1. (a) The distribution of consolidation and annexation incentive funding is dependent upon appropriation and funding by the General Assembly.

2. (b) Consolidation/annexation incentive funding shall be determined as follows:

   1. (1)

      1. (A) One hundred percent (100%) of the incentive allowance computed as provided in this part shall be in addition to the school district’s aid the first year of consolidation/annexation.
      2. (B) The second year of consolidation/annexation, the district shall receive fifty percent (50%) of the consolidation/annexation incentive funding received by the district in the previous year in addition to other state aid.
      3. (C) Beginning in the third year and each year thereafter, no consolidation/annexation incentive funding shall be provided.
      4. (D) The consolidation/annexation incentive is intended to supplement the customary state aid the districts would have received had the consolidation/annexation not occurred;

   2. (2) For those school districts not required to be consolidated/annexed in the current school year, if two (2) districts consolidate or one (1) district is annexed to another school district, multiply the prior year ADM of the smaller district by the per-student foundation funding amount, then by the funding factor, where the:

      1. (A) Minimum ADM applicable is one hundred (100); and
      2. (B) Maximum ADM applicable is three hundred (300);

   3. (3) For those school districts required to be consolidated/annexed in the current school year, if two (2) districts consolidate or one (1) district is annexed to another school district, multiply the prior year ADM of the smaller district by the per-student foundation funding amount, then by the funding factor, where the:

      1. (A) Minimum ADM applicable is one hundred (100); and
      2. (B) Maximum ADM applicable is three hundred (300);

   4. (4) For those school districts not required to be consolidated/annexed in the current school year, if three (3) districts consolidate or two (2) districts are annexed to a third school district, multiply the total prior year ADM of the two (2) smaller districts by the per-student foundation funding amount, then by the funding factor, where the:

      1. (A) Minimum ADM applicable is one hundred (100); and
      2. (B) Maximum ADM applicable is four hundred (400);

   5. (5) For those school districts required to be consolidated/annexed in the current school year, if three (3) districts consolidate or two (2) smaller districts are annexed to another school district, multiply the prior year ADM of the smaller district by the per-student foundation funding amount, then by the funding factor, where the:

      1. (A) Minimum ADM applicable is one hundred (100); and
      2. (B) Maximum ADM applicable is three hundred (300);

   6. (6) For those school districts not required to be consolidated/annexed in the current school year, if four (4) or more districts consolidate or three (3) or more districts are annexed to another school district, multiply the total prior year ADM of all except the largest district by the per-student foundation funding amount, then by the funding factor, where the:

      1. (A) Minimum ADM applicable is one hundred (100); and
      2. (B) Maximum ADM applicable is five hundred (500);

   7. (7) For those school districts required to be consolidated/annexed in the current school year, if four (4) or more districts consolidate or three (3) or more districts are annexed to another school district, multiply the prior year ADM of the smaller district by the per-student foundation funding amount, then by the funding factor, where the:

      1. (A) Minimum ADM applicable is one hundred (100); and
      2. (B) Maximum ADM applicable is three hundred (300); and

   8. (8)

      1. (A) If a district is annexed by multiple school districts, the incentive funding shall be computed as in subdivisions (b)(1) – (7) of this section.
      2. (B) The incentive funding shall then be prorated among the receiving districts based upon the percentage of the annexed district’s ADM received by each receiving district.

Codification Notes: “ADM” means average daily membership.