This study describes the economics of teacher education in a public research university. It assumes that faculty members in such schools, colleges, and departments of education (SCDEs) attempt to maximize an objective function that depends positively on research productivity and student quality and negatively on class size. A case study approach is used to test the degree to which a school of education carries out profitable activities that society is willing to pay for (e.g., teacher education) in order to obtain resources for costly faculty-preferred activities that society will not fully finance directly (e.g., small graduate seminars). The primary finding of this study is that the teacher education programs subsidize other programs by approximately 10 percent. The latter part of the paper addresses the question of how teacher education reformers can reallocate resources in support of the new set of goals implicit in their reform agenda. A list of references and four tables complete the document. (Author)