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A Marriage Made in Indiana

July 14, 2010

Just about everywhere you turn, state leaders are searching for a way to use online education to expand the reach of their public higher education systems at a time of diminished resources.

The approaches vary: In Minnesota, Gov. Tim Pawlenty has heralded a future of "iCollege," while in Pennsylvania, the state college system envisions using distance learning to help its campuses sustain their offerings by sharing courses in underenrolled programs. California's community college system turned to a for-profit provider, Kaplan University, to work around its budget-related enrollment restrictions. And a grand experiment to create a fully online branch of the University of Illinois, meanwhile, crashed and burned last fall.

Like those and other peers, Indiana's leaders have increasingly recognized that the state cannot thrive economically if it does not bolster college completion, particularly among adults (aged 29-49) who have historically been underrepresented in the state's seven public four-year universities. But they recognize that doing so at a time of (temporarily, if not permanently) diminished resources isn't easy -- and that online education is no panacea because, done right, it isn't cheap.

Rather than sink millions the state doesn’t have into a new institution, or prod its current existing institutions to ramp up their online offerings, perhaps distracting them from their existing missions, Indiana Gov. Mitch Daniels has opted to go another, more unusual route: essentially subcontracting the job out to Western Governors University, a nonprofit institution based in Salt Lake City.

Under the arrangement, announced last month, the state would set up a "private label" version of Western Governors known as WGU Indiana, creating, in essence, what Daniels called "Indiana's eighth state university." In contrast to the millions it would have to spend to truly create a new campus -- even a virtual one like Illinois's failed Global Campus -- Indiana will not directly invest funds to create WGU Indiana. The only significant change the state will make to enable the arrangement is to allow students to use their state-funded financial aid to attend the virtual institution. WGU Indiana's tuition is under $3,000 per six-month term, roughly comparable to most of Indiana's public universities.

The dynamic duo of philanthropies that finance many if not most experiments in higher education these days, the Indiana-based Lumina Foundation for Education and the Bill & Melinda Gates Foundation, will help cover the initial operating costs for the institution, which is envisioned to be self-supporting.

"WGU Indiana will fill the clearest and most challenging gap remaining in our family of higher education opportunities: helping thousands of adult Hoosiers attain the college degrees they've wanted and needed, on a schedule they can manage, at a cost they can afford," Daniels said in announcing the arrangement last month.

And while Indiana officials hope the partnership with Western Governors will help them achieve their goals, leaders of WGU see the arrangement as a possible path to spreading the nontraditional institution's reach. WGU Montana, and even WGU New York, anyone?

An Expanded Relationship

The relationship between Western Governors and Indiana traces back to the university's founding in the late 1990s; Indiana's then-governor, Frank O'Bannon, was one of the 18 state leaders who signed on to the idea of creating an online, competency-based university. (It's now 19 states.) Indiana students (like those in every other state) have continued to enroll at the institution, but the state ranks 25th (with 275, behind much smaller states such as Idaho's 391) in the number of residents among WGU's more than 19,000 students as of May 31.

Daniels joined the Western Governors Board of Trustees in January. As he learned more about the institution's distinctive approach -- which awards academic credits based not on how much time students spend in the classroom but on the skills and knowledge they can show they've mastered -- he saw it as a way to ramp up Indiana's educational offerings to often place-bound adults without draining funds away from existing public universities (while at the same time keeping pressure on those institutions to perform), aides say.

The historical relationship between WGU and Indiana played a role -- "When you find the flying carpet that's been stuck in the barn for a while, it's still a flying carpet," quipped Scott Jenkins, Daniels's education policy director -- but it was the university's innovative approach and proven sustainability that persuaded Indiana to pursue the new arrangement.

It can't hurt that whatever expanded capacity Indiana is getting will come without a dime of state spending. Lumina, Gates and the Indiana-based Lilly Foundation have agreed to contribute nearly $1,75 million in one-time grants to cover WGU Indiana's startup costs, which will include a chancellor, some in-state offices, and some marketing to students. But because the "new institution" will essentially be "us operating under the name of WGU Indiana in the state," as Western Governors President Robert Mendenhall puts it, the operation's costs will be largely absorbed in the operations of the university's headquarters in Salt Lake City.

The only state money that will flow to Western Governors will be financial aid funds that the State Student Assistance Commission of Indiana distributes to Indiana residents who enroll there; Daniels's executive order on the creation of WGU Indiana dictates the the commission take "all necessary steps now and in the future to ensure that WGU Indiana students will be eligible to apply for and receive student financial aid on the same basis as students at Indiana's public universities."

Institutions of all types -- independent as well as state-run, for-profit as well as nonprofit -- are eligible for the Frank O'Bannon Grant Program, the state's main need-based aid program. But even a relatively modest financial step like the one Indiana is taking in its partnership with WGU Indiana -- allowing state student aid to flow to an institution that is technically outside Indiana's borders -- would have been difficult if not impossible for Daniels to take with a for-profit college, says Jenkins, his education aide.

"From our standpoint, if the governor was going to endorse it and it was to become something like a quasi-state entity with a state advisory board, it sure helped that it was a nonprofit," Jenkins says.

Who is likely to go to WGU Indiana? State education leaders and administrators at Indiana's two-year-college system, Ivy Tech Community College, are hopeful that the arrangement will build on the articulation agreement that Ivy Tech and Western Governors announced in February, before the creation of WGU Indiana.

The key targets, though, are the large numbers of adult Indianans -- "partial completers" -- who have some college education but no degree or certificate. Indiana places 42nd among states in the proportion of adults with a postsecondary credential.

Broadening the Market

As is true of many states, the large number of adults and others whom Indiana wants to draw into postsecondary education leaves a big job to do -- big enough that there are roles for many players. It is for that reason -- along, perhaps, with not wanting to take issue with a pet project of a popular governor -- that leaders in traditional higher education who might see WGU Indiana as a competitor say that, in fact, they don't.

"There's plenty of work to be done" in using online education to reach underserved Indianans, says Daniel J. Callison, dean of Indiana University's School of Continuing Studies, which provides much of the online learning at the state's largest public university system. His school and WGU Indiana are both aimed primarily at adult students, Callison acknowledges, and there "could be some overlap" in who they seek to serve.

But even if the IU school doubled its current size of 8,000 to 10,000 adult learners at any one time, "that still doesn’t address all of the needs that we have in this state," Callison says. And the burst of attention that the creation of WGU Indiana will bring to the needs of adult learners in the state, he adds, could be good for all such programs. "It will highlight and get the word out, again, that there are programs to help our adult learners complete a college degree," he says. "I think they’re broadening the possibilities."

Kevin Kinser, an associate professor in the department of educational administration and policy studies at the State University of New York at Albany, studies nontraditional education providers and wrote his dissertation on Western Governors University. He shares Callison's view that the Indiana-WGU pairing is likely to expand the market for online education for adults in the states rather than intensify competition within it.

"This seems like a great example of a public-private partnership that can boost online enrollment in a way that does not impact the way that traditional campuses-based institutions operate," Kinser says. Significant publicity about the arrangement could generate interest in distance learning programs within Indiana, and having the name "Indiana" could attract Hoosiers to the program in a way that they wouldn't be drawn to the Salt Lake City-based Western Governors. "We know from research that students tend to look for online programs that have a geographic base that's kind of close to where they are anyway," Kinser says.

A Replicable Model?

Just as the new arrangement charts a new path for Indiana, so too does it, potentially, for Western Governors.

After early years in which it struggled to gain a foothold and first fought, and then accepted, the need for regional accreditation, WGU appears to have hit its stride, seeing its enrollment and number of graduates nearly double in the last two years (to roughly 19,000 and 6,600, respectively), and its revenues and staff more than double (to $105 million and 800, respectively) since 2007. About half of its enrollment is now in its teachers' college, about a quarter in business fields, and the rest in information technology and health professions, including nursing.

"WGU has developed a sustainable model, and they have figured out a way of getting sufficient enrollment to do what they’re doing," says Kinser. "The big question is whether they want to grow bigger, and if [the Indiana arrangement] is a way of increasing their scale."

Yes and yes, says Mendenhall, the president of Western Governors. WGU Indiana, he says, provides a model in which states can "add educational capacity to a system at no impact to the state budget" -- a proposition, he says, that "could be pretty appealing to a lot of other states."

That prospect presents appeal to Western Governors, too, of course. "I view the current budget crisis as an opportunity for us to go back to our roots and really go to the states and say, 'Look, we can educate thousands of your citizens at no additional cost to the state a year,' " says Mendenhall.

While some states might choose Illinois's path of trying to create an entirely new public institution, and others might try to prod their existing institutions to expand their online offerings, the reality is that most of the capacity growth of late has occurred among for-profit colleges, he notes. "That's fine, but kind of expensive for the students," Mendenhall says.

Kinser of Albany agrees that other states could seek to replicate the WGU Indiana model, especially given the fact that the university "already has political connections" to governors in many Western states. Even short of full-blown private labeling like in Indiana, states that lack institutional capacity could change their policies to make it easier for state financial aid to follow their students to Western Governors or other colleges outside their borders. Of course, Kinser notes, not every state has hometown foundations like Lumina and Lilly to pick up the not-so-insignificant ancillary startup costs of the WGU Indiana arrangement. "That," he says, "could make Indiana more of an idiosyncracy."

 

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