Chapter Three
THE COSTS OF TECHNOLOGY-RICH SCHOOLS
Chapter Two provided descriptions both of what is and what could be. The shape
of the future use of technology to facilitate learning depends upon the
decisions that are made by schools, school systems, states, teachers, and
families. In turn, their decisions will largely be based on their perceptions
concerning the importance and value of that technology. In this chapter, we
want to explore the costs of acquiring learning environments that utilize
significant levels of computing, telecommunications, and video.
We begin with a brief effort to estimate current expenditures for education and
then go on to look at the costs of the technology that was used by the group of
schools that were described in Chapter Two. We use those data to make rough
estimates of the continuing costs associated with decisions to equip schools
and school faculties with equipment and capabilities similar to those in the
schools we examined. Naturally, this implies a significant increase in
technology-related expenditures over what is currently spent.
Much of the current impetus to bring more technology into schools is not
motivated by a desire to improve the learning of students in academic areas.
Instead it is motivated by the sense that information and computational
technology has become so ubiquitous in our lives that schools must develop the
basic skills in students so that they can function in further schooling and
work. Moving to the levels of technology in the five schools described in the
preceding chapter accomplishes this goal but adds much more. Increasing the
level of technology enables fundamental changes in pedagogy, in the information
that students can use, and in the manner in which they use their time. These
changes result in significant improvements in their learning.
We can make a rough estimate of the current average per-student cost for school
technology, including computer and communications hardware and software, and
related expenditures for training and personnel. In 1994-95, the fall
enrollment was 44.2 million. The current expenditure per enrolled pupil was
about $5,600, and total current expenditures were about $249 billion.
[1]
Estimates from QED and others suggest that public school systems purchased
approximately a million new personal computers (PCs) in 1994-95. Pricing a
computer at $1,500 on average, expenditures for hardware would be $1.5 billion.
On the basis of information from the Software Publishers Association and
attendees at RAND's software workshops, expenditures for software were on the
order of $750 million. A major market survey estimated that expenditures for
training were about half those for software.[2] These costs then total about $2.6 billion.
Costs of networking, additional personnel, and other costs might add another
$400 to $600 million to provide a crude estimate of $3 to $3.2 billion.
If these costs are roughly correct, they imply a per-student expenditure for
technology of about $70, or somewhat less than 1.3 percent of current public
expenditures for elementary and secondary education, or 1.1 percent of total
expenditures including capital.[3]
Technology has and will continue to change rapidly. Those changes have lowered
costs for a given level of capability but have often spurred the development of
software that requires greater capabilities. Wireless networking technology
promises to reduce the costs of networks where building renovations are
substantial or where a site is geographically isolated. The power requirements
of many new computers have been reduced. Moreover, the manner in which such
technology will be introduced and used will vary greatly from school to school
and district to district. Thus future costs of educational technology are
necessarily uncertain.
As a consequence, for this study, we have sought to develop only a broad
estimate of the order of magnitude of the costs of introducing technology into
a school. In essence, we have examined the costs of the equipment and
associated training in a small number of schools that were nominated by experts
as examples of schools that were effectively using technology. We have used
these costs, together with estimates of student populations, to provide the
reader a sense of the magnitude of costs for more intensive use of
technology.[4]
The data collection that we undertook is described in another RAND report.[5] The approach was straightforward. We asked
experts to suggest schools that they thought made effective use of technology.
The schools were chosen to be representative of a spectrum of student
populations and grade levels. Many of them were described in the previous
chapter.
Table 3.1 shows the major technology cost components for the schools we
examined. The cost figures shown are normally not the actual historical costs
but rather a cost estimate based on the amortized cost of the current
installation, valued at today's prices. More specifically, the following rules
and assumptions were used:
- The current equipment inventory was used.
- Current prices were used for all computer hardware.
- The cost of hardware and software products was amortized over five years.
- The cost of infrastructure, such as special furniture and cabling, was
amortized over ten years.
- The cost of any initial teacher preparation was amortized over five years.
- The cost of new personnel and materials and supplies was treated as an annual
expense.
Table 3.1
Comparative Cost Figures for Eight Schools
______________________________________________________________________________________________________________________________________
Corona E.Bakersfield Elizabeth St. Taylorsville Blackstock ALL School Northbrook CC
______________________________________________________________________________________________________________________________________
Total annual cost $169,863 $299,835 $331,542 $227,942 $381,340 $233,018 $348,450 $151,940
Annual cost per student $142 $182 $184 $371 $410 $432 $453 $490
Student total 1,200 1,650 1,800 615 930 540 770 310
Ratio, 11:1 8:1 9:1 4:1 2:1 4:1 2:1 3:1
Student: computer units
Hardware subtotal $50,343 $133,400 $140,341 $110,619 $213,650 $100,258 $232,600 $57,790
Software subtotal $16,600 $11,620 $24,700 $23,633 $38,760 $15,300 $14,200 $15,800
Infrastructure $8,040 $14,905 $19,001 $5,000 $22,930 $6,900 $24,750 $8,300
Staff Dev. $24,880 $24,840 $26,500 $15,690 $85,000 $13,760 $19,400 $11,050
Personnel $62,000 $105,000 $100,000 $69,000 $12,500 $92,000 $42,500 $50,000
Materials $8,000 $10,000 $21,000 $4,000 $8,500 $4,800 $15,000 $9,000
Percentages
Hardware subtotal 29.64 44.51 42.33 48.53 56.03 43.03 66.75 38.03
Software subtotal 9.77 3.88 7.45 10.37 10.16 6.57 4.08 10.40
Infrastructure 4.73 4.97 5.73 2.19 6.01 2.96 7.10 5.46
Staff Dev. 14.65 8.28 7.99 6.88 22.29 5.91 5.57 7.27
Personnel 36.50 35.02 30.16 30.27 3.28 39.48 12.20 32.91
Materials 4.71 3.34 6.33 1.75 2.23 2.06 4.30 5.92
Per Student
Hardware subtotal $41.95 $80.89 $77.97 $179.87 $229.73 $185.66 $302.08 $186.42
Software subtotal $13.83 $7.04 $13.72 $38.43 $41.68 $ 28.33 $18.44 $50.97
Infrastructure $6.70 $9.03 $10.56 $8.13 $24.66 $ 12.78 $32.14 $26.77
Staff Dev. $20.73 $15.05 $14.72 $ 25.51 $91.40 $ 25.48 $25.19 $35.65
Personnel $51.67 $63.64 $55.56 $112.20 $13.44 $170.37 $55.19 $161.29
Materials $6.67 $6.06 $11.67 $ 6.50 $ 9.14 $ 8.89 $19.48 $29.03
______________________________________________________________________________________________________________________________________
NOTE: Costs annualized according to rules explained on in the text.
Our aim was to examine factors affecting total cost; to relate cost with
purpose, when possible; to consider how cost might affect financing; and to use
these data to prepare some projections for the cost of a nation of
technology-enabled schools.
These annualized cost figures do not provide a good picture of the level
of front-end investment required to implement a technology strategy. We
believe that technology costs should come to be viewed by schools as a
recurring expense, because technology is central to a school's operations. Our
treatment of costs in annualized terms is consistent with this vision.
However, if we assume that schools start with virtually no equipment and phase
the equipment and training in over a three-year period, the costs might be
approximately 70 percent greater in each of those first three years. Putting
this more concretely, for schools near the high end of costs in Table 3.1 with
annualized costs of $450 per student, the front end costs for a 1,000-student
school might be $2.3 million spread over three years. This would include the
training of teachers and administrators.
Not all these costs need be met by additional funds. For example, training
costs might be supported by existing funds for staff development or by the
staffs' own investments in their professional development. There are also
resources for additional staff built into these costs; these might be met by
redefining the functions of some of the existing staff members. Finally, some
schools will already possess some of the equipment and/or infrastructure. Thus
the costs of implementing the designs represented by the various schools we
examined will differ in alternative settings.
The data presented in Table 3.1 cannot be considered representative in any
statistical sense. Nonetheless, they provide some interesting insights into
distribution of costs in schools that have made heavy investments in technology
and that have integrated the technology into their education programs. The
following is particularly noteworthy:
- The range of costs per student is wide; from around $180 to $450 per student
(ignoring the lowest and highest outlying cost figures). Assuming a national
average current expenditure of $5,600 per student, this range represents about
3 to 7 percent of the current expenditures for educating a student, compared
with our estimate of existing expenditures of 1.3 percent of current
expenditures.
- The primary factor affecting total annualized student cost is equipment,
especially computer hardware density, i.e., the student-to-computer ratio.
Except at the low end of per-pupil cost, where certain fixed costs play an
important role, total cost is decisively affected by this factor. Table 3.2
and Figure 3.1 summarize the relationship of annualized per-student cost to
student-to-computer ratio in this sample of eight schools.
Table 3.2
Technology-Related Costs in Selected Schools
(annualized costs per
student)
______________________________________________________________
Cost Per Students
School Student Per
Computer
______________________________________________________________
Corona (Los Angeles, CA) $142 11:1
E. Bakersfield, (Bakersfield,CA) $182 8:1
Elizabeth St. (Los Angeles, CA) $184 9:1
Taylorsville (Taylorsville, IN) $371 4:1
Blackstock (Port Hueneme, CA) $410 2:1
ALL School (Worcester, MA) $432 4:1
Northbrook (Houston, TX) $453 2:1
Christopher Columbus (Union City, NJ) $490 3:1
______________________________________________________________
SOURCE: Keltner and Ross, 1996.
Figure 3.1--Relation of Annualized Cost Per Student to Computer Density
- Other computer hardware products associated with intra-school networks
(LANs) add to the total hardware cost; for schools favoring them, such as E.
Bakersfield, Elizabeth St., and the ALL School, audio/video equipment could add
substantially to total annualized cost.
- A second major factor affecting total cost is personnel. All of these
schools found it necessary to have continuing staff who were clearly devoted to
supporting technology operations. In some cases, individuals were newly hired
to provide specific technical services associated with the technology
implementation. In others, teachers became a combination of technical expert
and a source of assistance to other teachers who were seeking better ways to
integrate technology with their program.[6]
- Staff development ranged from $15 to $35 per student with most schools
spending on the order of $25. One exceptional school, Blackstock, spent over
$90 per student, but this represented the
unusual way in which the school chose to introduce technology. At
Blackstock, a number of lead teachers were provided a year off from their
classroom duties to develop new programs utilizing technology so that the term
"staff development" really understates the nature of the teacher's experience
in this case.[7]
- The per-student cost of software is low, between 4 and 10 percent of the
total, and much lower than the cost of software for typical enterprise
computing, where it can reach parity with hardware cost.
When the costs are tallied in the manner they are in Tables 3.1 and 3.2, they
are significant. If all schools in the United States were to spend an
increment of $450 per student, near the top of the estimated annualized costs
of the schools we examined, the total would be about $20 billion, or 8 percent
of the estimated total current expenditure per student.[8] If, instead, we adopt a cost per student
more nearly in line with the lower end of our sample of schools--perhaps $180
per student (see Figure 3.1)--the annualized cost is $8 billion, or 3.2 percent
of current expenditures. As we noted in the last section, these expenditures
compare with an estimated $3.1 billion, or 1.2 percent of current expenditures
that was devoted to technology in the 1994-95 school year. These calculations
are summarized in Table 3.3.
Table 3.3
Annualized Expenditures for Educational Technology in Public
K-12
Schools for Several Levels of Investment
_____________________________________________________________________
Annual Expenditures
Technology for Education Percentage of
Expenditures Technology Current K-12
_____________________________________________________________________
Current $70 3.1 1.2
Moderate $180 8.0 3.2
High $450 19.9 8.0
_____________________________________________________________________
NOTE: For public K-12 schools with 1994-95 fall enrollment of 44.2
million students and total expenditures of $6,300 per student.
These are national averages. State-level data show that in 1991-92,
when average current per-pupil expenditures were $5,594, the state level
averages ranged from a low of $3,180 (Utah) to a high of $9,415 (New Jersey).[9] Within-state variations are also quite wide
so that, as measured by current per-pupil expenditures, states and districts
vary substantially in the resources that they can draw upon. Since most of the
prices for equipment and software are set in national markets, we might expect
that the density of computers would be correlated to this expenditure level.
However, decisions to fund educational technology are not necessarily well
correlated with an indicator of "ability to pay," such as
overall educational expenditures are. Figure 3.2 shows the situation for the
three states with the highest overall ratios of students to computers and the
three with the lowest ratios. While the number of computers per student differs
by about a factor of two between these two groups of states, the expenditures
per student on education are more nearly the same. Clearly, decisions that
technology is important to education can lead states (and their constituent
districts) to allocate increased proportions of their resources to
technology.[10]
SOURCES: Computer density from QED, 1994; expenditures from NCES, 1995b.
Figure 3.2--Expenditures Per Student for States with
Lowest and Highest
Computer Densities
The costs of providing technology-rich learning environments in the nation's
schools are not inconsequential. Based on the experience of the schools we
have examined, the costs range from $10 to $20 billion, depending on the
richness of the environment assumed. These costs range from three to six times
what is currently being spent for technology. However, when viewed in the
context of the total public elementary and secondary school enterprise, the
costs seem more modest, ranging from 3.2 to 8 percent of the current
expenditures for the 1994-95 school year. Nonetheless, financing such costs
will require either a willingness of the nation's taxpayers to increase the
levels of spending for elementary and secondary education or for its school
systems to undertake a significant and difficult reallocation of the resources
they currently spend.
In the next chapter, we discuss this financing problem and then deal with two
other challenges that face the nation as it deepens the level of technology in
schools--the professional development of teachers and the shortage of content
software.
[1]These figures are taken from
National Center for Education Statistics (NCES), 1995c, Table 34; and NCES,
1995b. They are estimates for the school year ending in 1995. Total
expenditures (including capital) were actually $280 billion or about $6,336 per
enrolled student.
[2]This is based on a 1993 survey by Market Data Retrieval,
Inc., that is reported in OTA, 1995, p. 136.
[3]In a recent report based on interviews with a sample of
technology coordinators in school districts, QED estimated that the
expenditures were about $3.6 billion for school year 1994-95. See New York
Times, 1995. One problem with comparing national estimates of costs is
that the definitions that are used are not necessarily consistent. Some
probably include administrative as well as instructional applications. (The
distinction between the two is not always clear.) Expenditures for teacher
training may be understated as well since some of these are incurred by the
teachers themselves and some are components of other staff development efforts.
Therefore, it is best to treat these as rough estimates of magnitude.
[4]Several efforts are under way to develop a clearer
understanding of the costs of introducing technology into schools. The most
extensive appears to be that by McKinsey & Company done for the National
Information Infrastructure Advisory Committee. As this was being written, the
report had not been formally submitted. The McKinsey effort envisions several
models of school use of technology and costs the introduction of such
technology into schools over 5 and 10 year periods, as well as costing
operating and maintaining the equipment once it is in place. While the report
is currently confidential, the drafts we have examined suggest national cost
estimates that are similar to those that we discuss in this section.
[5]Keltner and Ross, 1996. Note that three additional
schools were surveyed by Keltner and Ross. The Corona school in Los Angeles is
a technology magnet funded, in part, with a California State Technology Grant.
Elizabeth Street School is a K-12 school in Los Angeles that is a part of the
New American Schools Development Corporation. The ALL School in Worcester,
Massachusetts, is also a NASDC school, and the design is under the direction of
Bolt, Beranek, and Newman. These three schools were not explicitly included in
our workshop because they did not yet seem to have had enough experience.
[6]As noted in the text, the salaries of these personnel did
not necessarily constitute an incremental cost to the school. In some cases,
existing personnel were assigned new duties and in at least one case, teachers
agreed to a slightly higher class load so that the school could hire a
technology specialist to help them.
[7]It is important to note that Keltner and Ross assumed that
teachers involved with staff development would be compensated for their
time--either through time when relieved from classroom duties (with a
substitute being hired) or through a stipend for additional time. This
assumption is made no matter what arrangements were made by the actual school
and was done to increase comparability of the estimates.
[8]Four hundred fifty dollars per student times 44.2 million
students in 1994-95. Current expenditures per student in 1994-95 are estimated
at $5,623 while total expenditures per student are estimated at $6,336.
Expenditure data are from NCES, 1995b, Table 163. Enrollment data are from the
NCES, 1995c, Table 2, Chapter 2.
[9]NCES, 1995b, Table 164.
[10]The fact that the three states with low ratios of
students to computers are substantially rural is almost certainly an important
determinant here. It is quite likely that distance learning plays a more
important role in these three states than in the other three. Remember also
that in the previous chapter we cited evidence that computer densities tend to
be higher in small schools, which are probably more prevalent in rural states.
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