television University (CCRTVU), 11-14 Beijing, China.

2. Costing and learner support Overview • Part I: Basic concepts- This part introduces the core concepts of cost-analysis by walking you through a case study of traditional distance education.- It summarizes the traditional cost-effectiveness argument in favor of distance education • Part II: Impact of ICT- This part discusses the impact of the information and communication technologies on distance education; - It picks up the case of this morning walking you for a second time through the development of a case study • Part III: Application to learner support- This part draws together observations form cost analysis relevant for learner support- It develops the economic case for learner support

3. Costing and learner support: Part I … back to the basics What is distance education? Back to the basics … A minimalist definition: Distance education is education at a distance, i.e. a form of education where the teacher and the learner are geographically separated for most of the time of the teaching and learning process. Peters’ ‘industrialization formula’ (1967) 1. Distance Education is the most industrialized mode of Teaching and Learning Characterized by • Rationalization and division of labor; • Mass production through mechanization and automation; • Systematic planning and organization; • Formalization and product standardization. 2. Distance education is a form of education ‘sui generis’

4. Costing and learner support: Part I … back to the basics What is teaching? Constitutive elements For conventional education it holds that in teaching- content presentation (p) and - interaction with the teacher (i) are intricately interrelated; In distance education it holds that for teaching - content presentation (p) and interaction with the tutor* (i) had to be separated and - level of interaction with the tutor (i) had to be reduced. The reason was that, at the time, there responsive real interaction at a distance was not available as a technology!

5. Costing and learner support: Part I … back to the basics In (1st and 2nd generation) distance education the two modes of presentation (p) and (real) interaction (i) have to be separated. In conventional education the modes of presentation (p) and (real) interaction (i) are 'interleafed'. The teacher can seamlessly move from presentation to interaction. Due to the lack of responsive real interaction at a distance 1st and 2nd generation had to shift the focus of teaching from real interaction to simulated interaction. Interaction was designed into the content. Terminology: following Holmberg we distinguish real and simulated interaction; real interaction can be mediated or non-mediated (f2f); 1st and 2nd generation DE knows no responsive real interaction at a distance.

6. Costing and learner support: Part I … back to the basics Simulated interaction e.g. COL/PREST Interactivityis designed into the text as, for example, - in-textquestion or - in-text activity: New forms of simulated interactions are available in digital learning environments !! Simulated interaction works. We know that. But can it compensate for real interaction? Most educators think it cannot.

7. Costing and learner support: Part I … back to the basics Distance education as a system There are two main subsystems in distance education: - the materials subsystem - the student support subsystem The teaching function was unbundled. In a break with mainstream understanding teaching was seen as course development rather than frontline interaction with students! "To be absolutely clear, where learning materials are produced for numbers of student ..., this is regarded as the academic teaching and is considered to be outside the framework of learner support." (Mills, 2003, p. 104)

8. Costing and learner support: Part I … cost analysis Basic parameters of the scenario Try to get some information of the basic parameters such as: • Creditpoints • Course duration • Student workload • Shelf life of the course • Expected number of students • Class size (if applicable) • Use of media/technologies The credit transfer point systems and modularization make course offerings more comparable! OUUK case studyA second level undergraduate course offered by the School of Health and Social Welfare of the Open University/United Kingdom

9. Costing and learner support: Part I … cost analysis Listing ingredients and specifying their quantities In principle you need to look at all sorts of cost drivers such as: • Human resources • Premises and accommodation • Equipment and furniture • Stocks supplies consumables and expenses In practice it depends on the purpose of the costing exercise what you will include and the level of detail. It is most important to be aware of the main cost drivers ! OUUK case study (continued)

10. Costing and learner support: Part I … cost analysis Categorization of costs Among the most important cost drivers are the recurrent costs, such as salaries of academic staff!

11. Costing and learner support: Part I … cost analysis The total cost equation Fixed costs (F) are those costs which do not change with 'volume of activities'. The main activity of a distance education institution is teaching students. Hence fixed costs are invariant against student numbers. Variable costs (VxN) vary with student numbers (as their definition VxN already implies). V stands for variable cost per student! • What contributes to fixed costs? • - development costs of teaching material (e.g. writing a study guide); substantial amounts of costs that arise in the ‘materials subsystem‘ are fixed. • What contributes to variable cost per student? • - production costs (e.g. printing the study guide) • tutoring an assessment costs (most costs in the student support system are contributing to variable cost per student) • many if not most of the costs related to student support (including teaching and counseling) contribute to the variable cost per student

12. Costing and learner support: Part I … cost analysis The average cost equation Average costs are total costs divided by numbers of students. Unlike the total cost function the resultant function is not a linear (straight) function. Expanding student numbers raises total costs but diminishes average costs. Note that for bigger N the contribution of the term F/N diminishes and the value of AC approaches V. This effect we refer to as economies of scale. Remember what cost items contribute to the variable cost per student: production of study guide, tutor marked assessments. The aggregate variable cost per student we call unit costs. To the extent the cost functions are complete V represents the unit costs. A quick test for cost-efficiency consists of estimating the unit costs of various strategies.If VDE > VCEscale economies can do nothing. The lesson for the manager: Keep an eye on unit costs! And since especially costs related to student support contribute to V: keep an eye on the student support costs!

13. Costing and learner support: Part I … cost analysis Economies of scale: total costs TCDE(N) = FDE +VDE x N FDE TC(N) = F + V x N F

14. Costing and learner support: Part I … cost analysis Economies of scale: Average costs V VDE

15. Costing and learner support: Part I … cost analysis • listing the ingredients and their costs and • classifying them according to the appropriate cost categories allows • modeling the cost functions and • depicting the correspondent graphs Fromlisting ingredients to modeling costs …

16. Costing and learner support: Part I … cost analysis Frommodeling costs to graphing the cost functions … • The break even pointbp = F/(V-I) • is the point beyond which revenue is bigger than cost • it is calculated by dividing the fixed costs by the difference of unit cost and student fee

17. Costing and learner support: Part I … first conclusions Perraton’s Cost-Effectiveness Cube The cube and the formula: • The formula: TC(N)=F+V*Ncan be related to Perraton’s cube: • Media sophistication tends to increase fixed costs (F) • Student-teacher interactivity contributes to raising variable cost per student (V) • Number of students (N) allow todistribute fixed costs over many shoulders (scale economies) Caveats: (i) though average costs fall total costs rise; i.e. the most cost-efficient system might not be affordable (ii) While the planner can influence F and V, he cannot determine N since enrollment levels depend on the market

18. Costing and learner support: Part I … cost analysis Daniel’s Triangles Ideally, Distance Education could be regarded as a major strategy to • expanding access • raising quality • while lowering (average) costs But these expectations depend to a large extent on the use of mass media. This often comes together with • lack of responsive teacher learner (and peer) interactivity • lack of scope in course offerings Historically responsive interaction at a distance became only possible with the emerging Informationand Communication technologies (ICT) and the Internet. They allow new educational scenarios but have a fundamental impact on the organization of distance education.

19. Costing and learner support: Part II … impact of ICT The Impact of ICT on Distance Education ICT stands for Information AND Communication Technologies. This means that ICT opens two distinct lines of development for distance education: • Type-i systems exploit the information processing aspect of ICT: programming & simulation, processing, storing, searching, retrieving data bases etc. New levels of sophistication for simulated interaction!! • Type-c online systems sustain communication at a distance either in - synchronous mode (e.g. videoconferencing) or - asynchronous mode (CMC, Virtual Seminars).In type-c systems there is little potential for scale economies. Possible economies of scope.This type drives horses through traditional distance education !! Main cost drivers: not technology but teaching costs !!

20. We need to regain the lost efficiencies! Learning objects facilitate course adaptation and repurposing of developed materials. They allow depreciating development costs not only over the shelf-life of a course but also across different courses. (Issues: tagging metadata; levels of granularization; context) Cooperation allows efficiency gains through creating synergies. Though distance education requires a number of functions to work, they need not all be housed at the same institution. Often it is more appropriate to outsource functions or seek alliances with partners. A combination of both. Governments and private donors can encourage the development of open educational resources (OER) and sharing them. Costing and learner support: Part II … impact of ICT The challenges of ICT - Type-i applications are compatible with the cost-structure of traditional distance education. But the enhanced options of simulated interaction in digitized learning environments can enhance simulated interaction albeit at high upfront fixed costs - Type-i applications allow for the first time responsive interaction at a distance albeit at increased variable cost per student The core issue is the trade-off between responsive real interaction at a distance and cost-effectiveness. Responsive real interaction at a distance sacrifices scale economies. The cost-effectiveness argument for distance education as such did depend on scale economies.

21. Costing and learner support: Part II … back to costing Annual budgetof a niche market program: the top athletes … Recurrent costs such as: • the project coordinator and • teaching / tutoring costs are the main cost drivers; NOT • course development or • technical infrastructure

22. Costing and learner support: Part II … back to costing c … back to the ‘top athletes’ • Recurrent costs such as: • the project coordinator and • teaching / tutoring costs are the main cost drivers; NOT • course development or • technical infrastructure

23. Costing and learner support: Part III … conclusions revisited Learner support and the efficiency chase There are efficiency reasons to keep V (variable cost per students) low: - V determines the gradient of the total cost function (the lockstep relation between cost and volume)- determine the limit for any economies of scale Most student support costs contribute to variable costs per student. Is the Perraton cube the pave to smash the ‘greenhouse of student support’?

24. Costing and learner support: Part III … conclusions revisited Types of learner support, costs, and what you can do about it … • teaching and tutoring (content related) • course developmentincl. the production, distribution, dissemination of content counseling and advising (non-content related) • tutoringcommunication between learner and teacher • counseling and advising (non-content related) • administrative and technical support

25. Costing and learner support: Part III … economic case for learner support Efficiency gained … effectiveness lost? Downsizing student support may help in terms of cost per student (at least at short term) but may be contra-productive in terms of demanding performance measures. The very measures which make you do better in cost per students may produce inferior outcomes in terms of cost per graduates. The question is: to which extent performance measures do have economic consequences (e.g. in terms of funding, fee generated revenues)?

26. Costing and learner support: Part III … economic case for learner support An economic argument for retention Loosing a student means incurring costs: • opportunity costs of lost income in terms of fees and grants (institutions want to be open to the charge to live on drop out money: hence they have a refund policy; grants are often tied to competed course rather than enrollments) • additional recruitment costs for a new student

27. Costing and learner support: Part III … economic case for learner support Measures for retention: varying costs varying benefits Some measures seem to be • employer support and • monitoring assignment submission Others seem costly but less effective, notably • Pre-start online discussion Source: Based on Simpson (2003, p. 137) Institutional research is required to identify the most cost-effective measures in your own context.

28. Costing and learner support: Part III … economic case for learner support Costs, outcomes and ethics … We have seen that • Costs will depend on socially agreed outcome / performance measures; - government funding policy can lead to cost/benefit implications of student support - the market may play a role: learners will migrate to • Costs will depend on institutional ethicsyou may know from research the student’s probability to succeed (pts): what consequences you will draw depend on the mission of your institution:- provide extra support for students in danger? or- to ‘counsel away’ students? It depends on policies, institutional and government policies to assure that the efficiency pave is not used to break the learner support greenhouse. Thank you!