The booklet addresses the controversy among the states regarding the programmatic requirements and fiscal implications of P.L. 94-142, the Education for All Handicapped Children Act. Examined is the development of state and federal support for special education. Using four states (Connecticut, Florida, Missouri, Oregon), the authors present an in-depth analysis of the distribution of students served and special education funds in the states and the likely impact of P.L. 94-142. A survey of 39 state directors that solicited their attitudes toward the compatibility of P.L. 94-142 and state special education programs is presented. Among findings is that categorical funding is the most popular, four out of five states believe that P.L. 94-142 will create other fiscal problems, and most states have similar classification systems for special education students. It is concluded that one of the benefits of P.L. 94-142 is likely to be increased coordination among agencies providing education services at the state and local levels. (SBH)