The document contains the second annual report of findings from a longitudinal study of 17 local education agencies (LEAs) on the implementation of P.L. 94-142 (the Education for All Handicapped Children Act). An introductory section describes the content of the report and design of the study. Chapter II considers the observed changes in the special education delivery systems in terms of strategies to decrease backlogs in children awaiting evaluation or placement; expansion of services to the preschool, elementary, and secondary student populations; changes in personnel and roles with particular emphasis on the boundary crosser role between special and regular education; and issues pertaining to borders of LEAs' responsibility. A third chapter discusses the responses, primarily at the school level, to those requirements of the law that directly affect the extent to which the needs of individual students are met. Discussion focuses on criteria for determining who receives special education and procedures from evaluation to placement. Included among the summary of findings in a final chapter are that LEAs had either tightened eligibility rules for the mildly handicapped or they expanded services allowing an increase in special education placements; that inservice training for regular education and administrative personnel remained minimal; and that there was continued progress in implementing procedural requirements at the school level. Appendixes present the study's conceptual framework and method of approach. (SB)