Cutting Montana's Dropout Rate in Half Projected to Boost State Economy $32 Million Per Year

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Montana's 37,000 high school dropouts cost state taxpayers nearly $23 million in Medicaid payments and about $216 million in lost taxable earnings annually, according to a new study released today by the Foundation for Educational Choice and the Montana Family Foundation.

Montana's 37,000 high school dropouts – more than three times as large as the entire class of 2008 – cost state taxpayers nearly $23 million in Medicaid payments and about $216 million in lost taxable earnings annually, according to a new study released today by the Foundation for Educational Choice and the Montana Family Foundation.

The study also illustrates that Montana’s dropout and graduation rates are stuck in neutral. Rates have not improved since the 2002-03 school year.

"We all know that a dropout pays a high personal and financial price for not earning a diploma, but a dropout also makes a direct hit on Montana taxpayers," said Robert Enlow, President and CEO of the Foundation for Educational Choice. "When the costs attributed to dropouts rise to the level that they offset the earnings of one of the state’s most valuable industries, it becomes painfully obvious that everyone in Montana is impacted. The ramifications hurt all taxpayers and the state’s quality of life, not just the student who drops out."

The report entitled "Montana’s High School Dropouts: Examining the Fiscal Consequences" was authored 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 Montana about $216 million in lost state taxable earnings.

Stuit and Springer find that, "The economic consequences of Montana’s dropouts are substantial. We estimate an annual loss of $216 million in reduced personal income and taxable earnings.” They continue, "Consider that the state’s total personal income generated by its Agriculture, Forestry, and Fishing industries in 2008 was $317 million. Even a small reduction in Montana’s high school dropout rate would demonstrably benefit the state’s economy.”

The study also highlights a nagging graduation gap between American Indians and their white peers in Montana. According to state records, only 63% of American Indian students in the 2008 class graduated school on time. This is an enduring problem impacting the state’s largest minority subgroup and is a critical concern for state policymakers. The authors also learned that high school dropouts earn nearly $7,000 less per year than those who graduate high school, accumulating to about $198,000 over the course of a lifetime.

“It’s clear that state lawmakers can no longer ignore Montana’s high dropout rate. The cost is just too high, both in terms of quality of life and in real dollars," said Jeff Laszloffy, President of the Montana Family Foundation. “It’s time for school choice. Montana is one of only 8 remaining states with no school choice of any kind. Lawmakers need to step up to the plate and implement what’s working in other states.”

Almost 30% of high school dropouts in Montana meet the federal definition of low-income, which is twice the rate of high school graduates, according to the study. Dropouts also have higher rates of incarceration, addiction and receive more government assistance.

The authors determine that cutting the dropout rate in half would result in over $32 million in annual economic benefits to the state of Montana.

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 outreach on 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/MT-dropout

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