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This project will develop estimates of the benefits and costs associated with various types of distance education and distributed learning delivery methods in higher education. A set of case studies involving several institutions will be used to obtain data on the benefits and costs of specific distributed instructional delivery modes (including interactive computer learning labs and networks, compressed two-way live video, one way video (two-way audio) delivered by ITFS, broadcast, satellite, or cable, and materials delivered via the Worldwide Web) that can be compared to the benefits and costs of lecture delivery mode. Benefit assessments will be based primarily upon comparisons of the educational outcomes between similar courses delivered by different means (e.g., lecture and two-way compressed video). Cost comparisons will be based upon cost estimates of the direct costs (both operating and imputed capital costs) for delivering the courses by different means. Case studies allow comparisons of educational outcomes for a given course at a given institution and reduces (but does not eliminate) the need to define educational outcomes in an absolute sense. Cost comparisons for a given course at a given institution eliminates the problems associated with making such comparisons across institutions. The methodology for the benefit and cost assessments has had some preliminary testing within the CSU. Its application to a larger set of case studies will provide information to guide higher education decision makers regarding the expansion of digital technology to instructional delivery into the next century.

Title Page

Abstract

Table of Contents

Narrative

Context

The Problem to be Addressed

Background to this Project Proposal

Goals and Objectives of this Project

Work Plan and Schedule

Organization and Personnel

Phases I and II The Case Studies
(includes response to Section 427 of GEPA)

Phase III Final Report and Case Study Scenarios

Phase IV Extensions of the Results

Notes on the Benefit Framework

Notes on the Cost Framework

Preview of Possible Outcomes

Attachment A -   Tables and Figures

Context  Television and computers have been used in higher education since the 1950s. Television was adopted to expand and enrich the classroom environment, to replace movie projectors in the classroom, and to extend the classroom to students at sites remote from the campuses (distance education). The computer has played an integral role in curriculum development. First in the sciences and accounting because of its ability to handle large and complex numerical computations quickly and accurately. Next it was adopted in a broad range of disciplines especially in the social and behavioral sciences where the need exists to work with large data bases or statistical applications. More recently the advent of the personal computer promises access to tremendous information resources and processing capacity for both students and faculty in all disciplines.

These technologies have far-reaching implications for education at all levels. At the postsecondary level the potential is to make higher education available to anyone at anytime and anyplace. All that will be necessary is that the individual have the time, the motivation, and access to the equipment to connect to a network.

The goal is not yet fulfilled. Substantial progress has been made, however, and activity is accelerating. Historically distance education involved sending a television signal to a remote site. Today the signal may be sent by means of microwave (ITFS), broadcast antenna, cable, or satellite, it may be digitized and compressed and sent over a telephone line. Instruction is conducted at distance sites by two-way live video or picture-phone. Such instruction may be augmented with materials supplied through the Internet via the Worldwide Web. Interactive, multimedia courses are available on local area networks in campus computer labs. It is a matter of time before the same courses are available on wide area networks. [A recent survey within the CSU showed, for example, that approximately 10,000 (about three percent) of the CSU's 330,000 regular students (plus an additional 4,500 extension students) had enrolled in a distance education course in 1995. Another 1,000 students were enrolled in an interactive, multimedia developmental mathematics course delivered on several campuses via a local area network.]

The reasons for implementing distance education and other forms of mediated instruction are several including:

• improving access and convenience for older, part-time students who may have work or family responsibilities,
  
• improving access and providing motivation for lower income and minority students by improving the quality of the instruction provided,
  
• assisting students with becoming more independent learners, and
  
• introducing students to the various digital communications technologies that they will encounter during their working lives into the next century.

Several opposing perceptions exist about both the effectiveness and the costs of these various forms of instructional delivery. On the effectiveness side distance education practitioners maintain that the quality is at least as good as classroom instruction and, since it provides access to a broader group of students, there is a net benefit. This view has been criticized for ignoring the importance of face-to-face contact (interaction) within the classroom as part of a quality learning experience and the importance of the larger campus environment as part of the total educational experience.

On the cost side, practitioners often admit the technology is expensive and requires major "start-up" costs but that investments in the technology are necessary and inevitable in order to improve access and keep the curriculum up-to-date. Others, including some legislators, see the technology as having the potential to focus and motivate a major restructuring of the university as a teaching institution that will produce efficiencies and cost savings, thus allowing public higher education to continue to serve the vital function of providing access to a large and growing segment of the population.

The Problem to be Addressed  Policy makers at all levels are faced with a series of questions regarding the future of the higher education enterprise. The fundamental question is how can public higher education provide a relevant curriculum accessible to the broad populace at a reasonable cost. This question takes on added significance in light of the observed inability of states to maintain historic (pre-1991 recession) funding levels for the institutions. The related question is what potential does mediated instruction and distributed learning (MI/DL) [This term is adopted in what follows to refer to instruction that is delivered substantially by means of electronic technology to sites on campus served by a network and to sites remote from the campus.] have to address the issues of access and relevancy in a fiscally constrained environment. This latter question leads to a series of questions that are the subject of this proposal:

(1) What are the benefits of MI/DL? How good is the instruction provided by MI/DL? How can quality MI/DL be assured? What other benefits can be associated with MI/DL?

(2) What is the impact of MI/Dl upon students and faculty? How will the MI/DL technologies change the nature of student learning? How will the MI/DL technologies change the nature of faculty work?

(3) What are the cost implications of MI/DL? What are the initial MI/DL investment costs? Can some MI/DL costs be shared through consortia arrangements? What are the costs related to student support (equipment and connection costs)? What are the faculty training and support costs? What are the ongoing support costs of MI/DL? What enrollment base is needed to take advantage of economies of scale in the production and delivery of MI/DL?

(4) What are some of the strategic and policy implications related to MI/DL? Are there investments in MI/DL that can be made now to save money later? What trade-offs exist between building networks and other MI/DL infrastructure and expanding traditional campuses? Should MI/DL programs be self-supporting or state-subsidized? Should expansion of MI/DL be encouraged? If so, what types should be encouraged? Is a more cautious approach to MI/DL advisable?

Background to this Project Proposal  In response to the National Learning Infrastructure Initiative (NLII) sponsored by EDUCOM, the California State University has led a national discussion on the topic of "Benefit-Cost Models for Evaluating Technology Mediated Environments." Since the initial meetings, the State Higher Education Executive Officers (SHEEO) organization has joined CSU as a sponsoring partner of the discussions with a particular interest in the public policy implications of MI/DL from the statewide perspective. The current status of the topic as presented below is based upon discussions at NLII meetings, [Representatives from approximately 30 institutions of higher education participated in the NLII discussions at Keystone (June 1995) and New Orleans (January 1996).] policy and technical suggestions from Jim Mingle of SHEEO, Dennis Jones of the National Center for Higher Education Management Systems (NCHEMS), and Tony Bates from the University of British Columbia (one of the continent's foremost authorities on distance education and instructional technology applications); and preliminary work on the costing of MI/DL completed within the CSU prior to 1996.

The status of the discussions can be summarized as a set of findings and recommendations which are incorporated in this proposal to estimate and analyze MI/DL benefits and costs from an operational perspective:

(1) The discussion of benefits should be separated from the discussion of costs initially. The benefits and costs of MI/DL should be compared with the benefits and costs of classroom instruction. Although difficult and controversial, these comparisons go to the very heart of the policy issues related to MI/DL. Benefits are primarily related to the quality of instructional outcomes. Comparisons of instructional outcomes for MI/DL with classroom instruction avoid the difficulty of measuring the quality of instruction directly.

(2) Other benefits of MI/DL should be identified. These may relate to increased convenience and student access, to improved course success rates and/or reduced drop-out rates for students, or reduced traffic congestion and air pollution for society.

(3) Costs should be calculated from the perspective of the educational institution. Other costs should be considered or acknowledged as appropriate, e.g., student costs that reimburse the university for special costs of MI/DL.

(4) Costs of both mediated and classroom instruction should be based upon a comprehensive list of institutional costs directly related to the specific instructional mode. These costs should be based upon activity analysis to the greatest extent possible. In addition to staffing and operating costs, estimates of the annual value of fixed equipment and facilities should be imputed to obtain an estimate of the total direct costs associated with each specific mode of instruction involved.

(5) Institutional costs that are not affected by the way instruction is delivered will be essentially the same for either mediated or classroom delivery. Such indirect costs should be ignored in the comparisons.

(6) The initial focus of the benefits and costs is upon "courses" because that is the unit of instruction provided whether by means of classroom or mediated mode. The studies should be designed, however, to offer insight about the effects of MI/DL upon the costs of entire degree programs and various organizational units up to and including entire campuses.

(7) Due to the diverse nature of MI/DL and the difficulties inherent in making inter-institutional comparisons of benefits or costs, the project should focus upon developing and applying the analytic framework outlined above to specific case studies.

(8) Finally, the project is generally agreed to have merit and has generated a good deal of interest. Its magnitude, however, exceeds that which can be accomplished by a group of volunteers. Successful completion will require the concentrated attention of several individuals over an extended period of time. Thus, this application to the Field Initiated Studies Educational Research Grant Program.

Goals and Objectives of this Project  The goal of this project is to develop a model for benefit-cost analysis related to the instructional process and student outcomes and to apply this model to a set of case studies. [This project has certain similarities with the Annenberg/CPB "Flashlight Project" which is undertaking five case studies involving evaluation of instructional outcomes and estimates of costs associated with MI/DL. Differences include the focus of the current project upon a set of specific policy questions, a stronger emphasis upon the potential for systemwide or statewide delivery, and the extensions of the case study data to a simulation model. To the extent there is overlap, this project can corroborate Flashlight findings and may be able to incorporate some of its methodology (Flashlight will be completed January 1997).] Results of the case studies will have direct application to the policy questions listed above.

The objectives of the project are:

1. To develop a framework for identifying and evaluating the major benefits of several types of MI/DL.

2. To develop a framework for identifying and estimating the major costs of several types of MI/DL.

3. To undertake eight case studies of applications of MI/DL at selected institutions of higher education.

4. To develop from the case studies a set of "scenarios" that summarize important results and conclusions from the case studies.

5. To investigate the potential for cost sharing of infrastructure and delivery networks by consortia or on a systemwide basis.

6. To develop models for specific types of MI/DL based upon cost and benefit estimates derived from the case studies that will allow simulations of alternative scenarios.

Work Plan and Schedule  The project is phased in four parts to be completed between July 1996 and June 1997. Phase I involves completion of the specification of the benefit and cost frameworks and the development of a case study guidebook in consultation with the case study participants. A pilot test of the guidebook will be undertaken for at least one site. Phase II involves the completion of the eight case studies. The case studies will be chosen to insure a variety of different types of MI/DL that are most relevant from the standpoint of public policy decisions. Phase III is to develop a final report on the case studies including a set of "case study scenarios" as a means of summarizing and disseminating the results of the project. Phase IV will undertake two extensions of what was learned from the case studies: (1) An investigation of the potential for consortia and other cost sharing arrangements - What are the implications of the data for sharing infrastructure costs among campuses? Are consortia or systemwide applications feasible ways of spreading infrastructure costs over a large enrollment base? (2) The development of a model based upon the case study data that will allow simulating expansion of institutions based upon classroom delivery and, alternatively, based upon selected forms of MI/DL delivery. Each phase is discussed below, a schedule is provided in Attachment B with the project budget.

Organization and Personnel  The project headquarters will be at the CSU Chancellor's Office in Long Beach, California. The project staff in Long Beach will include a full-time project director and clerical assistant. The director will work closely with two senior associate directors (consultants) and a Steering, Review, and Oversight (SRO) Group that will provide overall direction to the project and general review of the work. A Case Study Advisory Group (representatives from each participating case study institution plus SRO Group) will be formed to advise on the specifics of the case study development, the case study guidebook, and the final case study reports. A list of personnel, application authors, and brief statements about relevant experience is provided with the project budget in Attachment B.

Phases I and II The Case Studies  A series of case studies that focus upon the benefits and costs of specific MI/DL instructional applications will provide a substantial amount of information about MI/DL with direct application to the policy questions stated above. Such information will be most useful if the quantitative data and subjective judgments upon which it is based are obtained and reported using a consistent set of definitions.

Prior to starting the case studies project staff will work in consultation with the participants to complete development the benefit and cost frameworks, discussed below, and to insure a common understanding of the purpose of the case studies. At least one intensive working session of the case study participants and project staff is planned to gain final agreement on the frameworks and the set of protocols and strategies for developing the data and a general format for reporting the case study results.

The results of all this preliminary work will be documented in a case study guidebook. The guidebook will serve as the reference document and basis for each case study. It will provide guidelines for: (a) development of specific evidence regarding the quality of instructional outcomes associated with mediated instruction as compared to classroom instruction, and identification and quantification, if possible, of other benefits, (b) the application of the costing framework to the various types of mediated instruction and classroom instruction, (c) comparison of the specific benefits and costs associated with the case study, (d) consideration of administrative structures and processes that are relevant to the case study, and (e) development of conclusions about the case study.

Section 427 of the General Education Provisions Act requires each application to contain a description of the steps the applicant proposes to ensure equitable access to, and participation in, its Federally assisted program for students, teachers, and other program beneficiaries with special needs.

Response:  This project addresses a set of administrative policy questions about MI/DL. The immediate beneficiaries are the educational policy makers at the campus, system and state levels. The secondary beneficiaries are the students who will benefit from a better educational system because of the useful information obtained from the case studies. It is relevant in this context to indicate that the California State University has a full range of non-discrimination and affirmative action policies that apply to students and employees as required by state and federal law. In addition, a provision will be added to the case study guidebook, discussed herein, to determine how each mode of MI/DL studied makes provision for equitable access to individuals based upon gender, race, national origin, color, disability, or age. The potential of each MI/DL mode for improving access for individuals in each of the categories listed above will be included in the reports on the case studies. Such information is of direct relevance for designing MI/DL programs that meet the needs of these individuals.

Following development of the guidebook, individual case studies will be conducted at the participating institutions. Each case study will be developed by campus staff led by the designated case study coordinators with the assistance of the project staff to obtain the necessary data in accordance with the guidebook as well as sufficient institutional information to provide an accurate description of the MI/DL application. Funds are budgeted to pay for travel of the case study partners, to pay a case study coordinator for each institution, and to defray some of the data collection costs at each institution. The project director will draft each case study report in close consultation with the case study coordinator. Final case study reports will be reviewed and approved by the institution's administration.

A total of eight case studies are planned. The Educational Network of Maine, the State University of New York, the City University of New York and the California State University are all committed to participate in at least one case study (there are sufficient MI/DL applications in these four systems to provide all of the case studies). Efforts are underway to recruit other systems to participate including the Colorado Electronic Community College, the Utah Educational Network, and the Georgia system. [Several individual institutions have also indicated a strong interest in participating but have not yet committed: University of Pittsburgh, Virginia Polytechnic Institute and State University, Florida State University, New England Board of Higher Education (an interest in simulating creation of a new system of community colleges using either classroom instruction or distance education as the primary delivery), and USAF, Air University.]

The case studies will be selected to provide examples of the several generic types of MI/DL including: interactive computer learning labs and networks, compressed two-way live video, one way video (two-way audio) delivered by ITFS, broadcast, satellite, or cable, and hybrid courses, e.g. using one of the above modes and materials delivered via the Worldwide Web. [Describing the forms of MI/DL is a moving target. The use of the WWW to distribute course materials has only developed within the past 12-18 months.] The case studies will also be selected to provide examples of systemwide delivery, e.g., Educational Network of Maine, and cooperative programs shared by a consortium of campuses.

Phase III Final Report and Case Study Scenarios  The project director will draft and coordinate development of a final project report incorporating the case studies with summary conclusions. The conclusions will be stated as a set of case study scenarios that will make them accessible to a wide audience. This report will be made available for general distribution. The report will also be included with a panel discussion of representatives from the case study institutions at the November 1997 EDUCOM meeting. Status and progress reports will also be provided at the semi-annual NLII meetings January and June 1997.

Phase IV Extensions of the Results  The benefit and cost estimates obtained from the case studies will be used as the basis for further exploring two issues that have been identified in the course of the earlier benefit-cost discussions.

The large initial start-up costs for many MI/DL applications are often cited as a substantial barrier to the adoption of the technology. The potential of statewide or systemwide networks and consortia as a means of spreading infrastructure and other delivery costs over a large enrollment base will be examined. This part of the project will be especially important if the case studies substantiate that a large proportion of the annual costs incurred by MI/DL are fixed in the sense that they are independent of the annual program enrollments. Under such circumstances, large investments in these types of delivery systems may only be justified on the basis of cost savings if they are made at the state or system level.

Based upon the case study data a simulation model will be developed that will allow cost comparisons of expanding a campus or system using alternative modes of delivery, e.g., growth from 10,000 FTE to 25,000 FTE using classroom delivery only or using (a specific type) of MI/DL delivery only. [A simulation model developed by F. Jewett to evaluate the costs and benefits of year-round operation in the CSU based upon expanding two similar campuses under different calendar assumptions ("Year-Round Operation in the California State University," a report developed in response to legislative budget language, CSU, Long Beach, December 1992) could be adapted to simulate the costs of accommodating enrollment growth based upon different delivery modes.] Such a simulation over a period of several years will allow a more complete consideration of the different capital costs associated with the delivery modes as well as the ongoing support costs. The simulation results will also help to address the previous question regarding the role of systemwide infrastructure.

These studies will be developed and drafted by the project director working in close consultation with the Steering, Review, and Oversight Group (SRO) and the resources of the Case Study Advisory Group as appropriate. Other groups and individuals as identified by the SRO group and SHEEO will also be involved in the development of these extension studies. Results of the studies will be published and disseminated as appropriate.

The benefit and cost frameworks provide the substantive basis for the case studies. The following provides a sketch of each.

Notes on the Benefit Framework  The purpose is: (1) to identify some of the major benefits of MI/DL and to suggest how those benefits can be evaluated and (2) to indicate some difficulties inherent in the benefit measures and cautions that should be observed when applying them.

(1) Benefits  The educational process can be viewed as providing instructional services to students. Learning outcomes for the students are one of the primary results of the process and perhaps the single most important direct benefit of the educational process. Classroom instruction is one way of providing instructional services to students. MI/DL provides several alternative ways of supplying these instructional services. Because MI/DL has the potential to replace some of the classroom instruction that is taking place, the relevant question to be addressed is "how do the student learning outcomes associated with MI/DL compare with those of the classroom instruction that is (or may be) replaced?" Such a comparison should be sufficient as a basis for evaluating this component of MI/DL benefits.

There is a large literature on the effectiveness of various forms of MI/DL. Russell presents a bibliography that contains over 150 studies spanning the period 1952-1992 all concluding that various forms of televised instruction provides learning outcomes that are not significantly different from those of classroom instruction. [Thomas L. Russell, "Television's Indelible Impact on Distance Education: What We Should Have Learned from Comparative Research," Research In Distance Education, October 1992.] From a benefit-cost perspective, the "no significant difference" result has a certain appeal, i.e., if the learning outcomes can be deemed equivalent, costs of the various MI/DL delivery modes can be compared directly with classroom costs. Others suggest that the problem is more complex, however. Baker and O'Neil argue in their introduction to a collection of articles on this topic that evaluations of single projects will almost certainly fail to address adequately all of the learning outcomes of the newer technology and, at the same time, show the new technology to be more expensive. [Eva L. Baker and Harold R. O'Neil, Jr., Technology Assessment in Education and Training, Lawrence Erlbaum, Hillsdale, 1994, p. 5.]

Specific indicators of MI/DL benefits that will be used for the case studies include comparisons of the quality of learning outcomes for a course offered by some form of MI/DL with those for students who took the course offered in regular format. The most helpful of these comparisons will be in the form of a controlled experiment where essentially the same material is offered by the same instructor to different groups of students in the different delivery formats, e.g., lecture and computer lab. Other types of evaluations include comparisons of student and faculty evaluations of the outcomes for the course offered in different formats. Comparisons of student evaluations may be especially useful in this regard.

If particular applications of MI/DL increase the quality of learning outcomes, they will reduce the failure rate and the subsequent number of students re-enrolling in the course thus producing a saving for the university, the student and the state. Such savings are properly treated as benefits of MI/DL but require tracking of students for several years in order to verify. Other benefits including faster learning (as evidenced by the time required to complete a course or a degree), better learning (as evidenced by performance in later courses, e.g., math 101 following math 10), and more flexible learning (accommodating different learning styles) are sometimes claimed for MI/DL. Evidence to support these claims will be sought for incorporation in the case studies.

Other, more subjective, evidence on benefits will also be sought along at least two lines: (1) the potential for MI/DL to improve the motivation of students, including minority students, to become more fully engaged in their studies, and (2) the potential of MI/DL to revitalize both the curriculum and the faculty by a variety of means, e.g., increased and more flexible access to learning resources and a broader variety of teaching and instructional roles and experiences.

(2) Difficulties with Benefit Measures  The instructional outcomes for all courses taken by a student do not add up to an educated individual. The experience of attending college includes the social milieu of the campus, the interaction with faculty and students out of class, as well as the courses taken. The education of an individual is the integrated outcome of all of these college related experiences (plus all other life experiences). A focus upon comparative learning outcomes in a course or a group of courses is not sufficient for a comprehensive evaluation of benefits of MI/DL, this is especially so if the result of widespread adoption of MI/DL results in the loss of the broader intellectual and social environment provided by campuses. This reservation will be included as a component of the case study results. The reservation will also serve as a reminder to investigate in the case studies whether MI/DL has the effect of eliminating or changing the forms of social interaction.

Notes on the Cost Framework  As indicated above in the Background section, the focus is upon examining the direct costs associated with each instructional mode identified. The approach is adapted from Levin along lines similar to those used by Bates. [H. M. Levin, Cost effectiveness: A Primer, Beverly Hills, Sage, 1983, and A. W. Bates, Technology, Open Learning and Distance Education, Routledge, London, 1995.] It involves specifying and estimating all of the direct cost components associated with a particular instructional mode (whether classroom or some form of MI/DL).

The following list of cost components is an attempt to be as inclusive as possible. It is not suggested that any particular mediated course will incur costs in every category. There are at least five program or functional cost areas, four related to the course itself and one related to the number of students enrolled: (1) Course development and design costs  These relate to determination of the specific course content, the learning outcomes and learning strategies, and assessment techniques. (2) Course production costs  The cost of producing the course materials, the lessons, and all related supporting material as appropriate, e.g., video, computer, and print materials. (3) Course maintenance costs  (apply especially to courses that are produced for multiple distributions over a period of several years) These costs are related to keeping the materials that comprise the course content current. Such costs can be estimated based upon expected useful life of the course materials, e.g., if useful life is five years, provision should be made so that 20 per cent of the materials will be replaced annually. [If the course materials are produced before the course is delivered, failure to recognize explicitly these maintenance costs will result in discontinuance of the course as its material eventually becomes outdated.] (4) Course distribution costs  including: studio costs, network or broadcasting costs, technical personnel related to studio and transmission, the number of hours materials are being transmitted, and the number of receive sites. (5) Enrollment related delivery costs  including: materials provided to individual students, e. g., printed materials, cassettes, floppy disks, etc. (if the student pays for the materials, the costs and the reimbursements should be included), professional costs related to interaction with individual students regarding the course materials, monitoring, and evaluation (including grade assignments). Depending upon the particular circumstances communications costs (e.g., 800 telephone numbers) could also depend upon enrollments.

Within each of these functional or program categories, there is a set of budget expenditure categories. The support budget pays for the annual ongoing operation of the institution including personnel (faculty, staff, and management) and operating expense (utilities, communications, minor equipment items, leasing costs, license costs, etc.). Because support budget expenditures are made annually, at least some of them can be related directly to the annual flow of student enrollments.

The capital budget pays for the institution's permanent facilities including buildings, equipment within buildings, and infrastructure (facilities and equipment outside buildings - conduit, cable vaults, cabling, antenna, etc.). Capital expenditures tend to occur in "chunks" to build facilities or acquire equipment whose benefits are available over a period of several years (depending upon the useful life of the asset). Such expenditures cannot be related directly to the annual flow of student enrollments but they are, nevertheless, real direct costs of providing the instruction.

The approach here is to calculate an annual imputed cost based upon each asset's value and useful life. Imputed costs represent an annual estimate of the charge that is required to recover past capital expenditures. Such costs are fundamentally different from out-of-pocket expenditures and should be included but shown separately from operating costs.

Table 1 in Attachment A provides a general illustration of support and capital budget items for an institution and the relation between direct and indirect cost categories. Table 2 in Attachment A expands the direct cost column of Table 1 to indicate details of mediated instruction costs. Table 2 illustrates the essential elements upon which the cost analysis in the case studies will be based.

Preview of Possible Outcomes  Figures I and II are provided in Attachment A to illustrate two possible findings of this project. The cost curves that are shown in each figure are based upon the assumption that the educational outcomes produced by classroom instruction and a particular type of MI/DL are essentially equivalent, thus the costs can be compared directly at different levels of annual enrollment in a given course. In both figures the classroom instruction cost schedule rises from the origin illustrating the fact that the major cost of classroom instruction is the expense of assigning a faculty member to teach each of the course sections (the costs of classroom instruction are essentially enrollment driven) [Enrollment here is taken to be the number of students enrolling annually in the course - for classroom delivery, section size refers to average class size, the number of sections offered for any course is the number of annual enrollments divided by average section size.].

In contrast, the cost of many types of mediated instruction tends to have a relatively large annual fixed component, due to production costs, communications/equipment costs, transponder lease, etc., thus the MI/DL cost curve tends to intersect the (vertical) cost axis above the lecture cost curve and to lie above the lecture cost curve at low enrollment levels.

Figure I illustrates the situation where MI/DL is more expensive than classroom instruction at all levels of enrollment, the two cost curves diverge, MI/DL always costs more than classroom instruction (for a given average section size). If the situation illustrated in Figure I is an accurate description of the relative costs, MI/DL is always more expensive relative to the benefits generated (assuming learning outcomes are equivalent) and its future is uncertain.

Figure II illustrates the other possibility, i.e., where the MI/DL costs are initially above classroom costs at lower enrollment levels but as enrollment grows, the two curves converge and eventually intersect. To the right of the intersection point, MI/DL costs are less than classroom costs. This result is, of course, more promising for the future of MI/DL. One intriguing possibility is that Figure II shows the relative positions of the curves correctly but their intersection is at an annual enrollment level beyond that which any single university could hope to achieve. Thus cost savings from MI/DL can only be realized by some form of networking to allow course or degree program sharing among campuses that will expand the market for the course.

	Direct Costs	Indirect Costs (if considered, must be imputed or allocated)
Support Budget Items personnel communications license fees leasing costs (for buildings, equipment and infrastructure)	faculty media professional staff clerical course broadcast or line costs instructional materials instructional equipment, satellite transponder	school and campus admin. admin. clerical admin. communications line costs
Capital Budget Items (purchase of buildings, equipment and infrastructure - costs must be imputed or allocated) buildings equipment infrastructure	classrooms, studios instructional newtwork equip., lab. computers, studio equipment intra- and inter-campus network, satellite uplinks	general administrative space, corp. yard admin. computing, admin. communications

-------------------------Course/Program Related Costs------------------------					Enrollment Related Costs
	Design and Development	Production	Maintenance	Distribution
Support Budget Items Personnel Faculty Prof./Tech staff Stud. Asst. Clerical Communications ("line or connect" costs) Equipment lease License costs Other operating expense	X X X	X X X X X	X X X X X X	X X X X X X	X X X X X
Imputed Costs (based on capital costs, see below) Buildings Equipment Infrastructure		Y Y	Y Y	Y Y Y	Y Y
Capital Budget Items Buildings Equipment Infrastructure	Z Z	Z Z	Z Z	Z Z Z	Z

Note:  Xs and Ys are annual costs and additive. Xs are out-of-pocket expenses, Ys are not. Zs may be interpreted as initial start-up costs as distinct from annual operating costs. Zs are not additive with Xs and Ys.

This is an abridged version of the proposal/application sent to the U.S. Dept. of Education. It does not contain Attachment B. If you would like any other information, please contact:

Frank Jewett, Principal Investigator TCM/BRIDGE Project
Advisory Board Member TCM II
814 Lantana Avenue, Brea, CA 92821
(714) 990-9506
e-mail: frnkjewett@aol.com