1. (a) Consolidation/annexation incentive funding shall be distributed to either the:

   1. (1) Resulting district or districts established after consolidation; or
   2. (2) Receiving district or districts after annexation.

2. (b) Any district that has received consolidation/annexation incentive funds and subsequently dissolves shall be liable to the Division of Elementary and Secondary Education for the full or apportioned amount of incentive funding received if any of the following conditions result due to the dissolution:

   1. (1) Districts are formed with substantially the same boundaries as the former districts prior to consolidation or annexation;
   2. (2) The ability of any district to desegregate or remain desegregated is inhibited; or
   3. (3) The ability of the state to ensure that students are provided a quality education in an efficient manner is inhibited.

3. (c)

   1. (1) Any repayment due, as required in subsection (b) of this section, shall be paid from the assets of the district prior to dissolution of the district.

   2. (2) The division may withhold from any state funding due the district:

      1. (A) The amount of repayment funds; or
      2. (B) A portion thereof.

4. (d)

   1. (1) In the event full repayment is not made as required under subsection (b) of this section, the division shall withhold from those districts that are formed as a result of the dissolution, future state funding in the amount of the repayment owed.
   2. (2) The repayment shall be apportioned among the districts on a per-ADM basis unless the division determines that such apportionment would be inequitable.
   3. (3) In such case, the State Board of Education shall apportion the repayment among the districts upon an equitable basis.

Codification Notes: “ADM” means average daily membership.