Conducted by New York State's Legislative Commission on Expenditure Review (LCER), this program audit reviews the implementation of the 1980 legislative mandate that all new public school entrants be screened for handicapping conditions or giftedness and that children scoring below specified scores on third and eighth grade statewide standardized tests be screened for handicapping conditions. LCER found that the State Education Department (SED) had conducted no systematic evaluation of district compliance. Following initial interviews, a cross section of 20 school districts, including six in New York City, was selected for field visits. Findings indicated widespread compliance with the mandate in the 20 school districts. Chapter I of this report provides background information about the screening program and describes the intent of Chapter 53 of the Laws of 1980, Section 3208(6) of the Education Law. Chapter II reviews the programatic implementation of screening by districts, including the selection of instruments, screening administration with particular attention to screening for non-English speaking students, referral procedures, and the use of screening results for subsequent program provision. The mandate's impact on districts' policies also is analyzed. Chapter III analyzes the sample districts' expenditures for screening for school year 1983-84. SED's monitoring of the screening program and expenditures also is described and assessed. Related materials are appended. (RH)