The Oregon state funding formula for community colleges is based on several principles: 

1. State funding should be equalized on a per-FTE basis. 
2. All FTE will be weighted equally regardless of the type of class or program. 
3. The previous three years of actual enrollments at each college will be used to calculate the FTE used in the formula in order to guard against sudden changes in funding for any one community college. 
4. Because property tax funding is so unequal across the state, 50% of each district's property tax revenues will be included in funding formula calculations. 
5. Each college has need for certain functions regardless of size. Therefore there will be a "base funding" amount that will be allocated to each community college before funds are distributed on a per-FTE basis. 
6. "Equity" will be phased in over a multi-year period. 
7. Local Option revenues will not be included in the state funding formula. 

• Property tax numbers are gathered for each community college district [A]. The amount of "actual taxes imposed" is used for the current year. Property taxes are projected at a 4.5% annual increase for future years. 50% of property tax revenues are calculated for each college each year. 
• Enrollment data for the past three completed years are used for each community college. FTE are weighted at 40% for the immediate previous year and at 30% for each of the two years previous to that. The weighted average is used in the funding formula calculations [B]. 
• The total community college appropriation for the biennium is the starting point for the formula [C].Allocations for several special line items come off the top [D]. For the 2001-2003 Biennium, we expect these to total just over $5 million. The remainder makes up the "Total Available through the Formula" [E]. 
• The formula resources are then divided between the two years of the biennium [F]. We expect the resources to be divided 50-50 in the 2001-2003 Biennium. 
• 50% of the total property taxes imposed is then added to the formula resources for each year of the biennium [G]. 
• Each community college starts with a base funding allocation [H]. This number is equal to the 3-year weighted FTE average (up to a maximum of 1100 FTE) multiplied by the base funding factor. We expect the base funding factor in 2001-2002 to be $589. Therefore, the maximum base funding any community college will receive is $589 times 1100 or $647,900. 
• After the total base funding is subtracted from the formula resources total, the rest is available for FTE distribution [I]. This remainder is divided by the total of weighted FTE averages for each community college giving an amount available per FTE [J]. 
• The distribution amount for each community college [K] is then calculated by multiplying the college's weighted FTE average [L] by the amount available per FTE [J]. This amount is then added to the college's base allocation to give the total allocation amount for each college [M]. 
• Believe it or not, we're not done yet. Immediate full implementation of the funding formula would give a few colleges a very large increase in funding and a few others a very large decrease in funding. To phase in these large increases and decreases, the community colleges adopted what is called a three-year "gap" approach. Using 2001-02 as an example, a hypothetical allocation is calculated for each college based on its proportional share of the 2000-01 state resources [N]. The difference between this hypothetical allocation and the "real" allocation [O] calculated through the formula is called the "gap" [P]. Each year an adjustment [Q] is allocated to each college based on a percentage of that gap. The percentage adjustment increases each year (from 25% to 33% to 50%) until full implementation is reached after three years. Fiscal year 2001-2002 will be the second year of the gap implementation with 2003-04 being the first year of full implementation of the funding formula. The column marked "R" shows the amount each college will receive under the "gap" approach.