A study was conducted to examine the extent to which program improvement funds from Public Law 94-482 were used by states to aid state vocational education programs serving handicapped and disadvantaged students through research, exemplary and innovative programs, curriculum development, vocational guidance and counseling, and vocational education personnel training. Information was gathered through a survey of state research coordinating unit (RCU) directors, in all states, with 100 percent participation. The study indicated that the 10 percent handicapped and 20 percent disadvantaged set-aside funds were not generally used by most states to fund program improvement programs and activities. This does not necessarily suggest that the states have not funded program improvement activities that had an impact upon special needs learners, nor that the set-asides have not been appropriately used as basic grants to support the excess costs of educating handicapped an disadvantaged students in vocational education. Future state funding policies should reflect increased collaboration among vocational education, special education, vocational rehabilitation, and other agencies. Program efforts should be made to meet the needs of the handicapped and disadvantaged populations with potentially less funds and funding sources. (The appendix contains brief abstracts of various program improvement projects funded by the states.) (KC)