The Societal Benefits and Costs of School Dropout Recovery

This article reports an analysis of the societal benefits and costs of recovering school dropouts. Successful recovery is defined by subsequent graduation from high school. The analysis is based on established estimates of the societal costs of dropping out including reduced government tax collections and higher social costs of welfare, healthcare, and crime. These potential costs are cast as benefits when a dropout is recovered. A large dropout recovery program provides the setting for the analysis. Rigorous attention is given to accurate estimation of the number of students who would not have graduated without the program in the year assessed and to the induced public costs of their continued education. Estimated benefits are weighed against the total annual public costs of the program, which operates in 65 school centers and commands an annual budget of about $70 million. The estimated benefit-cost ratio for this program is 3 to 1, a figure comparable to benefit-cost ratio estimates reported in studies of dropout prevention. The sensitivity of this conclusion to specific assumptions within the analysis is discussed. 1. Overview This paper reports an analysis of the benefits and costs of recovering school dropouts. Dropout recovery refers to efforts that encourage adolescents who have left school without a diploma to re-engage in formal education and graduate from high school. This analysis focuses on societal benefits and costs. Individual benefits of completing high school include additional lifetime personal income, reduced reliance on various public services, and reduced costly behaviors such as crime. Society in turn stands to benefit from added tax revenues and decreased expenditures for public services. The analysis assesses a specific program engaging a dropout recovery model based on supervised independent study. This program operates nine public charter schools in the United States that enrolled a total of more than 10,000 full-time equivalent students in 2006-2007. Based on annual numbers of actual graduates, the benefit-cost ratio of dropout recovery through this program is estimated to be 3 to 1. In other words, one dollar invested in this program should return $3.00 in societal benefits. Our analysis tests the sensitivity of our estimates to key assumptions and projections underlying the calculations. We estimate that the program’s benefit cost ratio lies between 2.7 and 3.4. 2. Sizing Up the Problem By any indication, dropping out of school is a significant problem in American schools, one that has not responded significantly to public