The report card is in on the California high school exit exam, and it's flunking. Or rather, too many students are flunking.

Which means that despite happy talk from Gov. Gray Davis, it will almost certainly be at least two or three years before anyone knows for sure the significance of diplomas earned from high schools in this state.

For it now looks like at least 20 percent of all next year's high school seniors probably would not graduate if passing the exit exam remains an absolute requirement.

Reed Hastings, president of the state Board of Education, opined to a reporter, "It's unacceptable to have 20 to 30 percent of the kids not getting a diploma."

That's about what the nongraduation figure would be. Although some current high school juniors have taken the exam three times, 38 percent of the class of 2004 has yet to pass the math portion of the exam. That's 172,000 juniors who have failed the test multiple times.

This dismal performance comes on a test where passing grades are attained by getting just 55 percent of the answers right.

Things are not quite so bad on the verbal side, where 19 percent of students who tried have still not passed. Altogether, almost half those who have taken the test in the first class for which it is required have so far failed to pass one section or both. So it may be optimistic to think the nongraduation rate would be as low as 20 percent.

This did not prevent Davis from greeting a comprehensive study on the test with hosannas earlier this month.

"The California High School Exit Exam is serving as a powerful motivator to schools and students," he said. "The exam has improved curriculum and instruction. It is focusing schools and students on the need to reach higher standards."

Not exactly.

More accurately, the lousy performances on the test have focused flunking students and their advocates on ways to either dumb it down or make it irrelevant.

One lawsuit on behalf of disabled students asks that they be exempted from the exam, largely because they have never been taught material needed to pass. And curriculum has indeed been lacking in many schools.

Minority students protested around the state this month claiming the test "puts us in a position to compete with students who have resources we don't."

But in fact there is no competition on this exam. If everyone gets a passing grade, everyone passes.

Yet, there are valid reasons why kids fail, according to the new study from the Virginia-based Human Resources Research Organization. "Low student attendance and motivation were frequently cited (by teachers) as contributing factors," the report said. "Students do not always take advantage of remedial activities that are offered, particularly summer programs."

In short, the study indicates that eliminating or delaying the exam as a graduation requirement, as the state school board most likely will do in July, might reward lazy students who didn't bother using opportunities to make up material not offered to them at the elementary and junior high levels.

It would also be a blow to employers and consumers who hoped the test would at last provide a firm measure of what a high school diploma means.

For as things now stand, curriculum at high schools in various parts of this huge state varies so greatly that no one can be certain what graduates know.

Will a recent grad hired as a grocery clerk be able to add up a bill accurately if the check-out computer breaks down and can't read bar codes?

Will a graduate hired as a secretary understand the meaning of sentences dictated by the boss and then be able to clean things up a bit while typing on a computer?

That's part of what the math and verbal sections of the exam measure. Many past grads have lacked even the rudimentary academic skills needed for entry-level slots and they've had to be educated on the job or not at all. Part of the push toward educational improvement comes from businesses interested in a better-qualified work force.

But there is hope. The thorough HRRO study of the exam indicates students in subsequent years may do better than the class of '04. "Recent changes ... offer hope for improve(ment) for the class of 2005 and beyond," the study says. "Coverage of the content ... has increased at both the middle and high school levels. Students in the class of 2006 and beyond are receiving considerably more benefit from the adoption of textbooks aligned to the (exam)."

Which means that even though the exam has flunked for now as a graduation must, as have almost half those taking it, there may come a day in the not too distant future when everyone will know that California high school graduates really have learned certain minimum skills.