On paper, Muncie Central High School appears to be rising to the challenges of Indiana’s changing economy. As education becomes more essential for finding good jobs, the high school posted a graduation rate of 94%.

But because of a loophole in state law, that figure hides the fact that more than 100 students who were expected to graduate last year left the school without diplomas.

That group — though officially classified as leaving to home-school rather than dropping out — likely included struggling students who were not on track to graduate and teens the school incorrectly categorized when they left for alternative education options, according to state and Muncie school officials.

Out of all high schools in the state, Muncie Central recorded the highest number of students in the class of 2018 leaving to home-school. If those students were counted as dropouts, Muncie Central’s grad rate would fall to 68% — a drop of about 26 percentage points.

This problem is creating an underground pipeline of teens who aren’t prepared for careers and fueling the economic struggles of a city hollowed out by the decline of auto manufacturing in Indiana. Changes in technology and the economy mean that middle-class careers in Muncie now require education, leaving young adults who lack diplomas with limited opportunities.

“You are getting a set of students who are not going to be prepared to thrive in a 21st-century economy,” said Muncie School Board President James Williams. “They are going to be on the fringes of our economy.”

Even as Indiana policymakers say they want to hold high schools more responsible for preparing students for college and careers, a Chalkbeat investigation has revealed that state education officials have no way to monitor how many of these teens slip through the cracks — and leaders have allowed the problem to persist for years in schools such as Muncie Central.

Nearly a decade ago, The Star Press in Muncie revealed that a spike in the number of students leaving to home-school helped boost the graduation rate in the district. Between the classes of 2006 and 2009, the paper reported, the number of Muncie students leaving to home-school rose from 11 to 146.

Despite that scrutiny, however, the high numbers have persisted — with more than 1,000 students who were expected to graduate in the years since 2010 instead leaving to home-school. Those students were enrolled in Muncie Central and Muncie Southside High School, which is closed.

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Now, Muncie schools have new leaders — including Williams — who were installed after state lawmakers handed control of the financially troubled district to Ball State University in 2018. And those officials have already started putting in place procedures to stem the tide of students leaving to home-school.

Lee Ann Kwiatkowski, the district’s newly hired CEO, outlined in emails the steps the district is taking this year to educate high schoolers who are struggling and ensure that parents who withdraw their children to home-school have education plans — going beyond state requirements.

“Parents have the right to choose the best option of schooling for their child,” Kwiatkowski wrote. But she described Muncie Central as “an excellent option for students” with strong teachers, extracurricular activities, diversity, and several pathways for students to prepare for college or careers.

Muncie Central, which has a C rating from the state, is one of dozens of high schools where significant numbers of students left without diplomas over the past several years.

A Chalkbeat analysis of Indiana Department of Education data found that most teenagers who left to home-school were clustered in just 61 of the state’s 507 high schools in the class of 2018. Other campuses on that list include alternative schools designed for students who struggle and troubled schools under intense pressure to improve, such as Howe and Manual high schools, which were the focus of the recent Chalkbeat investigation.

Read more: Find how many students left your high school to home-school

Indiana lawmakers passed legislation earlier this year that aims to reduce the number of students labeled as leaving to home-school at some schools and improve the accuracy of grad data. But education officials have not implemented it yet, and it’s unclear whether it goes far enough to significantly reduce the problem.

Grad rates are one of the most public measures of success for high schools and drive their state evaluations, making results high stakes. That’s especially important for Muncie, which loses hundreds of students to neighboring districts.

Muncie Central Principal Chris Walker said in an interview with Chalkbeat in June that the school does not mislabel students as leaving to home-school to inflate the Muncie grad rate, but he did acknowledge the pressure Indiana high schools face.

“One of the charges I have as principal of the high school is to ensure, obviously, that the largest number of students we possibly can are graduating,” said Walker, who took over in 2016. “But we also need to make sure that we have as high a graduation rate as we possibly can.”

Walker said students who planned to pursue other educational programs — including high school equivalency preparation, virtual schools, or adult education — were labeled as leaving to home-school, which he believed was appropriate. Very few students are “just coming in and giving up and saying, ‘Hey, I’m withdrawing. I’m done. Count me as a dropout,’” Walker said. “They’re wanting the next alternative.”

Read more:Committee recommends change to Indiana A-F school grades, closing home-school loophole that skews graduation rates

But those withdrawals should not be coded as home-schooling, according to the Indiana Department of Education. Some of them, such as students who pursue high school equivalency preparation, should be categorized as dropping out. Others should be labeled as transfer students, who are removed from the graduating class if they enroll in another school.

Kwiatkowski said that since she took over the district in July, she cannot speak to past practices. But she said the district has reviewed the exit codes and is using them correctly.

Another Muncie official attributed the departures from school in part to the city’s working-class history, built by generations of manufacturing workers who didn’t need high school diplomas to secure good jobs. That culture takes time to change, said Jo Ann McCowan, the district director of career, curriculum, and assessment, who has worked in education for over 30 years.

“When a parent and a student come in to withdraw from school, you can’t hardly talk them out of it,” McCowan told Chalkbeat in June. If school officials refuse to let a student drop out, she added, “Many of the parents will tell you on their own, ‘Well, we’re going to home-school.’”

For parents to withdraw their children to home-school, Indiana law only requires them to submit a form.

Located about an hour outside of Indianapolis, Muncie is a former industrial hub where the population has been declining for decades. Ball State, a campus with about 23,000 students, and IU Health Ball Memorial Hospital are the largest employers.

The remaining manufacturing industry has changed: In 1970, more than two out of five U.S. manufacturing jobs went to employees without high school diplomas. The majority of manufacturing workers now, however, have at least some college.

“We still have a strong manufacturing industry, but it’s different,” said Jay Julian, president and CEO of the Muncie-Delaware County Chamber of Commerce. “The days of graduating high school and going into a low-skill, high-wage job are gone.”

In Muncie, the median household income is $33,000 — more than $23,000 below the state average, according to census data. High school graduates earn just $22,000 per year. And nearly a third of adults without high school diplomas live in poverty.

It’s a struggle Jordan Harris has lived through. In high school, he expected to graduate and get a job at General Motors. But in 2004, he became so discouraged he dropped out to work at Taco Bell. With Muncie’s low cost of living, working in fast food can pay the bills — but just barely.

“I haven’t been saving up for retirement. I have no medical insurance. My dental health is failing,” said Harris, 33, who recently returned to school to earn his diploma and become a pharmacy technician. “You get your head underwater — it’s really hard to get it back above.”

With the changing demands of the economy, it’s essential for students to have a high school education and many students who leave Muncie Central to home-school are not on track to graduate, said Williams, the school board president appointed by Ball State in 2018.

“Statewide, we have too many kids, in my view, who are checking out of public education for all the wrong reasons,” said Williams, a former circuit court judge. “It’s frankly unacceptable.”

The issue came to a head earlier this year. At the state level, policymakers began to scrutinize distorted grad rates and passed the law designed to tackle the problem. Meanwhile, Williams was troubled to learn from a district enrollment tally how many juniors and seniors in high school were leaving to home-school.

This year, Muncie school officials have begun a new approach designed to keep more students in school. Kwiatkowski said by email that the school system is overhauling programs for students who might consider leaving and the process for students to withdraw to home-school.

Muncie Central created an alternative program with a flexible schedule to help students graduate that enrolls about 35 students, according to Kwiatkowski. The district also modified an online learning program to require students to come to school weekly to meet with an instructor.

At the same time, officials have made it more difficult for students to leave to home-school. If parents wish to withdraw their children from Muncie schools to home-school, the district asks them to provide the curriculum plan for math, English, science, and social studies, according to Kwiatkowski. School staff discuss possible supports and “reiterate that we believe Muncie remains the best option,” she wrote.

Even in the first few months, the approach has drastically cut the number of students leaving to home-school, according to Kwiatkowski. Last year, 53 students left to home-school between the start of the school year and October 7.

During the same period this year, zero students left to home-school.