You have been hired as an economic consultant by a large urban school district (Los Angeles Unified School District, or LAUSDfor short). A recent report shows that more than 30 percent of LAUSD students who graduated in 2019 should not have been granted diplomas. In some cases, students who received diplomas had excessive absences, in other cases, students were granted credits for courses that they did not take.

The LAUSD superintendent has asked you to provide recommendations on how the district can prevent this type of behavior from happening again in the future.

At present, LAUSD has an accountability system in place that ranks schools based on (1) how many students met or exceeded academic standards ("proficiency rate") and (2) the change in the school-wide proficiency rate relative to the previous academic year. At the high school level, graduation rates also factor into a school's ranking. Rankings are published every year and students transitioning to high school are allowed to choose which school they would like to attend. There are no consequences applied to schools that receive a low ranking but principals and teachers in the highest ranked schools receive an annual bonus equal to 5 percent of their salaries.

You need to provide the superintendent with one or more recommendations for changes to existing policies or new policies that the district can implement to increase graduation rates while also making sure that students who graduate have completed all of the requirements for a high school diploma. The superintendent is especially interested in your recommendations that are based on economic reasoning and empirical research.