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r <br />ix <br />S. STtMY AND FORMULATE A i:ET80D OF ALLOCATING <br />EXCEPTIONAL CHILDREN'S FUNDS BASED ON WEALTH OF THE LOCAL <br />SCHOOL DISTRICT. <br />Data presented in this study reveal that in North <br />Carolina, state and federal funds account for well over 90 <br />percent of expenditures for special education. Although <br />most local districts do not currently support special, <br />education through local funds, they certainly differ in <br />their potential for doing so. Especially in the area of <br />programs for the academically gifted, where the majority of <br />districts are above the funding cap, the potential for <br />wealthy districts to assume the cost of these programs is <br />clear. Implementation of an equalization formula for <br />programs for exceptional children is advantageous to <br />policymakers in more than one resepct, in that it could <br />enable them to observe how such a funding change works for a <br />small portion of the population, and what its consequences <br />are. <br />in conjunction with the changes reco=ended for the way <br />state funds are disc- ributed to local districts, we recommend <br />a hold harmless provision, so that at the beginning of <br />implementation of these reco=ended policy changes, <br />districts will not receive fewer'state funds than in the <br />Previous year. <br />We reco.anend that changes in distribution of state <br />funds (weighting and equalization) be implemented during the <br />time state funding is increaseing. It is much easier to <br />