This manual, the first of a two-part study, describes an assessment and planning approach which school psychologists may employ in working with low incidence, severely handicapped students. Past assessment approaches are criticized for being nonfunctional and largely irrelevant; the proposed approach is directed to helping students achieve the criterion of ultimate functioning. Research is considered on the role of school psychologists and on the evolution of assessment strategies for individuals with low incidence handicaps. Six phases of the functional, chronologically age appropriate assessment/planning system are reviewed: collection of background information, observation, preliminary ecological analysis, data based evaluation, and evaluation of results. An example of a parent/guardian inventory is provided. (CL)