(1) If at fiscal year end school district special education allowable cost expenditures do not equal or exceed the amount of special education instructional and related services block grant funds plus required local match, as indicated by the annual trustees' financial summary, the district is required to revert the unspent portion of the special education allowable cost payment in the ensuing fiscal year. The unspent balance of state special education allowable cost funding cannot be used to reduce local levies or to increase the operating reserves, but must be used to reduce the state special education allowable cost payment of the district for the ensuing fiscal year through the reversion calculation described in (3). If special education allowable cost payments are not received by that district in the ensuing fiscal year, the district must return the unspent portion by warrant by December 31.

(2) For purposes of determining the special education funding reversion required by 20-9-321, MCA, the expenditure information provided on the trustees' annual financial report will be used.

(3) The reversion will be calculated as follows:

(a) Calculate the district's total prior fiscal year expenditures of allowable costs in accordance with 20-7-431, MCA, and ARM 10.16.3806 and 10.16.3807.

(b) Subtract the district's total prior fiscal year expenditures calculated in (3)(a) from the district's prior fiscal year minimum special education expenditure to avoid reversion as defined in ARM 10.16.3803.

(c) If (b) is less than or equal to zero, no reversion is required.

(d) If (b) is greater than zero, the required reversion amount is calculated by multiplying (b) by a factor that ensures that the district has paid a minimum of one dollar for every three dollars of state special education funds.

(4) Revisions to the annual trustees' financial summary report must be made in accordance with ARM 10.10.504. Revisions to the annual trustees' financial summary report made by the district after December 10 of the ensuing fiscal year, will not be considered in calculating the reversion amount. The Superintendent of Public Instruction may accept the adjustments after those dates for unusual circumstances.

(5) A district participating in a cooperative must provide to the cooperative the required related service matching funds as certified by the Superintendent of Public Instruction. Failure to provide the match by June 30 of the fiscal year for which the related services block grant was established will cause the participating district to lose eligibility for future membership in the cooperative at the end of the three year participation cycle as defined in ARM 10.16.3901 and may affect the terms of the cooperative's interlocal agreement.