Wednesday, March 4, 2009

Costs to raise the dropout age: $15 million, $29 million, or more?

House Bill 189 would require students to stay in school until age 17 during the 2010-11 school year and age 18 in 2011-12 and beyond. Several reports, including comments from Governor Beshear, suggest that costs make the bill unlikely to pass. So, what costs would those be?

$15 million is the minimum example of possible costs in the bill's fiscal note, based on just under 4,000 dropouts multiplied by this year's SEEK base guarantee.

$29 million is the minimum figure I'd offer, calculated this way.
  • Those 4,000 students would add 0.67 percent to average daily attendance.
  • $22 million is 0.67 percent of state SEEK funding plus the local 30¢ contribution. Adding students raises all SEEK costs, not just the base guarantee.
  • $7 million is 0.67 percent of retirement, health, extended school services, youth service centers, gifted education, school technology, professional development, and school safety, which should also go up to serve those added students.
Even $29 million will be low, because 4,000 students will fill 160 classrooms, and adding those classrooms will add some major construction costs.


  1. This note is just for true funding wonks.

    My estimation method has at least four blatant flaws:
    1. 4,000 more students won't add 4,000 to ADA.
    2. Would-be dropouts will be disproportionately at-risk students with disabilities.
    3. Local Tier 1 funding should have been in the SEEK total.
    4. Schools will need added teachers and some support staff, but schools and districts likely won't need added administrators, so health and retirement won't need to go up the full .67 percent.

    I decided to pretend that 1 and 2 cancel out and 3 and 4 cancel out. That allowed me to offer a rough number quickly.

  2. Susan,

    I don’t have time to go into great detail on this, but the total costs of this bill are going to be far higher than you estimate.

    Based on the latest Nonacademic Report from the KDE, a total of 6,175 students dropped out in the 2006-07 school year. As the bill eventually takes complete effect, virtually all of these would remain in school until age 18. We also know the official KDE dropout numbers are low by at least 30 percent thanks to an official audit in 2006. So, in round figures, we will probably add an extra 8,000 students to school enrollment once the age 18 provision kicks in. KDE reports attendance rates in the low to mid-90 percent range, so let’s call the ADA increase about 7,200 minimum (it will probably be higher, as the dropouts are under-reported by a lot more than 30 percent).

    The latest KDE Receipts and Expenditures report I have is for the 2005-06 school year. It shows total per-pupil expenditures were $8,487. I’m going to assume the federal government will fund on a pupil count just like we do with state money, so very crudely I would estimate the total cost for current expenses alone would be $8,487/pupil times 7,200 more pupils, or just over $61 million.

    Then as you correctly point out, we have to house these additional students. I found a construction estimate in the KDE Web site for additions to the Williamstown High School. Three standard classrooms will cost $516,176, and a science lab will cost $372,794. There are other construction items listed as well, but let’s just start with these. Assuming a standard high school classroom or science lab can accommodate 25 students, we can accommodate an additional 100 students at a cost of 888,970, or 8,889.70 per added student. Multiply that by the 7,200 more students we need to serve, and a bare bottom construction cost is going to be on the order of $64 million.

    So, a rough cost to get age 18 dropouts up and running is on the order of $125 million with continuing operating costs of well above $61 million (you have to heat, cool, and maintain all that extra square footage, too).

    Most of that cost will have to be borne by Kentucky taxpayers (even some of the federal part, though we do get back more than we contribute to Washington).

    All that said, if we could really turn these kids around and get them out the door with better educations, the savings in reduced prison support and increased income from higher tax revenues would probably more than offset the costs even without considering the much more important moral issues.

    However, I have not seen any research on diploma award rates in states that went to age 18. If these kids just spend two more years as mental dropouts, their physical location won’t matter much. There is no question that Kentucky has a serious dropout problem, more serious than the official numbers admit. But, I am not convinced that a simple age 18 dropout rule is going to help that.

  3. All-readers-other-than-Richard,

    This discussion is about to get very wonky and detailed. Join in or flee, depending in on whether you like this stuff.


    I appreciate your estimate on the construction costs.

    On the student count, I agree that schools are letting many other students slip away without being counted as dropouts, but I don't see any reason to think that will change with this law. So using the official dropout count was a conscious choice in my original estimate.

    On non-construction cost per student, we're roughly $1,100 apart. Adding $900 to my estimate a federal contribution would close that gap a lot.

    If anything, it puts us too close together, because I'm missing the local revenue above the minimum 30¢ tax rate--and my rough sense is that that should be more than $200 per student.

    One possible reason would be the handling of the dollars the state pays directly into health and retirement. In old reports, those "on behalf" payments weren't included in district funding. In new reports, I've heard both KDE and OEA express commitment to include them. 2005-06 is roughly when the change was happening, so your report could include or exclude. Can you tell how those payments are handled?


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