Calculating the ROI on virtual schooling

When calculating the Return on Investment (ROI) for VHS schools it is important to consider more than just training costs. Also to be considered is the cost to schools to relieve the teacher from teaching one period per day.

The National Education Association (2008) reported that in 2007 – 2008 a teacher’s average salary in the United States was \$52,308. In a typical high school, teachers are expected to teach 5 periods a day. This equates in a cost per course in terms of teacher salary of \$10,461.60 per year, or \$5,230.80 per semester.

Table 1 shows the total start-up costs for both a standard membership for a large urban school or suburban school and a small school membership for a small rural school for year one.

Costs –First year of Implementation

Standard Membership

Small School Membership

Tuition to train teacher (first year only)

\$3,500.00

\$3,500.00

Tuition to train site coordinator (first year only)

\$1,500.00

\$1,500.00

Annual Membership (1/2 year membership)

\$3,250.00

\$2,375.00

Average cost per course per semester to free up a teacher (based on average teacher salary)

\$5,230.80

\$5,230.80

Total Costs

\$13,480.80

\$12,605.80

Table 1 – Total start-up costs to schools: Year One

In addition to being able to offer over 225 courses to students, schools also benefit by being relieved from the expense of teaching these students one period per day.

The average student expenditure in the United States for 2007 – 2008 was \$9,963 (National Education Association, 2008). A typical high school student takes five classes per day. This equates to \$1,992.60 per student per class per year or \$996.30 per semester. A school district is entitled to 25 seats as a result of its membership for the standard membership or 15 seats for a small school member.

Table 2 shows the total tangible school system student benefits from enrolling in VHS.

Benefits –First year of Implementation

Standard Membership

(25 x \$996.30)

Small School Membership

(15 x \$996.30)

Educational savings having students taught online

\$24,907.50

\$14,944.50

Total Benefit

\$24,907.50

\$14,944.50

Table 2 – Total Benefit: Year One

To calculate the return on investment, the benefit of an investment is divided by the cost of the investment. The results are then expressed as a ratio or a percentage.

Return on Investment Calculation (based on 2007 – 08 figures)

Year 1 – Standard Membership:

\$24,907.50 - \$13,480.80

\$13,480.80

=

.848(100%) = 84.8%

Return on Investment Calculation (based on 2007 – 08 figures)

Year 1 – Small School Membership

\$14,944.00 - \$12,605.80

\$12,605.80

=

.185(100%) = 18.5%

For years two and beyond, the cost to provide online experiences through Virtual High School is reduced by the teacher and site coordinator training fees.

Table 3 provides the total cost data for Year 2 and beyond.

Costs –Year 2 and beyond

Standard Membership

Small School Membership

Annual Membership

\$6,500.00

\$4,750.00

Average cost per course per semester to free up a teacher (based on average teacher salary)

\$10,461.60

\$10,461.60

Total Costs

\$16,961.60

\$15,211.00

Table 3 – Total costs: Years 2 and beyond

Once the first year of training is complete, schools enroll students in VHS classes for the entire year.

Table 4 lists the benefits for years 2 and beyond.

Benefits –Years 2 and Beyond

Standard Membership

(25 x \$1,992.60)

Small School Membership

(15 x \$1,992.60)

Educational savings having students taught online

\$49,815.00

\$29,889.00

Total Benefit

\$49,815.00

\$29,889.00

Table 2 – Total Benefit: Years 2 and beyond

Return on Investment Calculation (based on 2007 – 08 figures)

Years 2 and beyond – Standard Membership:

\$49,815.00 - \$16,961.60

\$16,961.60

(100)

=

193.7%

Return on Investment Calculation (based on 2007 – 08 figures)

Years 2 and beyond – Small School Membership

\$29,889.00 - \$15,211.00

\$15,211.00

=

.965(100%) = 96.5%

Courtesy of the Virtual High School Global Consortium