A chart in the report.

Six years after Schools Chancellor Joel Klein vowed to crack down on a bureaucratic loophole that allowed principals to hide students’ failure to graduate high school, a new report (PDF) suggests that the loophole remains open and may be growing wider. The report calls for closer study of the students classified as “discharges” — departures from the system, but not dropouts — through steps including a state audit.

The report says that 21 percent of students who entered high school in 2003 both never graduated and were never counted as dropouts, instead falling into a category known as “discharges.” The percentage was up from 17.5 percent among the Class of 2000. The rate is especially high among special education students, and includes a remarkable jump in 2005, when the special education discharge rate shot up to 36 percent from 23 percent in a single year.

Students classified as discharges can include those who left the school system for legitimate reasons, such as moving to another state, deciding to enroll in an outside G.E.D. program, or death. But some advocates have argued that principals can also misuse the discharge code, entering students who simply dropped out in order to inflate their graduation rate artificially.

A recent audit of 12 high schools in New York State by the state comptroller, Thomas DiNapoli, found that high schools classified students as G.E.D. discharges who did not actually enroll in a G.E.D. program. “As a result,” DiNapoli’s audit concluded, “the report cards understated the number and percentage of dropouts and overstated the percentage of graduates for some of the schools we reviewed.” The audit did not probe any New York City high schools.

Two persistent critics of the Bloomberg administration compiled the report: the executive director of Class Size Matters, Leonie Haimson, and a Ph.D. candidate at Columbia University, Jennifer Jennings. Jennings was the author of the now-defunct Eduwonkette blog, whose analysis of New York City education data became (as I reported) a thorn in the Bloomberg administration’s side. The report is being released at a press conference this morning held by a third critic, the city’s public advocate, Betsy Gotbaum.

City school officials were already disputing the report’s claims yesterday, before it had been released. About 90 percent of high school discharges are for students who are enrolling at a private school or moving out of the city, DOE spokesman Andrew Jacob said. The financial firm Ernst & Young includes in its annual audit of the city’s graduation numbers an examination of whether schools properly documented that students enrolled where they said they would, Jacob added. And he said that the slightly higher number of discharges in 2007 represents a fluctuation, not a trend, with the DOE’s internal numbers indicating that the number of discharges dropped in 2008.

In an interview last night that was embargoed until the formal release of the report today, Jennings, the report’s lead author, said that the report is part of her dissertation, which looks at the effects of accountability policies. She said that the report should not be seen as a critique of the Bloomberg administration. Rather, she theorized that the federal No Child Left Behind law might have given principals an incentive to use the “discharge” code to inflate their graduation rates artificially.

One highlighted point in the report is a sharp rise in the percentage of first-year high school students who are discharged. Jennings speculated that the rise could be a result of a policy in NCLB that exempts principals from being held accountable for students who have not been at a school for more than five months.

She said the report’s main purpose is to call attention to students who may be being overlooked — and to urge policymakers to study who they are and why they are leaving. “It’s a problem that hasn’t been solved,” Jennings said. “But for the benefit of the 20,000 or some kids who are discharged every year, it’d be great to know.”

There’s tons more information in this report; we’ll pull out other interesting parts as we find them.