Previous increases in the costs of Canadian education were easily explained by rising enrollments. In an era of declining enrollments, increased costs are much more difficult to explain. One reason for increased costs is the large proportion of Canadian student population concentrated in high schools where programs are more expensive than at other grade levels. Inflation is another reason for rising educational expenditures, and because of the labor-intensive nature of education, this rise is probably greater than changes in the Consumer Price Index. In addition, the new focus on equal educational treatment has necessitated a wide range of expensive special and compensatory programs. Thus, equality has become more important than efficiency. Finally, an upgrading of educational quality, evidenced by teachers with more formal education and experience and a reduction in the pupil teacher ratio, has resulted in higher expenditures for teacher salaries. The dilemma facing school boards is the incompatibility of two highly desirable goals: equality and efficiency. In the future, when formulating programs, educational policy-makers must recognize the scarcity of resources. A more critical review of educational policies is necessary. Resources must be apportioned to the goods and services most valued by the public. (Author/JM)