The final report reviews achievements of a 30 month project to assist State Education Agencies (SEAs) in implementing physical education and recreation components of federal law (the Education for All Handicapped Children Act and the Rehabilitation Act of 1973). To develop comprehensive special physical education SEA plans, competencies of SEA Directors of Physical Education and SEA Directors of Special Education are listed. Legal requirements are analyzed. Fifty-six project training activities are summarized, and regional conferences on state planning in physical education for the handicapped are discussed. Results of a national needs assessment in physical education and recreation are analyzed. Among recommendations are that special incentive grants be awarded to State Education Agencies to develop inservice and preservice preparation programs in physical education for the handicapped. Three appendixes conclude the document, including questions and answers about the implementation of P.L. 94-142 and a sample needs assessment survey instrument. Not included from the original document are appendixes on the agenda and participation of the National Steering Committee meeting, the agenda and participation of the National Conference of SEA Directors, various evaluation results and forms, lists of workshop participants and sample letters received from them, and copies of Project Update. (CL)