1. (a) Declining enrollment funding is equal to:

   1. (1) The three-quarter ADM of the prior fiscal year; subtracted from
   2. (2) The average of the three-quarter ADM of the prior fiscal year and the ADM of the fiscal year prior to the prior fiscal year; multiplied by
   3. (3) The current amount of foundation funding per student established by the General Assembly.

2. (b)

   1. (1) Pursuant to Arkansas Code § 6-20-2305(a)(3)(C), no school district shall receive both:

      1. (A) Declining enrollment funding; and
      2. (B) Student growth funding.
   2. (2) These two (2) funding categories are calculated using ADM data from different time periods.

   3. (3) Therefore, within one (1) fiscal year, it is possible for a school district to qualify for:

      1. (A) Declining enrollment funding due to a decline in prior fiscal year three-quarter ADM compared to the three-quarter ADM in the fiscal year prior to the prior fiscal year; and
      2. (B) Student growth funding due to growth in quarterly ADM beginning with prior fiscal year quarter four (4) and ending with current fiscal year quarter three (3) compared to each corresponding prior fiscal year three-quarter ADM of the school district.

3. (c) The Department of Education will provide the funding category or categories that yield the most funding to the school district by:

   1. (1) Comparing declining enrollment funding to student growth funding; minus
   2. (2) Excess net revenues plus calculated miscellaneous funds.

4. (d)

   1. (1) Declining enrollment funding is unrestricted funding.

   2. (2) However, under Arkansas Code § 6-20-2203, by February 15 of each year for each school district receiving declining enrollment funding, the department shall submit to the State Board of Education, the Governor, the Senate Committee on Education, and the House Committee on Education a report listing:

      1. (A) The amount of declining enrollment funding received under Arkansas Code § 6-20-2305(a)(3)(A);
      2. (B) How the funds were expended;
      3. (C) The amount expended; and
      4. (D) Any other information required.
   3. (3) To enable the tracking of expenditures of declining enrollment funding for these required reports, the funds may not be transferred to another fund prior to expenditure but must be expended directly from the declining enrollment fund.

Codification Notes: "ADM" means average daily membership.