come more and more concerned with seeking and cultivating talent. We have become more conscious of the strategic importance of education in our society." The impact of technological changes on our past and future manpower needs can be clearly seen in table 1. Professional and technical workers rose from 4.3 percent of the labor force in 1900 to 8.6 percent in 1950 and are projected to increase to 14.0 percent in 1975. Corresponding reductions are taking place in the needs for less highly trained personnel. These figures dramatically illustrate the higher standards of adequacy that are constantly being required in American education.

TABLE 1.—Actual and projected occupational distribution of workers, 1900 to 1975

Source: Data for 1900-50 from Kaplan, David L., and Casey, M. Claire, "Occupational Trends in the United States, 1900 to 1950," Working Paper No. 5. Washington, D.C.: U.S. Department of Commerce, Bureau of the Census, 1958; table 2, p. 7. Data for 1965 and 1975 derived from unpublished data supplied by the Bureau of Labor Statistics, Sept. 12, 1958. Totals may not add to 100 percent because of rounding of percents for specific items.

The relationship between education and our military strength and national survival is even more direct. Higher and higher levels of education are required to supply a literate and well-trained source of military manpower in an age of electronic and nuclear weapons. Far more crucial, the apparent lead of the Soviet Union in missiles and space exploration can be overcome only by accelerated research and technological advance. In this much broader sense, education is a powerful weapon of greater importance to our national defense than military hardware. It spells the difference between being the world's first-rate and the world's second-rate power, scientifically and militarily. Our successful measures to increase plant capacity through various forms of subsidies and incentives (like accelerated amortization, price guarantees, and loan programs) must now be supplemented, perhaps in part supplanted, by equally strong and determined measures to expand brain capacity.

The National Defense Education Act is making a valuable, though limited and highly specialized, advance on this front. It in no way conflicts with, nor removes the pressing need for, broad measures like the Murray-Metcalf bill. This broader program of Federal support will strengthen the foundations on which the required higher levels of human understanding, skill, and scientific achievement can be built.

What kind of financial commitment must we make to gear our educational system to the performance of these vital tasks? Again, the Rockefeller group speaks with great cogency on this problem:

"Perhaps the greatest problem facing American education is the widely held view that all we require are a few more teachers, a few more buildings, a little more money. Such an approach will be disastrous. We are moving into the most demanding era in our history. An educational system grudgingly and tardily patched to meet the needs of the moment will be perpetually out of date. We must build for the future in education as daringly and aggressively as we have built other aspects of our national life in the past ***.

1 Rockefeller Brothers' Fund. "The Pursuit of Excellence of America." Panel report V of the special studies project. day & Co., 1958, pp. 6-7.

Education and the Future Garden City, N.Y.: Double

"Even allowing for considerably greater efficiency in the use of educational funds, it is likely that 10 years hence our schools and colleges will require at least double their present level of financial support to handle our growing student population. In other words, by 1967 the entire educational effort is likely to call for expenditures on the order of $30 billion, measured in today's prices."

If the urgent recommendations of the Conant report, "The American High School Today," are to be carried out, the $30 billion projection may prove to be modest. Consider, for example, Dr. Conant's recommendations for counselors, individualized teaching programs, more rigorous required courses, ability grouping, development reading, and a host of other improvements. All of these will serve as steps to the higher quality required by the complexities and dangers of tomorrow's world, and all of them are expensive.

3

Even apart from these and other qualitative improvements, increases in numbers and changes in the age composition of school-age children will push school costs up steadily for years to come. Enrollments in public elementary and secondary schools stood at 34 million in the fall of 1958, will rise to 36 million in 1960–61, 40 million in 1963-64, and 42 million in 1966-67. Rising even faster than total enrollments are secondary-school enrollments. Annual per pupil costs in high school are running about 1.4 times higher than elementaryschool costs for teachers, and 1.3 times higher for classroom construction.

In considering future costs, one is also struck with the rapid rise in costs in the past 10 years. Taking only current expenses (capital outlays grew even faster), one finds that the cost of public elementary and secondary education rose from $4.2 billion in 1948-49 to $10.7 billion in 1958-59, an increase of 155 percent.

III. OUR DEFICIENCIES IN SCHOOL BUILDINGS AND TEACHERS' SALARIES

As against the demonstrated need for a vast increase in our educational effort and in spite of the best efforts of State and local units to do the job, we find the American school system still suffering from classroom shortages and inadequate salary levels. If our goal is not merely maintenance of our educational efforts, but its expansion and upgrading, the deficiencies are all the more glaring.

Although the U.S. Office of Education estimates that 71,600 classrooms were constructed in 1957-58, the resulting net reduction in the classroom shortage was a mere 1,800: from 142,300 in the fall of 1957 to 140,500 in the fall of 1958. At this annual rate of net gain over obsolescence and increased enrollments, it will take decades to wipe out the backlog. If in the course of urban redevelopment we apply modern standards of school construction and safety to many of the older school buildings in the central cities of our metropolitan areas, the backlog of obsolescence is considerably greater. To eliminate many thousands of small high schools, as urged by Dr. Conant and others, an even greater building program is required.

Low salaries for teachers and chronic shortages of qualified teachers have ceased to be news. To some extent, standards for teachers have been held down to match the salary level. Young people with only 2 years of college education can still get elementary-school teaching certificates in a fourth of the States. Even with low standards of admission, some States have found it possible to staff their schools only by accepting teachers who have not obtained regular teaching certificates. This year, 7.4 percent of our public-school teachers are working on temporary or emergency certificates-a portion of 1 in 13. And this is a continuing condition that has shown no improvement in the past 8 years. Although the great majority of teachers do have college degrees and many have advanced degrees, more than one-fourth of our elementary-school teachers are not college graduates.

This condition is a tragic one for the schools and for the Nation. Many adults today feel a lack of the training needed for wise decisions and skillful

2 Ibid., pp. 33-34. (The Rockefeller Panel for Special Studies Project IV projected public, not total, outlays for education at $30 billion in 1967, and this figure is utilized in the discussion below. Total public and private expenditures for education, all levels, were about $18 billion in 1956-57. Estimates of public expenditures for education for the calendar year 1957 round to $15 billion.)

3 Conant, James B.: "The American High School Today: A First Report to Interested Citizens." New York: McGraw-Hill Book Co., 1959, pp. 41-76.

action in meeting the problems of our complex society. But, whatever the demands upon our generation, we know that they will be far greater upon the children who constitute the coming generation of adults. Without gifted and dedicated teachers at every level of the school system, our children cannot be prepared for challenges they must meet.

Yet the economic rewards of teaching are below the levels that would permit our schools to compete on even terms in the highly competitive market for the limited supply of human talent. In this school year of 1958, over 200,000 teachers are being paid annual teaching salaries of less than $3,500. The average salary this year of the instructional staff of the schools-classroom teachers, principals, supervisors-is only $4,935. For the past several years, the average annual salaries of teachers have been only a few percentage points higher than the average annual earnings of all wage and salary workers in the United States. Careful studies by the National Education Association conclude that to meet any reasonable estimate of a professional level of compensation, teachers' salaries would have to be at least 60 percent above their present average level.

Not only are schools currently understaffed and teachers underpaid, but recommended provision for better counseling and supervisory services, for small classes for the mentally talented as well as for the slow learners, and the like will involve a substantially enlarged school staff. To provide the numbers of qualified teachers needed and to raise their salaries to professional levels present major financial challenges.

IV. UNDERLYING ECONOMIC CAPACITY TO SUPPORT EDUCATION

An appraisal of the Nation's economic capacity to finance the required quantity and quality of education calls for a comparison of educational expenditures with the gross national product (GNP), the Nation's total output of goods and services each year. An inspection of the 1948-57 record and the Rockefeller Fund projections for 1957-67 (revised for recent changes in GNP) makes it undeniably clear that the United States has ample economic resources to overcome past deficiencies and to meet the huge new demands in public education. The underlying capacity exists, provided the American people have the will to allot somewhat more of their growing income to educating their children and somewhat less to frivolities, indulgences, and luxuries.

1 These growth rates are taken from the Rockefeller report on the U.S. economy: Rockefeller brothers' fund. "The Challenge to America: Its Economic and Social Aspects." Special studies project IV, America at midcentury series. Garden City, N.Y.: Doubleday & Co., 1958. Rockefeller projections are revised for recent revisions in gross national product.

Several points about this brief compilation of key figures are worth noting. While our investment in education as a percentage of GNP has risen 55 percent from 1948 to 1957 (from 2.2 to 3.4 percent of our total output), the Rockefeller projections indicate a slower rate of increase in the coming decade if our rate of growth in GNP matches or exceeds its postwar pace. That is, although the 3-percent projection represents the long-term rate of growth of the economy in roughly the 20th century, the 4-percent rate has characterized the economy since World War II and is, therefore, a more current and probably more reasonable basis for projection. The 5-percent growth rate, which the Rockefeller group posits as a target, would enable us to increase public education expenditures to $30 billion by 1967-100 percent in absolute terms, with an increase of only 24 percent in such expenditures when they are taken as a proportion of the Nation's total output.

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Or to put it another way, this doubling of public educational expenditures would absorb 10 percent of the 10-year increase in GNP at a 3-percent rate of growth, but only 5 percent of the increase at a 5-percent rate of growth.

These figures bear out the impression that the Nation has ample economic resources to support, almost any educational effort it may wish to undertake. In fact, it is safe to say that the limits to our public support of education lie less in our pocketbooks than in our hearts and minds. This Nation has a full enough pocketbook to finance any educational program it sets its mind to and its heart on.

But the economist cannot stop here and consider his job finished. He also has a task of translating national economic capacity into specific terms of fiscal responsibility and fiscal capacity. This requires, first, consideration of the role education plays in carrying out the implicit and explicit responsibilities of the Federal Government and, second, an examination of the fiscal capacity that each level of government can draw on to finance its share of the educational function.

V. FEDERAL

RESPONSIBILITY FOR SUPPORT OF PUBLIC ELEMENTARY AND SECONDARY

EDUCATION

Given the compelling need for expansion of our educational efforts and the evident economic capacity to meet this need, what factors shape the role of the Federal Government as a participant in the financing of public schools?

First and foremost, education is an essential instrument for carrying out functions which are a direct Federal responsibility. Education is an investment in human resources from which we expect to reap positive gains in the form of higher productivity, more rapid advancement in technology, a better informed and better implemented foreign policy, and a stronger Military Establishment and greater military potential. Here, the benefits of education transcend all State and local lines. They involve our national economic strength, prestige, and security, even our national survival. For the Federal Government to assume part of the costs of public education to serve these ends is no act of largesse or charity to State and local governments. It is simply the best available method of discharging certain national obligations. As in the case of aids for landgrant colleges, no part of the educational function would be centralized, yet national objectives would be served by Federal contributions to the financing of local school systems.

It is worth noting that this point is quite independent of the adequacy or inadequacy of State-local fiscal capacity and taxing efforts to support education. This point says simply that there is a strong national interest in better schooling to serve objectives that the Federal Government has been charged with both by the Constitution and by legislation, such as the Employment Act of 1946. Perhaps some would argue that the Federal Government should step in only if the State and local governments do not have the necessary taxable capacity to do the job (a question which is examined below). But the answer to this is quite plain: State and local governments should not be forced to the limit of their fiscal capacities to carry out, without Federal support, functions in which there is a strong Federal interest. If they are forced to do so in the field of education, other State and local functions will be deprived of their rightful share of Statelocal revenues and resources.

Consider for a moment the relative Federal contributions to the support of highways, health, welfare, and other State-local functions. Is there a difference in kind, or even in degree, between the Federal Government's responsibility in the area of education where it finances 4 percent of total State-local costs, and its responsibility in such other areas as highways where it finances 12 percent, and public welfare where it finances 46 percent.

Second, the combination of great population mobility and sharply unequal educational opportunity creates a problem which no single State or region can solve by itself. Census data show that roughly 20 percent of the U.S. population changes residence each year, including 3 percent who move across State lines. In numbers, this means that each year nearly 35 million people change residence and over 5 million people cross State lines. In a decade, one can assume that one-fourth of the population has changed its State of residence. The cumulative result of this movement, combined with the marked disparities in educational opportunity inherent in the fact that our wealthiest States have three times the. per capita income of our poorest States, is that no community is immune to the effects of substandard education. Only the federation of States-operating

through its agents, namely the President and the Congress-can surmount this problem by furnishing the financial support needed to raise the national floor of education to at least a tolerable minimum.

TABLE 2.-Percent of selected State-local expenditures financed by Federal aid, State revenues, and local revenues in the fiscal year 1957

1 The National Defense Education Act of 1958 may slightly increase the Federal share beginning with fiscal year 1959.

2 1957 figures do not show the full effect of the increased Federal support of highways.

Includes such activities as police, local fire protection, sanitation, and local parks and recreation which are financed largely from local revenue sources, and all other activities.

Source: U.S. Department of Commerce, Bureau of the Census. "Summary of Governmental Finance 1957." Series G-GF-57, pp. 27-28.

A third reason for Federal support of education is the vastly superior taxing powers of the National Government. The whole is greater than the sum of its parts. Our single Federal Government, covering the entire United States, is not hobbled by 49 State bouadiries and 100,000 local jurisdictions. Both as an economic and as an administrative matter, the Federal Government has greater freedom and greater power to tax. It is not haunted by the fear of interstate competition and interstate migration of upper income individuals. This competitive process prevents the localities form levying property taxes as high and the States from levying income and consumption taxes as high as might be required to carry out the wishes of their voters. In contrast, the Federal tax system permits full expression of voters' wishes without the hobbling fear of interstate competition.

Also, the Federal Government has at its command vastly superior administrative resources, division of labor, and the like. No State can match the inherent and adduced resources of the Internal Revenue Service. In other words, Federal collection of taxes coupled with Federal aid to States is not a case of "paying the additional freight of a round trip to Washington." The "freight” of administrative costs is, in fact, far less for an integrated nationwide agency like the Internal Revenue Service than it is where the tax collection process is divided among over 100,000 State and local units. To be sure, citizens are willing to pay a considerable premium for independent taxation at the State and local levels as a cost of preserving local independence and vitality. But where this cost can be reduced without reducing the stature of State and local government-and especially where the Federal Government is getting the benefit of the existing State-local administrative mechanism in education to fulfill its own functions-the net public interest would seem to be richly served.

The Federal Government can more readily, more equitably, and more economically convert our vast national economic capacity into tax dollars than can the State and local governments. Couple this with its direct interest in elementary and secondary education as an instrument for carrying out assigned Federal functions, and the positive case for Federal financial support becomes inescapable.

VI. THE FISCAL POSITION OF STATE AND LOCAL GOVERNMENTS

In spite of the foregoing arguments, it is often alleged that State and local governments are in a strong fiscal position to meet the rapidly expanding needs in the field of education. Indeed, it is pointed out that very substantial advances have been made in the levels of teachers' salaries, in the building of