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What Dropouts Are Costing California

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Levin and Belfield team up for another cost-benefit analysis of the payoff to improving high school graduation rates

Each year, 120,000 Californians reach the age of 20 without a high school diploma. Over a lifetime, those dropouts will cost the state $46.4 billon, or 2.9 percent of the gross state product, according to a new analysis by TC Professor Henry Levin and Clive Belfield of Queens College, City University of New York.

The Levin-Belfield analysis also finds that effective intervention programs that boost high school graduation rates could save California   $392,000 per high school graduate. In addition, the authors calculate that high school graduates earn an average of $290,000 more during their lifetimes than dropouts and pay $100,000 more in taxes. State and local government loses $3.1 billion in tax revenue for each one-year cohort of dropouts.

The analysis was conducted for the California Dropout Research Project (CDRP), a privately supported research program at the University of California at Santa Barbara that is funded by the Bill & Melinda Gates Foundation, the James Irvine Foundation, the William and Flora Hewlett Foundation and the Walter S. Johnson Foundation.

“Until now, we knew very little about the economic costs of California’s dropout crisis,” said CDRP director Russell Rumberger in announcing the data. “These findings reveal severe economic consequences to the state and underscore the need for solutions to the dropout crisis.”

Levin and Belfield, working with colleagues from Princeton and Columbia, have performed similar analyses at the national level showing that U.S. taxpayers could reap $45 billion annually if the number of high school dropouts were cut in half. Together they co-direct the Center for Benefit-Cost Studies of Education, based at Teachers College.

The additional costs to the state and taxpayer identified by Levin and Belfield in California stem from the increased incidence of crime, use of food stamps and welfare, and health-related expenditures associated with failure to graduate from high school. The projected savings from effective interventions was based on five programs with proven success in boosting graduation rates, taking into account the costs of implementing those programs.

In January 2008, the CDRP Policy Committee will draft a state policy agenda aimed at improving California’s high school graduation rate.

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