This study examined the effects on special education enrollment of state funding systems and high stakes testing. The study evaluated special and general education enrollment for each of the school years 1991-92 through 2000-01. Data were also collected on high stakes testing in each state and on funding systems, including the common bounty system under which schools receive state funding based on the size of their special education funding, thus rewarding schools for placing students in special education unnecessarily. The study found that state funding systems have a dramatic effect on special education enrollment rate. It estimates that, in states with the traditional bounty system, over the last decade the rate of special education enrollment grew 1.24 percentage points more than it would have if these states had lump-sum funding systems. The traditional bounty system accounts for 62% of these states total increase in special education funding and approximately 390,000 extra students placed in special education. In contrast, high stakes testing appeared to have no significant effect on special education enrollment. Suggestions for addressing this problem include federal funding of private school scholarships for students with disabilities, portability of federal funding by parents of such students, and giving higher financial priority to disabilities with objective diagnostic standards. (Contains 19 references.) (DB)