The document provides results of a study investigating implementation in 15 states of P.L. 89-313, an amendment to the Elementary and Secondary Education Act of 1965 which extends entitlement for Title I grant support to state agencies that operate or support schools serving handicapped children. Major areas of inquiry include a review of administration procedures, program standards, program financing, and education and related services for institutionalized and noninstitutionalized handicapped children. Part I provides background information with chapters covering legislation and administration of P.L. 89-313, previous evaluation efforts, and study purpose and methodology. Part II focuses on results of state agency assessment, while Part III presents results of a survey of state operated and state supported schools. Listed among major findings are that the administrtive structure in the State Education Agencies has changed so as to place more importance on the total special education program; that the states have standards of quality which meet or surpass federal requirements; that due to deinstitutionalization, the less severely handicapped are being served in local education agencies; and that the majority of states report an increase in state funding allocations for special education occurring during the past 5 years. Recommendations include that federal funding to meet the special education needs of children and youth in state operated and state supported schools be continued. (SBH)