This study focuses on school system characteristics that affect the dropout rate in the Chicago public high schools. Although the primary variable for investigation is attendance rate, other school system variables examined include type of school, percentage of low-income students in a school, and the overall level of student ability for a school as indicated by average reading scores. Chapter 1 provides statistics on enrollment and dropout rates for each of the four types of high schools in the Chicago system: selective academic, selective vocational, nonselective integrated (consisting of at least 30% white students), and nonselective segregated (consisting primarily of minority students). Chapter 2 provides statistics on the percentage of low-income students, average reading scores, school attendance rates, and school dropout rates for each type of school. The third chapter documents the process of recording attendance rates through sample attendance report forms submitted by high school principals during the 1984 school year. Chapter 4 is a critique of the state funding formula, arguing that it results in a lack of monetary incentive to reduce the dropout rate and chronic truancy. The final chapter relates the dropout rates of schools to attendance records, showing that schools with high dropout rates had proportionally fewer days of attendance than schools with low dropout rates. A system of reimbursement based on rewarding school systems on a per diem basis for student attendance is therefore recommended. References are included. (TE)