The paper examines the role of intermediate units in the provision of special education services to handicapped children with emphasis on formal and informal intermediate unit arrangements in New Jersey. Stressed for program effectiveness is the importance of positive attitudes of staff, practicality of programs, community and parent acceptance. Advantages (such as enabling local districts to have supplemental and supportive services) and disadvantages (such as high start up and operational costs) are listed. An informal arrangement in which nine participating New Jersey school districts cooperate to provide handicapped students with several placement options is described. Also explained is a more formal special services school district serving low incidence handicapped children. (DB)