This study addressed the relationship between alternative types of state funding formulas and the use of separate placements for students with disabilities, and identified other characteristics of states that might be associated with the degree to which they use separate placements for the delivery of special services. Three research questions are addressed: (1) identification of states which are high or low users of separate placements for students with disabilities; (2) identification of any relationships existing between use of separate placements and a state's type of funding mechanism; and (3) other factors associated with a state's high or low use of separate placements. First, states were ranked on their use of separate placements based on federally reported data for the 1991-92 school year. Second, components of state funding systems were reviewed to identify patterns or likely relationships. Third, state administrators in states identified as high or low users of separate placements were interviewed to discuss possible relationships. Finally, when interviews revealed that demographic characteristics might play an important role in the use of separate placements, geographic and regional relationships were investigated. States that are low users of separate placements tended to use a funding formula not explicitly linked to student placement. No single type of funding formula was found for states that ranked high in their use of separate placements. Administrators did not feel that state funding formula alone was a strong influence on student placement policy. Other factors, such as geographic features, history, and educational tradition, were identified as possible contributors to the extent of separate placements. (Contains 14 references.) (DB)