Recent legal decisions, coupled with Federal and State statutes, require the New York City Board of Education to follow definite guidelines in providing equal educational opportunities for its handicapped children. Among the problems raised are those of classification and labeling, criticized by some as a procedure that focuses more on pathology than on a child's assets; exclusion and special education assignments, which raise questions of equal educational opportunity and due process; and IQ testing, which is often seen as culturally biased and resulting in the disproportionate placement of minority children in special education classes. Even with more stringent legal regulations that guarantee due process and equal protection, more effort is needed in refining the use of labeling to meet individual needs, in encouraging mainstreaming where possible, and in insuring nondiscriminatory testing procedures. Appendices include abstracts of legal cases and regulations of governmental agencies relating to handicapped children. (WP)