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Program-based Funding   

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Notwithstanding any other provision of law:

(a) (1) Equalization funds appropriated in the annual Budget Act shall be allocated to districts in accordance with this section. These funds shall not be allocated to any district whose total local property taxes and student fee revenues exceed the revenue limit for that district under program-based funding, unless the district's funded per-credit full-time equivalent students (FTES) revenue derived from these revenue sources falls below the 90th percentile in funding per-credit FTES for comparably sized districts, as defined in subdivision (b).

(2) Funds shall be allocated by the chancellor within 30 days of enactment of the annual Budget Act.

(b) For purposes of distributing funds, the chancellor shall define districts as either large, medium, or small, in accordance with all of the following:

(1) A district is large if its total of funded credit FTES exceeds 6,250, based on the 2003-04 second principal apportionment, as modified for any subsequent growth adjustments.

(2) A district is medium if its total of funded credit FTES exceeds 4,000 but does not exceed 6,250, based on the 2003-04 second principal apportionment, as modified for any subsequent growth adjustments.

(3) A district is small if its total of funded credit FTES does not exceed 4,000 FTES, based on the 2003-04 second principal apportionment, as modified for any subsequent growth adjustments.

(c) (1) The chancellor shall compute an equalization adjustment for each applicable large community college district, so that no district's 2003-04 fiscal year base funding per credit FTES is less than the 2003-04 fiscal year base funding per credit FTES above which fall not less than 10 percent of the total statewide funded credit FTES for large districts.

(2) The chancellor shall compute an equalization adjustment for each applicable medium district, so that base funding per credit FTES is not less than the base funding per credit FTES equalization target determined for large districts under paragraph (1), multiplied by 1.03. This 3-percent adjustment for the medium district equalization target is intended to reasonably recognize diseconomies of scale for these districts.

(3) The chancellor shall compute an equalization adjustment for each applicable small community college district, so that base funding per credit FTES is not less than the base funding per credit FTES equalization target determined for large districts in paragraph (1), multiplied by 1.10. This 10 percent adjustment for the small district equalization target is intended to reasonably recognize diseconomies of scale for small districts, and approximates the difference in targets utilized by the state for elementary and secondary unified school district equalization allocations.

(d) The chancellor shall calculate the total equalization funding necessary to bring all districts up to the target funding per FTES levels determined pursuant to subdivision (c), and shall prepare a simulation of the allocations to each eligible district in this situation.

(e) If the amount appropriated for equalization in the annual Budget Act is less than the amount identified pursuant to subdivision (d), the chancellor shall prorate available equalization funding for each eligible district in proportion to the amount of funds necessary to fully fund those districts.

(f) The chancellor may promulgate regulations on an emergency basis to the extent necessary to complete the adoption of regulations to implement this section within the 2004-05 fiscal year.

(g) The chancellor shall provide a report by October 1, 2004, to the Joint Legislative Budget Committee, the appropriate policy and fiscal committees in each house of the Legislature, the Department of Finance, and the Legislative Analyst specifying the total calculated equalization cost for each eligible district as well as the prorated allocation provided to each eligible district in the 2004-05 fiscal year. The report shall include an evaluation of options and recommendations for revising allocation practices for funds available in subsequent years through restorations in workload, growth funding, and cost-of-living adjustments that further the objective of equalizing funding, consistent with the methodology in this section. The report shall also specify any regulatory and statutory changes necessary to effect the recommendations in future fiscal years.

(h) This section shall remain in effect only until October 1, 2006, and as of that date is repealed, unless a later enacted statute, that is enacted before October 1, 2006, deletes or extends that date.

(Amended by Stats. 2006, Ch. 631, Sec. 3.)