Abstract
This article examines the effects of state policy, sociodemographic composition, and school structure on high school dropout rates in 1980. The findings support a mediating model in which state fiscal resources are transformed by school systems to improve retention. Of the policy variables considered, total educational expenditures per students' average daily attendance is a significant determinant of school structure and exerts the largest indirect effect on dropout rates. Among the sociodemographic factors considered, family structure, measured by the percentage offemale-headed families with children, is a critical predictor of both school structure and dropout rates. This finding highlights the importance of developing state educational policies that are sensitive to the impact of at-risk groups on school processes.
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