This report shows that New York can reduce special ed costs and enrollment--and improve parental satisfaction with the program as part of the bargain--by adopting two simple reforms: changing the formula funding special education from a "bounty" system to a "lump-sum" system; and implementing a voucher program for children in special education. The authors note that the problem of increased number of children in special-ed is largely a self-inflicted one. There is little evidence to support contentions that increased disability rates are to blame. Indeed, the special education category which has grown the most in the 1990s, Special Learning Disability (SLD), is the one with the fewest objective standards governing its diagnosis, and hence the one most open to unintentional manipulation. The authors also examined the results of Florida's McKay Scholarship Program, which, gives parents of every special education child the choice to take a voucher for 100 percent of the amount the state spends on that child and use it at a private school. The authors cite research showing that parents who use a McKay voucher are overwhelmingly satisfied with their child's private school experiences. The authors conclude that adopting these two reforms--changing the special education funding formula to a lump-sum system and creating a universal special-ed voucher program--will improve New York's educational outcomes and save taxpayers money. (Contains 11 figures and 24 notes.) [This Special Report was written with Greg Forster.]