This report was prepared in response to the Oregon Committee on Instruction, Research and Public Service Programs' request that it be informed periodically as to developments in teacher education and the state system's production of elementary and secondary teachers in relation to demand. The report provides information and discussion concerning: (1) present allocations, both undergraduate and graduate, in teacher education in the state system institutions and the rationale for those allocations; (2) the relationship of present/projected production of teachers and other certified personnel to anticipated employment opportunities; (3) comparative costs of instruction in professional education courses among the state system institutions, and how these costs compare with average costs for all courses combined at those institutions; (4) appropriate production-demand ratio and means to attain and maintain this ratio; (5) quality improvement of teacher education graduates; (6) maintenance and improvement of inservice teachers' skills. Principal findings and recommendations are given for each area of investigation. The state policies regarding admission and retention of teacher education candidates in the state system is examined in the appendix. Extensive data tables are included. (MB)