Oregon State University revamps DL

OSU revamps distance education.

 

Not-for-profits seek profits?

The not-for-profit OSU refers to their "new revenue model" which "provides the incentive to departments to work with the Extended Campus in developing their courses for online delivery...."

Also this from the author of the article: "The Extended Campus recently opened a Professional Programs office at the Capital Center in Portland and is focusing efforts on developing customized training for working adults in a variety of business, industry, and government agencies. "

The author also offers this: "The OSU Extended Campus also is launching an expanded focus in Professional Programs that expands on its customized training programs for the health care industry."

Revenue models? Incentives? Customized training for industry (and others)? Positively entreprenuerial.

It is refreshing--and confirming--to see OSU compete in the marketplace like any other business. But as others have noted, their not-for-profit status will certainly ensure the continuance of these programs should they not be profitable. (Uh, er, I mean if they don't generate sufficient revenues.) For the betterment of the students and businesses served of course. Yeah, right.

 

I am not sure if this interesting development is related to the State of Oregon hiring the former president of US Open University as its new Chancellor of Higher Education or not. Oregon, like many states, has to been slow to implement DL. Hopefully this is a sign that it will ramp it up.

 

Re: Not-for-profits seek profits?

Rich - Ha! Ha! Very funny...

The fact that OSU is non-profit means they don't rip 30% of their tuition income off for the profit of their shareholders and corporate income tax to Uncle Sam. They probably don't spend 20% of their tuition dollars on "marketing expenses" either. They can, however, receive tax deductible contributions so that wealthy benefactors can subsidize the cost of education. That means that OSU likely spends as much as 90% of their tution income on instructional expenses - things like faculty that are engaged full time in teaching and research, libraries, etc. For profits spend as little as 53% of their revenues on providing education.

Of course non-profits have to look at finances. But fortunately, not as much as their for-profit friends. Unforutnately, of late some non-profits have focused too much on "bottom lines" and not enough on service to stakeholders. Instead, non-profits should think about a broader set of stakeholders - like society as a whole - than a for-profit's single focus on shareholder wealth.

Telling colleges to behave just like for-profit businesses is like telling a cat to behave like a dog. It just doesn't work.

I'm certainly not offended at OSU working to develop courses to meet stakeholder needs. They should do that as a service to stakeholders (both students and employers). And I'm not bothered that they are doing this in a financial responsbile way. Most non-profits have enough money losing operations that they can hardly afford to take on any more.

My question for advocates of for-profits stands - Show me one for-profit school on the U.S. News and World report ranking list that ranks in the top 3 tiers. You can't - because the quality of for-profits is so low that no in the academic world takes them seriously.

Regards - Andy

 

Always a shot at the for profits

US News and World Report rankings are a joke Andy. I think you know that. Talk about for profit, they do very little research. The greater percentage of their rankings come from peer assesments that amount to little more than popularity contests.

Anyone who has been on this board more than once knows that you hate for-profits.

Get real man, they are all for profit. 53% duh, what, where did that come from?

Simply because a school can depend on the government for a bottomless supply of money does't make them more virtuos.

I think you are irrational when it comes to this subject.

Ok, go ahead and post your 10,000 word response so we will all know what a great education you recieved from your non profit, fully accredited, institutions of higher learning.

 

Re: Always a shot at the for profits

I usually try to stay out of the non-profit vs. for-profit debate, but you're right. ALL colleges and universities turn a profit, at least those that don't go out of business. It's all in how you hide the profit.

Harvard University (a "non-profit") has an endowment that exceeds the Gross National Product of many countries. The salary of the President of Harvard rivals that of top-flight professional athletes. The same can be said of many "non-profit" schools.

The main difference I see between the two is that for-profit schools are new on the scene, and they're a hell of a lot more honest than "non-profit" schools.


Bruce

 

Re: Always a shot at the for profits

Picklehead - I distrust for profit educational institutions. I think there are some good reasons why. The numbers speak for themselves.

Pay attention class - there will be a quiz at the end of class!

To calculate the 53% figure I quoted, please follow along.

1. Go to www.yahoo.com and select the "finance" option.

2. Look up the Apollo group. Find their most recent quarterly P&L.

3. Calculate the following percentages:

Revenue $276 million = 100%
Cost of Revenue $130 = 47% (that is, the cost of providing education)
Selling & Admin $66 = 24%
EBIT $88m - that is Revenue - cost of revenue - selling&admin
Taxes $33 = 12%
Net income $50m = 18%

Ok, so instructional expenses aren't 53% this quarter they are only 47%. In a prior quarter it was 53% Looks like Apollo is figuring out how to make more money and spend a lower percentage on educating students. Where does Apollo puts tution revenue? Over half goes to profit, selling and administration expenses - not to instruction.

For a comparison go to www.guidestar.com.

1. Lookup Nova Southeastern University.

2. Click on the financials. Of $295 million in revenue, $11 million is in gifts, $8 million in investment income and $16 million is in grants - sources that for-profits typically don't have. NSU students, however, get the benefit of these moneys.

3. Figure the %s:

Revenue $295 million = 100%
Program Services Expense = $241 million 82% of total revenue, 93% of program service revenue.
Administration $34 million = 12%

What does this all say? There are radically different business models between for-profits and non-profits.

Now for the quiz. Just one question:

1. Where do you want to go to graduate school:

a. at a school where over 50% of my tuition dollar is consumed by profit, tax and selling and administrative expenses. Such a school employs virtually no full-time instructors and conducts virtually no research.

b. at a school where 90% of my tutiion dollar is put into providing educational services. Such a school employes a balance of full and part-time faculty and conducts significant research.

c. I don't care as long as I can get a degree fast and cheap.

Regards - Andy

 

Re: Re: Always a shot at the for profits

Your sort of analysis seems to me to be applicable to businesses in general, not just to universities. So do you see any legitimate role for for-profit enterprises in any field, or does profit = theft (or at least waste) across the board?

And building a "top tier" university costs a lot of money. Hundreds of millions of dollars perhaps. So where does the investment come from, and why?

Luckily non-profit schools don't have administrative expenses.

Might a non-profit's 'educational program' expenditures include some of the expense of administering those programs? Who pays the departmental secretaries and the senior professors who spend half their days in meetings? At some universities, departments are like little kingdoms that design their own courses, do their own hiring and firing, admit their own graduate students and so on. Other schools might centralize many of those functions in their administrative structure. Is the latter automatically less efficient?

I'm not sure that your numbers are even comparable unless we know exactly what expenses are included where.

And of course, schools that are insulated from market forces can "waste" their money in different ways, such as teaching stuff that interests professors more than it does students. How much of what passes for contemporary humanities at many universities is little more than fluff that won't even be remembered a century from now?

Some of the best classes that I have ever taken were taught by people with day jobs in industry and governemnt. They can teach you what's happening out there in the real world with an authority and an immediacy that a full-time academic theorist may have trouble matching.

 

Re: Re: Re: Always a shot at the for profits

Bill - Great questions - here are some answers.

By the way - for an excellent discussion of related topics, go to:

Tomorrow's Professor

They make some excellent points on how educational institutions are and are not businesses.

Thanks - Andy

I'm all in favor of for-profit businesses in many walks of life. The Pizza business is a great example - competition keeps prices low and customer satisfaction high. Automobiles, groceries, and many more work fine as for-profit. Incidently, I don't know of many businesses that have the kind of profit margins that for-profit universities are showing.

But some areas such as hospitals, churches and educational institutions don't fit well in a for-profit mode. For-profits don't comprehend the interests of stake holders other than their shareholders.

Take a look at major institutions - Harvard, Vanderbilt, etc. They receive large donations from individuals and foundations. Why did Rockefeller give University of Chicago millions when he died? I don't know for sure, but perhaps he wanted to leave a legacy that would benefit society as a whole. The result is a world class university. For profits benefit a narrow group of stakeholders - namely shareholders. I can't think of a single for-profit that any one would label "world class".

Good questions here - but the sheer magnitude of the dollars certainly raises questions.

But non-profits aren't totally insulated from market forces. They have to provide utility to someone - or they won't have students or gifts.

And I worry that some for-profits are so busy teaching what students think they need that they aren't letting faculty that know a discipline teach students what they need to learn.

If I asked freshman students in engineering if they want to take Physics or Calculus, I'd imagine many would say "no". They don't know what it takes to earn a degree in engineering or practice in the field.

I don't deny that part-time adjuncts add value to many academic programs. But such folks often don't provide the intellectual base that students need for a life of learning. I'd argue for balance on a faculty - some academics and some practitioners. In my field, many of the best faculty I have studied and worked with have both academic and industry roots. Besides, part-time adjuncts typically don't conduct research or work on expanding knowledge in their field. Graduate education should go beyond current practice and involve creation of new knowledge. For profits aren't in that business typically.

Regards - Andy