constitutes an appalling national waste. It confronts all States with greater demands on their manpower.

Significant progress has been made in fundamental and literacy education, particularly in the education of Negroes. Since 1940 the number of functional illiterates 25 years old and over has been reduced by 650,000. However, when we face the fact that there are, according to the 1950 census, 9.5 million functional illiterates 25 years old and over, we can understand the seriousness of this problem in terms of our need for trained manpower.

The extent to which potential trained manpower in the Nation has been lost is also revealed by the school retention record of the children entering public school 5th grade in 1943. By the end of the 8th grade nearly 200 of every 1,000 in this class had left school; by the end of

the 10th grade, 200 more. About 100 dropped out in the 11th and 12th grades. In other words, just about 500 of the 1,000 children who were fifth-graders in 1943 finished high school.

Although there is a close relationship between dropouts and functional illiteracy, delinquency, social and economic competence, and military service, figures show that those who drop out of school are not necessarily the least able ones. We lose each year hundreds of thousands of able youngsters. This loss is a serious national handicap. National and State groups are cooperating to correct the "dropout" situation; progress is being made, as is indicated by more than a 25-percent increase in the holding power through high school graduation since 1946. This is, however, a continuing problem which requires continuing attention.

Our national needs for citizens trained to fulfill their civic and technological responsibilities indicate that we must take positive steps to enlarge our educational opportunities and to provide each American youth with the best education possible.

The responsibility of facing and meeting these problems is that of our Nation as a whole. No agency, no group, no individual, nor any fragmentary collection of these can successfully meet the challenges outlined. They call for devoted and energetic action by an informed and enlightened citizenry. The Office of Education seeks to strengthen such efforts. It does so in many ways. Some of these are outlined in later pages of this report. Others have been mentioned briefly in terms of the contributions the State and White House Conferences can be expected to make to education, and those that legislation strengthening the research functions of the Office can effect.

Under Public Law 530, a series of State and Territorial conferences on education were authorized, to be followed by a White House Conference on Education late in 1955. The preliminary conferences are to enable educators and interested citizens in each State to discuss the educational problems of their State and make recommendations for appropriate action at local, State, and Federal levels. An appropriation of $700,000 for the State conferences is to be allotted among the States on the basis of their respective populations, but with no State receiving less than $5,000. In accepting its allotment, each State agrees to report the findings and recommendations of its State conference for the use of the White House Conference.

The White House Conference on Education, scheduled to be held in Washington, D. C., November 28-December 1, 1955, will be a conference broadly representative of educators and other interested citizens from all parts of the Nation. It will consider and report to the President on significant and pressing problems in the field of education. An appropriation of $200,000 for fiscal 1955 was made available for this Conference. The Commissioner of Education is authorized to accept and use funds, equipment, and facilities donated for the purposes of the Conference.

The White House Conference will be planned and managed by a committee of citizens and educators appointed by the President as representative of varying political, religious, racial, educational, and nonschool interests. The committee operates as an independent agency directly responsible to the President. It is not a part of the Office of Education, although it is assisted by the resources of that Office. The committee will determine the agenda for the Conference, its plan of organization, and participation in Conference matters by representatives from the States. The committee will also be responsible for followup reports to the Nation at the conclusion of the Conference. In a letter to the State Governors, President Eisenhower indicated

that he viewed the Conference as an opportunity to determine what steps Americans can take at local, State, and national levels to insure the best possible education for American youth.

A bill enacted as Public Law 531, approved July 26, 1954, authorized the Commissioner of Education to enter into contracts or jointly financed cooperative arrangements with universities and colleges and State educational agencies for the conduct of research, surveys, and demonstrations in the field of education.

Public Law 532, approved July 26, 1954, provided for the establishment within the Department of Health, Education, and Welfare of a National Advisory Committee on Education, to supply the "advice of a group of representative citizens on the initiation and conduct of studies of problems of national concern in the field of education and on appropriate action as a result thereof. The Committee is to be composed of nine members, a majority of whom shall be other than professional educators. The Commissioner of Education is to be, ex officio, a nonvoting member of the Committee. An appropriation of $25,000 was made available for the expenses of the Committee during the fiscal year 1955. The Committee is to meet not less often than three times each calendar year.

III. Services to Education in the United States

One of the major and traditional functions of the Office of Education is to provide information, consultation, and advisory service concerning the operation of State and local school systems throughout the Nation.

The major organizational units in the Office share in carrying out this responsibility. Highlights of these services in 1954 are in the sections which follow.

A summary which attempts to highlight activities of an organization tends to catalog observable achievements such as publications issued, money disbursed, conferences held, and the like. This summary is typical in that respect. However, the listings that follow can only suggest the services rendered. The significance of these services lies in less tangible elements. If these publications, if this money, if the conferences and other activities caused citizens and educators to provide children with more effective, more efficient educational experiences they were wise activities, and publications, and conferences. This summary does not attempt to produce evidence of the value of Office activities. It points out, however, an awareness that activities are means to an end, not ends in themselves. It comments that the Office is concerned with the significance of its services rather than with compiling a record of documents and activities.

STATE AND LOCAL SCHOOL SYSTEMS

The vastness of the American educational enterprise (26 million elementary school children in 134,000 schools and 7 million secondary school children in 27,000 schools in 1953-54) and the long tradition of State and local control of education have led the Office to rely very heavily upon the departments of education in the various States as intermediate points of contact. During recent years much of the work of the Office has been carried on in close collaboration with the State departments, including many joint conferences and parallel activities on educational problems of common interest and concern.

The services provided by the Office to State and local school systems are widely diverse and varied. Yet they are all directed at the common statutory objective of aiding "the people of the United States in the establishment and maintenance of efficient school systems."

State School Administration

The research program in State school administration during fiscal 1954 was focused on two major areas: (1) State educational organization, and (2) State educational records and reports. A series of studies was initiated on The State and Education, Part I of which it is entitled The Structure and Control of Public Education at the State Level. This study was designed to provide information for States which will embark on the task of reorganizing and revitalizing their State educational administration machinery in the immediate years ahead. This study will be printed in fiscal 1955.

Continued progress was made in implementing The Common Core of State Educational Information, Handbook I, of the State Educational Records and Reports Series. A companion pamphlet was completed in cooperation with State department of education representatives entitled, Suggested Program for Putting Into Practice Handbook I, The Common Core of State Educational Information. In addition, the data-collection program of the Office of Education was revised to correspond with Handbook I beginning with the Biennial Survey for the school year ending in June 1954. Work was initiated on Handbook II, Financing Accounting for Local and State School Systems. Considerable basic research was conducted as a necessary prerequisite to this second phase of the nationwide financial accounting project.

Local School Administration

Information was collected from 16 States as part of a study involving intensive investigation of the reorganization programs in 16 States where redistricting activity, involving participation by local

people, is currently, or has been recently, underway. Work on the study has involved identification and evaluation of a wide variety of factors influencing local people in establishing more effective school districts. These factors include: (1) the reorganization legislation, (2) State leadership and services, (3) local techniques and procedures, and (4) school finance provisions.

Descriptions of the redistricting programs were prepared for six of the States participating in the project and were checked for completeness and accuracy with State department of education personnel. Analyses of the State-by-State descriptions are being prepared for each of the four areas noted above. These analyses will be used as the basis for developing statements of policies and procedural steps which should characterize a sound redistricting program.

School Finances

Expenditures for Education at the Midcentury was distributed near the end of December 1953. In this study the average expenditure per classroom unit was determined for 63,402 separate school districts in the 48 States and the outlying parts of the Nation. The median for the Nation was $4,391, and the medians for the low and high States were $1,451 for Mississippi and $7,627 for New York, respectively. The report provides information designed to be useful to legislators and educators in planning the improvement of State and local systems for financing the public schools.

A supplement to Expenditures for Education at the Midcentury was published and distributed in March 1954. Twelve States were included in this supplementary study because they had separate data for white and Negro children.

A study of Federal funds for education was completed during fiscal 1954. In preparing this report on Federal funds, the Office analyzed data and provided descriptions of 56 different programs. Amounts expended and allocation procedures are given along with public law citations authorizing the Federal expenditures. The report was published as Office of Education Bulletin 1954, No. 14, and entitled, Federal Funds for Education, 1952-53 and 1953-54.

Another report entitled, Public School Finance Programs of the United States, was issued as 1954, Misc. No. 22. It gives estimates of revenue for the 1953-54 school year, describes the various State funds allocated to local school districts, and indicates procedures by which boards of education obtain local taxes for public education.

School Legislation

At the request of the Study Commission of the National Council of Chief State School Officers, a comprehensive summary on The Legal