The previous estimates have assumed that all students lacking in basic skills have either dropped out of high school or enrolled in remedial education courses. That is, we have based our calculations on the estimate that out of the 120,776 students who entered high school in 1994, 29,085 dropped out and another 14,848 graduated but lacked basic skills. These estimates could be mistaken. Perhaps we are over-estimating the number of students lacking basic skills if some of the students who drop out actually possess basic skills. Perhaps we are under-estimating the number if some of the students who graduate but lack basic skills never enroll in remedial education courses. The latter error seems more likely to outweigh the former error; nevertheless it seems desirable to develop a different way of identifying the number of students lacking basic skills.

The National Assessment of Education Progress (NAEP) is administered periodically by the U.S. Department of Education in states that agree to participate. The NAEP is generally considered to be the most reliable long-term measure of student achievement because its low stakes provide little incentive to educators and administrators to manipulate the results. According to the most recent math NAEP results for 8th-graders, 33 percent of students perform "below basic."^{24} If high school neither improves upon nor worsens this rate (and there is strong reason to believe that the situation should worsen as students get older), we can estimate that a third of Michigan students leave public school lacking basic skills.

Interestingly, this rather rough way of estimating the number of students lacking basic skills generates a figure surprisingly close to the number in our prior estimate. If a third of students who enter high school in Michigan leave lacking basic skills, the figure would be around 39,900. According to our prior estimate that 29,085 students drop out and 14,848 students enroll in remedial education, a total of 43,900 students leave high school each year lacking basic skills. Only 4,000 students separate the two figures.

If we assume that these 39,900 students are roughly two years behind in their skills and if the cost of handling their lack of skills is roughly equal to the cost of teaching those skills in high school, then the lack of basic skills costs Michigan employers and schools of higher education approximately $523 million per year. Using the last three strategies we are arriving at annual figures close to a half-billion dollars.