When most people think about work force training and the knowledge economy, they immediately think of our major research universities - and rightly so. That's where many of the great ideas that will ultimately shape and propel our nation's economy will see their first light.

What we often fail to grasp is that the knowledge economy is already here, and it's not limited to "futuristic" companies staffed by nerds and computer geeks. It's all around us.

Modern manufacturing continues to experience dramatic productivity gains made possible by the introduction of more sophisticated technology. While requiring fewer workers, the typical manufacturing operation requires more intelligent workers, people who can think on their feet and are not afraid of hard work. The same is true for the service sector, and experts tell us this trend will continue.

The only difference is that the pace of change will quicken even more.

What we as a people often forget is that, even in the richest, most advanced nation in the world, most of our adult population does not have a college degree, much less an advanced degree in some cutting-edge math or science discipline.

For the majority of America's work force, high school -maybe some junior college - is the end of the road, at least in terms of formal schooling.

That's why public schools are so important to our country's economic well-being. Their ability to produce the kind of worker demanded by the knowledge economy will go a long way in determining whether we continue to be a strong and prosperous nation, and whether we will continue to enjoy our high quality of life.

It will also determine whether or not we are able to pass along the American Dream to our children.

But this is not just a national issue, far removed from the concerns of Main Street USA. Contrary to all the election babble about education, the federal government only provides about 7 percent of the total funding for public schools. Public education is still a local responsibility.

Take a good look at the kids coming out (either through graduation or by dropping out) of your local high schools. They will form the backbone of your community's work force for the next 50 years.

If they're hard working and smart, your community is likely to grow and prosper, attracting companies that offer good paying jobs and will contribute significantly to the local tax base. If your schools consistently produce high drop out rates and low test scores, companies will likely abandon your community over the years in search of a better labor pool.

Fifty years. Think about it.

For executives of companies that are actively looking for the best location to expand their operations, the quality (and quantity) of the work force is perhaps the single most important issue facing them.

Sure, taxes, business climate, transportation infrastructure, quality of life and financial incentives - they're all important in determining where to locate that next facility. But not having an acceptable work force is a show-stopper, regardless of how favorable the other factors are.

That's why, for the past 12 years, Expansion Management has published its annual Education Quotient(tm) study of secondary school districts nationwide. It provides our readers with a basis for comparing the type of work force they are likely to encounter in various communities throughout the United States.

Criteria for Selection

This year's EQ includes all school districts that are located in cities with a minimum population of 15,000 and which have an enrollment (K-12) of at least 4,800 students. This resulted in a study of slightly more than 1,500 school districts nationwide.

A Few Minor Changes

This year's EQ contains a few minor changes from last year's rankings.

The most noticeable difference is cosmetic. We have adjusted the old 100-point numbering system that gave districts a score between 50 and 150, replacing it with a numbering system that gives scores between 1 and 99. This number reflects the national percentile ranking of that school district in that category.

We also made a minor change in the formula for the graduate outcome index, giving college board scores slightly more weight than the graduation rate.

Finally, we reduced the number of districts in this year's study from 2,500 to 1,500 because of internal staff changes. We intend to resume evaluating 2,500 districts with the 2003 EQ.

How we evaluate the districts

As in previous years, the EQ score is still based upon three primary categories: the graduate outcome index, the resource index and the community index.

By far the most important component of the EQ is the graduate outcome index (GO), which attempts to measure how well a school district performs its basic mission of educating children. The GO compares the average college board - either ACT or SAT - scores among each of the 1,500 school districts in order to measure how much their students learned while in high school.

The reason we use college board scores is that students around the country take the same test. While most states now have standardized tests to measure learning in a variety of disciplines, unfortunately they don't lend themselves to a nationwide comparison, which the ACT and SAT do.

The other major component of the GO index is the high school graduation rate.

Each state seems to measure graduation rates differently. Some measure the rate in a four-year period, others in a one-year period. Some attempt to track dropouts and transfers to determine if they graduate within a five-year period, others don't. Therefore, we had to establish our own definition in order to ensure comparability.

In the case of this year's EQ, it was the number of 11th grade students in the fall of the 1999-2000 school year compared with the number of students who graduated in the spring of the 2000-2001 school year.

The resource index (RI) attempts to measure a community's financial commitment to education. The RI is the second most heavily weighted category and consists of such things as per-pupil expenditures, student-teacher ratios and beginning and average teachers' salaries. This is the area on which most local elections focus.

The community index (CI) attempts to measure the education and income level of the adult population in the district. It consists of items such as the percentage of the adult population over 25 with at least a high school diploma, the percentage with at least a college degree and the average household income in the district, as well as the child poverty rate within the district. The CI is used primarily as a benchmark and has virtually no weight in the final EQ calculation.

Together, these three indices - the GO, RI and CI - produce the final EQ score.

What distinguishes the EQ from other rankings of school districts is that we don't believe that you can simply spend your way to excellence.

That's why the graduate outcome index is given more weight in our final calculations. We don't believe that higher teacher salaries, lower class sizes and higher per-pupil spending - while good things in and of themselves - are nearly as important as how much the students learn, and if they finish what they started by graduating.

The final rankings

Based upon their final EQ score, school districts are given one of five designations:

* Gold Medal - the top 17 percent of districts nationwide.

* Blue Ribbon - the top 33 percent of districts nationwide.

* Green Light - the middle 48 percent of districts nationwide.

* Yellow Light - the bottom 25 percent of districts nationwide.

* Red Light - the bottom 10 percent of districts nationwide.

Some observations

What makes for a good school district is a matter of perspective. In the final analysis, though, for employers it is the end result - knowledge and being able to finish tasks - that is much more important than the means it took to get there.

That's not to say that, as good citizens and as parents, it isn't important to understand the means to a good education.

The reason we collect the CI data is to measure the "silver spoon" effect on a school district. The presumption is that the children of adults who are well-educated and who earn a good income do better in school than do the children of adults who are less educated and whose income is substantially below the national average.

While this is unquestionably true, it is not because these high-achieving school districts spend more money, or have smaller classes, or pay their teacher more than do the less affluent districts. They don't. In fact, many of the districts that spend the most money on education produce the poorest results.

It also doesn't explain the continued excellence found in the Upper Midwest and in many rural districts throughout the country, where education and income levels are usually well below the national average, while test scores and graduation rates are among the best in the nation.

We find these trends year after year in our annual EQ studies.

So why the difference in results? We've argued for years that conscientious parenting - the ultimate form of mentoring - is the decisive factor. Without at least one parent or guardian pushing these kids along, most are probably doomed to a lifetime of failure or, at best, mediocrity.

Well-educated parents, and those who make a good income, understand the importance of a good education, and are more inclined to push their kids to work harder. Likewise, life on the farm is all about hard work, and education is simply another chore to be done well. In either case, students who grow up in these environments clearly seem to do better in school.

It sounds simplistic, but it bears repeating. Children are children - even when they are six feet tall and sport a goatee - and require a firm guiding hand. Making sure they study, do their homework, show up for class and are receptive to learning is not something you can simply dump in the laps of teachers and expect great results.

Sometimes you might get lucky, but the odds aren't in your, or your child's, favor.

But what does all this mean to typical executives trying to get a handle on the type of work force their companies are likely to encounter in various communities throughout the nation, or throughout a particular region?

It means that they should take a hard look at the secondary schools in any community you are seriously considering, and not just from the standpoint of where their senior managers can send their children.

No, what these executives need to look at is all of the school districts of any significant size and see what results they are producing. Every metro area has good districts and bad districts. Unfortunately, the bad districts often carry the name of the metro area itself.

Pay attention to the size of the district. Often, some of the suburban school districts are, in fact, larger than the urban school district.

The idea is to look at the totality of the metro area's secondary schools, and to base your own conclusions on the worker needs of your company.

Remember, what you are looking at is that community's work force for the next 50 years.

Bill King is chief editor and Michael Keating is research editor of Expansion Management magazine. They can be reached at BillKing@penton.com and MKeating@penton.com. Also contributing as research assistants were Linda King and Joyce Porter.

How We Calculate the EQ

A school district's Education Quotient(tm) (EQ) score is composed of three major indices: the Graduate Outcome, the Resource Index and the Community Index.

The Graduate Outcome measures the final output of a district's schools, and includes average college board scores and graduation rates. This is the most important and, consequently, the most heavily weighted factor in our final calculations.

The Resource Index measures a community's financial commitment to public education. It includes things such as teachers' salaries, student-teacher ratios and per-pupil expenditures. While important, it has a lesser weight in the final calculations because we feel that a school district should be measured by its results, not by how much money it spent.

The Community Index measures the economic and educational background of the adult population and has almost no weight in the final calculation. Instead, it is used as a benchmark for site selectors and other people engaged in evaluating a work force.

These three indices, as well as the final EQ score, are calculated on a scale of 1 (lowest) to 99 (highest), with 50 being the midpoint.

While the purpose behind the Education Quotient(tm) to provide our readers with a basis for comparing the type of work force they are likely to encounter in various communities throughout the United States, we touch base with school administrators on a regular basis.

"What Expansion Management magazine is doing is pretty much confirming what we have seen," said Robert Schiller, superintendent of education for Illinois. "Most states have their own accountability report card systems that are online. If [people] want to find more details about districts, and how they compare on a variety of additional indicators that we use, all they need do is visit our Web site."

Is there a correlation between our schools and the work force?

"Generally speaking, the students coming out of these highly rated districts are the ones who go off to our better colleges and universities around the nation," Schiller said. "I would then, by extension, believe that these are the students who are then going into the upper-tier ranks of our work force."

Christine Jax, commissioner of Minnesota's Department of Children, Families & Learning, said school districts in the state work directly with businesses when developing performance-based standards.

"Students have to actually show they know how to apply the information," Jax said. "They are not just able to take tests. They are able to actually apply what they learned. The performance-based standards came about because business said this is what was needed. We get feedback from employers on our work force. We work closely with the business community in Minnesota on making sure the work force measures up."

Accessing the Data

Gathering data on public school districts is no easy task, despite the tremendous amount of information now available to the public via the Internet.

In general, budget-related data is easily obtainable. What's harder to find, at least in some states, is the "accountability" data, primarily standardized test results.

While most state departments of education now have that data readily available, about one-third of the states do not make that data available on the Web. For those states, the only way to get the necessary data is to call the individual school district.

As you might imagine, the response we received was often closely related to how well the district's students' did on their college board tests.

If they did well, the superintendent's office would provide us the information in a matter of seconds. If, on the other hand, the district's scores were low, getting the information was like pulling teeth.

Even for the larger urban school districts, which continued to fare poorly in our ratings, not all the news was bad.

Barbara Byrd-Bennett, CEO of the Cleveland Public School District, pointed out that the number of students graduating from the district increased by 9 percent from 2000 to 2002. More importantly, according to spokesman Dan Minnich, the district had a 50 percent increase in the number of seniors who passed all five parts of Ohio's 12th grade proficiency test in 2002.

Standardized testing at the state level has become commonplace, and will become even more so with the enactment of the "No Child Left Behind Act."

Still, testing of students is not a new idea.

"We've been doing testing for 17 years," said Thomas Murphy, spokesman for the Connecticut Department of Education. "When we determine that large blocks of students aren't getting something, we can then turn to that issue and see how we are teaching and change that instruction."

States are realizing the importance of secondary education to work force development, and that their economies rest heavily on the shoulders of the workers of the future.

"One of the goals of Kentucky's education system is to prepare high school graduates for life after school, and whether they decide to pursue higher education or seek employment, their choices reflect positively on their school systems," said Lisa Gross, spokeswoman for the Kentucky Department of Education.

"A very high percentage of our high school students graduate, or obtain a diploma," Connecticut's Murphy said. "About 80 percent of those grads go on to some form of higher education. We have a skilled, educated and motivated work force that recognizes the importance of education. In many ways, that's attributable to the schools, and the culture developed from our public school system."