In February 1994 the Legislative Analyst's Office (LAO) in its Analysis of the 1994-95 Budget Bill cited a number of major problems with the state's current special education funding formula. Among the major shortfalls cited were (1) unjustified funding variations among local education agencies (LEAs), (2) unnecessary complexity, (3) constraints on local innovation and response to changing requirements, and (4) inappropriate fiscal incentives. Based on this analysis, the Legislature adopted language in the Supplemental Report of the 1994 Budget Act directing the State Department of Education (SDE), the Department of Finance, and the LAO to jointly review the Master Plan for Special Education (MPSE) and propose a new funding model by May 31, 1995.