State and local education officials in New Jersey tout the state's high school graduation rate as the highest in the nation. At the same time, independent research indicates that 40 percent of students in Newark drop out and only half of African-American students in urban districts graduate. Meanwhile, there is increasing concern in New Jersey over the meaning of a high school diploma as a sign of academic achievement in a state where nearly 20 percent of students are unable to pass the mandatory High School Proficiency Assessment required for graduation, but still receive a diploma by passing the Special Review Assessment, raising concerns that this may provide a "back door" to a diploma for students who have not been adequately educated. This study documents the public costs of high school dropouts in New Jersey. It calculates the annual cost of New Jersey dropouts caused by reduced tax revenue, increased Medicaid costs and increased incarceration costs. It also documents the employment impact that dropouts have on the New Jersey economy. It examines objective evidence from the labor market to assess whether employers value a high school diploma as highly in New Jersey as in other states. Finally, the study examines how competition from private schools raises public school graduation rates, and it calculates the dollar value of the public benefits that would follow from increasing New Jersey's public school graduation rates by enacting even a modest school choice program. (Contains 10 figures, 7 tables and 33 endnotes.) [This study was released jointly by the Friedman Foundation for Educational Choice, the Latino Leadership Alliance of New Jersey, Excellent Education for Everyone and the Black Ministers Council of New Jersey.]