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Saying Yes to Competency-Based Education: The Big Picture (Part 2)

The EvoLLLution | Saying Yes to Competency-Based Education: The Big Picture (Part 2)
Once a new business model is created, it’s a great deal of work to determine how to put the plan into action.

This is the second installment of a two-part series by Rhonda Tracy discussing how the Kentucky Community and Technical College System (KCTCS) is revising its competency-based education model and planning for the future of CBE. In the first installment, Tracy outlined the goals of the new business model and discussed the importance of establishing a firm value proposition.

Reviewing Business Models: Setting the Stage

After developing the value propositions that would support the business plan, the investigation of innovative business models for distance education began. Guiding questions were developed to ensure relevancy and applicability of the research to KCTCS:

  • Is the population served by the business model similar to KCTCS students?
  • Does the business model demonstrate large-scale implementation?
  • Is the business plan a revenue-sharing plan across similar institutions?
  • What is centralized in the business plan and who and what is managed centrally?
  • Has the plan been in place for longer than two years?
  • Does the plan indicate or delineate factors that impact sustainability and how these are measured/supported?


An Emerging Business Model: Getting into the Weeds

To build on the value propositions and acknowledge the costs associated with each proposition, it was now necessary to focus on the specific finance-related questions that would lead to the appropriate and “best fit” business model. The following questions were included in a distance education business plan presentation at the CBE4CC Convening in Denver, CO in June 2015 by Dr. Dennis Jones, NCHEMS. These questions help further refine what should be addressed in the business plan:

  • What costs are associated with development?
  • What number of students is needed to support the plan?
  • Could revenues be subscription or tuition-based? Can students pay on a per-piece basis?
  • Is the model more than just a boutique operation?
  • What are the institutional taxes such as overhead, indirect, and/or administration fees?
  • Is there a differential charge for online that in essence serves as a surcharge?
  • For sustainability, is the asset maintenance coming from program revenue or one-time funding?
  • Are the expenditure streams aligned with the revenue stream? How do things fit? How are records maintained?
  • Can we get to the point where revenue sustains the expenditure model?
  • Is there variability around human resources that are less rigid and involve cross-training? The less variability of who does what, the harder it is to make it work.
  • Does the delivery focus on course-level or program-level outcomes and financial pictures? The focus should be at the program-level. Bundling may be necessary.
  • Have we kept costs for students low? CBE should not be a nice idea that costs more for students.


Results of the First Online Business Model Review

A work team reviewed structures in place at institutions in California, Florida, Maryland, Tennessee, Virginia, Arizona, Wisconsin, North Carolina, New Hampshire and Massachusetts for both public and private institutions. Their general observations from the first round of research on innovative business models were varied. Some of the practices observed by the team would be considered for the emerging model.

  • Most online delivery business models are established as either auxiliary or integrated units.
  • Staffing and support vary depending on the structure and format for delivery.
  • Program and course design is usually conducted by faculty and instructional designers with continuous review and update.
  • Some but not all of the business models focused on CBE which limited the review in terms of applicability.
  • Students were assigned to a either a home college or an online college.
  • Support services were available such as tutoring, help desk contacts and advising, and many services centralized with individual colleges providing on-ground support if needed.
  • Many had additional fees for online with some charging a flat fee (subscription or regular tuition), some charging a percentage of regular tuition (either a higher or lower percentage), and some charging fee differentials for various specific programs.


Refining the Model: Getting Closer

After more in-depth research, it was clear that most distance learning online business models were either auxiliary or integrated units.

According to the Rochester Institute for Technology’s distance learning study, auxiliary online learning units operate outside of the policies, procedures, and administration of the college. Examples include residence halls, food services and bookstores. For online learning this typically means that online courses and programs are developed and delivered within the auxiliary unit. Other college functions such as student recruitment, registration, advising and technical support may be provided by either the auxiliary unit or the college. Typically, funding for auxiliary units is either self-funded (most common) or overhead-funded.

Integrated online learning units operate within the same policies, procedures and administration as the rest of the college. Online courses and programs are developed and delivered using the same resources as classroom-based courses and programs. Integrated units can be overhead funded (most common) or self-funded.

Following the first level of review, team members were divided into two groups. One team was charged with developing an auxiliary business plan and one group was charged with developing an integrated business plan. Each group would address the following questions.

  • What courses and programs should be offered in online format for this model?
  • Describe what the management/governance structure should look like within this model.
  • Within the governance structure, describe the various management roles for an effective system-wide online business model.
  • How should funds be distributed for online courses and programs and where do the funds go with this business model?
  • Who should advise and/or govern the online unit in terms of policy for this model?
  • Who oversees the hiring of faculty for this online business model?
  • Who oversees the quality of the courses and programs for the online model?
  • Describe how the model can ensure sustainability and work towards a positive return on investment.
  • Describe how this model is innovative and unique for Kentucky students.


Current State of Progress

At the present time, the Distance Learning Work Group has identified the value propositions with targeted resources and is studying which business model—auxiliary or integrated or a combination—is the most appropriate. The teams have a defined format for the model that identifies the administration, development and delivery of the model as defined below:

Administration: this is the critical component of the business plan and the guiding questions above address this area

Development: taken from the value propositions

Delivery: taken from the value propositions

Additional work is being conducted on a cost/financial calculator which will take the estimated costs of implementing all the value propositions combined with other overhead costs and determining what is needed to produce a sustainable and scalable distance learning model for the competency-based program.


Saying yes to competency-based education means saying yes to innovative practices for student support, technology and business practices. KCTCS is committed to developing a business model that fully supports CBE in a way that takes advantage of the full complement of services and opportunities that ensure CBE is sustainable and scalable.

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Series Resources

Paul J. LeBlanc, “Finding New Business Models in Unsettled Times,” EDUCAUSE Review, November 10, 2014

Donna A. Dickson, Anne Canale, Jeremiah Parry-Hill, Michael Starenko, and Lynn Wild, “Business Model for Online Learning at Rochester Institute of Technology: Research and Recommendations”

Hanover Research, “Business Models for Online Higher Education,” August 2013

Beth Rubin, “University Business Models and Online Practices: A Third Way”

Presidential Innovation Lab, “Beyond the Inflection Point: Reimagining Business Models for Higher Education,” ACE and CEAI, 2014

Paul Fain, “Overview of College for America at Southern New Hampshire University: Taking the Direct Path,” Inside Higher Education, February 21, 2014

Tamar Levin, “Promising Full College Credit, Arizona State University Offers Online Freshman Program,” The New York Times, April 22, 2015

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