Presently, school personnel must formally label special needs children if the cost of services rendered to these children is to be reimbursed by governmental agencies. Research indicates that current diagnostic systems are characterized by limited reliability and questionable validity. There is considerable, although not conclusive, evidence indicating that the labeling process may be harmful to children. It is hypothesized that categorical funding strategies have also restricted school psychologists from delivering a full range of services to schools. An alternative approach is presented that includes (a) a move away from categorical labeling, (b) the distribution of special education funds to school districts on a lump-sum basis, and (c) the provision of reinforcers to appropriate school personnel for successful remedial interventions. The incorporation of these concepts into new funding laws should result in a higher quality of educational programming, fewer children who are unnecessarily stigmatized, and a more appropriate utilization of school psychological services.The manner in which special education funds are allocated within school systems is of central importance to school psychologists and the children they serve. Funding laws have had a major, although probably inadvertent, impact on several crucial parameters relating to the delivery of psychological services in schools and are therefore deserving of close scrutiny. A primary focus of this analysis concerns the efficacy of federal and state statutes that require children to be categorized and labeled (e.g., emotionally disturbed, learning disabled, etc.) before special education funds can be spent in their behalf.
Current StatusCurrently, laws in virtually every state (Massachusetts being the clearest exception) mandate psychological labeling as a prerequisite to service delivery if local school districts are to be reimbursed by the state for the cost of special services. Recent federal legislation, in particular Public Law 94-142, 1 has reinforced this arrangement. Needless to say, special services are expensive, and most local districts are therefore largely dependent on these external state and federal funds if they are to provide such services for their students.The advantages of current funding approaches are clear and were no doubt largely responsible for their original establishment. Local school districts benefit by receiving large sums of revenue that can be utilized to help meet the educational and psychological needs of their exceptional children. Labeling practices benefit state and federal governments by providing a structure of accountability so that funds earmarked for children 1