Texas’ 2007 dropouts will cost taxpayers $377 million every year

New study finds even a modest school choice program would reduce costs

AUSTIN - The 2007 class of high school dropouts in Texas will cost state taxpayers $377 million this year and every year after, over the course of their lifetime, according to a new study released by the National Center for Policy Analysis (NCPA), Hispanic Council for Reform and Educational Options and the Milton and Rose D. Friedman Foundation. In addition, the study finds that a modest school choice program would reduce public school dropout rates and save taxpayers up to $53 million a year in costs associated with dropouts.

"This research brings into sharp focus the disastrous results of not embracing bold steps to reform our public education system," said Dr. Rod Paige, former U.S. Secretary of Education. "No society can long prosper under the weight of so many children lost."

Conducted by Friedman Foundation Senior Fellow Brian Gottlob, "The High Cost of Failing to Reform Public Education in Texas"finds that each of the state's estimated 119,000 annual dropouts costs the state about $3,168 every year for the rest of their lives because of increased Medicaid costs, increased incarceration costs, and loss of tax revenue. The study concludes that the state spends about as much every year on dropouts after they leave school as it does in state aid to schools when they are in school. The study can be downloaded at http://www.friedmanfoundation.org/txfiscal.pdf.

"High school dropouts are not simply a short-term problem for the Texas education system," said NCPA Distinguished Fellow Robert McTeer, former chancellor of the Texas A&M University System and former president of the Federal Reserve Bank of Dallas. "Today's dropouts often become an extremely costly long-term problem for all Texas taxpayers."

The study finds that Texas school districts facing more private school competition have lower public school dropout rates. A modest school choice program, which would increase private school enrollment by just five percent, would reduce the public school dropout rate by 8,700 - 17,400 students per year. This would save between $27 and $53 million annually over the expected life of the students.

Rebeca Huffman, President and CEO, Hispanic Council for Reform and Educational Options (Hispanic CREO) said that "in a school choice environment the drop out rate is cut in half, which means returning $365 billion to Texas public education and keeping 60,000 students in school each year"She also stated that "when parents have a choice and use that choice to send their children to better schools, research shows those children succeed academically. School choice empowers parents to break the cycle of educational underachievement in their families and steer their children toward success."

Other key findings include:

  • Over an expected lifetime of 50 years, one year's class of dropouts will cost Texas taxpayers $19 billion.
  • The costs of dropouts are concentrated in Texas' large urban districts. Houston and Dallas dropouts cost $29 million and $26 million respectively.
  • The unemployment rate for Texas high school dropouts is 7.4 percent compared to 5.5 percent for high school graduates.
  • Texas dropouts earn $24 billion less per year than high school graduates.
  • Lower earnings of dropouts cost the state $2 billion in lost tax revenue each year.
  • Dropouts cost Texas taxpayers additional Medicaid costs of $321 million and additional incarceration costs of $12 million per year.
  • A modest school choice program in Texas would reduce the public school dropout rate by 8,700 - 17,400 students per year. This would save between $27 and $53 million annually over the expected life of the students.

"Not only does dropping out cost those students their futures and dreams, but it is an extreme burden on all taxpayers," said Robert Enlow, executive director of the Friedman Foundation. "Whether you live in a big city or a small town, every Texas taxpayer pays a hefty price for an education system that is not working for all its students."

The NCPA is an internationally known nonprofit, nonpartisan research institute with offices in Dallas and Washington, D. C. that advocates private solutions to public policy problems.

Hispanic CREO's mission is to improve educational outcomes for Hispanic children by empowering families through parental choice in education. We achieve this by providing parents with free information and resources, which help them become self-advocates for their children. CREO is a non-profit, non-partisan organization. "CREO is Spanish for ‘I believe.'"

Based in Indianapolis and dubbed "the nation's leading voucher advocates" by The Wall Street Journal, the Milton & Rose D. Friedman Foundation was started by Nobel laureate Dr. Milton Friedman and Dr. Rose D. Friedman in 1996 as a non-profit organization dedicated to educating the public about the role competition plays in achieving real K-12 education reform.