Amends the Education of the Handicapped Act to revise a formula for determining a "cap" on the amount of funds allotted to a State for the education of handicapped children. Provides that such "cap" applies when the number of handicapped children aged three through 21 exceeds 12 percent of the total number of children aged three through 21. (Current law makes such "cap" applicable when the number of handicapped children aged three through 21 exceeds 12 percent of the total number of children aged five through 17.)