Tennessee data were analyzed longitudinally from 1979–80 to 1987–88 in terms of numbers of children placed in a variety of service options. In 1983–84, the Tennessee funding formula was changed from a “flat” rate to a “weighted” formula. The weighted formula was associated with a statistically significant decrease in less restrictive placements and a reliable increase in more restrictive placements. A statewide survey of district special education directors suggested that service needs may have been more likely than monetary incentives to explain the observed changes.
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