San Francisco – The poor performance of California’s public schools costs Californians up to $14 billion in remedial education programs, rivaling the state’s current budget deficit of $17 billion. The High Price of Failure in California: How Inadequate Education Costs Schools, Students, and Society, released today by the Pacific Research Institute, calculates the annual direct and indirect costs for the entering freshmen class needing remedial education in public colleges and universities, both two- and four-year. The total estimated annual cost ranges from $3.9 to $13.9 billion annually, driven largely by lost earnings from lower educational attainment and its related social costs.

In 1996, the California State University trustees adopted a policy to reduce the need for remediation to no more than 10 percent of incoming freshmen by 2007. “Unfortunately, the results have not been encouraging,” said Vicki E. Murray, Ph.D., senior education fellow at PRI and author of the study. In 2007, only 44 percent of the incoming Cal State freshmen were proficient in both reading and math. In 2006, the most recent year for which complete data were available, at least 30 percent of University of California (UC) freshmen, 60 percent of Cal State, and up to 90 percent of California Community College needed remedial education – more than 655,000 students in all. Empirical evidence spanning two decades indicates that about 40 percent of those students, nearly 270,000 college freshmen, likely will not earn their degrees.

Since there is no way to predict how many community college students unlikely to earn a degree because they are in a remedial education plan to pursue four-year bachelor’s degrees, the study uses low and high projections and finds that the annual estimated cost of inadequate academic preparation includes:

• $274 million in direct remediation costs to California public postsecondary institutions.
• $107 to $447 million in direct remediation costs to California businesses.
• $1.1 to $5.5 billion in diminished annual earnings to college students, which corresponds with:
• $245 million to $1.27 billion in reduced annual federal spending on California.
• $194 million to $1.05 billion in reduced state and local tax receipts.
• $1.9 to $5.4 billion in increased health care, crime, and social welfare costs.

A bipartisan coalition of California lawmakers and education leaders headed by Governor Arnold Schwarzenegger vowed last year that 2008 would be the year of education reform. “With an enormous state budget deficit, the governor and other stakeholders now want to postpone much-needed improvements,” said Dr. Murray. “But California can no longer afford its ‘promote now, pay later’ approach to academic preparation. An ounce of prevention today can save pounds of remediation-related costs tomorrow.” Specific recommendations include:

1. Do not wait until the 11th grade to measure college readiness. Use the existing California Standards Test “advanced” performance marker to gauge students’ four-year college readiness trajectory throughout the education pipeline.
   
   
2. Replace confusing state and federal measures of growth toward K-12 proficiency with a single statistical forecasting model that can reliably track individual student, student subgroup, and schoolwide progress toward proficiency.
   
   
3. Add teeth to California’s existing ban on social promotion and bring accountability to postsecondary remedial education. Redirect current funding for disparate elementary, secondary, and postsecondary remedial all education and related prevention programs – as well as funding for redundant assessments and associated preparation services – toward “money-back guarantee” remediation grants for individual students.

“Such a system would replace ineffective programs and mandates with powerful incentives to improve basic skills and college-readiness rates. It would also promote a competitive, data-driven network of remedial education providers free to develop a variety of effective strategies that could be used statewide,” Dr. Murray said.

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About PRI
For 29 years, the Pacific Research Institute (PRI) has championed freedom, opportunity, and individual responsibility through free-market policy solutions. PRI is a non-profit, non-partisan organization. For more information please visit our web site at http://www.pacificreseach.org