Abstract
This study of the provision of services to handicapped children focuses on local school districts because they are assigned the responsibility of evaluating children, providing services, and paying for state-imposed special education mandates. A three-equation model is developed and a tentative test of the model is made with recently available data from Wisconsin. The empirical results show that fiscal and socioeconomic variables play statistically identifiable roles in labeling children as handicapped and in the amount spent per handicapped child. Budget-maximizing behavior and the response to financial incentives are as likely to show up through the process of identifying children as handicapped, as in spending decisions. One can infer the exercise of administrative discretion and the tendency of local school districts to operate in their own financial interests.
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