This paper examines California education policy and its impact on school dropouts. It first assesses the difficulty of defining the scope and context of the dropout problem by summarizing the principal research findings on its causes. The paper then proposes a policy framework for mapping state policy strategies. The central question posed in the paper is whether the state suffers from policy dysfunction by, on the one hand, promulgating policies to keep students in school, while on the other hand promulgating policies that unintentionally drive students out of schools?