We analyze various approaches to construct exchange‐correlation functionals which are able to describe states of definite spin multiplicity in the density functional theory (DFT) realm and outline the characteristics of possible functionals consistent with the Kohn–Sham theory. To achieve this goal the unitary group technique is applied to label many‐electron states of definite total spin and to calculate the corresponding analogs of the Roothaan coupling coefficients. The possibility of using range separated Coulomb potential of electron–electron interaction for constructing functionals discriminating multiplet states in the d‐shells is explored and a tentative system of state‐specific functionals, covering nontrivial correlations in d‐shells of transition metal ions, is proposed for the Fe2+ ions. © 2009 Wiley Periodicals, Inc. Int J Quantum Chem, 2010