(1) At its first meeting following receipt by the library commission of the estimate of the appropriation to public library federations the commission shall allocate all funds received to library federations according to the following formulas:

(a) Before funds are allocated among federations, the travel expenses for federation coordinators will be estimated and subtracted off the top of the funds federations receive. Each federation will receive travel funds for its coordinator. The remaining portion of the appropriation allocated to library federations shall be distributed among the six federations according to the following formula: 50 percent of the first $250,000 shall be divided equally among the six federations and 50 percent shall be allocated on the basis of population within the six federations.

(b) Any appropriation in excess of $250,000 shall be divided according to the following formula: 20 percent of the remainder shall be allocated equally among the six federations. 80 percent of the remainder shall be allocated among the six federations on the basis of population.

(2) The state library commission has the responsibility and authority to approve federation plans of service and to approve or deny funding for the components of the plans of service.

(a) A federation and individual member libraries of a federation may not receive a distribution of appropriated funds from the state library commission until the federation's annual plan of service for federation activities is approved by the commission.

(b) Following approval of a federation's plan of service, the state library commission, through the state library, will distribute appropriated funds to libraries that are members of the federation according to the federation's approved plan of service.

(c) The state library commission can disapprove a plan of service only because:

(i) it was not prepared according to the procedures and forms established by the state library commission; or

(ii) it does not address the authorized purposes and/or priorities as established by the state library commission to implement its state long range plan for libraries.

(3) Each federation's annual plan of service shall be based upon direction given by the state library commission from its consideration of the state long range plan for libraries. The annual plan of service is submitted to the state library each spring for consideration and action by the state library commission. Changes or appeals related to the plans of service are acted upon by the state library commission in May and June of each year.

(4) Each federation member shall expend the federation funds according to the purposes stipulated in the federation's plan of service. Each member shall annually report how the funds were used for the stated purposes to the federation coordinator and a copy of the report will be provided to the state library commission. If the federation member does not use funds as set forth in the annual plan of service, the federation coordinator shall notify the state library commission within 30 days.

(5) If a federation member does not use funds in accordance with the proposals set forth in the annual plan of service, then the member will be notified by the state library commission and the member shall return the funds to the state library commission within 60 days. The state library commission shall revert such funds to the appropriate state account.

(6) Each federation shall ensure equal opportunity for representation of its member libraries and shall have approved bylaws that shall address approval procedures for the annual plan of service, proxy voting, quorum requirements and other procedural matters necessary for conducting federation business.

(7) An appeals process shall be available for any federation that is denied funding or for any member library that is required to revert funds. This appeals process shall follow the appeals process for denial of a grant as set forth in ARM 10.101.206.