State of Washington Spokane School District No. 81 v. U.S. Department of Education

We review the determination of the United States Department of Education that in fiscal year 1981-82 the State of Washington and the Spokane School District violated the requirement of the Education of the Handicapped Act, 20 U.S.C. §§ 1400-1485 , that federal funds be used only to supplement and not to supplant state or local funds for the education of handicapped children, id. § 1414(a)(2). We affirm in part, reverse in part and remand.

I

The Education of the Handicapped Act “represents an ambitious federal effort to promote the education of handicapped children.” Board of Educ. v. Rowley, 458 U.S. 176, 179 , 102 S.Ct. 3034, 3037 , 73 L.Ed.2d 690 (1982). Under the Act, states are responsible for providing “a free appropriate public education,” 20 U.S.C. § 1412 (1), including special education and related services, id. § 1401(18); see id. § 1401(16), (17), to all handicapped children. Recognizing that this responsibility would entail increased costs, Congress provided funding to defray the additional costs of educating handicapped children. See id. § 1414(a)(1). A state meeting the requirements of the Act receives federal funds based on the number of handicapped children…