Setting up a school as a business may offer cash-strapped districts a way to find much-needed funds. But, like any small-business startup, it could take some time to turn a profit.
When the Global Services group of Florida Virtual School (FLVS) in Orlando began licensing its courses outside the state of Florida, the intention was not to set up a business. As a distance learning pioneer, FLVS had been getting regular requests from other online schools to license FLVS’s online courses. Before it could do that, however, the state had to pass legislation—which it did in July 2001—that allowed the school to open a business unit, says Phyllis Lentz, director of Global Services.
Since then, FLVS has been delivering courses to school districts outside the state. (The courses are free to Florida schools.) Under a nondisclosure agreement, potential customers can preview courses. This is an important step in the process, according to Lentz.
“As much as we think standards are alike among the states, they aren’t,’ she points out. “Customers want to see if the standards [of FLVS’ s curriculum] meet the standards for their individual districts.”
They must be doing something right because business is growing, FLVS currently delivers 75 courses to high school students: It provides a complete high school curriculum that includes English, mathematics, science and social studies, as well as 11 advanced placement courses. Several eighth-grade courses for a middle school program are in development.
In addition, FLVS has developed an online General Equivalency Diploma (GED) prep course. The school also has modified some high school courses for adults who want to obtain a high school diploma rather than a GED.
While FLVS’s entry into selling online curricula was in response to customer demand, the Houston Independent School District (HISD) took a proactive approach. Leonard Sturm, the school district’s marketing director, saw an opportunity to recover some taxpayer dollars by copyrighting and selling the courses HISD had developed to other school districts in Texas.
“We needed to protect the [courses] we had developed, the things taxpayers were paying for,” Sturm explains. “Our prices are low compared with commercial vendors, but when we get the money back in, we can help pay for more products and continue development.”
Looking for ROI
The concept of selling curricula begs the question: Can other schools develop and profit from the FLVS and HISD models?
“We had a huge advantage because we had all the courses developed when we started to sell the curriculum,” says Julie Young, executive director at FLVS. “Even so, based on preliminary numbers, we are not making a profit at this point.”
FLVS offers both limited and unlimited licenses. With limited licensing, prices are based on the number of students. Another option is an unlimited license, which is more like a purchase. Schools are able to use unlimited-license courses in perpetuity and can even modify them.
The fee for a small district (fewer than 5,000 students) is $9,600 for unlimited use of a full-credit course, or $96 per student for a limited license. For a half-credit course, the fee is $7,000 for unlimited use or $70 per student for a limited license. Like any good business, FLVS is responsive to its customer needs. “We try to offer options,” Lentz says. For instance, the school is currently working to get another licensing tier approved.
“One of the neat things about this program is that the dollars other schools are spending on the out-of-state licensing program go into improving and enhancing the curriculum content,” she continues. “We’re seeing revenue generation, but at this point, we’re spending as much as we’re making to get the program up and running. Next year, with two years under our belt, we hope to see a profit.”
HISD is currently in the early stages of licensing its curriculum. Three Texas districts have already purchased the classroom version of the curriculum in portable document format, but HISD has not yet licensed the online version to any other district, though it plans to do so.
The HISD Clear suite of products provides content specifications, details of what should be taught at each grade level and several assessment tools. Some smaller districts, according to Sturm, use the Clear products intact, but larger districts install it in their curriculum management systems so they can modify it to suit their needs.
“We used to give away everything we developed,” Sturm says. “Right now, we earn more than we spend, but we still need to market the products. We’re trying to expand outside the state.”
HISD’s fees range from $17,000 to $350,000, depending on the size of the district. If the customer wants to modify the classroom curriculum, there’s a base fee plus upgrade fees. When online courses are available, they will be charged on a per-student basis.
By June 2002, curriculum sales and other marketing programs generated $535,000 in profits, and that money has been used for support and for the development of the curriculum and other district programs. “We’re recovering taxpayers’ money to help continue development,” Sturm explains.
Sturm believes that HISD is on the right track to solve the school funding dilemma. “We need to run the districts like businesses,” he says. “Schools need to be more businesslike in terms of utilizing the resources they’re generating.
“The curriculum system we developed is an asset, but we need a structure to market this product.”
Developing the Market
The market is clearly open to development. Rob Darrow, project director for Clovis Unified School District in Clovis, Calif., licenses online courses from FLVS to fill a temporary gap in the district’s offerings. For him, knowing that “real classroom” teachers develop the products is significant.
“FLVS is using these courses to teach the same way we do,” Darrow points out. “With commercial products, they’re just marketing the content—they’re not teaching the courses—so I couldn’t get teaching support. But FLVS understands the day-to-day issues of working with students.”
Nevertheless, Darrow won’t be licensing courses forever. “Once we learn how to develop our own, we won’t license anymore,” he says. However, creating a licensing business is not in the works, either. “The main purpose of our online courses is to offer them to students, not to create a business out of it,” he explains.
“We’re weaning ourselves away from licensing, because every teacher wants to change and adapt courses to their specifications, and there’s no single online course that’s going to perfectly meet the needs of every teacher and every student. However, compared with other commercial products on the market, the FLVS courses give us that flexibility.”
At the Appleton eSchool based in Appleton, Wis., Constance Radtke, program leader for online learning, decided to license online curriculum based on resource issues. “During our pilot phase in the spring of 2002, we developed one online course in creative writing, and we found out how much work it is,” she recalls. “We decided that if we were going to get a strong program going, we would have to find some high-quality content that we could license or purchase, because we didn’t have the manpower or money to develop it all from scratch.”
Radtke points out that teacher involvement is the key to developing quality courses. “How would our teachers know what a good-quality online course looked like unless they had the chance to work with one?” she asks. “Our philosophy now is to buy the best of what’s out there and develop courses when we can’t find ones to meet our needs.
“I suspect we will always do some licensing of courses to fill in the needs of individual students,” she adds. “We are hoping that as more schools and programs get going in our state, there will be opportunities to barter for course content or to collaborate on the development of courses. Our vision is to expand on the partnerships that we already have and perhaps eventually have an area consortium or even a statewide one.”
Although the market is clearly open for development, curriculum licensing is not for the faint of heart. Districts that already have a wealth of courses could find licensing a way to help balance the school budget, but they shouldn’t expect an overnight fix.
“You have to be cautious about [curriculum licensing] being the next ‘white knight’ in funding,” cautions FLVS’s Young.
Based in San Francisco, Catherine LaCroix covers education trends, technology, and health-related topics for print and Web publications.