States to Respond to New Graduation Rate Reporting Guidelines

Getting a handle on the nation's graduation rate has been difficult because states use different criteria to measure the percentage of students leaving high school with a diploma. However, starting this year, new federal guidelines will require states to use a unified definition and to set graduation rate targets.

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If history is any indication, on the day that Linda Cooper of Lexington, Ky., dropped out of school in the seventh grade, she was one of approximately 7,000 students in the nation to leave school without a diploma. That’s more than 1 million students dropping out of school each year.1 In Cooper’s case, she never learned to read and write proficiently, which made it impossible for her to succeed in school.

Even today, as an adult, her eyes well with tears when she speaks candidly about having to pay neighbors to read letters that come in the mail because she is not able to read them herself. Over the years, her decision to leave school has resulted in her having to take a variety of low-wage jobs available to people without a high school diploma, such as washing dishes in a local restaurant. “I’ve had to quit several good jobs because I can’t read,” she said.

Dropouts often face insurmountable challenges in the real world of work. Once they leave school, their options for improving on their situations are limited. Getting a true read on the number of people in Cooper’s dilemma may sound relatively simple. But, in fact, state and federal policymakers face their own challenges in accurately measuring the nation’s dropout rate because states have used different formulas for defining whether students graduated from high school. This patchwork of state policies for calculating graduation rates is about to give way to a new, unified definition with reporting guidelines for students who drop out of school without a diploma.

Former West Virginia Gov. Bob Wise, who now serves as president of the Alliance for Excellent Education, explained the new federal reporting requirements during an Alliance webinar in September 2010. “In one state, students could leave high school 29 different ways, including transfer, administrative withdrawal, expulsion, enrolling in a GED program, pledging to enroll in a GED program, and even incarceration and they still were not counted as dropouts,” he said.

Misleading graduation rates
In 2002, the U.S. Department of Education estimated 85 percent of all students graduated from high school. That figure was initially confirmed in separate studies by the U.S. Census Bureau and National Center for Educational Statistics. Upon further review, however, independent research found the reported graduation rate estimate was inflated.

Several independent studies by experts such as Chris Swanson, formerly of the Urban Institute, Jay Greene of the Manhattan Institute, and Russ Rumberger of the University of California at Santa Barbara, placed the rate of students who graduate with a traditional diploma in four years or less at around 70 percent. The rate for disadvantaged minority students was reportedly close to 50 percent.2

In June 2010, Swanson reported in Education Week that the national graduation rate was 68.8 percent for the class of 2007, the most recent year for which data are available. He stated it represented a decline of nearly half a percentage point from the previous year.2 However, the accuracy of Education Week’s estimate was questioned by the Economic Policy Institute, which released a statement that Education Week’s study didn’t fully take into account students who repeated grades and therefore overstated the high school dropout rate by as much as 9 percent.3

There are several reasons why the initial graduation estimate was inflated, according to Wise. For one thing, both the National Center for Education Statistics and Census Bureau studies counted students who had dropped out but later earned General Equivalency Diploma, commonly called GED, in their graduation rates. They also estimated high school completion by using dropout data, which is considered by many experts to be an unreliable means to determine a graduation rate.

For example, some states only counted as dropouts those students who took time to go to a school district’s central office to fill out paperwork declaring their intent to drop out of school. Students who simply stopped attending school but didn’t complete paperwork to withdraw were not counted as dropouts, according to Wise.4

“As a result, this calculation artificially inflated the number of high school graduates while decreasing the number of high school dropouts,” Wise explained.

Wise noted the average gap between statereported graduation rates and the rates reported in independent studies was 13 percentage points. New Mexico, for instance, reported 89 percent of its students graduated from high school while independent research concluded the rate was actually 57 percent—a difference of 32 percentage points. North Carolina’s self-reported graduation rate also exceeded independent studies by more than 30 percentage points, according to Wise.

In a report for the Manhattan Institute for Policy Research, Greene writes, “Because school systems and their officials are under strong pressure not to have high dropout rates, they have incentives to assume that students moved out of town or fell into some other category that exempted them from being called dropouts.”5

Although Wise encourages dropouts to get a GED, which enables them to continue with postsecondary education, he also notes, “We also have to be frank with one another that a GED is not the same earning potential as a high school diploma. The best thing we can do for our students is to make sure that they get that diploma.”

Consequences of Dropping Out
A 2006 study concluded on average, a woman without a high school diploma earned an average of only 65 percent as much as a woman with a high school diploma. Men without a diploma earned an average of 70 percent of men with a diploma.6

Cecelia Rouse, a professor of economics and public affairs at Princeton University, said in a report that relative to high school graduates, dropouts have higher unemployment rates and work fewer weeks each year. Because of less favorable employment outcomes, the Alliance for Excellent Education concluded the total income of high school dropouts in this country is approximately $328 billion less over their lifetimes than the amount they would earn if they had graduated from high school.7 (See chart for a state-by-state-breakdown.)

Failing to complete high school not only has an impact on the individual, but also on society in general, according to Rouse. She estimates dropouts pay only about 42 percent of the amount that high school graduates pay in federal and state taxes each year.

Over a lifetime, Rouse estimates the combined cost to federal and state governments from high school dropouts amounts to approximately $36 billion.8

Furthermore, studies conclude that high school dropouts are more likely to use public health insurance and are overrepresented in U.S. prisons. The Bureau of Justice Statistics reports that more than two-thirds of the nation’s state prison inmates are dropouts. Students who drop out of high school may also be less effective at parenting and may be less likely to vote.4

New rules for reporting graduation rates

Although the federal No Child Left Behind Act of 2001—called NCLB for short—places a heavy emphasis on states reporting test scores, Wise points out that it has not placed the same emphasis on graduation rates in determining whether schools are making adequate yearly progress.

Two events have taken place in recent years to serve as a catalyst for a more accurate reporting model for high school graduation. In 2005, the governors of 45 states signed a compact agreeing on a common calculation for a state’s high school graduation rate.9 The new graduation rate is based on the number of students who graduate with a regular diploma in four years or less, divided by the number of first-time ninth graders minus students who have transferred or died.

The second event occurred in October 2008, when then-U.S. Education Secretary Margaret Spellings issued new regulations that created a uniform definition for graduation rates that is consistent with the definition agreed upon by the National Governors Association. This uniform definition excludes students who drop out but later receive a GED. Starting at the end of the 2010-11 school year, all states will be required to report their graduation rates using this common standard. Other stipulations with which states are required to comply include:

  • Disaggregating graduation data by subgroups, such as race, ethnicity, disability and limited English learner proficiency;
  • Requiring all states to set realistic graduation goals and yearly targets; and
  • Making graduation rates a component of schools’ and school districts’ adequate yearly progress, beginning in the 2011-12 school year.

In addition to requiring every state to report the four-year graduation rate to the federal government, the federal regulations allow states to calculate and report one or more extended year rates. For example, a state has the option to calculate and report a fiveyear and six-year graduation rate using the same formula as the four-year graduation rate.

Without longitudinal data tracking systems in the past, school districts could not effectively monitor students who transferred from one school to another or one school district to another. Therefore, the first step in developing accurate systems to track students to determine if they graduate on time is to create longitudinal data tracking systems. The federal government has awarded states more than $500 million in grants since 2005 to develop these tracking systems that are intended to provide a more accurate picture of high school graduation rates—and in some cases track students through postsecondary education and careers.

“This isn’t just a data keeping exercise,” Wise said. “We need to know how well our children are doing so we can improve performance. … Today, 60 percent of our work force requires postsecondary education. … We need to become the graduation nation. We need to make sure that high school is the starting point, not the ending one, that it’s the launch pad. But to do that, we need to graduate our children.”

The graduation goals and yearly targets are accessible at the following Alliance for Excellent Education website.


1 Alliance for Excellent Education. “High School Dropouts in America.” 2009.
2 Swanson, Christopher. “U.S. Graduation Rate Continues Decline.” Education Week. June 2, 2010.
3 Mishel, Lawrence, et al. “News from EPI: Accuracy of Education Week’s report on U.S. high school graduation rate questioned.” June 16, 2010.
4 Alliance for Excellent Education Webinar on High School Graduation Rates. September 9, 2010.
5 Greene, Jay P. “High School Graduation Rates in the United States.” Manhattan Institute for Policy Research. 2002.
6 Tyler, John H. and Magnus Lofstrom, “Finishing High School: Alternative Pathways and Dropout Prevention.” The Future of Children. 2009.
7 Alliance for Excellent Education, “The High Cost of High School Dropouts: What the Nation Pays for Inadequate High Schools.” 2007.
8 Rouse, C.E. “Labor market consequences of an inadequate education.” Paper prepared for the symposium on the Social Costs of Inadequate Education, Teachers College Columbia University, 2005.
9 The National Governors Association. “Governors Sign Compact on High School Graduation Rate at Annual Meeting.” July 2005.

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