The report describes progress in a collaborative review of the current New Jersey system for delivering special education programs and services, with particular emphasis on concerns about labeling practices, the efficacy of programs, use of personnel, and the funding system. Brief summaries of 10 school districts designated as demonstration site districts during the 1981-82 year explain varying approaches to implementing alternative delivery systems. The five phases of the project are: review of professional literature; State Education Agency organizational framework; demonstration projects; dissemination/outreach efforts; and project policy formation which involved the formation of a Special Education Study Commission and Subcommittees on program options, training, funding, and child study teams. Future plans for the project are listed. (CL)