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The Costs of High School Failure and School Suspensions for the State of California

Authors: Clive R. Belfield
Date Published: October 01, 2014

In this report, we first calculate the economic losses to the state of California that result from students’ failure to complete their high school education, and then relate these losses to current school policies on suspension.
Related Documents
Note:  The report The High Cost Of Harsh Discipline And Its Disparate Impact was based on this commission in addition to The Economic Burden of High School Dropouts and School Suspensions in Florida.


Graduating from high school has become a prerequisite for individual economic prosperity. A wealth of social science research has established positive links between education and income, health, and personal well-being, and, further, that these links are not coincidental but causal (Fernandes-Alcantara, 2012; Oreopoulos and Salvanes, 2011). Investing in education is an important mechanism by which young people—particularly those who come from disadvantaged backgrounds—can create a better future for themselves.

These private gains from college also generate public benefits. Individuals with more education pay more in taxes and are less reliant on government health and welfare programs; they are also less likely to be involved in criminal activities (Belfield and Levin, 2007a). Education yields a fiscal benefit to the taxpayer and a social benefit to local residents, thus failing to complete high school has long-term and pervasive economic consequences.

Although the benefits of education should provide strong motivation for individuals to stay in school and enroll in college, many students fail to complete high school (Rumberger, 2011). Annually, between one-fifth and one-quarter of each age group leaves school without having met the standards for high school graduation. Male, minority, and low-income students have even higher failure rates. Moreover, students who drop out typically forgo college, and if they do enroll they have a low probability of completing their degree program (Knapp et al., 2011).

Students fail to complete high school for many reasons (Rumberger, 2004), including financial pressures, family responsibilities, poor health, and limited English proficiency. Some school policies also hinder students’ ability to complete high school, suspension practices in particular (Losen and Gillespie, 2012). If suspension practices were improved, it is likely that more students would finish high school.

In this report we present an empirical study of the link between the economic burden of dropping out of high school and the effects of suspension practices across California. (For a companion study on Florida, see Belfield, 2014; for a discussion of California’s demographic patterns and economic standing relative to the rest of the U.S., see Brady et al., 2005). We apply a lifecycle economic model to estimate the fiscal and social consequences that result when California students fail to graduate from high school. We then link these consequences to suspension policies across the state in order to calculate their economic burden. These calculations enable us to estimate the cost to the state of California of ineffective school suspension policies.

Our analysis is structured as follows. First, we describe educational attainment in California and the pattern of public spending across the state. Next, we briefly explain our economic model and key parameter values. We then determine the economic value of education in terms of higher incomes, amount of taxes paid, lower government spending, and other outcomes. With a consistent accounting framework, these economic values can be added up to estimate the burden of high school failure from the perspective of an 18- year-old student. We use these values to estimate the economic burden of ineffective school suspension policies. Finally, we discuss the policy implications of our analysis.


In compliance with the UC Open Access Policy, this report has been made available on eScholarship:

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