The document reports findings from the first year of a longitudinal study of the implementation of P.L. 94-142, the Education for All Handicapped Children Act. Based primarily on interviews with a wide variety of respondents (e.g., administrators, teachers, and parents) from 22 local education agencies (LEAs) in nine states, the report describes how local school systems are responding to the law's requirements and explains the reasons behind these responses. An introductory section provides an overview, background to the study, context of evaluation studies, orientation of the study, and caveats and comments about the findings. Section II covers the goals and context of local implementation. Section III addresses the method of approach in terms of sample selection, data collection, and data analysis. A fourth section considers who gets into special education. Mechanisms for finding children are reviewed. A fifth section focuses on procedures for determining appropriate services and placement with subsections on notification and consent, the individualized education program (IEP) meetings, linkage between settings and services decisions, and parent/school interactions. Section VI reviews the impact of the least restrictive environment provision, IEPs, role changes, inservice training, and attitudes and concerns; while Section VII looks at implementation at the district level. The document concludes with a summary which includes the following findings: whether a child will be identified as a potential beneficiary of services is determined to a large extent by the criteria made by the staff in the referral and evaluation processes; for the majority of students found eligible for special education, the decisions about what services and placements they will receive are essentially determined by what is known to be available; and LEAs are able to change the special education mechanisms and procedures over which they have control, but they are having difficulty determining the borders of their legal responsibilities and achieving effective coordination with each other. (SB)