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iti. <br />between district racial composition, local wealth, or state <br />and federal share of education costs and the proportion of <br />students served as handicapped. A moderate, negative <br />relationship was found between the size of districts and the <br />proportion of students served i.n. programs fQr the <br />handicapped (r = -.261 p < .01), meaning that smaller <br />districts tend to identify and serve a higher proportion of <br />their student population as handicapped. <br />The patterns of expenditures and proportions of <br />handicapped children served in.North Carolina were compared <br />to other states, to the Southeast region, and to the nation <br />as a whole. These comparisons yield the finding that North <br />Carolina's rate of serving handicapped children is slightly <br />below the regional average. Second, North Carolina's state <br />share of special education expenditures is the second <br />highest in the South. Related to this is the finding that <br />we expend the lowest proportion of local money for special <br />education as any of the states in the South. Indeed, local <br />money supports little of the excess cost of special <br />education while it accounts for between 20 and 25 percent of <br />total education expenditures. <br />visits to three states (one in the Midwest, a Mid- <br />Atlantic state, and a Southern state) yielded data regarding <br />various methods of allocating and distributing funds for <br />exceptional child -en. Each of -the three states in this <br />study provides an equalization component in their funding <br />formulas for special education that ranges from a required <br />