UMass Online Does Something With Someone

Last week we saw a classic announcement-without-details from UMass Online (UMOL), the centralized online education unit of the UMass system, and Brandman University, the working-adult school created by Chapman University. As described in the Boston Globe:

The announcement – in press releases or media coverage – did not describe the form of the partnership nor the financial terms. Just partner as the basis of the news.

This news has been in the making for over a year, after the March 4, 2019 announcement from the University of Massachusetts that they planned “the creation of a new online college focused solely on adult learners”. That announcement coincided with a Request for Information (RFI) by UMass Online seeking Online Program Management (OPM) services to help establish this new college. RFIs typically collect enough information for the issuing organization to release a Request for Proposal (RFP) with sufficient details to allow an evaluation of the best proposal. In this case, there was no RFP, just silence for a year. Well, public silence at least, as the announcements imply plenty of back-room discussions.

So what is the form of this new partnership? Given the importance of this move for online education in general and for the OPM market, it is probably worth some research and effort to fill in the blanks.

Background

Last March in System President Marty Meehan’s State of the University, he set up the need for a new online college based on the “looming demographic crisis” best described by Nathan Grawe.

This argument is very similar to the one made by former California Governor Jerry Brown to create Calbright College, the fully-online community college created with $100m of initial funds and a $20m annual budget.

According to the RFI released two weeks prior to the State of the University speech:

Subsequently, per the Boston Globe:

There never was an RFP, nor was there any public discussion with the UMass Board of Trustees on this new venture. If the board discussed the results of the RFI or the deal with Brandman, they did not include it in any meeting agenda or minutes.

The RFI itself was a fairly standard description of OPM services – market research, marketing, recruiting and enrollment management, technology platform, student support, course and curriculum design, and interestingly “curriculum licensing”. This last element was further described in an RFI Q&A document:

In another answer:

Thus we have the setup for the new UMOL-managed college to be independent from the system universities, generate $300m in revenue within five years, targeting working adults. They were looking to outsource OPM services as well as some or much of the actual curriculum.

As for Brandman University, they were looking for change, as noted in Chapman University’s announcement.

Financials

Per the Boston Globe, there is not any agreement yet, despite the talks over the past year.

Even without financial details, UMOL is convinced there is no financial risk involved. Per MassLive:

Kilburn has been around this business for years and was CEO at Pearson Learning Solutions when Pearson acquired Embanet, the OPM provider, in 2012. He knows you don’t get something for nothing, and I assume this statement implies that the financial deal will be some form of tuition revenue-sharing, where an OPM vendor typically funds the up-front cost of the program and makes its profit years later.

If UMOL meets its objectives stated in the RFI, this deal would probably be worth more than $150m in OPM fees, per year, just based on typical revenue sharing arrangements.

It is interesting, however, that UMOL selected Brandman as its partner, without figuring out the financial details first. That approach doesn’t make for much of a competitive analysis nor solid topic for discussions with the board of trustees.

Why Announce A Pre-Deal?

This leads to the question of why make this announcement now? Why not wait until you have an actual deal in hand? I suspect the answer comes from this June 10th announcement: [emphasis added]

UMOL made this agreement with Mass General Brigham and needed to have something to back up their plans on the degree completion pathway. Note that degrees require accreditation, and UMOL is not accredited. To act fast and deliver degrees, guess what – you need a pre-existing institution and not just an OPM.

Does UMOL have to acquire Brandman for this to work? Technically, no, as they could simply send students to Brandman. But this would go against the basis of the whole initiative. Going back to the March announcement by Marty Meehan:

Shuffling students to out-of-state Brandman instead of something within the University of Massachusetts is what UMOL wanted to avoid.

What is more likely (or more justifiable) would be a Purdue Global style deal, which was created from Purdue University’s acquisition of Kaplan University for $1, turning Kaplan Higher Education into an OPM provider. I covered the recent financials showing that Purdue Global lost $43m in its first full year of operations, showing the difficultly to backup claims of no financial risk.

Brandman University and Calbright College Connection

The focus on competency-based education (CBE) in the Mass General Brigham announcement also helps explain the Brandman side of this partnership. That university created its first CBE program in partnership with Flat World, as I described in e-Literate in early 2015. Flat World became Sage Learning, which in turn became Strut Learning, which is the courseware provider for Calbright College and its CBE-driven working adult focus. I described the hot mess of Calbright College course design in this recent post. You can see the same platform design from this 2016 Brandman CBE presentation, although it looks like Brandman is more sophisticated than Calbright in the course design.

California chose to defer accreditation and degrees, and thus is using Strut Learning as a contractor without any acquisition of a school for accreditation purposes. Kudos to my state for at least acknowledging the costs upfront and not buying out-of-state students, unlike Purdue and potentially UMass.

Note that Brandman University already offers a CBE-based Bachelor’s of Business Administration, which is the core of the Mass General Brigham plans.

What UMOL has in Brandman is an accredited school ready to change ownership willingly, with pre-existing CBE platform and even curriculum for the initial program ready for licensing (albeit with updates and modifications, I assume). And Brandman is growing at a healthy rate for fully online students – faster than any UMass campus, with more than 11,000 pre-existing students (per IPEDS for the most recent 2018 data).

Terribly Extended Press Release Rewrite

This, I believe, is what the UMass Online / Brandman University partnership probably means. A state-demanded rapid online education growth initiative independent of the system universities, leveraging OPM services and likely a school acquisition, to deliver CBE curriculum for working adults, with a workforce alliance deal forcing an early announcement before details are finalized.

Obviously there is guesswork involved here, and I will update and correct when and if new information emerges.

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