In the last two decades, the Education Sector in Kenya and other parts of the world has faced many challenges particularly dropout of students which is one of the indicators of low Internal Efficiency levels. This study analyzed and determined the student dropout levels against economic factors in Public Secondary Schools in Kericho District of Kenya for the period between 2004 and 2007. The Internal Efficiency indicator was dropout rates which were studied against the independent variable namely: Economic factors in School Size, School Type and School Regime categories of schools. The study was informed by the Production Function Theory. Data were collected from Heads of schools and Guidance and Counseling Teachers in sixty-four out of seventy-five public secondary schools in the District. The study used Descriptive Survey as a method of data collection and employed Cross Sectional Research Design as a framework for data collection. Primary data on Internal Efficiency particularly dropout rates was obtained from the respondents using structured questionnaire. Documentary sources were used to obtain secondary data on dropout levels from the sample schools for the years 2004-2007. Reliability of research instruments was ensured using Cronbach’s Alpha reliability test which attained a reliability coefficient of α=0.819. This reliability coefficient met the minimum threshold. Both Descriptive and Inferential Statistics were used for data analysis. Weighted Index and ANOVA were used to establish the differences that existed between the variables of the study. Test of significance was set at 5% level. Statistical analysis was done using Statistical Package for Social Sciences (SPSS) version 17 for windows. The study revealed that Economic Factors had the highest contribution to student dropout in all schools irrespective of school characteristics. In addition, this study found that Guidance and Counselling was widely used as a measure to minimize negative Internal Efficiency indicators. The findings of the study are beneficial to the Board of Governors, the Parents Teachers Association, Principals and Ministry of Education in making decisions about School Size, School Regime and School Type, with respect to dropout rates.