Since 1995, the state of California has been at odds with the U.S. Department of Education (USDE) over special education services for eligible inmates in state prisons. The dispute has threatened receipt of federal funds for special education programs in California's public schools as we indicated in our Analysis of the 1997-98 Budget Bill (see page D-89). Despite the recent approval of changes in federal law by the Congress and the President, which Californians believed would resolve the state-federal conflict, the USDE continues to assert that California is out of compliance. This could place more than $300 million in federal funds for special education in California's public schools at risk.