Financing Online Learning

Lorri Palko, Chief Financial Officer

​Schools often ask the question, “How do we finance online learning?”  I often think back to the ways I thought about this question during my time as Associate Head of School for Finance and Operations at Atlanta Girls' School.

As you can imagine, there is not one specific answer that fits every independent school, but there is a starting point for the conversation. Like any budget discussion, it is a matter of choice. The choice involves setting priorities on how to allocate available resources to fund programs in alignment with the school’s mission. The process for answering the question about financing online learning is no different than funding any other aspect of a school’s program: “How do I fund a new maker space?’ “How do I fund a new gym?” “ How do I fund STEAM initiatives?” 

Schools may face a number of challenges in the budgeting process: demand to expand the curriculum, staffing classes with few enrollments, scheduling constraints, need to reduce FTE’s, and human resource challenges (often prompted by our inclination to ask teachers to continue to do more and more and more). Whatever the drivers, we find that there is an opportunity to meet mission and budget objectives through using online courses as a supplemental AND strategic part of delivering student programs at independent schools.

Program Expansion: Independent school parents and students demand more courses and programs on an annual basis.  As demand for courses (think increased Computer Science strands or new languages) have accelerated, schools have been challenged with not only providing the courses, but also to do so in a cost-effective way. What is the choice at hand? Do we try to find a Computer Science teacher or a new language teacher to start a program (at a cost of $60,000-80,000, dependent on market) or do we build the program or jump start a program through supplemental online options (at a per student cost that is much lower)? Starting a program online may solve two issues schools face when expanding a program. First, online partners have access to hire an experienced teacher from anywhere -- and take the challenge of hiring a specialized faculty member away from the school. Second engaging an online partner allows the school to pay for courses as the program builds and the student enrollment increases. Schools have found program expansion in this manner to be not only lower cost, but also lower risk.

Small Enrollment Classes: The need to offer certain classes to challenge the most gifted students at our schools is always going to be a need and a challenge. What is the choice? Do we continue to offer the most advanced courses in areas such as math and accept the fact that the per student teaching cost for these classes is going to be off the charts? Or could we enroll our handful of students taking an advance math course, such as Multivariable Calculus, in an online learning environment. This would allow students to experience an online class before college, learn with and from other top math students from around the country, and free up faculty to teach and reach more students within the standard curriculum and sequence. We will always need to fund small classes to meet our mission. Again, the question is there a way to do this differently?

Reduce FTE’s: This is a sensitive one because as soon as online learning is mentioned at a school it immediately elicits fear among pockets of the faculty. If we engage in online learning is this going to mean having fewer faculty? Given that 60-70% of independent day schools' costs are in their FTE's, the answer for many schools trying to create a different financial model, will almost certainly be "yes," whether engaging with an online partner or not. And, yes, using online learning strategically may mean fewer faculty in the long run. How many faculty are we actually talking about, maybe a few? But, if an average faculty member costs a school $70,000 per year (including benefits) and we were able to reduce faculty by four or $280,000 per year, what other opportunities might we be able to provide for students, including those online?

We know that online learning may not be a part of the strategic answer to some of your questions, but we believe that engaging in the questions you will have clarity in the financing choices that you are making.

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