This document discusses how improving education in Rhode Island could significantly boost the state's economic growth and productivity. Closing achievement gaps between racial groups could increase statewide earnings by $315-430 million. Reaching the national average test scores could increase earnings by $380-515 million. The document argues Rhode Island needs world-class standards, robust data systems, a focus on teacher quality, school choice options, interventions for failing schools, and a dynamic funding system tied to student needs to achieve these results.

1. Education and Rhode
Island’s Economic Future
Bryan C. Hassel, Ph.D. and Jacob Rosch
December 1, 2009

2. $400 ‐ $670 Billion, with a “b”
Payoff in national GDP of closing the
income achievement gap
3 – 5% of the nation’s economic output
‐ McKinsey & Company
Source: McKinsey & Company, “Economic Impact of
the Achievement Gap in America’s Schools,” 2009
12/1/2009 2

3. $425 ‐ $700 Billion
Payoff in national GDP for improving
education in low‐performing states
3 – 5% of the nation’s economic output
‐ McKinsey & Company
Source: McKinsey & Company, “Economic Impact of
the Achievement Gap in America’s Schools,” 2009
12/1/2009 3

4. Overview
Why are these numbers so large?
How would better education
payoff for Rhode Island?
How can RI get there from here?
12/1/2009 4

5. Overview
Why are these numbers so large?
How would better education payoff
for Rhode Island?
How can RI get there from here?
12/1/2009 5

6. More Education Pays
Median Earnings and Tax Payments of Full‐Time
Year‐Round Workers, by Education Level, 2005
$120,000
$100,000
$100,000
$79,400
$80,000
$61,300
$60,000 $50,900
$37,100 $40,600
$40,000 $31,500
$23,400
$20,000
$0
Not a High High School Some Associates Bachelor's Masters Doctoral Professional
School Graduate College Degree Degree Degree Degree Degree
Graduate
After‐Tax Income Taxes Paid
Source: College Board, “Education Pays”
(2007)
12/1/2009 6

7. More Education Pays
Individuals 25 and Older In Households in Public
40%
Assistance Programs, by Education Level, 2005
Percentage Participating
30%
20%
10%
0%
Medicaid School Lunch Food Stamps
Not a High School Graduate High School Graduate
Some College Associates Degree
BA or Higher
Source: College Board, “Education Pays”
(2007)
12/1/2009 7

8. More Education Pays
Incarceration, by Educational Attainment, 1997
2.5%
2.0% 1.9%
Percentage Reporting
1.5%
1.2%
1.0%
0.5% 0.3%
0.1%
0.0%
Not a High School High School Some College BA or Higher
Graduate Graduate
Source: College Board, “Education Pays”
(2007)
12/1/2009 8

9. Quality Matters
It’s not simply more education that matters
– Test scores predict attainment
– Test scores predict earnings
12/1/2009 9

10. Early scores predict future scores
How Low-Performing 4th Graders Fare in 8th Grade
80%
62%
60%
40% 30%
20% 11%
2%
0%
Bottom 26th‐50th 50th‐75th Top Quartile
Quartile
Eighth‐grade achievement
Source: McKinsey & Company, “Economic Impact of
the Achievement Gap in America’s Schools,” 2009
12/1/2009 10

11. Math scores in high school predict
future, especially for poor kids.
Highest Level of Education Attained,
by High School Math Scores
30% 29%
11%
10x Greater
3%
Low Math Scores High Math Scores
No High School Degree BA or Higher
Source: College Board, “Education Pays”
(2007)
12/1/2009 11

12. 8th grade performance predicts
education attainment
Percent of Students Graduating College by 8th
Grade Achievement Quartile
56%
36%
5x Greater
20%
10%
Bottom 25‐50th 51‐75th Top
Quartile Percentile Percentile Quartile
Source: McKinsey & Company, “Economic Impact of
the Achievement Gap in America’s Schools,” 2009
12/1/2009 12

13. Quality Matters
The median income of students with the
highest 8th grade achievement is 40% greater
than students with the lowest achievement.
$28,000
$25,000
$24,000
40% Greater
$20,000
Bottom 26‐50th 51‐75th Top
Quartile Percentile Percentile Quartile
Source: McKinsey & Company, “Economic Impact of
the Achievement Gap in America’s Schools,” 2009
12/1/2009 13

14. Payoffs for States: Tax Revenues
More education leads to greater lifetime tax
revenues.
Present Value of Lifetime Increases in Tax
Revenue from Increased Education, White Male
$211,000
$91,000
$54,000
High School Graduate Some College BA or Higher
Source: RAND, “The Benefits to Taxpayers from Increases in
Student’s Educational Attainment” 2009
12/1/2009 14

15. Payoffs for States: Tax Revenues
A greater concentration of college graduates
improves overall average income
$27,000
$20,400 23% College Grads
28% College Grads
33% College Grads
38% College Grads
Not a high school graduate
Source: College Board, “Education Pays”
(2007)
12/1/2009 15

16. Payoffs for States: Other Benefits
High quality education, and greater
attainment have been shown to improve:
– Attractiveness to businesses choosing locations
– Housing prices
– Level of political participation
– Level of volunteerism
12/1/2009 16

17. Payoffs for States: Economic Growth
Improving the quality of education for low
performing students would have a huge payoff
National Impact of Eliminating Gaps, in Billions
Increase in GDP Over 10 Years
$670 $700
$525
$400 $425
$310
Racial Gap Income Gap Low Performing States
Lower Estimate Upper Estimate Source: McKinsey & Company, “Economic Impact of
the Achievement Gap in America’s Schools,” 2009
12/1/2009 17

18. Overview
Why are these numbers so large?
How would better education payoff
for Rhode Island?
How can we get there from here?
12/1/2009 18

19. Education Payoff for Rhode Island
Rhode Island has one of the nation’s largest
racial achievement gaps.
Achievement in Rhode Island lags the national
average.
What if the state could close these gaps?
12/1/2009 19

20. Education Payoff for Rhode Island
Closing racial achievement gaps could increase
statewide earnings by between $315 – $430
million
– Improving black performance to that of white
students: $95 – $130 million
– Improving Hispanic performance to that of white
students: $220 – $300 million
12/1/2009 20

21. Education Payoff for Rhode Island
Reaching the national average could increase
statewide earnings by between $380 – $515
million
– Improving the state’s performance to that of
Connecticut: $800 million – $1 billion
– Improving the state’s performance to that of
Massachusetts: $1.5 – $2.1 billion
12/1/2009 21

22. Overview
Why are these numbers so large?
How would better education payoff
for Rhode Island?
How can we get there from here?
12/1/2009 22

23. Getting There from Here
World‐class standards will aligned assessments
Robust data‐sharing, transparency
Intense focus on teacher and leader quality
Vigorous new school creation
Truly dramatic changes for failing schools
Dynamic funding system
12/1/2009 23

24. Dynamic Funding System
Transparency
Money following children
Funding based on needs
Change over time as enrollment changes
Incentives to get results, especially for poor
children
12/1/2009 24

25. PUBLIC IMPACT is a national education policy and management
consulting firm based in Chapel Hill, N.C. We are a small, growing
team of researchers, thought leaders, tool‐builders, and on‐the‐
ground consultants who help education leaders and policymakers
improve student learning in K‐12 education. We believe that if we
focus on a core set of promising strategies for change, we can make
dramatic improvements for all students.
For details about sources of data and calculations in this presentation please contact
Dr. Hassel.
Bryan_Hassel@PublicImpact.com
www.PublicImpact.com