California Dropouts Contributing to Economic Bust

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California’s 3.8 million high school dropouts cost state taxpayers more than $1 billion in Medicaid payments and another almost $1 billion in lost tax revenue due to the lack of a quality education, according to a new study released today by the Foundation for Educational Choice.

California’s 3.8 million high school dropouts cost state taxpayers more than $1 billion in Medicaid payments and another almost $1 billion in lost tax revenue due to the lack of a quality education, according to a new study released today by the Foundation for Educational Choice.

The study also found that California’s high school dropouts earn $14,226 less a year than those who graduate high school, totaling about $412,000 over each of their lifetimes.

“We all know that a dropout pays a high personal and financial price for not earning a diploma, but so do all California taxpayers,” said Robert Enlow, President and CEO of the Foundation for Educational Choice. “In times like these, California can’t afford to keep subsidizing a broken educational system. It hurts every taxpayer’s bottom line, not just the student who drops out.”

The report entitled “California’s High School Dropouts: Examining the Fiscal Consequence” was written by David A. Stuit, a Michigan-based education researcher and Jeffrey A. Springer, a researcher at Vanderbilt University. It documents that dropouts, who usually find lower-paying jobs due to a lack of a diploma, cost California about $958 million in lost state tax revenue annually.

“Of all the states in the Union, California is surely the one that could use an extra billion in its state coffers right now,” Enlow said. “Unfortunately, these astronomical public costs are the consequences of enabling a failing system. To break this cycle and ensure that all students graduate and get a good job, we must offer families more educational choice.”

Stuit and Springer write in their new report that, “The economic and social consequences of the dropout crisis are profound.” They add that “high school dropouts place a substantial fiscal burden on local, state and national economies. This fiscal burden arises from lost tax revenue because of drop outs lower incomes, and elevated expenses arising from crime, welfare and poor health.”

Dropouts have higher rates of incarceration, addiction and receive government assistance. Almost half are enrolled in Medicaid, according to the new study.

The authors found that by permanently cutting the dropout rate in half would result in $1.4 billion in economic benefits to the state of California annually. “That’s real money that the Governor and state Legislature desperately need to balance the budget right now,” Enlow added.

To see a table of some of the largest California Unified School Districts and their dropout rates as reported by the state and then by other independent measures, see Table A-1 or link here http://www.EdChoice.org/CA-local-grad-rates.

About The Foundation for Educational Choice

The Foundation for Educational Choice is a 501(c)(3) nonprofit and nonpartisan organization, solely dedicated to advancing Milton and Rose Friedman’s vision of school choice for all children. First established as the Milton and Rose D. Friedman Foundation in 1996, the foundation continues to promote school choice as the most effective and equitable way to improve the quality of K-12 education in America. The foundation is dedicated to research, education, and promotion of the vital issues and implications related to choice and competition in K-12 education.

Please visit our website to read the full study at http://www.EdChoice.org/CA-dropout.

Funding provided by The Koret Foundation

Based in the San Francisco, guided by an entrepreneurial spirit and rooted in the Jewish Community; Koret adds to the region’s vitality by promoting educational opportunity, contributing to a diverse cultural landscape, and supporting organizations that bolster economic stability and free market expansion.

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