This report describes the process and outcomes of implementing Oregon state legislation (Senate Bill 814 in 1991), which restructured the state's special education funding system. The new system provides districts with grants that are twice the regular per student allocation for every identified special education student up to 11 percent of the total school population. Specific features of this formula include its neutrality with regard to disabling condition and placement, lack of additional required paperwork, lack of a requirement to use funds only on students with disabilities, and a weighting to adjust for district wealth. A chapter on the historical context for reform notes the influences of the existing system of excess cost reimbursement and interdistrict inequities. Additional chapters summarize stakeholder perceptions of the major issues leading to reform, specify the objectives for reform, and explain the current formula. A chapter on the impact of reform reports on a survey of administrators, parents, lobbyists, and representatives of key advocacy groups. It addresses the system's objectives in the areas of equity, adequacy, identification, placement, services, technical assistance and staff development, and other concerns. Overall, reactions to the current special education funding mechanism have been positive. (DB)