(a) Funds allocated to the soil and water conservation districts by the commission shall be used only to pay the costs of installing soil and water conservation practices of the types listed in Section 9-8A-7. Soil and water conservation district supervisors shall designate which soil and water conservation practices will be eligible for cost-share grants in their district, subject to approval by the Agricultural and Conservation Development Commission. The commission, through the State Soil and Water Conservation Committee, may allocate any available appropriations and other moneys received by the commission for cost-share grants to the soil and water conservation districts in steps identified as original allocation, reversion of allocated funds, and reallocation of reverted funds.

(b) Original allocation. The commission may allocate funds to the state's soil and water conservation districts at the beginning of a fiscal year in accordance with formulas established by the commission taking into account the percentage of the state's highly erosive areas in, the reforestation needs and other soil and water conservation needs of, and the agricultural water pollution problems of, each soil and water conservation district in the state.

(c) Reversion of allocated funds. Any allocated funds allocated in a fiscal year that the soil and water conservation districts have not obligated by March 1 of that fiscal year, and any allocated funds that were obligated during the previous year for projects respecting which disbursements have not been begun by March 1 will revert to the commission for reallocation.

(d) Reallocation of reverted funds. The soil and water conservation districts shall submit requests for reallocation of reverted funds identifying valid applications and cost estimates, if any, to the commission by February 1 of each year. The allocation to any district shall be the lesser of:

(1) The amount of available moneys less reserve funds divided by the number of districts applying for a reallocation, or

(2) The amount requested.

(e) Reserve funds. The commission shall administer a reserve fund for each program year that shall not exceed ten thousand dollars ($10,000) to be set aside and used only to meet contingencies that occur in the districts or within the commission. Each time a reallocation is made to the districts an allocation shall be made to the reserve fund if necessary to return the reserve fund balance to the appropriate level.