The following link explains that a previously named Department of Education, not the same cabinet level department that we have today that was established in 1979, was established in 1867, only to be demoted to an "office of education" shortly thereafter in 1868. Since that time, the office of education or whatever it was called from time to time was handled within other agencies, and federal involvement in education was very limited compared to today, and did mainly perform the functions as Foxfyre explained.
http://en.wikipedia.org/wiki/United_States_Department_of_Education
Also, this link:
http://www.hhs.gov/about/hhshist.html
And again this link on the history of the Department of Education:
http://www.pubpol.duke.edu/centers/child/briefs/Brief%20History%20of%20US%20DOE.pdf
So, it is a fact that the current full fledged cabinet level Department of Education was formed in 1979, and federal involvement and mandates have taken a marked upturn since that time. This fact is not arguable.
Federal budgetary expenditures on the Department of Education now exceeds 50 billion, many times what it was in 1979. I have been unable to find the figures. Strange how the government websites don't bend over backwards to post the graphs of annual expenditures. I did find a link that stated that overall expenditures per student have increased 4 fold, ADJUSTED FOR INFLATION, from 1950 to present day.
Having a discussion about the wisdom of funding and managing education on the local level vs. injecting federal funding and federal mandates is a very legitimate debate with arguments on both sides. To call someone a rightwingnut merely because one is in favor of 100% local funding and control of education is uncalled for. Education was very successful when it was totally controlled and funded locally. In fact, as I said before, it developed the most technologically advanced country in the world.