Legislators looking to save money think virtual schools should cost a fraction of the price, but for the next five years they’ll be mostly textbooks online with similar teaching ratios to traditional schools; there are fewer facilities and transportation costs but big platform and content investments to be recuperated.  That amounts to 10-15% less than traditional schools not 50-60% savings the folks in South Carolina and Georgia were hoping.  A few operators bite on these cut-rate deals—they’ll lose $1000 per student but hope to make it up in volume (with some effective lobbying).

The fiscal crisis is putting pressure on state virtual schools, many of which are line item funded (providing generous double funding for kids in traditional schools taking an online course or two).  Some state virtual schools are plagued by success and the double funding isn’t scalable or sustainable.  The inevitable switch to ‘money follows kids to the best options possible’ will be difficult for state virtual schools and school districts.

Increasing competition for online enrollment and tight funding has resulted in some tension between private operators and state virtual schools.  In many states, they are both marketing to districts—the world is going blended and, in most cases, districts are the gatekeepers to student enrollment.

States and districts are broke—they are cost, not quality, buyers. There’s limited incentive for online operators to invest in second-generation content.  Some providers are beginning to sell their courses and platform services in lieu of textbooks—displacement at scale will provide some incentive for investment.

Fortunately, online providers aren’t the only ones building digital curriculum.  An explosion of open content, freemium learning games, proprietary learning systems, and consumer products are building engaging and often personalized content.  The catch is, how does all this new stuff fit together into a coherent offering?

For a few more years, schools will choose between flat and sequential online courses (and computer-based instruction) with a web 1.0 learning management systems and second generation content—games, simulations, virtual environments—that spit out tons of irreconcilable data.  For folks that want interesting and engaging blended school models, it will take the work of a blended service provider to integrate components into a coherent model.  When you add the challenges of launching a new school or turning around a struggling school to the task of systems integration, you have the rationale for City Prep, a company I formed in 2008 to support the transition to more productive school models.

The next horizon is student motivation.  Our standard school model assumes that students arrive prepared, motivated and compliant.  Unfortunately, that’s not the case for about two thirds of US students.  We’re bound to get a lot smarter about this in the next five years as we draw upon lessons from areas that produce persistent behaviors and skills development—sports, casual gaming, and social networking.  And if public and private investors support focused programs of research, the neuropsychology of learning should unlock tremendous promise for building and queuing motivational learning experiences.

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