Gevirtz Study Examines Fiscal Impact of Dropouts on State

Until now, the issue of high school dropout rates had never been assigned an economic value. Last week, the California Dropout Research Project (CDRP)-an arm of the Linguistic Minority Research Institute (LMRI) at UCSB’s Gevirtz School of Education-released the findings of a study on the fiscal impact high school dropouts have upon the state of California. Authored by institute director Russell Rumberger, “The Return on Investment for Improving California’s High School Graduation Rate” posits that California loses $46.4 billion annually for every group of dropouts-usually about 120,000 people-that reaches age 20 without receiving high school diplomas. This impact can be seen in lost tax revenues, as well as increased medical care, welfare, and incarceration costs.

Henry Levin and Clive Belfield-professors of economics at Columbia University and Queens College in New York, respectively-had released a national study in January that identified five cost-effective dropout intervention programs that they said would save more money in the long run than allowing students to drop out of school. This study-along with a total of $850,000 in funding from a variety of philanthropic foundations-spurred the creation of the CDRP.

“The programs in the national study were proven to be cost-effective, but there are a larger range of programs California could invest in,” Rumberger said. “To put a big dent in this problem, we’re going to have to invest in a lot of programs.” The measures recommended in Levin and Belfield’s study were: two preschool programs emphasizing small class size and parent involvement, small learning communities led by dedicated teachers, reducing class size in the first four years of school (K-3) from 25 to 15, and increasing salaries by 10 percent for K-12 teachers. The statistics reported by the national survey indicate a 5-19 percent reduction in dropout rates for each program implemented.

The five intervention programs cost $37,810-$131,000 per graduate, but offered $392,000 in economic benefit for every graduate-a minimum three-dollar return on every dollar invested. Furthermore, the study found that high school graduates earn $290,000 more over a lifetime and pay $100,000 more in taxes. Dropouts, meanwhile, are 68 percent more likely to be on welfare, and two-thirds use food stamps.

A benefit of this economic analysis, said Rumberger, is that it satisfies the demands of both conservative and liberal state legislators. “Conservatives typically don’t want to spend a lot on programs, but this shows that it’s cost-effective to invest in the future by spending money now.” Liberal legislators, he said, would favor intervention programs.

In the Santa Barbara School District, 75 students were reported as dropouts for the 2005-06 school year-the most recent for which records are currently available. By the terms of Rumberger’s study, that equates to roughly $29 million in lost state revenue. According to Assistant Superintendent of Secondary Schools Paul Turnbull, the district already has three intervention programs aimed at reducing dropout rates. The pupil retention program aims to improve the math and English skills of first-year high school students. La Cuesta continuation programs-attached to all Santa Barbara-area high schools-focus on excessively absent students who need to recover credits to graduate. Finally, SBSD has a partnership with Santa Barbara City College for students who, according to Turnbull, don’t fit into the academic programs offered by the three high schools. These programs are funded by block grants from the state.

At 4.3 percent, the dropout rate in Santa Barbara is lower than the rate in the county (8.4 percent) and the state (14.5 percent). “For the most part, we’ve held pretty steady,” Turnbull said of the Santa Barbara dropout rate. “There’s a real push for every single student to go to college, and a pretty good indication that we should augment our vocational and technical programs.”

CDRP is scheduled to release a series of additional reports throughout the next six months in a continued effort to effect policy change in the educational arena. Visit the Web site at lmri.ucsb.edu.