This report provides information about special education costs in Vermont and the effects of recent policy changes implemented through Vermont's Act 230 and special education reform efforts. The report begins by describing Vermont's funding formula for special education and explains how the formula is flexible, more equitable, and better able to meet the needs of all students. Chapters address the topics of: (1) special education costs in Vermont and how Vermont compares with other states; (2) factors associated with high spending in special education and what other factors may be impacting special education costs; (3) extraordinary reimbursements, why there are major differences in the amount of extraordinary reimbursements that districts receive, and why extraordinary reimbursements increased so dramatically; and (4) information that is available on outcomes for students with disabilities. The review indicates that spending levels in special education vary among school districts as dramatically as spending in general education, and that state funding and policies have a significant impact on special education spending and local attitudes toward special education. Remaining questions covering equity, need, results, and funding conclude the chapter. Appendices include a glossary, a list of 1995 per-pupil costs by local education agency (LEA), and summary charts of special education costs by LEA, costs compared to special education placements, and educational outcomes correlations. Data collection forms are appended. (CR)