COLUMBIA — South Carolina’s education system needs dramatic improvement for the state to compete economically, according to a report Monday from the Education Oversight Committee.

The report, titled “A Wake-Up Call for South Carolina,” shows the state is falling behind on its benchmarks and, without changes, won’t meet the group’s 2020 goals.

“We need a new sense of urgency in our state about improving education,” said EOC Chairman Neil Robinson, a lawyer with the Nexsen Pruet firm. “We cannot afford to be complacent.”

The nonpartisan EOC was created by the state’s 1998 education accountability law and consists of 18 business, legislative and education leaders. They are tasked with evaluating the state’s progress toward meeting education goals and issuing state report cards for schools and districts. It reset the goals two years ago after legislators approved a revamping of the state’s end-of-school-year tests. The initial goals for 2010 were not met.

The “2020 Vision” focuses on four areas: reading proficiency, high school graduation, workforce readiness and failing schools.

Rep. Kenny Bingham said improving education must become a priority for everyone — from politicians to parents — who work together to bring about true innovation and change, rather than getting bogged down in rhetoric.

“Education and economic development ultimately go hand in hand,” said Bingham, who leads a House Ways and Means subcommittee that writes the budget for K-12 public schools. “We need an educated workforce to compete for jobs in the 21st century.”

A key indicator for students’ success is reading ability. Various studies show children who aren’t reading on grade level by third grade are far more likely to drop out of school, as they fall further behind their peers with each passing year.

The goal for 2020 is that 95 percent of fourth- and eighth-graders will be proficient readers.

Last year, results on nationally standardized tests showed nearly 40 percent of South Carolina’s fourth-graders and 30 percent of eighth-graders could not read on grade level. Fourth-graders performed better on state-standardized tests, with 20 percent not passing, but eighth-graders performed slightly worse.

That hurts the state’s job-recruiting efforts because companies need a reliable pipeline of highly qualified workers. Technical colleges do a great job of training the start-up workforce, but a main concern for company executives looking to expand or locate their business in the state is whether they’ll be able to fill jobs with competent people decades after any multi-million-dollar investment, said Jim Reynolds, chairman of the state Chamber of Commerce.

And such dismal early reading scores don’t boost confidence, he said.

“We need to embrace fundamental change in K-12 education,” Reynolds said.

The EOC wants South Carolina’s on-time graduation rate to top 88 percent by 2020. That refers to high school students earning a regular diploma in four years. The target for 2011 was 76 percent; the actual rate came in 2.5 percentage points lower.

If the current trend continues, only one-third of high schools statewide will actually reach the 95 percent goal for proficient reading, according to the EOC report.

On workforce readiness, just two-thirds of high school graduates enrolled in two- or four-year colleges last year, representing no improvement from two years earlier.

The EOC wants no school to be rated “at risk,” the bottom of five categories, on state report cards by 2020. Last year, 69 schools rated in the lowest tier, unchanged from 2010.

The state’s 2020 goals are different from the federal goals set by No Child Left Behind.

That federal law expects 100 percent of students to test proficient in math and reading by 2014, regardless of race, disability or English-speaking ability. Schools that miss just one of their targets face consequences that increase yearly. The Obama administration has encouraged states to apply for a waiver to the law’s stringent standards. South Carolina Superintendent of Education Mick Zais plans to submit the state’s application this month.