The Center on Education Policy has released a fascinating set of papers on a hidden aspect of American history: the role of the federal government in encouraging public schools in the states.

The papers are in response to calls for the federal government to return to its “traditional” role of not being involved with elementary and secondary education. However, as CEP shows, the federal government has been involved with encouraging education since before the Constitution was adopted.

Specifically, the Land Ordinance of 1785 and the Northwest Ordinance of 1787 provided new territories and states with land that was dedicated to supporting public schools. These ordinances set a precedent. Similar provisions were attached to other federal legislation setting up territories and admitting new states.

What was the rationale for this federal intervention? According to one of the CEP papers, the key issue was the need for adequate education to support the new democratic nation:

“Many of the revolutionary leaders and Founding Fathers, most famously Thomas Jefferson, held a fervent belief in the importance of education. They felt that providing a public education was the only means by which to ensure that citizens were prepared to exercise the freedoms and responsibilities granted to them in the Constitution and thereby preserve the ideals of liberty and freedom. Education was the most promising way to make sure that Americans, no matter where in the country or territories they were located, were being raised as English-speaking citizens loyal to the ideals of democracy…” (Usher, p. 5)

From an economist’s perspective, the rationale for federal intervention is spillovers. One state’s action in promoting education has benefits for the entire nation in promoting understanding of democracy.

Spillovers remain an important reason that rationalizes federal support for education. Such spillovers include more than education’s role in helping everyone play their role as citizens. Spillovers also include the role of education in helping people become productive workers. Because Americans are to some degree mobile, one state’s actions in educating its current residents to become productive citizens and workers will benefit other states.

As I outline in my book, the benefits of early childhood programs spillover and provide benefits for other states. This benefit spillover is due to out-migration. For every $1 of benefits that accrue to a state residents from their own state’s investments in early childhood programs, from 34 cents to 36 cents accrue to other states.

The own-state benefits from early childhood programs are big enough to rationalize state investments from a state perspective, without any federal aid.  But the spillover benefits for the nation are big enough to rationalize a sizable federal subsidy for early childhood programs.  Both these statements are simultaneously true.

The issue for federal policy towards early childhood education, and towards K-12 education as well, is how to encourage the positive national spillovers of education through federal policy, while avoiding rigidities in funding rules that might inhibit local innovation.