This audit report focuses on transportation costs and practices incurred by the Preschool Handicapped Education Program for counties outside of New York City from July 1, 1994 through March 31, 1998, and addresses the level of cooperation between counties and the State Education Department. The report also includes recommendations for improvement of county transportation programs. Following an introduction that describes the background, objective, methodology, and scope of the audit, a section on county practices and department oversight discusses contracting practices, operating practices, and suggested practices for counties. A section on state aid and related issues examines rate-setting responsibilities, administrative costs, and the reporting system. Also contains a table of"Costs For Center-Based Facilities" (September 1994-June 1995) for 58 counties, major contributors to the report, and comments by Department officials. (RIB)