A report from Saskatchewan's provincial auditor says more work needs to be done to engage First Nations and Métis students.

According to the auditor's latest report — which was released Tuesday — as of last year, 42 per cent of Indigenous students graduated from high school within three years of turning 18. That's half the non-Indigenous student graduation rate of 84.5 per cent.

The numbers are even lower in the Living Sky School Division, which includes North Battleford, Unity and Spiritwood. There, only 32 per cent of Indigenous students graduated last year, 10 per cent lower than the provincial average.

In a report, provincial auditor Judy Ferguson said student engagement was critical for the school board to keep Indigenous students in the education system.

"Students that are not sufficiently engaged in school are at an increased risk of not graduating, which may negatively impact future employment opportunities for these students," read the report.

Ferguson noted that a provincial survey showed Indigenous students in Living Sky School Division had higher levels of depression and anxiety than the national average. Meanwhile, they showed lower numbers in positive homework behaviour and positive relationships.

"For the five schools we visited, the schools did not effectively set out clear responses to the survey results in the reflection forms," read the report.

"For example, the schools' responses on the forms did not set out specific actions to identify the underlying causes of the results, or to address those causes."

The report asked the school division to set out timely action plans on the engagement results and compare the results year-over-year.

It also asked Living Sky to have a detailed discussion on the results with its elders' council.

"The Council provides the Division with a connection to local First Nations and Métis communities," read the report. "The Council has a common interest of improving graduation rates for First Nation and Métis students."

Increasing grad rate 'not good enough': division

Although the graduation rate for Indigenous students in Living Sky School Division is low, director Randy Fox said it has actually increased.

Last year, the graduation rate was 25 per cent — meaning in the past year, the division has gone from having one in four Indigenous students graduating to one in three.

"That's low. And it's not something any of us feel good about," Fox said. "I think that's the first piece of it — for everyone to accept that it's not good enough."

Recently, the division has started some new programs like land-based learning, a graduation coach program at North Battleford Comprehensive High School, and reading coaching at Spiritwood High School. Fox said initiatives like those are making a difference for students and resulting in a higher level of credit attainment than the division has ever seen before.

It's also started to give more support to elementary students so that skills for success are instilled early on.

"School can be obviously a very challenging place and a very discouraging place if you can't read at least close to a high school level," Fox said. "I know we have a long ways to go as far as graduation rates, but the good thing is we are making some progress and I think we're on the right track."

In the school division, on-time graduation rates have gone up in the last two years, as have extended graduation rates.

Province-wide, graduation rates for Indigenous students are on the rise. In 2011, 33 per cent of students graduated, compared to 42 per cent last year.

Saskatchewan wants to grow graduation rates for First Nations and Métis students to at least 65 per cent by 2020.

With files from Bonnie Allen.