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ROI: ‘There is no downside to education,’ says state’s economist

There is no doubt that public education is expensive, taking on average 58% of the budget for the State of Mississippi. But what is less well recognized is the cost to the state and its residents for a high school dropout rate of 40% and low percentages of Mississippians who achieve degrees in higher education.

State economist Dr. Phil Pepper spoke at the Mississippi Economic Outlook Conference in late October on the topic of the positive return on investment for education of the state’s citizens. There is a definite cost to the state from having one of the lowest educational achievement rates in the country.

“We have a less-educated population,” Pepper said. “What you see when you look at salaries is that folks with the least education start out with the lowest salary, but also have the smallest growth in salaries over time. As times goes by, there is less and less demand for people with little education, and more and more demand for people with more education. It makes it harder for Mississippi to move up in the per capita income rankings when the rest of the country has residents with more education and the more educated you are, the faster the income rises.”

In studies done following the state’s 40,000 first graders in 1988, the number of students enrolled in school started dropping off in the ninth grade. Only 23,415 made it all the way through high school.

Not only does that mean that about 40% of youths don’t have the kind of educational achievements that could help them get a good paying job, it also means they are less likely to have a job at all.

“The less educated you are, the less likely you are to be in the workforce,” Pepper said. “Unemployment averages 12.16% for people lacking high school degrees. For people with a bachelor’s degree from college, the unemployment rate is only 2.9%. With almost any indicator you look at, the more education for a population, the better off they are and the better off the state is. All of this is arguing for more education.”

The state loses also because citizens lacking a high school diploma are more likely to be incarcerated, and are more likely to need Medicaid to take care of their healthcare needs. The low educational achievement also means on average citizens pay less taxes. A high school drop off over a lifetime pays the state an average $59,000 in taxes compared to someone with a college degree who pays an average $177,000 in taxes.

“You get about three times as much return from the state with baccalaureate degree,” Pepper said.

When it comes to the return on investment, the state gets $1.20 back for every $1 spent to educate a high school graduate. For every $1 spent on a college graduate, the state gets $2.13 back. Pepper thinks it is important to educate policy makers about the big return on investment in education.

It isn’t just the state that losses, but the individual. Over a working life of 45 years, a high school dropout will earn on average $763,000 compared to $1.6 million for a college graduate. That is twice as much earned income over a lifetime.

Clearly, there is a huge personal and societal cost to having a 40% high school dropout rate. But what should be done about it?

Pepper said State Superintendent of Education Hank Bounds is on the right track and is taking comprehensive steps to reduce the dropout rate. One prong of the effort is to encourage kids to stay in school by making school more relevant to the workforce.

One of the goals of the program promoted by Bounds, Redesigning Education for the 21st Century Workforce in Mississippi, is to reduce Mississippi’s dropout rate by providing students with alternative school hours and the option of completing vocational and academic courses online. The plan also calls for utilizing a rigorous academic and vocational curriculum, a personalized learning environment and more options of study, including dual college credit.

“We need to get our people into college, provide a quality education, and graduate them,” Pepper said. “To get more college grads, we need more high school grads. It goes all the way back to pre K. How do you get kids prepared for school? If you start looking, at that age those kids’ future capacity is being determined. There are some arguments to be made for pre K education. It is important to generate the largest percentage of kids possible to graduate out of high school, and get them to go on to two-year and four-year college. Long term it helps the state and the individuals.There is no downside to education. The state has a vested interest.”

There are also efforts to improve school counseling in terms of raising expectations and aspirations. It is important to get students to appreciate education and what it can do for them. Pepper said failure to get a good education isn’t just a problem for the individual who drops out of school, but costs the state money.

“Long term high school dropouts are a cost to the state,” Pepper said. “The more we can change expectations and aspirations so they stay in school, the more good it is going to do for the state as a whole. Fewer teen pregnancies, healthier people, lower smoking rates, all of these things associated with better education.”

Gov. Haley Barbour has proposed an overall 7% increase in funding for public education in fiscal year 2008. The governor’s education budget proposes a $65 million increase for the Mississippi Adequate Education Program along the lines of a phase-in funding plan passed by the Legislature in the 2006 legislative session. Other elements of the governor’s plan include a 3% teacher pay raise, full funding for high growth school districts, doubling funding for classroom supplies, support for early childhood education, daily physical activity and the funding requested by Bounds to redesign high schools.

“Education is the number one economic development issue and the number one quality of life issue in our state,” Barbour said. “It is rightly the number one priority of state government.”

Contact MBJ contributing writer Becky Gillette at bgillette@bellsouth.net.

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