This document presents findings of an independent committee that was organized by the Twentieth Century Fund to study the Federal role in shaping educational policy, and includes the comprehensive background paper (prepared by Paul E. Peterson) on which the task force discussions were based. The report describes current problems in elementary and secondary schooling, reviews effects of the past Federal role in education, and proposes Federal policy involvement in the following areas: (1) establishment of a program to reward teaching excellence ; (2) emphasis on English language literacy; (3) provision of advanced science and mathematics training; (4) continued support of special programs for disadvantaged students; (5) support for educational research; and (6) financial support to provide parents with schooling options. The background paper examines the history and current state of American education, evaluates the impact of Federal policy on education, and provides a framework for evaluating recommendations for change. Specifically, the paper describes declines in educational expansion over the years; suggests that the Federal government has had only modest effects on the educational system; and stresses that Federal policy should consider the need to balance the issues of quality and equality and of Federal direction versus local autonomy in education. (MJL)