NCPA - National Center for Policy Analysis


February 12, 2007

In Texas, only 67 percent of students graduate from high school and some large urban districts have graduation rates of 50 percent or less.  As a result, the state spends more on dropouts each year after they leave school than it spent when they were in school, according to a study jointly released by the Milton and Rose D. Friedman Foundation, National Center for Policy Analysis and the Hispanic Council for Reform and Education Options.


The annual public cost associated with just one year's class of dropouts is $377 million or about $3,168 per dropout, compared to the state portion of about $3,004 per pupil in school. 

  • Dropouts increase Texas's state Medicaid costs by $321 million each year.
  • Texas dropouts are twice as likely to be incarcerated; each class of dropouts costs an extra $12 million in incarceration costs every year.
  • Over an expected lifetime of 50 years, one year's class of dropouts will cost Texas taxpayers $19 billion.

But there is a way to stem these costs, and help more students graduate, says Brian J. Gottlob, senior fellow at the Milton and Rose D. Friedman Foundation and author of the study.  School choice improves graduation rates and produces millions in public savings:

  • School districts with more students in private schools have higher public school graduation rates; all Texas children would benefit from increased competition from private schools.
  • Even a modest school choice program, one that increased private school enrollment by fewer than 5 percentage points, would reduce the number of Texas public school dropouts by 8,720 to 17,440 per year.
  • That reduction would save Texans between $27 million and $53 million in tax revenue, Medicaid costs and incarceration costs every year.
  • The total savings from preventing these students from dropping out, over an expected lifetime of 50 years, would be between $1.4 billion and $2.8 billion.

Source: Brian J. Gottlob, "The High Cost of Failing to Reform Public Education in Texas," Milton and Rose D. Friedman Foundation, February 2007.


Browse more articles on Education Issues