Bob Jensen's Threads of Online Program Costs and Faculty Compensation
Bob Jensen at Trinity University

"Does Technology Ever Reduce the Costs of Teaching?" by Corrine Ruff, Chronicle of Higher Education, January 26, 2016 ---

Bob Jensen's Education Technology Threads ---

Bob Jensen's thread on concerns about faculty workloads and burnouts are at

Also see the "Dark Side" ---  

"One Business School Is Itself a Case Study in the Economics of Online Education," by Goldie Blumenstyk, Chronicle of Higher Education, October 1, 2012 ---

Distance education has been very good for the business school at the University of Massachusetts at Amherst. More precisely, the revenue-generating online M.B.A. program has been good for the school.

The 11-year-old online program accounts for just over a quarter of the enrollment at UMass's Isenberg School of Management, yet revenues from the program cover about 40 percent of the school's $25-million annual budget. And that's after UMass Online, the in-house marketing agency, as well as a few other arms of the university have taken their cuts.

The business school's experience helps to illustrate the economics of distance education and the way one college with a marketable offering is using online education to help its bottom line.

With a total of about 4,830 undergraduate and graduate students and a faculty of 105, the Isenberg school spends an average of about $5,175 per student. The online M.B.A. program, with 1,250 students, generates about $10-million in net revenue, or about $8,000 per student. Looking at it one way, that's nearly double the per-student revenue that the school generates from all other sources of income for the rest of its enrollment, which comprises about 3,400 undergraduates, 100 full-time, on-campus M.B.A. students, and 80 doctoral candidates.

Mark A. Fuller, the dean, says the profitability of the online program has little to do with any inherent cost savings from offering courses via technology, but quite a bit to do with the high student demand for M.B.A.'s offered by a brand-name public institution in a format and on a schedule made possible by the technology.

The key, he says, is that it's a new educational product, for which the school commands a premium price. The online M.B.A. costs $750 per credit hour (although the business school gets only 60 percent of that), and students take 39 credits; the price equivalent for the 55-credit face-to-face M.B.A. is $482 per credit hour.

Aside from not having the expense of providing the classroom and keeping it heated or cooled, a college doesn't necessarily save money providing a course online rather than in a classroom. In some cases, other costs associated with an online course, for technology and student support, can equal and even exceed those savings.

But institutions do have ways to make their online classes more profitable. With no physical-space limitations, they can pack more students into the distance-education courses, so each class generates more revenue. Or they can hire part-time faculty members to teach a packaged curriculum for lower pay. They can also go cheap on the learning-management system or support services for distant students.

The Isenberg school has a single faculty for all its courses; the online-class sizes aren't any larger than the other ones; and, with few exceptions, all professors teach a mix of undergraduate and graduate courses, including the online ones. "We try to create the same experience" for all students, Mr. Fuller says. (Most students take the M.B.A. online, but they have the option of taking some of their credits at sites in Massachusetts.)

Mr. Fuller says the price is in line with or less expensive than that charged by other public universities offering online M.B.A.'s.

Under this approach, he says, the entire business school participates in the online program, and the entire school benefits.

The online business model takes into account other costs as well. Ten percent of the gross revenues goes to UMass Online, a systemwide organization that helps market online courses and provides the learning-management system that delivers them. The Amherst campus also takes a few other bites, including a charge for overhead and a payment to the provost's office for other universitywide projects.

In the end, the Isenberg school keeps 60 percent of revenue generated by the program. Still, Mr. Fuller considers it a financial boon for the school. "It opens up new markets, particularly for high-quality students with work experience who are placebound," he says. About 20 percent of the students are doctors or other health professionals, with a good number of lawyers and engineers enrolled as well—"all the people you would expect who can't quit their job" and move to Amherst, says Mr. Fuller.

Continued in article


Jensen Comment
There are obvious cost savings of distance education delivery that avoids the needs for land, buildings, classrooms, and dorms (although dorms generally are self-funding). However, not all distance education programs avoid such costs. For example, in the past it was common to pipe live classrooms into dorms and homes. This still entailed having classrooms.

Faculty costs may be greater or lower for distance education relative to onsite education. Very intense distance education programs with small classes and top faculty don't necessarily save on faculty costs ---

The fact of the matter is that distance education really offers a much wider range of alternatives from low cost to very high cost per student. Also tuition charged may vary with distance education. The University of Wisconsin at Milwaukee often teaches the same course online and onsite but charges higher tuition for the online version, thereby treating the online courses as cash cows.

Does online "convenience" trump onsite benefits in college courses?

It's interesting that UW Milwaukee did not try to justify higher online tuition on the basis of higher cost of delivery or advantages in learning. Instead it seems to be developing an online cash cow to support other programs.

"Students Will Pay Extra for Online Courses at U. of Wisconsin at Milwaukee,"  By Josh Fischman, Chronicle of Higher Education, July

Students will be able to take a lot more online courses at the University of Wisconsin at Milwaukee this fall. But they will pay more for the privilege, according to an article in the Miwaukee Journal-Sentinal. The university will charge as much as $275 per course on top of regular tuition.

The university now is offering 90 more online classes than it did last fall, for a total of 366 online courses, the newspaper says. It also reported complaints from one student about the extra fee for an online class, because he did not feel he had the resources to wait a year for that class to be offered on campus again.

But the newspaper quoted the university's provost, Rita Cheng, as justifying the fees by saying that students were paying for the convenience of taking classes early. "I don't see that as a penalty," Ms. Cheng told the Journal-Sentinel. "I see it as an option students have if they want to speed up their graduation." She pointed out that were the online courses unavailable, the student would have to wait a year for the on-campus course. In addition, students who take all their courses online do not pay the regular student fees for campus services. A number of students, however, take a mix of on-campus and online courses, so they get hit with both fees.

Online-course fees vary throughout the university, with $275 at the high end. And other campuses in the Wisconsin system, such as the Madison flagship, generally do not charge extra for online courses at all.

The newspaper reported that Milwaukee collected $7.8-million in tuition-and-fee revenue for online courses last academic year. University officials said they did not track the destination of this money precisely, but they were sure that most of it went back into online-course development and delivery.

Jensen Comment
The online UW program at Madison is Godzilla compared to the online program at UW Milwaukee, although both are state supported universities. It will be interesting to see if Godzilla follows the same line of reasoning and increases online tuition accordingly.

I have a sadly neglected page on costs of online programs at
One of the key cost considerations is that online programs often use a higher proportion of part-time instructors, but urban state universities like UW Milwaukee use relatively high proportions of part-time instructors in onsite courses, especially courses offered in extension programs.

If done right, distance education courses with instant messaging between instructors and students is generally more demanding of instructor time than onsite equivalent courses with limited office hours ---

It's interesting that UW Milwaukee did not try to justify higher online tuition on the basis of higher cost of delivery or advantages in learning. Instead it seems to be developing a cash cow for other programs.

nTechnology Costing Methodology Project
The TCM Handbook outlines the policies and methodology utilized to calculate technology costs. The initial feedback indicates that the TCM Handbook will be a useful tool for institutions and system offices to analyze instructional technology costs for decision-making purposes.
nA PDF file is available for download 1.9 MB [large file] ---

"Long Tails in Higher Education," by Saul Fisher, Inside Higher Ed, May 27, 2005 ---

Education experts often wonder whether bestseller status among college courses might provide lessons about educational markets and planning, just as popularity shapes entertainment and cultural products. Such speculation has grown with the advent of online education. Some argue that by making the most popular courses virtual, colleges can slash costs, helping to pay for low enrollment courses.

The alternative has been to raise revenues for low-enrollment courses by adding enrollment. This “add seats” approach has become more attractive in the new world of online education. Which alternative makes more sense for colleges considering online versions of some courses?

Cost-cutting advocates suggest that great efficiencies may result from delivering online a small set of popular undergraduate courses. Courses such as Chemistry 101 or Introduction to European History would have large enrollments and “basic” curricula. These popular courses illustrate the “80-20 rule” — 20 percent of a resource typically generates 80 percent of the possible benefits. Popular courses may not even constitute 20 percent of the catalogue’s contents, yet they often represent 80 percent of enrollments. If that 80 percent can be served through automated, virtual means, that should release tremendous savings, offsetting the cost of courses that don’t lend themselves as easily or cheaply to virtual delivery.

Continued in article

Bob Jensen's threads on distance education alternatives are at

Bob Jensen's threads on education technology are at


In this age of exploding technology, three things are still certain --- death, taxes, and cost accounting.  The bottom line for universities and corporations developing online courses will ultimately boil down to revenues minus costs.  Measuring and accounting for costs of online courses is an enormous problem that entails joint costs, indirect costs, and economies of scale.  Brian Morgan at Marshall University is sharing a tremendous research study into cost analysis of online courses and programs.  He also shares a worksheet that readers can implement for their own programs.

I would love to thread your comments on the report and its worksheet.

Links to Dr. Morgan's paper and a worksheet to determine the cost of an online education course --- 


I think the following applies to education as well as any business corporation.  The problem is that universities are notoriously slow to change relative to such organizations as business firms and the military.

From Syllabus News on December 9, 2003

MIT Sloan Professor: Use Tech to Reinvent Business Processes

Many private companies are using technology to keep down their labor costs, but the key to sustained growth and revived employment lies in whether they will successfully use technology to redesign the basic way they operate, says MIT Sloan Prof. Erik Brynjolfsson, director of the Center for eBusiness at MIT Sloan.

In his research, Brynjolfsson found widely different outcomes among companies that spent similar amounts on technology, the difference being in what managers did once the new tech was in place. "Some companies only go part way," said Brynjolfsson, an expert on information technologies and productivity. "They use technology to automate this function or to eliminate that job. But the most productive and highly valued companies do more than just take the hardware out of the box. They use IT to reinvent their business processes from top to bottom. Managers who sit back and assume that gains will come from technology alone are setting themselves up for failure."

Bob Jensen's related threads are at the following URL:

Assessment --- 

August 11, 2002 message from Bob Jensen

Michael Maher was in my CPE Workshop Session 1 at the AAA meetings in August 2001 in Atlanta. In addition to his full-time faculty position at UC Davis, he is a part-time instructor of managerial accounting for UNext. You can view the PowerPoint slides and listen to the UNext presentation at 

I decided to share a recent message (see below) and its attachments from Professor Maher. My threads related to his message can be found at 

I would also like to remind those of you who want to attend our CPE Session 1 (on technology in accounting education)in San Antonio on August 13 at 8:30 a.m., the meeting rooms are Conference Rooms 3 and 4 in the Marriott Rivercenter Hotel. There are five speakers, and our session runs all day. Details are provided at 

Those of you arriving in San Antonio may like to see my San Antonio helpers at 

See you in San Antonio! Even though I live in San Antonio, I will be staying in the Rivercenter Hotel August 12-18 and will not be in contact with my email system until after August 18.

Bob Jensen

-----Original Message----- 
From: Michael Maher []  
Sent: Friday, August 09, 2002 2:59 PM 
To: '
Subject: cost effectiveness of online education

Dear Bob,

Last year at AAA, I mentioned that I was working on a grant from the Mellon Foundation to study the cost-effectiveness of online education for large undergrad courses. That project is here at Davis; I since have also joined with a Berkeley crew working on a similar project. At Davis, we are looking at 9 different courses--all large undergraduate courses. Our early findings indicate that the cost of online education is lower than the cost of traditional lecture courses, but the student performance is a bit lower also. The attached paper "Moving from the lecture hall to online..." shows these results for one of the courses. Administrators don't look at costs the same way that economists do, of course, which is the topic of the second paper "Relevant costs of online education". In our cases, the cost information used by administrators indicated the online course was more costly than the traditional lecture course, while an economics-based analysis said the opposite. This project's description and additional papers are at: http://moby/ 

At Berkeley, for its required chemistry course, we found that the technology enhancements 'paid for themselves' by the second course offering. (I note that the Berkeley enhancements were modest.)

Hope you are doing well! Always good to see you.

Michael W. Maher 
Graduate School of Management 
University of California, Davis Davis, Ca. 95616

Wow! Thank you Richard. I have added your message to my threads on cost analysis of education technology and distance education at 

I can always count on you for interesting messages Richard.


-----Original Message----- 
From: Fern, Richard [mailto:Richard.Fern@EKU.EDU]  
Sent: Friday, January 18, 2002 4:21 PM 
To: rjensen@TRINITY.EDU 
 Subject: online costing resources


Well, after 3 months, I finally have some additional resources on online costing for you:

Here's an NEA link but it's only part of the full document: 

Brian Morgan at Marshall University has an online costing worksheet with back up documentation: 

Western Interstate Commission for Higher Education has a costing handbook and case book available for free download: 

The Mellon Foundation has many projects going on: 

I have particularly found the report: Milam, John, Ph.D. Cost Effective Uses of Technology in Teaching: Final Report on the Mellon-Funded GMU Cost Study, (Mellon Foundation Report, and November 8, 2000) very useful since it gives a lot of practical guidance. The Milam report is not online (that I can find) but I can send you a Word version of it if anyone requests it.

Hope this helps.

Thanks for your suggestions.

Richard Fern

A message from Dennis Beresford [dberesfo@TERRY.UGA.EDU

The latest issue of "Business Officer," the monthly publication of the National Association of College and University Business Officers (NACUBO) contains an interesting article titled, "Calculating the Cost of Online Courses." It is written by a Professor of Integrated Science and Technology at Marshall University. I suspect that some might quibble with the approach in the article but it's an interesting side to the technology debate that may not have been discussed much.

NACUBO makes the contents of its magazine available free on its web site ( However, the article is in the October issue and the latest one presently available is September so it probably will be a week or two until the article is available electronically.

Denny Beresford 
University of Georgia

The Calculating the Cost Project site is at 

"From Managing Expenditures to Managing Costs Strategic Management for Information Technology," by George Kaludis and Glen Stine (From Martin J. Finkelstein, Carol Frances, Frank I. Jewett, and Bernhard W. Scholz, eds., Dollars, Distance, and Online Education: The New Economics of College Teaching and Learning.  (text-only --- this one is easier to print) 


The costs of information technology can only be managed to the extent that an institution understands its technology-enabled educational objectives and places them in the context of overall institutional mission. Information technology–enabled improvements are potentially available at many levels and parts of the institution. Some colleges and universities, however, will be neither willing nor able to achieve the fundamental shifts in thinking necessary to manage the cost of information technology. Many do not have an integrated, purposeful plan for applying information technology to new delivery systems and new customer markets. They will treat such efforts through separate organization, using separate faculty policies and approaches and generating separate revenue streams and investment decisions. Traditional students may or may not be included in any redesign of the learning delivery process. Some institutions have made and must continue to make their reputation on course delivery mechanisms that do not allow economies of scale essential to manage technology costs. Further, the introduction of certain technologies creates significant links and ramifications to and with other administrative systems, resource planning and allocation policy, libraries, student services activities, alumni management, and degree and course certification. Without critical enterprisewide thinking and strategic agenda setting, the costs of instructional technology are essentially an unmanageable process. We have labeled the process Comprehensive Enterprise Planning (CEP). 

The CEP planning model identifies the following five critical areas of concern for every institution: 

1. What are the key characteristics of the institutions as they relate to the use of instructional and other technologies? 

2. What is the institution’s current and desired future market position in terms of instructional applications of information technology? Going into distance learning, for example, on a small scale will be extremely costly because shared technologies and overhead costs cannot be leveraged. 

3. How ready is the campus in terms of the physical, policy, and management infrastructure to apply information technology to the instructional program? Campus attitudes are also part of this question.

4. Is the institution ready to deal with management issues like activity-based costing, multi-year capitalization of losses, and a broader view of strategic asset management? 

5. What are the critical determinants for the institution’s reputation and current market position? 

A critical mission element to consider is what portion of an institution’s mission includes services to non-traditional students. For the most part, this means working students, older students, and students for whom convenience and price are primary considerations. The higher the mission importance of these students, the less likely traditional delivery systems are going to work in the future and the greater potential for instructional applications of information technology. A second mission element to consider might be the role research, particularly research in the use of information technology, plays at the institution. A few institutions will play leading roles in the development and implementation of instructional applications of IT as a spin-off of their research roles. Current institutional economics should also contribute to the analysis. Small institutions may have to join together or make greater use of outsourcing services than institutions that can absorb short-term investment costs within their existing revenue streams. Institutions with large numbers of high enrollment introductory classes and sections have significantly greater use of technology opportunities than institutions that limit class size.

You can download other parts of the document from 

"Is Anyone Making Money on Distance Education?  Colleges struggle to figure out how much they are spending on online programs." by Sarah Carr, The Chronicle of Higher Education, February 16, 2001 --- 

"From the very beginning, we had to combat the myth that online learning is cheaper to produce and cheaper to deliver than face-to-face curricula," says Robert E. Myers, the executive vice president of the University of Maryland's University College. "But I think we are finding that as people become more sophisticated and knowledgeable about the online-education space, there are fewer and fewer people out there that you have to disabuse of the myth that online is cheaper."

In fact, several distance-education leaders predict that some administrators will slow or stop their expansion into online learning as they develop a better sense of the costs.

And many college officials are at least trying to explore various assumptions about distance learning by focusing on costs. "There probably have been some that felt that this was the panacea, the silver bullet for responding to increasing demands for higher education," adds Bruce N. Chaloux, the director of the Southern Regional Education Board's Electronic Campus. "But I don't know that anyone has reached the conclusion that this is indeed the case. That is why the whole issue of what it costs to do this has become so important."

The twin issues of the cost of online education and its potential profitability are analyzed in detail by six new studies commissioned by the Alfred P. Sloan Foundation. Reports based on the studies, which were among the first of their kind, explore the financial costs and potential profitability of distance learning at six universities, all of which have received grants from the foundation's Asynchronous Learning Network to develop online programs. The reports were presented at a seminar last summer.

The researchers who conducted the studies tackled the issues in strikingly different ways, but their reports point to two broad conclusions: The universities aren't losing a lot of money on distance learning, but they aren't making much either -- at least not yet. And how well the programs appear to be doing depends, in part, on how their costs and revenues are defined. Those often-thorny questions are increasingly important as institutions decide whether it is financially feasible to expand their fledgling distance-learning efforts over the next few years.

Most of the reports -- based on studies conducted at the Rochester Institute of Technology, the University of Illinois at Urbana-Champaign, the University of Maryland's University College, and Drexel, Pace, and Pennsylvania State Universities -- reveal that the universities are hovering close to the break-even point with their distance-learning programs.

In most cases, the studies relied on estimated-cost projections because university accounting procedures were not always well suited to a case-study approach.

"Author Says Colleges Must Reallocate Money to Academic Technology, By Florence Olsen, The Chronicle of Higher Education, February 27, 2001 --- 
From an interview with A.W. Bates, author of Managing Technological Change: Strategies for University and College Leaders published by Jossey Bass in November, 1999. His previous book, Technology, Open Learning and Distance Education, Routledge, 1995, won UCEA’s Charles Wedemeyer award for the best book on distance education published in 1995.  Tony Bates has been responsible since June 1995 for developing distance education programs and flexible delivery of credit and non-credit programs at the University of British Columbia,

Q: Some proponents of information technology say their aim is to broaden access to higher education, enhance its quality, and lower the cost of teaching and learning. Which of these aims might be the most difficult to achieve?

A: (Bates) Reducing costs is the hardest part, at least initially. It's like retooling an industry. You have to do things differently, and there are high costs in doing that. The second reason is the amount of time that faculty have to spend learning how to use the new technology. It has to be done, but it means that people aren't doing other things like research and standing in front of a class teaching.

Q: Course-management systems, then, really haven't automated course production to the level yet where faculty members can just focus on the content?

A: (Bates) Quite the opposite. What they've done is drag a lot of faculty into activities that they're not trained for and that take them away from their research and teaching. It's misleading of companies like WebCT and Blackboard to advertise, Get your course up in 15 minutes. Sure you can get it up in 15 minutes, but after that you can spend the rest of your life trying to get it right.

Q: Will there be a time when academic programs can save money by using information technology?

A: (Bates) I think so. But again, it won't be as great as we think, because the technology keeps changing. Organizations will get better at managing this. The real problem at the moment is that most faculty don't have enough technical support.

A few institutions, like the University of Central Florida, have managed to move [technology for teaching] into the mainstream by making it relatively easy. Professors can see the benefits of working in a different way, which is encouraging, and it hasn't led to huge extra costs for the university.

One area that interests me is the indirect impact of learning technologies on cost savings. Although we have a very large campus at the University of British Columbia, we have a limitation now on how many new buildings we can put up. If you cut down from three lectures a week to one lecture a week, and you do this systematically, then you might be able to reduce considerably the use of classroom space and car-parking space. But very often it would mean going outside the academic budget and into other budgets. We need a lot more research into the consequences of that.

I'm sure we're not very different from most big research universities. Nearly half of our teaching budget involves indirect costs -- heating, lighting, classrooms, the library, and so on. We don't know what the indirect costs are for online teaching. There are infrastructure costs, but a lot of the costs we see listed as necessary indirect costs for classroom teaching don't apply to online teaching.

The other problem with [reallocation] in a university is that you can't do it in a top-down way. So a lot of what we're trying to do is get [people to buy in to the idea, particularly faculty members]. We feel in a way we've done that now. Over the last 12 months, we've had a lot of consultation, we've had faculty workshops on learning technologies, on where those fit into their overall teaching plans.

Journal of International Forum of Educational Technology & Society and IEEE Learning Technology Task Force --- 

"Prospect of a Technology-based Learner Interface for Schools,"  by Arthur Recesso, Educational Technology & Society 4(1) 2001 ISSN 1436-4522 --- 
(Includes a module on development costs.)

The International Forum of Educational Technology and Society (IFETS) hosted an online discussion about the potential for the development and widespread implementation of a technology-based learner interface. The following is a summary of the discussion, which took place from October 23 to November 9, 2000 on the IFETS listserv. This was an open forum with participant's backgrounds ranging from private industry to public education academia. In the context of a K-12 school implementation there were several issues raised. A technology-based learner interface to be used successfully in a classroom would have to overcome barriers presented by teacher training, costs, and providing a system conducive to facilitating effective instruction.

Early Patterns of Faculty Compensation for Developing and Teaching Distance Learning Courses---  
by Gary A. Berg

This paper is an investigation into compensation practices for faculty developing and teaching distance learning courses. The research divides itself into two basic lines of inquiry: direct and indirect compensation (including royalties, training, and professional recognition). Also, economic models for distance learning are examined with a view towards understanding faculty compensation within attempts to reduce labor costs. The primary questions this research attempts to answer are: What are the current policies and practices in higher education for compensating faculty who develop and teach distance learning format courses? Will the increased use of distance learning format courses alter overall labor conditions for American faculty? If so, how? Although information is limited, it is found that faculty work in both developing and teaching distance learning format courses tends thus far in this early stage to be seen as work-for-hire under regular load with little additional indirect compensation or royalty arrangements.

Managing Technological Change Strategies for College and University Leaders 
A.W. (Tony) Bates 

Implementing new technology at a college or university requires more than simply buying new computers and establishing a Web site. The successful use of technology for teaching and learning also demands major changes in teaching and organizational culture. In Managing Technological Change, Tony Bates -- a world-renowned expert on the use of technology in university teaching -- reveals how to create the new, technologically competitive academic organization. He draws from recent research and best practice case studies--as well as on his thirty years of experience in using technology for teaching--to provide practical strategies for managing change to ensure the successful use of technology. Readers will learn how to win faculty support for teaching with technology and get advice on appropriate decision-making and reporting structures. Other topics covered include reward systems, estimating costs of teaching by technology, and copyright issues. Bates also details the essential procedures for funding new technology-based systems, managing the technology, and monitoring its ongoing educational effectiveness in anticipation of future changes. Throughout the book, he maintains a focus on the human factors that must be addressed, identifying the risks and penalties of technologically based teaching and showing how to manage those hazards.

When Professors Create Software, Do They Own It, or Do Their Colleges?
Disputes over the issue are likely to arise soon in the courts and contract negotiations
By Scott Carlson ---
Chronicle of Higher Education, July 21, 2000

In the past few years, as the invention of new software has moved from labs to laptops, more professors from various disciplines have been trying their hands at developing potentially salable programs. This trend, along with the information-technology gold rush, has raised urgent new questions about faculty-created software for both professors and technology-transfer officials, who market and license new technology at colleges. Is software traditional scholarly publishing, and thus owned by the professor? Or is it more like an invention, a work for hire, and thus owned by the university?

Similar legal questions have emerged about online course notes over the past few years. Course notes and books are usually owned by faculty members, but software can blur the lines between traditional coursework and new technology. If a professor writes a chemistry manual and puts it on a CD-ROM with audio and video, Internet links, and software that automatically generates test questions, is it more like a textbook or more like a computer program? According to some university policies, the answer to that question can be key to determining who owns it.

The Pew Chartible Trust hosted a symposium on this topic in February and recently made a summary of the proceedings available on the web. The summary covers the issues as four case studies: The Arthur Miller case (Harvard); The case; The CaseNet case; and The Virginia Tech Math Emporium case. A very interesting, and readable, way to highlight the main issues, I thought.

The summary is at: 

Joe Brady Accounting and MIS College of Business and Economics University of Delaware

Message from Jagdish Gangolly on July 7, 2000

Those of us making large time committments to develop stuff using universitiy resources might like to read this.

When I asked the question at one of our school faculty meetings recently,(in particular, the issue of ownership of webCT stuff developed by faculty), there was a lot of ho-humming and arm-waving by the administrators -- and comments like "That is a fascinating question".

The important question is if the university can claim ownership of the stuff even if it was created at home using one's own personal computer.

jagdish -- Jagdish S. Gangolly, Associate Professor ( ) State University of New York at Albany, Albany, NY 12222. Phone: (518) 442-4949 Fax: (707) 897-0601 URL: 

WHEN PROFESSORS CREATE SOFTWARE, DO THEY OWN IT, OR DO THEIR COLLEGES? As professors in a wide range of fields increasingly write commercially viable software, the issue of whether the programs belong to professors or to their colleges is heating up. If software is viewed as traditional scholarly publishing, then professors own the work. However, the university has ownership claims if the program is seen as an invention, or a work for hire. Copyright laws hold that an employer owns a creative work that falls within the bounds of the worker's employment--for example, a program that helps a professor grade papers, legal experts say. In addition, universities could claim ownership if a professor creates the software as an assigned project or uses university resources, including grants awarded by the school. While colleges nearly always claim ownership over patented software, most software is not patented, because products have to be innovative and not obvious to receive patents, says patent and copyright attorney Ray K. Harris. However, software is protected by copyrights, and scholars have traditionally held copyrights to their academic works. Despite this precedent, universities are increasingly writing policies that give them ownership of professors' software, as the potential to capitalize on these programs grows, Harris says. (Chronicle of Higher Education, 21 July 2000)

Instructors who deliver their materials off campus!

Copyright issues wasn't a big reason I went off on my own server in 1997. Rather, the pitiful state of the web server (speed, etc) and space offered at my then-employer, FIU, was the main driver. In addition, the relatively inexpensive investment ($20/month for unlimited hosting + $35/year for domain [all available cheaper now]) required coupled with a big payoff in ease of use, etc. were the main drivers.

However, I have chosen to keep my materials "off-campus" so to speak, because of the potential of those issues David mentions. Here at UA, I have not had any uncomfortable experiences regarding these issues, and in fact, I could have more server space here and much much much better technology than I was faced with at FIU, for sure. But, I prefer to keep things separate, as they are, as a know a few other colleagues have chosen to do. As far as I know, these choices, like mine, were not particularly driven by intellectual property concerns, but more likely by technology preferences.

If my materials were published in traditional paper and ink and bound with cardboard and glue [and financed by a publisher, perhaps?], we wouldn't even think of having this conversation would we? C'est la vie! Who wants to be traditional, anyhow? :-D


PS. isn't AECM wonderful!?

Amelia A. Baldwin, Ph.D. Arthur Andersen Faculty Fellow & Associate Professor Culverhouse School of Accountancy, Box 870220 The University of Alabama, Tuscaloosa, Al 35487-0220 Ph: 205-348-2922 Fx: 205-348-8453 Email: Web:

 -----Original Message-----  
From: David Albrecht [mailto:albrecht@PROFALBRECHT.COM]  
Sent: Friday, July 21, 2000 10:12 PM  
Subject: Re: Edupage, 21 July 2000 (fwd)   

I am a prof at Bowling Green State University, and have  commented on this  issue before. As stated in the Educause review, professors  currently have  legal protection on their works via copyright. It is  important, though,  for all faculty to check to see University policies WRT created works.  BGSU's faculty charter explicitly grants to faculty copyright  protection to  created works. Sometimes faculty rights are being discussed  in the context  of Conflict of Interest.   To make it more difficult for BGSU to claim ownership of my online  materials (although I doubt it ever will), I have rented web  server space,  secured a domain (, and have gone my merry way. 

I  recommend this to one and all. Amelia Baldwin (U of  Alabama), a sometimes  contributor to this list, is the real trail blazer here, with  her materials  at Her work is very good, and makes me look like a  beginner.   Some publishers offer facilities to host course/professor web  sites, using  webct or blackboard. I think this is also a good alternative.   So, if you are worried about a university "nationalizing"  your work, go off  on your own.   

Dave Albrecht

The intellectual property issues as well as the technological poverty issues mentioned by Dave and Amelia are very important. However, they were not the reason for my post, since I literally run a server farm in my lab and have more technology than I can understand. the reason for my posting the edupage piece was primarily the issue of ownership of copyrightable software produced by us.

As a pathological fan of open-source/free software, I firmly believe in the sharing of intellectual resources -- in fact all my notes, running probably into thousands of pages are for free on the internet. The ambiguity of the answers I got from the administrators has led me to decide against use of WEBCT for my fall classes -- not because I want to make money off it, but because I believe the school should not make money off it, except to bring education to wider audiences. After all, universities are not .com.edus yet; if they were, we would have stock options, golden parachutes, R&R budgets, and whatnot. I will, nevertheless fiddle with WEBCT to learn how to use it.

It is a different story when it comes to software. So long as its development does not interfere with my teaching responsibilities or research productivity, I do not see any reason universities should assert rights over the work. After all, we academics are neither indentured nor chattel.

I am currently shopping for a service provider who can deliver full service (support for domain name, servlets, JSP/ASP, cgi, multi-platform, etc.). Haven't found one yet. Shall be grateful for any pointers in this regard.

jagdish -- 
Jagdish S. Gangolly, Associate Professor ( ) State University of New York at Albany, Albany, NY 12222. Phone: (518) 442-4949 Fax: (707) 897-0601 URL:

I decided to use Powweb Hosting  . I am extremely impressed with the customer service as they reply almost immediately to my email queries. The price is also good, approximately US$95 for a year's hosting.

My university is a bit behind in the full "adoption" of the Internet for facilitating the learning process, primarily because of unguaranteed access to all (Approximately 500 students in the School of Business and about 50% major in Accounting!).

The site was published in April and I intend to "force" my students to use it full force come Fall.

My 2 cents worth,

Rohan Chambers 
Lecturer in Auditing and Accounting 
School of Business Administration 
University of Technology, Jamaica. Tel: (876)-92-71680-8 Ext.2109 USA- e-Fax: (707)-982-0364 

I just switched to . I did it primarily for their cold fusion support. Their rates were cheaper than virtualscape another provider I was using. So far I've been satisfied with how quickly I have been able to set up the account.

Jim McKinney 
University of Maryland.

I use  - They offer great support. There is a price war going on now in web hosting. The way these web hosting companies make money is in selling value-added services. So you will find if you need to do something unusual, (not in their packaged offerings) you will need to come up with more money.
Richard J. Campbell [campbell@RIO.EDU

Texas A&M Case on Computing the Cost of Professors and Academic Programs

Jensen Comment
In an advanced Cost/Managerial Accounting course this assignment could have two parts. First assign the case below. Then assign student teams to write a case on how to compute the cost of a given course, graduate in a given program, or a comparison of a the cost of a distance education section versus an onsite section of a given course taught by a tenured faculty member teaching three courses in general as well as conducting research, performing internal service, and performing external service in his/her discipline.

From The Wall Street Journal Accounting Weekly Review on November 5, 2010

Putting a Price on Professors
by: Stephanie Simon and Stephanie Banchero
Oct 23, 2010
Click here to view the full article on

TOPICS: Contribution Margin, Cost Management, Managerial Accounting

SUMMARY: The article describes a contribution margin review at Texas A&M University drilled all the way down to the faculty member level. Also described are review systems in place in California, Indiana, Minnesota, Michigan, Ohio and other locations.
CLASSROOM APPLICATION: Managerial concepts of efficiency, contribution margin, cost management, and the managerial dashboard in university settings are discussed in this article.

1. (Introductory) Summarize the reporting on Texas A&M University's Academic Financial Data Compilation. Would you describe this as putting a "price" on professors or would you use some other wording? Explain.

2. (Introductory) What is the difference between operational efficiency and "academic efficiency"?

3. (Advanced) Review the table entitled "Controversial Numbers: Cash Flow at Texas A&M." Why do you think that Chemistry, History, and English Departments are more likely to generate positive cash flows than are Oceanography, Physics and Astronomy, and Aerospace Engineering?

4. (Introductory) What source of funding for academics is excluded from the table review in answer to question 3 above? How do you think that funding source might change the scenario shown in the table?

5. (Advanced) On what managerial accounting technique do you think Minnesota's state college system has modeled its method of assessing campuses' performance?

6. (Advanced) Refer to the related article. A large part of cost increases in university education stem from dormitories, exercise facilities, and other building amenities on campuses. What is your reaction to this parent's statement that universities have "acquiesced to the kids' desire to go to school at luxury resorts"?

Reviewed By: Judy Beckman, University of Rhode Island

Letters to the Editor: What Is It That We Want Our Universities to Be?
by Hank Wohltjen, David Roll, Jane S. Shaw, Edward Stephens
Oct 30, 2010
Page: A16

"Putting a Price on Professors," by Stephanie Simon and Stephanie Banchero, The Wall Street Journal, October 23, 2010 ---

Carol Johnson took the podium of a lecture hall one recent morning to walk 79 students enrolled in an introductory biology course through diffusion, osmosis and the phospholipid bilayer of cell membranes.

A senior lecturer, Ms. Johnson has taught this class for years. Only recently, though, have administrators sought to quantify whether she is giving the taxpayers of Texas their money's worth.

A 265-page spreadsheet, released last month by the chancellor of the Texas A&M University system, amounted to a profit-and-loss statement for each faculty member, weighing annual salary against students taught, tuition generated, and research grants obtained.

Ms. Johnson came out very much in the black; in the period analyzed—fiscal year 2009—she netted the public university $279,617. Some of her colleagues weren't nearly so profitable. Newly hired assistant professor Charles Criscione, for instance, spent much of the year setting up a lab to research parasite genetics and ended up $45,305 in the red.

The balance sheet sparked an immediate uproar from faculty, who called it misleading, simplistic and crass—not to mention, riddled with errors. But the move here comes amid a national drive, backed by some on both the left and the right, to assess more rigorously what, exactly, public universities are doing with their students—and their tax dollars.

As budget pressures mount, legislators and governors are increasingly demanding data proving that money given to colleges is well spent. States spend about 11% of their general-fund budgets subsidizing higher education. That totaled more than $78 billion in fiscal year 2008, according to the National Association of State Budget Officers.

The movement is driven as well by dismal educational statistics. Just over half of all freshmen entering four-year public colleges will earn a degree from that institution within six years, according to the U.S. Department of Education.

And among those with diplomas, just 31% could pass the most recent national prose literacy test, given in 2003; that's down from 40% a decade earlier, the department says.

"For years and years, universities got away with, 'Trust us—it'll be worth it,'" said F. King Alexander, president of California State University at Long Beach.

But no more: "Every conversation we have with these institutions now revolves around productivity," says Jason Bearce, associate commissioner for higher education in Indiana. He tells administrators it's not enough to find efficiencies in their operations; they must seek "academic efficiency" as well, graduating more students more quickly and with more demonstrable skills. The National Governors Association echoes that mantra; it just formed a commission focused on improving productivity in higher education.

This new emphasis has raised hackles in academia. Some professors express deep concern that the focus on serving student "customers" and delivering value to taxpayers will turn public colleges into factories. They worry that it will upend the essential nature of a university, where the Milton scholar who teaches a senior seminar to five English majors is valued as much as the engineering professor who lands a million-dollar research grant.

And they fear too much tinkering will destroy an educational system that, despite its acknowledged flaws, remains the envy of much of the world. "It's a reflection of a much more corporate model of running a university, and it's getting away from the idea of the university as public good," says John Curtis, research director for the American Association of University Professors.

Efforts to remake higher education generally fall into two categories. In some states, including Ohio and Indiana, public officials have ordered a new approach to funding, based not on how many students enroll but on what they accomplish.

Continued in article

Bob Jensen's threads on managerial and cost accounting are at


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