Online Visioning Task Force (OVTF)
Proposal on the OVTF “Short Term” recommendation
Overview
As the initial OVTF report found, we cannot re-establish and strengthen the University’s position
as a preferred provider of online degrees unless we abandon our historic “organic” model of
growth for one that intentionally identifies market risks and opportunities and develops online
programs to address them. The OVTF “short term” recommendation to achieve that goal is to
increase our inventory of online and hybrid degrees and courses in the areas of greatest
market demand and potential. Our first step to implement that recommendation was to do
a preliminary market analysis. That analysis at this point is able to identify degree programs
which are good candidates for online delivery and identifies academic core courses we
need to add to our online inventory and the need to increase the frequency of which they
are offered in order to support the new online programs.
The second step is to secure the agreement of the schools, colleges and departments
offering these programs to offer them online. To augment leadership’s power of persuasion,
our financial analysis identifies sufficient revenue generation to offer a revenue sharing model
that will reduce the financial risks to schools/colleges/departments and offer them significant
revenue incentives should they reach modest enrollment goals.
The third step is to implement a course development and marketing plan that makes these
new online programs available as soon as possible. If steps 1 and 2 are complete by
November 2013, marketing these programs can begin immediately and a sufficient number
of courses can be developed to launch the online degrees by fall term 2014. If these
decisions are not made by November, the goal of launching these programs by fall 2014 is in
jeopardy. To achieve the proposed timetable the project will leverage our existing faculty
grant model for new online program development and expand the e-marketing processes
currently employed by CU Online.
Finally, the OVTF report recognizes that this short term action is not sufficient to reach our goal.
While our expanded inventory of online programs will enable us to compete for a larger pool
of online students it will not address competitive issues such as the assessment of prior
learning, short semesters, customized/personalized degree programs and other features
students find attractive. Moreover, it only begins to address the “Foundational Requirements”
identified in the report but instead largely relies on existing processes and support
mechanisms. These and other issues will be addressed in a separate proposal to address the
“mid-term” recommendation in the OVTF report. What this current report does do is identify
the CU Online reserves needed for the short term project and those remaining for the midterm proposal.
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Market Analysis Summary
To meet short-term demands for online program growth, we have identified the following
candidate programs. The criteria for selecting programs to pursue is:’
1. Program must be a currently approved degree program. The online program will
overlay a current program. As a result, no action by the Board of Regents or HLC is
required.
2. Select programs with demonstrated local demand. Current programs with large
enrollments point to a level of local demand that online delivery can tap into and
expand..
3. Select programs with strong national demand and/or growth. While most online
students are likely to come from within the state, demonstrated strong national
demand is another indicator of likely online curriculum demand.
4. Current course online. Programs with online inventory can leverage these courses and
online delivery expertise.
5. Overall fitness. Is the program a good fit for online? On indication of fitness are the
number of competing programs already in the space. Another are intangibles such as
faculty willingness, perceived complexity of putting the program online or other
environmental factors. For instance, there is a perception that teaching lab science
online is a barrier.
6. Lack of competition. While the space for online programs grown increasingly more
crowded, there are opportunities for “first movers” in high enrollment, but few online
programs areas such as biology
The following table summarizes the top candidates for short-term online program overlays.
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Undergraduate Online Program Opportunity Matrix
Program
UCD
rank
by
major
UCD
Major
s
UCD
enrollment
trend
2009-11
degrees,
US
Current
courses
online
Student
requests
Competitors3
Biology 1
1
1016
+ 10%
+4.28%
4U
15
Psychology
Economics
Communications
Business Admin2
Accounting
Management
Finance
Marketing
Public Health
Civil engineering
2
4
7
663
396
337
808
247
213
174
174
197
115
-10%
+19%
-8%
+3.78%
+3.22%
+2.42%
+36.03
-3.82%
4U
5U
7U, 1G
30
0
15
W (Biological science); R (applied
science)
C; P; M; (Boulder [pending)
P
R; G; D; M
-3.18%
-3.45%
+41%
+10.98%
8U,11G
1.
2.
3.
10
12
17
18
14
33
-12%
-27%
-17%
-12%
+1482%
+4%
6U, 6G
6
15
10
A; R; G; W; M
A; R; G; W; P; M
R; M
A; R; G; W; M
None
None
Biology may be a candidate for a hybrid model that may or may not be appropriate for Phase I
Business Administration has a variety of emphases that students can take. Those with the largest # at CU Denver are listed.
Competitors Key: A=Adams State, C=CSU Online+, D=DU, G=CSU Global, M=University of Maryland, P=Penn State World Campus, R=Regis, W=Western Governors
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Criteria 1 dictates that we look at currently available programs. However, based on
national trends, there are a number of potential degree areas In which we already
have expertise, that could presumably be proposed over a slight longer, but still nearterm, timeline.
The follow table highlights some of these opportunities
Other Undergraduate Online Program Opportunities
Program
2009 -11 Notes
degrees
US
Interdisciplinary
+12.17% We currently have an individually structure major in
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studies
CLAS. But this degree is not entirely equivalent to a
general studies degree, or interdisciplinary studies
degree. This degree is widely available from
competitors.
Health care
+18.43%
admin/management
Information
+ 23.36% We have an “emphasis” in information systems
technology
available in our Business Admin degree.
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Financial Analysis Summary
1. The attached financial analysis models creation of an online degree in Psychology and
shows significant net revenue results from a conservative estimate of enrollment. This is
true even at the 36% GAR rate. Since Finance and Administration has already
determined that increases in enrollment are generally net revenue positive, and that has
been a guiding principle in our campus strategy, this outcome was not unexpected. The
financial model can be used to look at other potential online degree programs by
adjusting the variables such as the number of new courses needed for the respective
degrees and anticipated enrollment.
2. There are no known additional facility or infrastructure costs for offering online programs
apart from additional faculty and staff offices should expansion increase beyond the
elasticity in our current usage. Online students do not require campus facilities and
services such as police, and do pay for technology infrastructure costs through their
technology fees. Moreover, as of July 2013, online students now pay the student services
fee and provide financial support for delivering student services online. This is an
important strategic goal for the campus as a whole since the provision of online services
has been shown to be a mark of institutional quality for both campus and online students.
These facility and infrastructure cost savings may be persuasive in arguing for a lower GAR
rate on revenue from these online courses as is the case with extended studies revenue.
3. Rather than replace current curriculum, phase I simply adds online delivery options of
current curriculum in order to increase the availability of online degree achievement. As a
result, targeted programs will expand through an emphasis on alternative deliver models,
not disruption of curriculum.
The means targeted programs and courses can reach enrollment targets through
incremental staff growth. This includes hiring new adjunct and full-time instructors as well
as encouraging current tenure-line faculty to teach no more than one online course a
year. This is an important point because it emphasizes faculty control of course and
curriculum while providing incentives and support to expand delivery options.
4. All costs for developing and supporting new online courses are paid entirely from online
student fees. Plant fund fee reserves are more than adequate to cover any anticipated
scale of new online program development. Online fees currently cover all ongoing
operational costs except for advertising (not a permitted use of fees) and the budget
model shows that even the reserves spent to launch the new programs can be
replenished over time by additional fees collected through online enrollment growth.
CU Online operations have historically been able to create program development
reserves by keeping expenses below costs, especially during periods of enrollment growth
where revenue grew faster than expenses. CU Online will generate a surplus again this
year and after the Blackboard and eCollege contracts expire in June and July
respectively, considerably more revenue will be available to invest even if enrollment
remains flat. CU Online does not have budget for FY15 yet but anticipates up to $400,000
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per year in surplus revenue will be generated that year at current enrollment rates. The
budget for this project does not rely on any of that future revenue. The intent is to use that
revenue, as well as additional reserves, to fund the 2nd “intermediate term”
recommendation from OVTF. In other words, the expenditures in this budget do not
jeopardize our ability to fund the next phase of the OVTF recommendations.
Current CU Online Plant Fund reserves:
One-time expenses for “short-term” project (8 new degrees)
Reserves left available for the “mid-term” OVTF project
$1,101,212
-$500,000
$601,212
5. Advertising costs will depend on the number of degrees offered and the number of
students you need to recruit. Average national costs for recruiting undergraduates range
from $500 - $2000. Our budget identifies $30,000 per online degree in initial launch cost
plus $500 x the number of new students needed. CU Online has an experienced
marketing team that can help place, manage and track advertising activities, as well as
the infrastructure to evaluate and optimize where programs should be advertising (email,
social, ad words, banner ads, etc...). To assure schools/colleges and departments that
advertising costs will be covered in the future, it is advisable to consider earmarking a
percentage of revenue for advertising in any proposed revenue sharing model.
6. Cannibalization rate. This term refers to students who are on campus deciding to take
their courses online when that option is available to them. This does not result in a decline
in tuition revenue or costs if instruction on campus is reduced and added to online
commensurate with the scope of cannibalization. It is important, however, if a greater
proportion of the tuition revenue in online classes goes to the
schools/colleges/departments than is the case under the existing model. Cannibalization
in this case would result in greater revenue for the units and less for central administration.
It is uncertain what the cannibalization rate will be, although some is anticipated. Nor is
cannibalization entirely bad, because at least students are staying at CU Denver instead
of going to another online program because the University doesn’t have one they need.
This defensive financial rationale should not be underestimated, especially in cases, such
as psychology, where the number of degrees awarded nationally is increasing but our
enrollments are decreasing and the possibility that other institutions are cannibalizing our
students is real. CSU Online Plus, for example, just started offering an online psychology
degree this past year and they are actively recruiting in the Denver area.
There is some indirect evidence to estimate cannibalization rates. In a national study of
online students approximately 30% of them said they also had considered on-campus
programs and so it is likely that the existence of online programs does have some effect
on campus enrollment. Perhaps our best evidence comes from what happened when
the BACJ degree began to be offered online this fall. Enrollment in campus sections of
BACJ declined from 271 to 257 (5%). However, enrollment in online sections grew from 71
to 223 (314%). Combined campus and online enrollment increased by 139 (41%).
Furthermore, applications for the degree increased from 153 to 225 (47%). If these
numbers hold for other degree programs it is clear that the risk of cannibalization is far
exceeded by the opportunities for enrollment growth.
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7. Revenue Sharing
Many institutions with highly selective admissions and nationally ranked programs as well
as many of our aspirational peers, have determined that there are no longer
pedagogical obstacles to offering many of their programs online and have decided to
do so. Given the national acceptance of online programs and our own experience the
OVTF recommended that our institution make decisions about the mode of delivery of
academic programs based largely on strategic and market considerations.
The OVTF also recognized that our current budget model and incentives for departments
to develop online programs remained obstacles. Consequently, we recommend that
leadership explore other revenue or profit sharing models beyond our existing campus
budget and extended studies models to provide greater incentives to the schools,
colleges and departments offering online degrees. A spreadsheet with adjustable
formulas to model different revenue sharing options has been prepared and shows the
excess revenue provided by online programs is sufficient to accommodate significantly
greater incentives for those units offering the online degrees as well as generously
contributing to administrative overhead.
Conclusion:
Expanding online degree programs by leveraging our current infrastructure carries very little
risk and very significant revenue potential. In addition, it puts us in a better competitive
position to re-establish and strengthen our status as a preferred provider of online education.
Doing so does not mitigate the need to implement the more ambitious mid-term
recommendation in the OVTF report but it will be a good foundation for that next step and
will generate additional online fee revenue that will help make that next step possible. The
pieces are in place to execute this plan if there is the will to do so.
The risk of doing nothing is great. The University will not be able to compete for the increasing
numbers of students seeking online programs and our existing students who seek more online
courses as their academic career progresses may be tempted to transfer to other institutions
that offer them.
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