This report presents results of an examination of state and federal funding of special education programs in Hawaii. Among the objectives of the study were assessment of resources and the appropriateness of their allocation, as well as exploration of alternatives for resource allocation. After a brief introductory chapter, chapter 2 presents background information for the budget revew and analysis, covering the Early State Education Program, federal involvement and requirements, and state special education planning and programs. Chapter 3 discusses selected budget and program issues including questionable budgeting practices of the Department of Education and the need to establish the scope of the special education program. Includes 10 references. Attached are comments on agency responses.(PB)