This report summarizes the results of a large-scale study of the dropout problem in Texas. The report is divided into three major sections which deal with these questions, respectively: (1) What is the magnitude of the dropout problem in Texas? (2) What is the economic impact of the dropout problem for Texas? and (3) What is the nature and effectiveness of in-school and alternative out-of-school programs for dropouts in the state? The findings are presented in detail, analytically and statistically. General conclusions are that the dropout problem is growing and particularly severe for Black and Hispanic youth. Implications of the research point to the need for the development of: (1) a standardized dropout definition; (2) standards for calculating the dropout rate; (3) a centralized and standardized system for collection of dropout data; (4) tracking mechanisms to increase the reliability of dropout counts, resulting in more appropriate program interventions; (5) early dropout intervention efforts; (6) model dropout prevention and recovery programs for particular types of high risk groups; (7) additional dropout prevention and recovery programs; (8) systematic approaches to the evaluation of dropout prevention and recovery efforts; (9) linkages between public and private sector initiatives; and (10) an investment in dropout prevention and recovery which is commensurate with the magnitude of the problem. A directory of dropout programs in Texas and a bibliography are included. (KH)