Only two-thirds of Washington state's public school students who should have graduated in 2001 actually received a high school diploma.

According to a new study funded by the Bill and Melinda Gates Foundation, the graduation rate for high school students is 67 percent - much lower than the official state statistic of 82 percent.

''We're losing a third of our kids," said Tom Vander Ark, the foundation's executive director for education.

''We're losing about half of our African American and Hispanic kids. They never graduate from high school." The study, conducted by the Manhattan Institute's Center for Civic Innovation, uses a different formula from the one employed by the state.

To come up with its graduation rate, the state has traditionally looked at the number of students who enroll for their senior year in high school and compare that with the number who obtain their diploma.

But most students who drop out of high school leave long before they become seniors, said researcher Jay P. Greene.

The problem with the state's tabulation *TATis that ''it's only telling you the percentage of students who make it to the 12th grade," he said. ''Unfortunately, most students who drop out of high school do so earlier, usually in the ninth and 10th grades."

Greene, a senior fellow at the Manhattan Institute, decided to look at the actual number of students who entered high school in 1996-97 and contrast that average with the number of graduates in 2001. He also adjusted for students who move in and out of the school system.

The state's official dropout rate can also be misleading, Greene said, because it doesn't count the number of students whose whereabouts are unknown. Only students who fill out the paperwork to remove themselves from school are considered dropouts, he said.

But the reality is, when a kid drops out of high school, they simply stop attending school.

Greene's study doesn't include students who ended up getting a General Educational Development (GED) certificate.

One of his study's goals was to assess the performance of high schools, so students who drop out to get a GED should not be considered a ''success," he said.

Statewide, whites and Asian American students are more likely to graduate than their Native American, Hispanic and African American counterparts.

Based on Greene's study of 15 Washington state school districts, Asian Americans in the Bellingham School District have the highest graduation rate in the state at 100 percent. The lowest rates are for Native Americans in Tacoma and Hispanics in Everett, both at 27 percent.

Spokane public schools have a graduation rate of 71 percent, according to the study. But blacks and American Indian kids in the Spokane district still lag behind.

Kids drop out for a variety of reasons, said Dave Petty, Spokane's director of student services.

Some say school is boring, that it has no relevancy for them. Others point out that their friends have dropped out or that no one in their family has ever received a high school diploma. Petty also hears from kids who end up working full time, getting pregnant or feel that they have no choice.

''Like adults, kids have crises," said Greg Baker, principal of Spokane's Havermale Alternative Center. ''Something happens in life and they start missing school. When they miss a lot of classes, they fail and eventually lose sight of graduation being a possibility."

To help them get back on track, it's essential that these kids enter smaller, more personal learning environments, Baker said.

Students who can't adjust to the large comprehensive high schools often find themselves at Havermale, where they receive individualized instruction.

Teen moms can drop off their babies at the school's child-care center so they can attend class. Those who work full-time can go to school in the evening or come twice a week. The center offers a variety of programs to meet different students' needs, Baker said.

Students appreciate the flexibility, he said. And they like the fact that everyone knows their name.

''Students must feel a connection to their school," Petty said. ''And they can't feel that connection unless they have a significant relationship with an adult."

Thanks to a $16 million grant from the Gates Foundation, the Spokane School District has spent the past three years studying how to create smaller learning environments within its large high schools. Petty and other administrators also have asked graduating seniors about their experiences in high school to see what worked, what didn't and what improvements the district needs to make so that students stay in school.