Budget Categories
While many of the costs associated with running an online learning program are the same as operating a traditional school, there are differences as well. Depending on your program type some of the cost categories shown below may not apply to your program.
It is also important to remember that costs will change over the life of your program. During the start-up phase, there will be concentration on establishing the program infrastructure and there may be expenses you incur such as needs analysis that don’t clearly fall into any of the categories below. Also, if you decide to build your own courses or purchase perpetual licenses for your content, during the start-up and early years significantly more resources will be dedicated to those costs. Other costs may not appear in your budget until your program reaches maturity. For example, programs will occasionally decide they need to migrate from one administrative system to another (perhaps because of requirements to periodically issue competitive bids). Similar to the start-up phase, there are costs specific to system migration.
Personnel
As is the case with any educational program, the cost of salaries and benefits for your personnel will be the single largest expense in your online learning program. While there are many similarities between the personnel required for a brick-and-mortar school and an online school, there can be some significant differences. For example most state virtual schools require that the student’s local school provide guidance counseling services and thus do not have any school counselors on their staff. The Staffing Areas topic provides detailed information regarding the typical staffing needs of online learning programs.
While in a traditional school most teachers are full-time, in online schools there can be a combination of full-time, part-time, and teachers that have a mixture of online and traditional classroom teaching assignments. The Teacher Salaries topic provides information on different approaches on teacher pay for these different types of teachers.
Another issue to be aware of when developing your personnel budget is the possibility that teachers or other staff may work from home. Your program will need to determine if they will cover any home office expenses such as Internet connectivity and phone expenses.
Instruction
The decision on whether you will build or buy your course content will have a major impact on your instructional budget. Programs that decide to license (i.e. buy) their courses will not require start-up funds for course content, but will have higher ongoing operational costs. There are several options when it comes to buying your courses which is discussed in detail in the Curriculum section under Licensing & Purchasing Models. On the other hand, programs that decide to build their courses require significant up-front costs for course development, but will have much lower ongoing operational costs. (Note: Programs that decide to buy perpetual licenses will have similar budget needs of those programs that decide to build their courses.)
Often when programs decided to build their courses, they will spread the course development effort over a number of years and either will initially have a smaller number of course offerings or license some courses until they have an opportunity to build all of their courses. It is not unusual for programs to license some courses on an ongoing basis even if they primarily choose to build their courses.
There are two items that many programs initially overlook when developing their instructional budget:
- Programs that choose the build option need to budget for ongoing course maintenance. Building a course is not a one-time only expense. Courses need to be reviewed on a regular basis and either updated or sometimes replaced entirely.
- Programs that choose the buy option may find that they wish to customize the course content for their specific needs. If so, they may need to budget for some course development related activities. They should also budget for possible charges from their course vendor(s) for ongoing course maintenance.
Beyond the basic build or buy costs, there are a number of other items that may need to be included in your instructional budget:
- Textbooks and Workbooks: If any of your courses require textbooks and/or workbooks, you will need to budget for both the purchase and costs associated with distributing the books to the students and having the books returned. There may be an option to utilize an online textbook, and while that will eliminate the distribution costs, there will still be licensing costs.
- Software: Similar to the need for textbooks, it is possible that some of your online courses require the teacher and students to have specific software. If the software requirement is for a common program such as a word processor, you may choose to make that the responsibility of the student, but if the course requires more specialized software, typically the program will purchase and distribute the software to the students.
- Other Resources: Similar to the above two items, some courses may require other resources which have associated costs such as royalties for access to copyrighted materials, licenses for access to multi-media content or other technology services. Other courses might require kits for hands-on course components such as a science or art kit.
Technology
One large technology expense for some online learning programs is the cost of providing a computer, printer, and Internet access for their students. This cost is most often associated with full-time programs than supplemental programs and not all full-time programs provide this technology for their students (or in some cases only provide some of this technology). In some states, online learning programs may be required to provide some or all of this technology for their students.
All online learning programs will incur costs for the software systems that are used to deliver the online courses and manage their program such as the Learning Management System, Learning Content Management System, Student Information System, and web-conferencing system. More information about these systems may be found in the Administrative Systems section.
One of the decisions you will need to make as you select your administrative systems is if you want someone else to host the software such as the LMS or will you be using your own servers? If you choose to use your own servers, your budget will need to account for items such as the cost of the servers, the staff required to operate the servers, and the necessary Internet connectivity. Your organization may already be operating a computer center and thus already incurring some of these costs.
Another technology expense is the cost of technology for your staff and teachers. Some items to consider in determining your budget for these items:
- If you have adjunct faculty, will you provide them computers or other technology?
- If staff or teachers work from home, what technology will you provide for their home office?
- Will you provide cell phones or reimburse teachers for cell phones?
Professional Development
Due to the continual changes in online learning, ongoing professional development for your teachers and staff is especially important for online learning programs. Items to consider for your staff and teachers when determining your professional development budget include:
- Provide ongoing mentoring for your online teachers.
- Formal courses (online or traditional) related to online learning.
- Conferences related to online learning, such as iNACOL’s Blended and Online Learning Symposium.
- Conducting in-service days. If your teachers and/or staff work from home, in-service days provide an opportunity for in-person interaction.
Other Items
- As indicated in the Quality section, external program evaluation is an important part of ensuring program quality. External evaluations are not necessarily an annual expense, although sometimes the evaluation effort will span multiple years.
- Another expense related to overall program quality is reporting and data analytics tools to support program management. Often these tools will be integrated into your program administrative systems.
- As online learning is a choice for students, you will definitely want to consider establishing a marketing budget.
- You need to make sure you budget for some program administration expenses such as travel, human resources, and legal.
- General office costs including office rental, supplies, phone, and utilities. If your program is part of a larger organization, the cost of some or all of these items may be paid for by that organization.
- If required for your program, costs associated with administering required state assessments. Full-time programs typically have this requirement.