Reposting: My $71.5 million estimate for dropout costs

Based on recent legislative interest in raising the dropout age, I'm re-posting my reasoning from last year about the possible costs, with slight modifications to make it easy to read in 2011. The dollar figures are still based on 2009-10 spending data.

Raising Kentucky's dropout age from 16 to 18 by 2014 would require more than $71.5 million in added resources.

The dollars would well spent, yielding an important return both to the students and the state in future economic strength.

Nevertheless, the money won't grow on trees. The costs of keeping those students in school must either be added to state P-12 funding or subtracted from services districts provide to other students.

For number lovers, here come the details.

STEP 1: ADDED ENROLLMENT
The most recent statewide dropout figures show:

• 6,297 dropouts in 2006-07.
• 6,729 dropouts in 2007-08.

Students who were 16 or over in 2006-07 would be 18 two years later, so I assumed that half of those students would drop out. As a result, I assumed that under House Bill 301, Kentucky schools would have:

• 9,878 additional students enrolled.

STEP 2: ATTENDANCE ADJUSTMENT
Kentucky funds schools based on average daily attendance, not enrollment. For 2007-08, the statewide attendance rate was 94.12 percent. Applying that to enrollment, I estimated that Kentucky schools would have:

• 9,302 students in average daily attendance.

STEP 3: PER PUPIL FUNDING
Under the 2009-10 SEEK formula, schools are guaranteed an average of:

• $3,866 per pupil in base funding.
• $5,285 once the add-ons for special needs and transportation are added to the base.
• $6,078 once Tier I additional funding is added to base and add-ons.

Those figures include both state and local funding.
STEP 4: BENEFITS FUNDING
For 2009-10, Kentucky provides state funding of:

• $362.7 million for retirement benefits for certified staff in schools and districts.
• $577.7 million for health benefits for all staff in schools and districts.
• $940.4 million total for benefits.
• $1,606 for benefits per pupil in average daily attendance.
• $7,684 per pupil adding benefits to the earlier $6,078.

STEP 5: ESTIMATED NEEDED FUNDING
My total estimate is:

• 9,302 students in average daily attendance, multiplied by...
• $7,684 in per pupil funding, to get...
• $71,474,246 in needed additional funding.

FACILITIES
That estimate leaves out a major facilities issue: serving 9,878 more students would require 318 additional classrooms even at the high school maximum of 31 students per class.


TIER II UNEQUALIZED LOCAL FUNDING
The estimate includes the local contribution to the SEEK base and the local revenue needed to qualify for Tier I equalization. Most districts now raise additional revenue--called Tier II--that does not qualify for state equalization, but I do not have a good estimate of that revenue at my fingertips.


UNTRACKED DROPOUTS
That estimate uses only official reported dropouts. Based on comparing eighth grade student counts to graduates four years later, roughly 3,000 students a year seem to disappear without officially dropping out. My estimate assumed that those students would continue to be "lost or stolen or strayed."