Hold Schools Accountable for Cost of Finished Graduate

Published October 1, 2002

U.S. taxpayers paid on average $108,730 to produce each 1998 high school graduate. But among the country’s 50 largest districts, Cleveland’s graduates cost almost $300,000, whereas Utah’s similar-sized Jordan School District produced graduates for one-fifth of Cleveland’s cost.

The cost per finished graduate is as important a measure of a school system’s productivity as the annual academic progress reports called for in President George W. Bush’s education reforms.

According to the U.S. Department of Education, the annual per-pupil cost of K-12 public education was $6,189 for the 1997-98 school year, with state-level expenditures ranging from a low of $3,969 in Utah to a high of $9,643 in New Jersey. Because the purpose of these expenditures is to produce a high school graduate over a 13-year period, one measure of the cost of a K-12 education is $6,189 multiplied by 13, or $80,460 per pupil.

But Jay P. Greene of the Manhattan Institute recently calculated that only 74 percent of the class of 1998 actually graduated, ranging from a low of 59 percent in Tennessee to a high of 93 percent in Iowa. Graduation rates in the nation’s 50 largest districts ranged from 28 percent in Cleveland to 87 percent in Fairfax County, Virginia.

Because the expenditure of $80,460 per pupil produced graduates only 74 percent of the time, the cost per finished U.S. high school graduate is $80,460 divided by 74 percent, or $108,730. Using this calculation provides a cost index to how productively each school, district, or state is using tax dollars.

This index varies significantly across jurisdictions. For example, it costs more to produce a high school graduate in the District of Columbia ($181,851) than in any of the 50 states. The three states with the highest costs per graduate are New Jersey ($156,701), New York ($155,507), and Alaska ($153,599). The three states with the lowest cost per graduate are Utah ($67,003), North Dakota ($75,542), and South Dakota ($77,818). The Dakotas are also efficient in another way: Their students typically score in the highest range on national examinations.

Of the 50 largest school districts, Utah’s Jordan School District produces each finished graduate for only $59,199, just over half the U.S. average. Cleveland has the highest cost per finished graduate in the country ($297,282), almost three times the U.S. average. Joining Cleveland are Milwaukee, Wisconsin ($243,886), and Columbus, Ohio ($197,080).

In these least efficient cities, lawmakers have recently tried vouchers (or scholarships) with which students are able to attend private schools. Studies by Caroline M. Hoxby and Paul E. Peterson, both of Harvard University and the Hoover Institution, show the benefits: lower costs, greater parental satisfaction, and increased achievement not only of scholarship students but of students who remain in public schools.

“Overall, an evaluation of Milwaukee suggests that public schools have a strong, positive productivity response to competition from vouchers,” says Hoxby. “The schools that faced the most potential competition from vouchers had the best productivity response.”

If we want more, better-educated high school graduates and more value for tax dollars, the solution is obvious: Unleash competition.

Herbert J. Walberg is chairman of the board of directors of The Heartland Institute. He is a distinguished visiting fellow at the Hoover Institution and member of its Koret Task Force on K-12 Education. This material was first published as a Hoover Institute Weekly Essay on June 10, 2002 and copyright of the Trustees of Leland Stanford Jr. University.