VACostCutting

Friday, January 30, 2009

High costs

Okay, so our name is VA Cost Cutting, and yes, normally we talk about cost-savings measures (or at least measures to increase transparency and accountability). But today, we want to mix things up a bit, and talk about some things that cost Commonwealth (and Virginia taxpayers) lots of money.

Namely, what is the cost of high school dropouts?

Educational attainment has become a hot topic for many reasons, but one thing that is often overlooked is the fiscal impact of students not completing high school.

The researchers at the Friedman Foundation have looked into this impact in several states. And, to be true to our cost-cutting theme, they also look at how much state's could save by implementing school choice and increasing their graduation rates!
We examine how Maryland’s decreasing graduation rates are materially affecting the state’s finances through reduced tax revenues, increased Medicaid costs and higher incarceration rates. This study examines how increased competition from private schools could raise public school graduation rates and save Maryland taxpayers millions of dollars each year.

It finds that each dropout costs the state $4,437 per year in lost tax revenue and increased Medicaid and incarceration costs, every year for the rest of his or her life. Each year’s class of dropouts costs the state $169 million every year. A modest school choice program, increasing private school enrollment by 4 percentage points, would improve public school graduation rates, reducing dropouts by up to 5,483 students per year, saving North Carolinians up to $24 million in tax revenue, Medicaid costs and incarceration costs every year.

It finds that each dropout costs the state $3,228 per year in lost tax revenue and increased Medicaid and incarceration costs, every year for the rest of his or her life. Each year’s class of dropouts costs the state $98 million every year. A modest school choice program, increasing private school enrollment by 6 percentage points, would improve public school graduation rates, reducing dropouts by up to 1,549 to 3,137 students per year, saving South Carolinians between $5 million and $10 million in tax revenue, Medicaid costs and incarceration costs every year.

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