(1)__The school administrative unit's state share of the total allocation if the local share was the sum of the following:

(a)__The local share amount for the school administrative unit calculated as the lesser of the total allocation excluding debt service costs and the school administrative unit's fiscal capacity multiplied by the mill rate expectation established in section 15671-A less .50 mills; and

(b)__The local share amount for the school administrative unit calculated as the lesser of the debt service costs and the school administrative unit's fiscal capacity multiplied by .50 mills.

3.__Adjustment limitations.__The amounts of the adjustments paid to school administrative units or municipalities in subsections 1 and 2 are limited to the amounts appropriated by the Legislature for these adjustments.

Sec. 16. Basis for funding costs of education from kindergarten to grade 12. Notwithstanding any other provision of law, beginning in fiscal year 2005-06, funding of the costs of education from kindergarten to grade 12 must be based on the cost of providing essential programs and services as described in the Maine Revised Statutes, Title 20-A, chapter 606-B.

Sec. 17. Special education. To ensure greater consistency in providing special education services, beginning in fiscal year 2004-05, state-approved guidelines must be utilized in the identification of children requiring special education services. Beginning in fiscal year 2004-05, the Department of Education shall provide to school administrative units training in the application of the state-approved identification guidelines and shall conduct periodic reviews to ascertain compliance in the application of the state-approved guidelines. To ensure greater equity and efficiency in the use of special education resources, beginning in fiscal year 2005-06, special education costs must be included in the essential programs and services operating cost calculations and be based on a special education funding formula that adheres to the 4 principles of being cost-based, equitable, flexible and identification-neutral. The funding formula must include provisions for providing supplemental funds for school districts with extraordinary expenses associated with high-cost