Penn State Report on OPMs Aims to Inform Policy Makers

In February of this year, Doug Lederman at Inside Higher Ed described work for an upcoming report, requested by a US Senator, about the OPM market. Lederman initially contrasted this work with the partisan approach taken by Senators Warren and Brown in letters sent to OPM vendors.

Now another federal review is under way — also apparently initiated by leading Democratic senators, including Warren and Brown. But this one — a Government Accountability Office analysis requested by Senator Patty Murray, the top Democrat on the Senate’s education committee — by most accounts takes a more even-handed approach to the topic than the Warren and Brown letters were seen as doing.

Phil Hill, an education technology consultant and analyst who was interviewed by GAO investigators, said their inquiry “seems like actual research, and that matches the nature of the GAO,” which is generally regarded as living up to its self-described goal of giving Congress and federal agencies “objective, nonpartisan, fact-based information to help the government save money and work more efficiently.”

Later in the article, Trace Urdan gave his impressions of this review.

[Tyton Partners Managing Director Trace] Urdan also said the GAO officials seemed intent on exploring gray areas rather than sticking to black and white. For instance, on the thorny issue of the appropriateness of revenue sharing, he said the conversation revolved around whether the academic programs in question involves students who are or are not dependent on federal financial aid. They also discussed the reality that lines were increasingly blurring between providers that once operated exclusively on a revenue-sharing basis and those that charged colleges explicitly for each service they performed.

“They seemed to recognize that OPM is a less and less useful shorthand” for an increasingly complex and diverse market, Urdan said.

The GAO report is likely to be influential in upcoming regulatory changes on the OPM market, but as noted, this is not a black / white area with sharp lines. Well, the public noise too often takes a binary nature (gray is not the best fundraising color), but the reality of the market and the nature of effective regulations should not. But this upcoming report is not the only one coming from neutral sources on this growing and changing market.

New Report

Researchers from Penn State University’s College of Education have released a pre-print version of a report examining the OPM market that can and should augment the GAO report and help those looking at regulatory changes and better oversight. The report should also serve as a description of the market and its key drivers for other researchers to reference. Academia should be more involved in OPM market research, and here is an excellent baseline.

The report “Examing the OPM: Form, Function & Policy Implications” was written by John Cheslock, Kevin Kinser, Sarah Zipf, and Eunjong Ra, with support provided by Arnold Ventures. I should clarify that I had some indirect involvement with this report based on the researchers’ reading of my OPM coverage in blog posts as well as with an interview and follow up questions to verify the accuracy of any references to my work. I appreciate the opportunity I had to be interviewed by the Penn Sate researchers (just as with the GAO researchers).

The report starts with a brief section on “Defining OPM,” which is no easy task.

Our first challenge in understanding the OPMuniverse is to bring clarity to what “OPM” actually means, starting with the term itself. Past discussions have been complicated by the use of multiple definitions for this acronym. For example, OPM sometimes stands for Online Program Management and sometimes represents Online Program Manager. These two versions direct attention in very different ways. When ‘M’ stands for “Management,” attention centers on a portion of the work that must be completed to develop and sustain an online program. When ‘M’ stands for “Manager,” the focus shifts to the entity that is completing this work. The Management of online programs could be fulfilled by multiple Managers. An external online program manager could complete the management work on behalf of a higher education institution, or the institution could complete that work internally. When an external manager completes the work, attention could be directed to a third item: an OPM agreement between the higher education institution and the external manager.

This report examines all three of these items: management, managers, and OPM agreements.

The next section is “Colleges and Universities: Why They Do (or Do Not) Partner with OPM Firms,” and it includes a framework for understanding OPM services in terms of key activities organized by student enrollment lifecyle as well as program revenue and expenses. This section naturally dives into the tuition revenue sharing model and fee-for-service models and how they can be modeled.

Given the rise of nonprofit conversions, including the creation of the University of Arizona Global Campus, the authors provide a model showing revenue flows for the old and new systems, which they describe as a branding and partial governance (B&PG) partnership. That is an accurate yet pithy term that I should adopt.

The branding component of the partnership meant that PUG and UAGC are associated with two prominent public research universities. For both PUG and UAGC, all or a share of the board of directors are appointed by the leadership of the associated public research universities,11 and this provides a meaningful connection to the branding association. The governance connection is limited, however, because the board of directors is only one component of governance within higher education. Governance decisions at the level of academic programs within the online institution are not similarly shaped by the academic programs of Purdue University and the University of Arizona. The academic programs contain the academic expertise that is central to the value of the brands, so the limitations in governance are substantive.

The following section is “OPM Firms: Who Are They?” which draws heavily from the work here at PhilOnEdTech.

The report then moves to “Policy Perspectives,” which notes some risk.

The policy implications in this report do not include specific recommendations for policy changes. Instead, we highlight the interconnected components of what regulators and policymakers might consider when regulating this area of higher education. Any changes to the regulatory landscape targeting online programs of higher education could reverberate through all forms of outsourcing. Paying attention to unintended consequences of such regulations is of particular importance. Caution and consideration for “why regulate” is at the foreground of the issue.

Additional Material

After the Conclusion, the report includes Appendices such as “More Detailed Lists of the Tasks of Online Education Production.”

This report is dense and meant to be a resource, not a quick read. Kudos to the authors for producing this report, and I hope this effort along with the GAO research can lead to some improvements in the oversight of the OPM market.