This paper looks at trends toward more inclusive education for students with disabilities in Sweden in the context of budgetary cut-backs in school resources. It reports on a project that investigated processes of defining target populations for special education in Swedish schools. Special educators (N=27), classroom teachers (N=35) and principals (N=18) were interviewed about how the concept of special education was defined in terms of practice and asked to describe special education activities in their schools. The study also analyzed data from a longitudinal database that included 5,000 pupils born in 1977 and 10,000 pupils born in 1982. Among findings were: (1) classroom teachers and special educators recognized that special education lightens the work load of teachers in regular classes by offering more or less permanent solutions to the problem of difficult students; (2) among individual child characteristics, socio-emotional disorders were the most common reason for referral to special education; (3) most special education takes place outside the regular classrooms in part-time settings; and (4) more than half of interviewees reported that Individualized Education Plans were never used. Results suggest that definitions of target groups for special needs education vary greatly among schools. (Contains 25 references.) (DB)