School Dropout Demonstration Assistance Act of 1987

School Dropout Demonstration Assistance Act of 1987 - Authorizes appropriations for FY 1988 through 1990 for grants to local educational agencies (LEAs) for demonstration programs of dropout prevention, reentry, and information.

Allots specified percentages of such funds to various categories of LEAs. Limits the Federal share of project cost to no more than 90 percent in the first fiscal year, 80 percent in the second, and 70 percent in the third.

Sets forth grant application requirements, including plans for dropout information collection and reporting systems.

Sets forth authorized activities for which such grants may be used.

Requires that: (1) at least 30 percent of grant funds be used for dropout prevention activities; (2) at least 30 percent of grant funds be used for dropout reentry persuasion and assistance activities; and (3) not more than 15 percent of any grant be used for administrative costs.

Requires that grants be used to supplement other funds.

Requires grant recipients to cooperate with the coordination and dissemination efforts of the National Diffusion Network and State educational agencies.

Directs the Secretary of Education to report annually to the appropriate committees of the Congress on the activities under this Act.

Sets forth provisions for auditing and withholding payments.

Directs the Secretary to use a specified amount to conduct a one-year study of the nature and extent of the dropout problem.