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The formula used to allocate federal funding to states for special education is one of IDEA’s most critical components. In this study, we evaluate the distribution of IDEA funding within states. We find that the revised formula generates large and concerning disparities within states in federal special education dollars - specifically, that (a) the distribution of existing federal IDEA dollars systematically disadvantages LEAs with higher levels of need, as measured by the share of students identified with a disability and students living in poverty; and (b) federal aid for special education exacerbate within states disparities among LEAs in total education funding.