CORRECTION

A story on Page 1B Thursday incorrectly characterized state Rep. Paul Stam of Apex as a supporter of taxpayer-funded vouchers to help students pay the costs of attending private schools. Stam said he supports offering tax credits to parents as an incentive for them to send students to private schools.

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High school dropouts are costing North Carolina taxpayers millions of dollars each year, according to a new report, but there's sharp disagreement on what is the best way to solve the problem.

The report released Wednesday by the Milton & Rose D. Friedman Foundation says a single year's group of dropouts costs the state's taxpayers $169 million annually in lost sales tax revenue and higher Medicaid and prison costs. It's the first time a specific dollar figure has been given for the cost of dropouts in this state.

"In additional to the personal consequences it has on dropouts, this has a very real cost for taxpayers," said Darrell Allison, president of Parents for Educational Freedom in North Carolina. The group instigated the report as part of its efforts to get public money vouchers for students to attend private schools.

The report's recommended solution of using taxpayer-funded vouchers to help students pay for private schools has drawn a sharp dividing line between supporters and critics of public schools.

Legislators and state public education officials are paying more attention to the dropout problem since numbers released this year showed more than 30 percent of high school students aren't graduating. Authors of the Friedman Foundation report estimate this translated into more than 38,000 dropouts in 2005.

According to the latest figures from the state, 69.5 percent of students who entered high school in 2003 graduated by this year.

Those numbers were the result of mandates by federal education officials that forced school districts across the country to change the way they measure graduation rates. Schools now have to tally how many students enter ninth grade and how many graduate four years later.

Using a less demanding measuring stick, previous state numbers had the graduation rate at more than 90 percent.

'In a crisis'

"We're in a crisis now with the dropout problem," said state Rep, Earline Parmon, a Winston-Salem Democrat and supporter of public education who attended Wednesday's news conference. "We can't continue to do the same things and get the same results."

Two new committees formed by the General Assembly are focusing on the dropout problem. Legislators created a 15-member committee of business and education leaders to determine which school districts and groups will receive $7 million in dropout prevention grants.

Another group, the Joint Legislative Commission on Dropout Prevention and High School Graduation, will evaluate the grant recipients to see whether expanding their efforts will help reduce the dropout rate.

"We're not going to solve the problem on the cheap," said state Sen. Vernon Malone, a Raleigh Democrat who is a co-chairman of the joint legislative committee. "It's going to require considerable resources to get it done."

But there is a better way, say members of Parents for Educational Freedom in North Carolina and the Friedman Foundation, named after economists who had the idea of using vouchers to send students to private schools.

They say giving parents vouchers so their children can attend private schools could reduce the dropout rate in public schools. They say even a modest gain in private school enrollment could save the state as much as $24 million a year.

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