Introduction. Findings in Summary

Table of Contents Introduction... 1 Findings in Summary... 1 Comparative K-12 Education Performance Statistics... 3 The Fiscal Implications of Nevada s Current Graduation Trends... 6 Return on Investment for Enhanced English Proficiency Programs... 14 Conclusion... 18 Appendix Exhibits... 19

Introduction Applied Analysis was retained by the Nevada State Education Association (NSEA) to review and analyze education-related performance statistics in the State of Nevada, to prepare a costbenefit analysis relative to high school graduation rates; and, more specifically, to estimate the potential return on investment for improved English-language proficiency programs. On June 21, 2012, Applied Analysis delivered a summary of our preliminary findings at the NSEA s English Mastery for Nevada s Prosperity forum held at the University of Nevada, Las Vegas (UNLV). This summary briefing report similarly provides an overview of our research and the salient findings of our review and analysis. Importantly, education-related statistics are vast, complex and notoriously inconsistent. This report is not intended to be comprehensive, addressing all facets of Nevada s education system or its performance compared to other states. Rather, this analysis highlights a number of key comparative statistics drawing heavily from generally accepted and widely cited state and national resources as well as the extensive body of research that has been prepared on the nexus between social conditions (e.g., poverty, crime, or homelessness) and K-12 educational attainment, both in and out of Nevada. We have intentionally attempted to be conservative in our assumptions, respecting that in reality we are drawing preliminary conclusions from imperfect comparisons and potentially incomplete data and that significant additional research would be required to fully assess the impacts of any policy initiative. These important limitations notwithstanding, we believe that meaningful conclusions can be drawn from this analysis and the data underlying it. Findings in Summary The primary findings of our review and analysis are as follows: 1. Comparative K-12 Education Performance Statistics. Nevada schools and school districts are remarkably diverse, including one of the nation s largest school districts and some of its smallest. Overall, schools in Nevada tend to be larger and more crowded than in comparable states. They are also more diverse. Nevada has some of the largest class sizes in the nation, limiting individualized attention and putting acute strain on teachers, administrators and support staff. Overall, student performance is arguably among the nation s worst. Nevada has the lowest rate of graduation in the United States, and the state s test scores on nationally standardized reading, math and science tests for elementary and secondary students uniformly rank in the bottom performance quartile. A comparably low number of students take college entrance exams, even fewer enter college without the need for remediation, and yet fewer graduate with a bachelor s degree. Respecting some notable bright spots, the overall system appears Page 1

stretched thin and student performance is suffering. 2. Fiscal Impacts of Nevada s Current Graduation Trends. There is an extensive body of research clearly evidencing that education is a pay-me-now or pay-me-later proposition. Poorly educated citizens earn less money over their lifetime, generating significantly less in terms of state and local tax payments. They also demand significantly more in terms of public services. Those without a high school education have a considerably higher incidence of joblessness, poverty, food insecurity and incarceration. They also tend to be uninsured, straining both public and private health care systems. These trends are not unique to Nevada, but they are particularly intense in the state due to an uneducated workforce and the nation s lowest rate of graduation. Each high school dropout is estimated to cost the state just over $60,000. While this may seem like a fairly modest number, when applied to the 9,925 students who failed to graduate last year, this figure increases to more than $600 million; and, when applied to the 129,800 Nevada K-12 students who would not be expected to graduate should current trends continue the cost to Nevada rises to $7.9 billion. 3. Return on Investment of Enhanced English-Proficiency Programs. At 20 percent, Nevada schools have among the highest share of English-language learners in the country. Although the majority are native Spanish speakers, there are as many as 145 different languages spoken by students in the Clark County School District alone. Spending a modest $100 to $125 per ELL student per year and having only a fraction of classroom teachers bilingual has proven an ineffective strategy in terms of getting these students fluent and ready to learn -- a condition consistently reported by teachers and administrators and clearly reflected by attainment and performance statistics for minority students in Nevada schools. This also raises legitimate concerns regarding equal education for all students. Obtaining fluency is a condition precedent to high school graduation; and, there is compelling evidence that bilingual students perform as well, if not better, than their English-only classmates. Assuming a five to seven-year period to obtain proficiency and a weighted per pupil instruction cost of 1.5 to 2.0, 1 the state s return on investment is preliminarily estimated at between $1.15 for every dollar invested to $2.03 for every dollar invested in English-language proficiency. 2 1 Weight is intended as a comparison factor to be applied to classroom instruction spending for an average student. 2 Note that this is a preliminary analysis. There are a number of factors, only some of which that are considered herein, that could materially impact the return on investment for the state of Nevada. Additional factors include, but are not necessarily limited to, the age at which students with limited English-language proficiency begin to participate in special programs designed to increased fluency, the effectiveness of such programs in improving student performance, the impacts of various type of graduation, the share of students ultimately going to college and receiving degrees or other special technical training, and the local economic conditions. Figures citied herein should be considered preliminary, order-of-magnitude estimates. Page 2

Comparative K-12 Education Performance Statistics Applied Analysis reviewed the K-12 education learning environment and educational attainment statistics for the State of Nevada. These statistics are summarized below. In nearly every major category, Nevada s education-related human and capital assets are asked to do more with less. Demands on human resources and physical infrastructure are made greater by higher-than-average special needs student populations. As a result, Nevada s students rank low in terms performance and achievement at all levels. Total enrollment in Nevada schools is estimated at 437,057, 3 suggesting that roughly 16.1 percent of the state s population was enrolled in a K-12 school during 2011. 4 Nevada school districts include one of the largest school districts in the nation and some of the smallest school districts in the nation. With approximately 310,000 students, the Clark County School District ranks as the 5 th largest district in the United States; 5 by contrast, the Esmeralda County School District has only 66 students in total. 6 Nevada has a total of 22,100 licensed teachers who work in approximately 630 schools. 7 At 19.41 students per teacher, Nevada ranks 5 th in the nation in terms of average class size. 8 With 674.4 students per school, Nevada ranks second behind only Georgia in terms of the number of children attending each school. 9 Nevada s student population reflects both diversity and a large at-risk population. The state reports a minority majority among its student population, with students classified as white accounting for only 38.7 percent of all pupils. 10 More than 1 in 10 Nevada students require an individualized education program (IEP), more than 1 in 7 have limited English-language proficiency (LEP/ELL), 40 percent have low enough incomes to qualify for free or reduced lunch programs, and more than half of all students attend Title I schools (low-income schools qualifying for additional federal funding). 11 Nevada s 15.8 percent of students who have limited English-language proficiency ranks second only to California where more than 1 in every 4 students has limited English-language 3 Nevada Department of Education, Nevada Annual Report of Accountability. 4 Calculation by Applied Analysis based on population estimates reported by the Nevada State Demographer. See, http://nvdemography.org/wp-content/uploads/2012/03/popul-of-nevadas-counties-and-incorp-cities-2011-centified-series- 031112.pdf. 5 U.S. Department of Education, National Center for Education Statistics, Common Core of Data (CCD), "Public Elementary/Secondary School Universe Survey," 2008 09, Version 1a, "Local Education Agency Universe Survey," 2008 09, Version 1a, and "Local Education Universe Survey Dropout and Completion Restricted-Use Data File," 2007 08, Version 1a. 6 Nevada Department of Education, Nevada Annual Report of Accountability. 7 The U.S. Department of Education, ED Data Express. See, http://www.eddataexpress.ed.gov/statereport.cfm?state=nv&submit=. 8 Calculation by Applied Analysis based on data reported by the U.S. Department of Education, National Center for Education Statistics, Common Core of Data (CCD). 9 Id. 10 Nevada Department of Education, Nevada Annual Report of Accountability. 11 Id. See also, Table 3. Number of students in membership in operating public elementary and secondary schools, by school type, charter, magnet, Title I, and Title I school wide status, and state or jurisdiction: School year 2010 11. Page 3

proficiency. 12 According to the United States Census of Governments, Nevada spent approximately $4.3 billion on K-12 education programs in 2009 (includes federal, state and local spending). This figure translates into roughly $9,990 per pupil per year. 13 Nevada s aggregate per pupil spending ranked as the 38 th highest, or 14 th lowest, in the United States. In terms of capital construction spending per student, Nevada ranks among the nation s highest at $1,480 per student per year. 14 By comparison, in terms of per student spending on classroom operations, Nevada ranks 9 th lowest in the nation at $8,510 per year. 15 During the same period, the average state spent $11,700 per student on K-12 education, $1,400 per student on education capital construction, and $10,300 per student on school operations. Nevada ranks near the middle of all states in terms of the share of total state and local revenue dedicated to education. At 24.9 percent, Nevada ranks 28 th nationally. 16 That said, Nevada is a low-tax state, which means its overall budget tends to be lower. As a percentage of Gross State Product, Nevada allocates about 3.4 percent to K-12 education; this ranks as the 7 th lowest rate nationally. Similarly, in terms of education spending as a percentage of combined state personal income, Nevada s 4.4 percent ranks 13 th lowest nationally. 17 Nevada s teachers reported an average salary of just over $53,000 for the 2010-11 school year, ranking them as the 21 st highest paid teachers in the country. 18 When compared to teachers relative workload, however, Nevada teachers drop to the 47 th highest paid, or the 5 th lowest paid in the nation. Nevada teacher reported earning $2,730 per student; while the average among the states during the same period was roughly 25 percent higher at $3,640 per student per year. 12 Calculation by Applied Analysis based on data reported by the U.S. Department of Education, National Center for Education Statistics, Common Core of Data (CCD). 13 Calculation by Applied Analysis based on data reported by the U.S. Census of Governments, Public Elementary Secondary Education Finance Data and the U.S. Department of Education, National Center for Education Statistics, Common Core of Data (CCD). 14 Id. 15 Id. 16 Id. 17 Calculation by Applied Analysis based on data reported by the U.S. Bureau of Economic Analysis, the U.S. Census of Governments, Public Elementary Secondary Education Finance Data and the U.S. Department of Education, National Center for Education Statistics, Common Core of Data (CCD). 18 Calculation by Applied Analysis based on data reported by the U.S. Department of Education, National Center for Education Statistics, Common Core of Data (CCD). Page 4

Nevada students rank below the national average on all National Assessment of Education Progress (NAEP) exams in reading, writing, math and science administered to elementary and middle school students. 19 In every case, Nevada students fall in the bottom quartile of all reporting states; and, in many cases, Nevada ranks in the bottom 10 percent of reporting states. Nevada students rank in the middle quartile in terms of the ACT and SAT college entrance exams. 20 That said, Nevada reports a very low number of students taking those exams. In fact, no state with a higher share of students taking college entrance exams reported a lower average score. 21 Nevada reported an average ACT score of 21.3, slightly ahead of the national average, but only 34 percent of students took the exam. The national average was 52 percent. According to the U.S. Department of Education, National Center for Education Statistics, Nevada s average freshman graduation rate, defined as the number of students entering high school as a freshman and graduating on time, was 56.3 percent in 2009 (latest data available). 22 Nevada s rate was the lowest in the nation, besting the State of Mississippi, which reported a freshman graduation rate of 62.0 percent. The national average for all states was 75.5 percent. 23 Notably, Nevada s freshman graduation rate has decreased from 77.0 percent in 1991 to 56.3 percent in 2009. 24 During that same period, the nation s graduation rate improved from 73.7 percent to 75.5 percent. 25 Calculated differently, the Nevada Department of Education reports a graduation rate of 70.3 percent for the Class of 2010. 26 The graduation rate among white students is reported at 78.4 percent, while the rate among Hispanic and Black/African American students is 60.3 percent and 57.6 percent, respectively. 27 Clark County reports the lowest graduation rate at 68.1 percent; Lander County reports the highest rate at 94.1 percent. 28 19 National Assessment of Educational Progress: Math data is from 2011, Reading data is from 2011, Science data is from 2009, Grade 4 Writing data is from 2002, and Grade 8 Writing data is from 2007. See also, The Nation s Report Card, State Profiles: Nevada available at: http://nces.ed.gov/nationsreportcard/states/. 20 ACT. 2012 ACT National and State Scores; see also, College Board, College Bound Seniors, Nevada Report 2011. 21 Note that the District of Columbia reported a lower percentage of students taking the ACT (32) and a lower average score (19.7; Hawaii reported the same average score, but had a lower number of students take the ACT exam. 22 U.S. Department of Education, National Center for Education Statistics, Common Core of Data (CCD), NCES Common Core of Data State Dropout and Completion Data File, school year 2007 08; 2008-09, version 1a; and State Nonfiscal Survey of Public Elementary/Secondary Education, 1990 91, Version 1b; 1995 96, Version 1b; 2000 01, Version 1b; 2005 06, Version 1b, and 2006 07, Version 1b. 23 Id. 24 Id. 25 Id. 26 Nevada Department of Education, Nevada Annual Report of Accountability. 27 Id. 28 Id. Page 5

The Fiscal Implications of Nevada s Current Graduation Trends The economic, fiscal and social implications of failing to graduate from high school are both intuitive and well documented. 29 High school completion is positively correlated with higher incomes and lower public service demand. Below we summarize the implications of these impacts. In reviewing the impact estimates, it is important to keep in mind that these data have both comparison and completeness limitations. Assumptions based on national and regional income and service demand incidence reports are used to generate order-of-magnitude estimates for the Nevada population. A combined impact assessment summary schedule is provided in Appendix Exhibit 1 at the end of this report. In modeling combined impact estimates, Applied Analysis assumed the more conservative graduation rate reported by the Nevada Department of Education (70.3 percent as opposed to the 56.3 percent freshman graduation rate reported by the U.S. Department of Education). Estimated Incremental Impact of the Nevada Graduation Rate High School Drop Out Versus High School Graduate Single High School Drop Out All Seniors Not Expected to Graduate All K-12 Students Not Expected to Graduate 1 Student 9,925 Students 129,806 Students Lifetime Unemployment Benefits $ 1,694 $ 16,810,245 $ 219,851,263 Lifetime State and Local Tax Payments $ 30,755 $ 305,247,048 $ 3,992,145,852 Lifetime Cost of Incarceration $ 16,438 $ 163,150,048 $ 2,133,743,119 Lifetime Uncompensated Health Care Costs $ 4,532 $ 44,978,327 $ 588,244,968 Lifetime Supplemental Nutrition Program Costs $ 7,191 $ 71,377,033 $ 933,498,051 Combined Total $ 60,610 $ 601,562,701 $ 7,867,483,253 29 See, e.g., Levin, H. and Rouse, C. The True Cost of High School Dropouts The New York Times January 2012, Op-Ed. (noting, When the costs of investment to produce a new graduate are taken into account, there is a return of $1.45 to $3.55 for every dollar of investment, depending upon the educational intervention strategy. ); see also, Tyler, J. and Loftstrom, M., Finishing High School: Alternative Pathways and Dropout Recovery The Future of Children in America, Princeton and Brookings. Journal of America s High Schools. Spring 2009, Vol. 19, No. 1 (noting, Although researchers have much to learn about which dropoutprevention programs work, they do know that trying to keep students in school is not cheap. They have also learned, however, that the costs to society of each student who fails to graduate from high school are high.); see also, Whitaker, B., High School Dropouts Costly for American Economy CBS Evening News. May 2010 (noting, Dropouts cost taxpayers more than $8 billion annually in public assistance programs like food stamps. High school dropouts earn about $10 thousand less a year than workers with diplomas. That's $300 billion in lost earnings every year. They're more likely to be unemployed: 15 percent are out of work versus a national average of 9.4 percent. They also are more likely to be incarcerated. Almost 60 percent of federal inmates are high school drop outs. ); see also, Alliance for Excellent Education, Education and the Economy: The Economic Benefits of Helping High School Dropouts Earn Both High School Diplomas and College Degrees. December 2011. Page 6

Estimated Incremental Impact of the Nevada Graduation Rate High School Drop Out Versus College Graduate Single High School Drop Out All Seniors Not Expected to Graduate All K-12 Students Not Expected to Graduate 1 Student 9,925 Students 129,806 Students Lifetime Unemployment Benefits $ 4,822 $ 47,860,265 $ 625,936,132 Lifetime State and Local Tax Payments $ 70,863 $ 703,330,945 $ 9,198,450,015 Lifetime Cost of Incarceration $ 23,160 $ 229,863,740 $ 3,006,252,088 Lifetime Uncompensated Health Care Costs $ 11,920 $ 118,309,852 $ 1,547,304,671 Lifetime Supplemental Nutrition Program Costs $ 14,583 $ 144,738,818 $ 1,892,953,507 Combined Total $ 125,348 $ 1,244,103,619 $ 16,270,896,413 The estimated income for a high school dropout is approximately $22,000 per year. For a high school graduate annual earnings increase to $32,500 per year and for a college graduate, they increase to $63,300 per year. 30 This suggests that a high school graduate will earn an additional $452,000 over her lifetime. The opportunity cost of the high school graduate in terms of lost wages during high school years is approximately $83,160, suggesting that the return on investment for that student is roughly $5.44 to $1.00. 30 U.S. Census Bureau, Current Population Reports, Income, Poverty, and Health Insurance Coverage in the United States: 2010 (September 2011, Release). Page 7

Those who do not graduate tend to have a much higher rate of unemployment. 31 Failing to complete high school dramatically decreases earning potential, and significantly increases a person s lifetime demand for unemployment insurance benefits. Over their lifetime, a person without a high school diploma will demand nearly $10,000 in unemployment insurance payments; for those with a high school diploma, that figures drops by 12 percent. For those attaining at least a bachelor s degree, the rate drops by 43 percent. Estimated Average Unemployment Rate by Education Level 31 U.S. Bureau of Labor Statistics, Current Population Survey, Education Pays (2011 Release). Estimates for combined and/or unreported categories by Applied Analysis. Page 8

Because high school graduates tend to work more, they also generate more in the way of state and local tax payments. This is particularly true for taxes such as Nevada Sales and Use Tax, ad valorem (property taxes), live entertainment taxes, utility franchise fees, and car registration (governmental services) tax. Based on a review of taxable household spending by income level, it is estimated that over their lifetime, an average high school dropout will generate approximately $55,000 in state and local tax payments. 32 For those earning a high school diploma, this figure increases by 53 percent to $89,100; for college graduate s total lifetime state and local tax payments are more than double at $129,200. Estimated Lifetime State and Local Tax Payments Per Capita by Education Level 32 Based on Applied Analysis tax incidence model derived from the income and consumption tables in the IMPLAN economic impact modeling software. Page 9

Uninsured adults are about twice as likely as privately insured adults to have no education beyond high school according to a 2011 report prepared by the Kaiser Commission on Medicaid and the Uninsured/Urban Institute. 33 There is also evidence that adults with low educational attainment are more likely to die from cardiovascular disease, cancer, infection, lung disease, and diabetes. 34 On average, a high school graduate lives six to nine years longer than a dropout. 35 Stated otherwise, high school dropouts have a significantly higher incidence rate of being uninsured, and ultimately higher uncompensated health care costs for those that do not complete high school. 36 Estimated Percentage of Uninsured Adults by Education Level 33 Kaiser Commission on Medicaid and the Uninsured/Urban Institute analysis of 2011 ASEC Supplement to the Current Population Survey. 34 Alliance for Excellent Education, Healthier and Wealthier: Decreasing Health Care Costs by Increasing Educational Attainment Issue Brief. November 2006. Citing, Muennig, P. Health Returns to Education Interventions. Washington, DC: A report commissioned by the Alliance for Excellent Education and Wong, M., Shapiro, M., Boscardin, W. & Ettner, S. Contribution of major diseases to disparities in mortality. New England Journal of Medicine, 2002, 347, 1585-1592. 35 Id. 36 U.S. Department of Health and Human Services, Socrata Data System (2011 Release). Note analysis of annual per capita cost based on The Kaiser Commission on Medicaid and the Uninsured (2004). Report estimates 60 million uninsured Americans generating a total of $40.7 billion annually in uncompensated care. Values inflated to current dollars using the Bureau of Labor Statistics Inflation Calculator. Page 10

Estimated Average Uncompensated Lifetime Healthcare Cost by Education Level Page 11

Those who fail to graduate from high school work less and earn less, which means that a far higher percentage of uneducated adults and their families live in poverty. According to the Congressional Research Service 34.7 percent of 25 to 34 year olds without a high school diploma live at or below the poverty level. 37 Within that same age group, that number dropped to 16.7 percent for those with a high school diploma and to 4.4 percent for those with a bachelor s degree or higher. Less educated household increase pressure for social welfare programs such as the Supplemental Nutrition Assistance Program (SNAP). Lifetime demand for SNAP benefits is estimate to roughly double between those with and without a high school diploma; for college graduates, demand drops by roughly 90 percent. 38 Estimated Lifetime Demand for SNAP Benefits by Education Level 37 Gabe, T. Poverty in the United States: 2008, Congressional Research Service. April 2010. 38 Average SNAP benefit as reported by the United States Department of Agriculture, Food and Nutrition Service, SNAP Community Characteristics Reports (2007-2011). Page 12

There is also a measurable correlation between educational attainment, poverty unemployment, and crime. 39 To this end, those with lower levels of educational attainment tend to have significantly higher rates of incarceration. 40 The average annual cost of incarceration is estimated at approximately $20,656, little more than twice the annual cost to educate a K-12 student in the State of Nevada. 41 The anticipated lifetime cost of incarceration for those without a high school diploma is more than $24,000, three times higher than the cost of those with a high school diploma and nearly 24 times higher than the average reported by those with at least a bachelor s degree. 42 Estimated Rate of Incarceration by Level of Educational Attainment 39 See, e.g., Hsieh, C.C. and Pugh, M. D., Poverty, Income Inequality, and Violent Crime: A Meta-Analysis of Recent Aggregate Data Studies Criminal Justice Review. Autumn 1993 vol. 18 no. 2 182-202; see also, Kelly, M. Inequality and Crime The Review of Economic and Statistics. November 2000, 82(4): 530-539 40 Harlow, C., Ph.D. Education and Correctional Populations, U.S. Department of Justice Office of Justice Programs, Bureau of Justice Statistics Special Report. Revised April 2003; see also, National Center for Education Statistics, Literacy Behind Prison Walls, Profiles of the Prison Population from the National Adult Literacy Survey. US Department of Education. October 1994; see also, Pettit, B. and Western, B. Mass Imprisonment and the Life Course: Race and Class Inequality in U.S. Incarceration American Sociological Review, April 2004. Vol. 69, No. 2, pp. 151-169. 41 Estimates were made based on available prison population data such that the total allocation did not exceed the combined rate of incarceration in the United State 0.7 percent; Estimated annual cost per inmate based on the Vera Institute of Justice Report, Nevada (January 2012). 42 Id. Page 13

Return on Investment for Enhanced English Proficiency Programs Nevada schools have among the highest share of English-language learners in the country. Recent reports suggest that as many as 145 different languages are spoken in the Clark County School District alone. 43 Unlike most states, Nevada does not utilize a weighted student funding model; and as such, provides little in the way of incremental funding for students with Englishlanguage limitations. 44 An exact estimate of dedicated spending is not readily available; however, information provided by the Clark County School District and the Nevada Department of Education suggest incremental funding is between $8.7 million and $10.9 million each year, or between $100 and $125 annually per ELL student. It goes without saying that fluency significantly increases the probability of graduation, but there is also compelling evidence that bilingual students perform as well, if not better, than their English-only classmates. 45 Obtaining English fluency is no simple task for non-native speakers. Reports suggest it can take between five and seven years to achieve academic fluency, a timeline confirmed by local educators. 46 Further, discussions with those involved in 43 Ryan, C., School District seeks study on actual cost of educating students. Las Vegas Review Journal. March 14, 2011 (citing CCSD Associate Superintendent Joyce Haldeman); see also, Congressional Record, V. 150, Pt. 9, June 2, 2004 to June 16, 2004 (citing 81 different languages spoken in the Clark County School District in 2004). 44 Hightower, A., Mitani, H., and Swanson, C. State Policies That Pay EPE Research Center with Support from the Pew Center. April 2010 (Indicating on Exhibit 3.1 that 32 states use weighted funding formulas for ELL/ESL student populations.) 45 See, Adesope, O., Lavin T. and Thomson T., A Systematic Review and Meta-Analysis of the Cognitive Correlates of Bilingualism, Review of Education Research June 2010 vol. 80 no. 2 207-245 (after reviewing 63 studies involving more than 6,000 participants, the authors noted, Results indicate that bilingualism is reliably associated with several cognitive outcomes, including increased attentional control, working memory, metalinguistic awareness, and abstract and symbolic representation skills. ); see also, Espinosa, L. Challenging Common Myths About Young English Language Learners FDC Policy Brief, Advancing PK-3. Foundation for Child Development. January 2008. No. 8.; see also, Cisneros, C., et al, Common Assumptions and Evidence Regarding English Language Learners in the United States, American Institute for Research, May 2010; see also, Abedi, J, et al, Performance of English Language Learners as a Subgroup in Large Scale Assessment: Interaction of Research and Policy Educational Measurement: Issues and Practice, v25 n4 p36-46 Win 2006; see also, McAllister T., Bilingual Kids Outperforming English-Only, Local Educators Say Lake Elsinor-Windomar Patch (citing Riverside County Superintendent of Schools Kenneth M. Young, as stating Research shows that they (bilingual students) outperform monolingual kids. February 2012; see also, numerous additional academic studies cited by the American Council on the Teaching of Foreign Languages at http://www.actfl.org. 46 See, Carhill, A., Suárez-Orozco, C. and Páez, M., Explaining English Language Proficiency Among Adolescent Immigrant Students American Educational Research Journal. Published on behalf of the American Research Association. 2008; 45; 1155 (noting suggest that immigrant youth require seven years to obtain proficiency); see also, Hakuta, K. and Butler, Y.G., Witt, D. How Long Does it Take English Learners to Attain Proficiency? Stanford University, The University of California Linguistic Minority Research Institute. Policy Report 2000-01. January 2001 (noting, most successful in teaching English to LEP students, oral proficiency takes 3 to 5 years to develop, and academic English proficiency can take 4 to 7 years).; see also, The Center for Public Education, Preparing English language learners for academic success Posted October 2007 at http://www.centerforpubliceducation.org/main-menu/instruction/what-research-says-about-english-language-learners-at-aglance/preparing-english-language-learners-for-academic-success.html. (suggesting that fluency takes four to seven years); see also, Edvantia, Research Review: What Research Says About Preparing English Language Learners for Academic Success Report Conducted for the Center for Public Education. October 2007 (suggesting fluency requires three to six years); see also, American Speech-Language-Hearing Association. Acquiring English as a Second Language What s Normal What s Not posted at http://www.asha.org/public/speech/development/easl.htm. (noting that ELL students must outgain the native speaker by making 1.5 year's progress in English for six successive school years; see also, Wisconsin Department of Education, Instructional Strategies that Support the Success of English Language Learners AYP Handbook. (noting that it requires five to seven years for full academic parity); see also, Center for cognitive-developmental assessment and remediation, English Page 14

English-language programs also suggest that the cost to get students with limited English skills fluent is 1.5 to 2.0 times the cost of educating a native English speaker during this period. While we tend to believe this cost range is aggressive compared to what is reported by some other states, 47 we utilized them to generate a conservative return-on-investment calculation (i.e., if Nevada would be expected to obtain a positive return assuming seven years and twice the instructional cost, the return would only be higher if a lower cost or shorter period could be achieved). Assuming a five to seven-year period to obtain proficiency and a weighted per pupil instructional cost of 1.5 to 2.0, the state s return on investment is preliminarily estimated at between $1.15 for every dollar invested to $2.03 for every dollar invested in English-language proficiency. 48 For those students going on to graduate college those figures increase to $2.37 per dollar invested and $4.20 per dollar invested, respectively. Appendix Exhibit 2 provides the summary return-on-investment analysis assuming a five-year fluency window and 1.5 times average instructional costs, and Appendix Exhibit 3 provides the same summary assuming seven-year fluency window at 2.0 times average instructional cost. Language Learning in Internationally Adopted Children posted at http://www.bgcenter.com/interview2.htm (suggesting a timeframe of five to seven be allotted for students to acquire academic English). 47 Note that the 1.5 to 2.0 times instructional allocations equates to between $11,100 and $13,600 dollars per student per year. At current funding levels this is an effective weight of.30 and.60. C.f., with State of Oregon, Legislative Revenue Office, Research Report #2-06 (citing weights of 0.5 for ESL students); South Carolina Education Oversight Committee, Annual Update to the EOC Funding Model, April 2011 (reporting a weight of 0.20 is included for students with limited English proficiency who require intensive English language instruction programs and whose families require specialized parental involvement intervention); although state funding formulas very significantly, other ELL weights include: Arizona, 0.155; Hawaii 0.2373; Iowa 0.22; Kansas, 0.395; New Mexico, 0.50; Oklahoma, 0.25; Texas, 0.10; and Vermont, 0.20. 48 Note that this rate of return is generally consistent with other studies that have looked at the return on investment of programs aimed at increasing graduation rates. See, e.g., Levin, H. and Rouse, C. The True Cost of High School Dropouts The New York Times January 2012, Op-Ed. (noting, When the costs of investment to produce a new graduate are taken into account, there is a return of $1.45 to $3.55 for every dollar of investment, depending upon the educational intervention strategy. ); see also, Belfield, C. and Levin, H. The Return on Investment for Improving California s High School Graduation Rate California Dropout Research Project, UC Santa Barbara Gervitz School of Education. August 2007; see also, EMSI, The Economic Impact of Communities in Schools prepared for Communities in Schools. May 2012 (finding an average of an $11.60 positive economic impact per dollar invested); see also, Alliance for Excellence in Education, The High Cost of High School Dropouts What the Nation Pays for Inadequate High Schools Issue Brief. October 2007; see also, Alliance for Excellent Education, Education and the Economy: The Economic Benefits of Helping High School Dropouts Earn Both High School Diplomas and College Degrees. December 2011; see also, Levin, H., et al, The Costs and Benefits of an Excellent Education for All of America s Children Lilo and Gerry Leeds to Teachers College, Columbia University. January 2007 (finding a net economic benefit to the public purse of $127,000 per student and the benefits are 2.5 times greater than the costs); see also, The Economic Benefits from Halving Minneapolis s Dropout Rate January 2010; see also, Mitra, D., Ph.D. Pennsylvania s Best Investment: The Social and Economic Benefits of Public Education Education Law Center, Philadelphia Office. June 2011. Page 15

Increased Cost for English Language Learners Assumes Five Years to Achieve Fluency at 1.5 Times Instructional Cost 49 Increased Cost for English Language Learners Assumes Seven Years to Achieve Fluency at 2.0 Times Instructional Cost 50 49 Total funding is made up of four categories, instruction ($5,121), instruction support ($926), operations ($1,826) and leadership ($643). Model assumes the increase multiplier is applied only to the instruction cost line item. 50 Id. Page 16

Estimated Return on Investment for English Language Learner Programs High School Drop Out Versus High School Graduate and College Graduate Estimated Costs Five Years @ 1.5x Seven Years @ 2.0x Incremental Education Cost - Additional Years in School $ 17,032 $ 17,032 Incremental Education Cost - English Language Program $ 12,803 $ 35,847 Total Incremental Costs $ 29,835 $ 52,879 Estimated Benefits - High School Graduate Lifetime Unemployment Benefits $ 1,694 $ 1,694 Lifetime State and Local Tax Payments $ 30,755 $ 30,755 Lifetime Cost of Incarceration $ 16,438 $ 16,438 Lifetime Uncompensated Health Care Costs $ 4,532 $ 4,532 Lifetime Supplemental Nutrition Program Costs $ 7,191 $ 7,191 Total Estimated Cost Savings/Additional Public Revenue $ 60,610 $ 60,610 Estimated Return (Per Dollar Invested) 2.03x 1.15x Estimated Benefits - College Graduate Lifetime Unemployment Benefits $ 4,822 $ 4,822 Lifetime State and Local Tax Payments $ 70,863 $ 70,863 Lifetime Cost of Incarceration $ 23,160 $ 23,160 Lifetime Uncompensated Health Care Costs $ 11,920 $ 11,920 Lifetime Supplemental Nutrition Program Costs $ 14,583 $ 14,583 Total Estimated Cost Savings/Additional Public Revenue $ 125,348 $ 125,348 Estimated Return (Per Dollar Invested) 4.20x 2.37x Page 17

Conclusion Nevada s education system is strained by nearly every measure. In the name of efficiency, accountability and fiscal responsibility, the state has designed a system that expects schools, teachers, administrators, students and parents to do ever more with ever less. At the same time, a rapidly changing demographic profile and economic landscape have increased what is required to prepare students for life beyond high school. The result of this cognitive dissonance is underperforming schools at all grade levels and the nation s lowest rate of high school graduation. The lower earning power and greater social service demands of uneducated adults will inevitably cost Nevada billions of dollars over the coming decades. English-language learners in particular provide a clear and compelling opportunity to stem the tide of these disturbing trends. Today, 20 percent of the state s students have limited English proficiency. Lacking fluency is a disadvantage, not a disability. The State of Nevada can either choose to invest what is necessary to give these children the opportunity to succeed, or steps should be taken immediately to shore up the revenue sources needed to offset the cost of the social services they will inevitably require. Page 18

APPENDIX EXHIBITS Page 19

By The Numbers A Review and Analysis of Nevada's Education System Appendix Exhibits Exhibit 1: NSEA Analysis of Education ROI Preliminary Baseline Summary Assessment PER STUDENT ANALYSIS No High School High School Difference College Difference Cost to Educate (K 12) $ 89,418 $ 106,450 $ 17,032 $ 106,450 $ 17,032 Lifetime Earnings $ 949,173 $ 1,383,958 $ 434,785 $ 2,597,608 $ 1,648,435 Productivity Multiplier 10.6x 13.0x 24.4x Incremental Public Costs and Contributions Lifetime Unemployment Benefits $ (10,441) $ (8,748) $ 1,694 $ (5,619) $ 4,822 Lifetime State and Local Tax Payments $ 58,303 $ 89,058 $ 30,755 $ 129,166 $ 70,863 Lifetime Cost of Incarceration $ (24,181) $ (7,743) $ 16,438 $ (1,021) $ 23,160 Lifetime Uncompensated Health Care Costs $ (17,634) $ (13,102) $ 4,532 $ (5,713) $ 11,920 Supplemental Nutrition Program Costs $ (16,380) $ (9,188) $ 7,191 $ (1,797) $ 14,583 Total Estimated Cost Savings/Additional Revenue $ 60,610 $ 125,348 Education Public ROI 3.56x 7.36x STUDENTS FAILING TO GRADUTATE (2011) 9,925 Based on Nevada Department of Education Graduation Rate of 70.3% No High School High School Difference College Difference Cost to Educate (K 12) $ 887,492,220 $ 1,056,538,358 $ 169,046,137 $ 1,056,538,358 $ 169,046,137 Lifetime Earnings $ 9,420,737,910 $ 13,736,066,424 $ 4,315,328,514 $ 25,781,795,302 $ 16,361,057,392 Productivity Multiplier 10.6x 13.0x 24.4x Incremental Public Costs and Contributions Lifetime Unemployment Benefits $ (103,632,389) $ (86,822,144) $ 16,810,245 $ (55,772,124) $ 47,860,265 Lifetime State and Local Tax Payments $ 578,668,826 $ 883,915,874 $ 305,247,048 $ 1,281,999,771 $ 703,330,945 Lifetime Cost of Incarceration $ (240,001,108) $ (76,851,060) $ 163,150,048 $ (10,137,368) $ 229,863,740 Lifetime Uncompensated Health Care Costs $ (175,016,248) $ (130,037,922) $ 44,978,327 $ (56,706,397) $ 118,309,852 Supplemental Nutrition Program Costs $ (162,571,967) $ (91,194,935) $ 71,377,033 $ (17,833,149) $ 144,738,818 Total Estimated Cost Savings/Additional Revenue $ 601,562,701 $ 1,244,103,619 Education Public ROI 3.56x 7.36x STUDENTS UNLIKELY TO GRADUATE (ALL GRADES) 129,806 Based on Nevada Department of Education Graduation Rate of 70.3% No High School High School Difference College Difference Cost to Educate (K 12) $ 11,606,986,559 $ 13,817,841,142 $ 2,210,854,583 $ 13,817,841,142 $ 2,210,854,583 Lifetime Earnings $ 123,208,266,821 $ 179,645,899,628 $ 56,437,632,807 $ 337,184,872,888 $ 213,976,606,067 Productivity Multiplier 10.6x 13.0x 24.4x Incremental Public Costs and Contributions Lifetime Unemployment Benefits $ (1,355,346,800) $ (1,135,495,537) $ 219,851,263 $ (729,410,668) $ 625,936,132 Lifetime State and Local Tax Payments $ 7,568,067,789 $ 11,560,213,641 $ 3,992,145,852 $ 16,766,517,804 $ 9,198,450,015 Lifetime Cost of Incarceration $ (3,138,832,740) $ (1,005,089,621) $ 2,133,743,119 $ (132,580,653) $ 3,006,252,088 Lifetime Uncompensated Health Care Costs $ (2,288,934,141) $ (1,700,689,172) $ 588,244,968 $ (741,629,469) $ 1,547,304,671 Supplemental Nutrition Program Costs $ (2,126,182,736) $ (1,192,684,685) $ 933,498,051 $ (233,229,229) $ 1,892,953,507 Total Estimated Cost Savings/Additional Revenue $ 7,867,483,253 $ 16,270,896,413 Education Public ROI 3.56x 7.36x

By The Numbers A Review and Analysis of Nevada's Education System Appendix Exhibits Exhibit 2: NSEA Analysis of Education ROI Return on Investment of English Language Programs (Assumes 5 Year Program @ 1.5 Times Instructional Cost) PER STUDENT ANALYSIS No High School High School Difference College Difference Cost to Educate (K 12) $ 89,418 $ 119,253 $ 29,835 $ 119,253 $ 29,835 Lifetime Earnings $ 949,173 $ 1,383,958 $ 434,785 $ 2,597,608 $ 1,648,435 Productivity Multiplier 10.6x 11.6x 21.8x Incremental Public Costs and Contributions Lifetime Unemployment Benefits $ (10,441) $ (8,748) $ 1,694 $ (5,619) $ 4,822 Lifetime State and Local Tax Payments $ 58,303 $ 89,058 $ 30,755 $ 129,166 $ 70,863 Lifetime Cost of Incarceration $ (24,181) $ (7,743) $ 16,438 $ (1,021) $ 23,160 Lifetime Uncompensated Health Care Costs $ (17,634) $ (13,102) $ 4,532 $ (5,713) $ 11,920 Supplemental Nutrition Program Costs $ (16,380) $ (9,188) $ 7,191 $ (1,797) $ 14,583 Total Estimated Cost Savings/Additional Revenue $ 60,610 $ 125,348 Education Public ROI 2.03x 4.20x STUDENTS FAILING TO GRADUTATE (2011) 3,342 Based on an Assumed Graduation Rate of 50.0% for ELL Students No High School High School Difference College Difference Cost to Educate (K 12) $ 298,818,929 $ 398,520,481 $ 99,701,552 $ 398,520,481 $ 99,701,552 Lifetime Earnings $ 3,171,965,626 $ 4,624,938,190 $ 1,452,972,564 $ 8,680,739,159 $ 5,508,773,533 Productivity Multiplier 10.6x 11.6x 21.8x Incremental Public Costs and Contributions Lifetime Unemployment Benefits $ (34,893,060) $ (29,233,045) $ 5,660,015 $ (18,778,493) $ 16,114,567 Lifetime State and Local Tax Payments $ 194,837,989 $ 297,614,773 $ 102,776,784 $ 431,649,755 $ 236,811,766 Lifetime Cost of Incarceration $ (80,808,454) $ (25,875,778) $ 54,932,676 $ (3,413,255) $ 77,395,199 Lifetime Uncompensated Health Care Costs $ (58,928,030) $ (43,783,812) $ 15,144,218 $ (19,093,063) $ 39,834,967 Supplemental Nutrition Program Costs $ (54,738,036) $ (30,705,365) $ 24,032,671 $ (6,004,427) $ 48,733,609 Total Estimated Cost Savings/Additional Revenue $ 202,546,364 $ 418,890,107 Education Public ROI 2.03x 4.20x STUDENTS UNLIKELY TO GRADUATE (ALL GRADES) 43,706 Based on an Assumed Graduation Rate of 50.0% for ELL Students No High School High School Difference College Difference Cost to Educate (K 12) $ 3,908,076,283 $ 5,212,013,989 $ 1,303,937,707 $ 5,212,013,989 $ 1,303,937,707 Lifetime Earnings $ 41,484,264,923 $ 60,486,834,892 $ 19,002,569,969 $ 113,530,260,232 $ 72,045,995,309 Productivity Multiplier 10.6x 11.6x 21.8x Incremental Public Costs and Contributions Lifetime Unemployment Benefits $ (456,345,724) $ (382,321,730) $ 74,023,994 $ (245,592,818) $ 210,752,906 Lifetime State and Local Tax Payments $ 2,548,170,973 $ 3,892,327,825 $ 1,344,156,852 $ 5,645,292,190 $ 3,097,121,217 Lifetime Cost of Incarceration $ (1,056,846,041) $ (338,414,014) $ 718,432,027 $ (44,639,950) $ 1,012,206,090 Lifetime Uncompensated Health Care Costs $ (770,684,896) $ (572,622,617) $ 198,062,279 $ (249,706,892) $ 520,978,004 Supplemental Nutrition Program Costs $ (715,886,443) $ (401,577,335) $ 314,309,108 $ (78,528,360) $ 637,358,083 Total Estimated Cost Savings/Additional Revenue $ 2,648,984,260 $ 5,478,416,301 Education Public ROI 2.03x 4.20x

By The Numbers A Review and Analysis of Nevada's Education System Appendix Exhibits Exhibit 2: NSEA Analysis of Education ROI Return on Investment of English Language Programs (Assumes 7 Year Program @ 2.0 Times Instructional Cost) PER STUDENT ANALYSIS No High School High School Difference College Difference Cost to Educate (K 12) $ 89,418 $ 142,297 $ 52,879 $ 142,297 $ 52,879 Lifetime Earnings $ 949,173 $ 1,383,958 $ 434,785 $ 2,597,608 $ 1,648,435 Productivity Multiplier 10.6x 9.7x 18.3x Incremental Public Costs and Contributions Lifetime Unemployment Benefits $ (10,441) $ (8,748) $ 1,694 $ (5,619) $ 4,822 Lifetime State and Local Tax Payments $ 58,303 $ 89,058 $ 30,755 $ 129,166 $ 70,863 Lifetime Cost of Incarceration $ (24,181) $ (7,743) $ 16,438 $ (1,021) $ 23,160 Lifetime Uncompensated Health Care Costs $ (17,634) $ (13,102) $ 4,532 $ (5,713) $ 11,920 Supplemental Nutrition Program Costs $ (16,380) $ (9,188) $ 7,191 $ (1,797) $ 14,583 Total Estimated Cost Savings/Additional Revenue $ 60,610 $ 125,348 Education Public ROI 1.15x 2.37x STUDENTS FAILING TO GRADUTATE (2011) 3,342 Based on an Assumed Graduation Rate of 50.0% for ELL Students No High School High School Difference College Difference Cost to Educate (K 12) $ 298,818,929 $ 475,531,070 $ 176,712,140 $ 475,531,070 $ 176,712,140 Lifetime Earnings $ 3,171,965,626 $ 4,624,938,190 $ 1,452,972,564 $ 8,680,739,159 $ 5,508,773,533 Productivity Multiplier 10.6x 9.7x 18.3x Incremental Public Costs and Contributions Lifetime Unemployment Benefits $ (34,893,060) $ (29,233,045) $ 5,660,015 $ (18,778,493) $ 16,114,567 Lifetime State and Local Tax Payments $ 194,837,989 $ 297,614,773 $ 102,776,784 $ 431,649,755 $ 236,811,766 Lifetime Cost of Incarceration $ (80,808,454) $ (25,875,778) $ 54,932,676 $ (3,413,255) $ 77,395,199 Lifetime Uncompensated Health Care Costs $ (58,928,030) $ (43,783,812) $ 15,144,218 $ (19,093,063) $ 39,834,967 Supplemental Nutrition Program Costs $ (54,738,036) $ (30,705,365) $ 24,032,671 $ (6,004,427) $ 48,733,609 Total Estimated Cost Savings/Additional Revenue $ 202,546,364 $ 418,890,107 Education Public ROI 1.15x 2.37x STUDENTS UNLIKELY TO GRADUATE (ALL GRADES) 43,706 Based on an Assumed Graduation Rate of 50.0% for ELL Students No High School High School Difference College Difference Cost to Educate (K 12) $ 3,908,076,283 $ 6,219,189,993 $ 2,311,113,710 $ 6,219,189,993 $ 2,311,113,710 Lifetime Earnings $ 41,484,264,923 $ 60,486,834,892 $ 19,002,569,969 $ 113,530,260,232 $ 72,045,995,309 Productivity Multiplier 10.6x 9.7x 18.3x Incremental Public Costs and Contributions Lifetime Unemployment Benefits $ (456,345,724) $ (382,321,730) $ 74,023,994 $ (245,592,818) $ 210,752,906 Lifetime State and Local Tax Payments $ 2,548,170,973 $ 3,892,327,825 $ 1,344,156,852 $ 5,645,292,190 $ 3,097,121,217 Lifetime Cost of Incarceration $ (1,056,846,041) $ (338,414,014) $ 718,432,027 $ (44,639,950) $ 1,012,206,090 Lifetime Uncompensated Health Care Costs $ (770,684,896) $ (572,622,617) $ 198,062,279 $ (249,706,892) $ 520,978,004 Supplemental Nutrition Program Costs $ (715,886,443) $ (401,577,335) $ 314,309,108 $ (78,528,360) $ 637,358,083 Total Estimated Cost Savings/Additional Revenue $ 2,648,984,260 $ 5,478,416,301 Education Public ROI 1.15x 2.37x