This final report describes a project to develop a funding process for the distribution of Federal Vocational Education dollars to eligible recipients as dictated by P. L. 94-482. An introductory section considers project background and rationale for a revised system. Section 2 discusses procedures used in the development of a funding process to distribute federal special needs set-aside funds to Minnesota Area Vocational-Technical Institutes. Minimum special needs support services are the topic of section 3. Section 4 provides discussion of procedures used in the preparation of proposals for special needs set-aside funds. Twelve recommendations are made in section 5 for consideration by the Division of Vocational-Technical Education for its short- and long-term planning. Section 6 provides exhibits associated with discussions in section 2-5, including state criteria, Model Guidelines for Annual Application, sample budget/financial reports, and sample special needs analytical profile. The final section, Federal Funding, provides a compilation of the proposed system, including diagrams, steps, timelines, and criteria describing procedures used in the distribution of federal funds. (YLB)