The report considers two major issues in the provision of special education services to handicapped children in Minnesota schools: eligibility for instruction and services, and effectiveness of special education programs. The first chapter provides an overview of special education programs in the state, with data on number and types of children served, levels of service provided, types of service providers, student-teacher ratios, and funding sources. Chapter 2 examines programs for students with learning disabilities, noting the need for improving eligibility criteria and assessment practices. Recommendations are made for more specific criteria, clarification about tests and procedure requirements, and more active review of local district practices. In terms of program evaluation for students with learning disabilities, the report recommends identification of possible outcome measures, assistance in interpretation of results, and dissemination of "best practice" information. Chapter 3 addresses eligibility and effectiveness issues concerning emotional and behavioral disorders. Despite the finding that the department's eligibility criteria are an improvement over the existing federal definition, inadequacies are pointed out in the guidelines criteria and handbook. Chapter 4 addresses four areas: speech/language services; services to low incidence and severely handicapped persons; early childhood special education; and problems in out-of home placements in licensed residential facilities. Summary information and recommendations for action on the part of the Department of Education, school districts, the State Board of Education, and the State Legislature are presented in the concluding chapter. (CL)