(a) The State Board of Education shall provide sparsity grants to qualified local school systems beyond those funds to which they otherwise are entitled by the provisions of this article and other statutes, subject to appropriation by the General Assembly. To qualify for a sparsity grant, a local school system shall meet the following conditions:

(1) The local school system is unable to offer its students or a portion of its students educational programs and services comparable to those which are typically being offered to students in this state under provisions of this article with the funds provided for this purpose; and

(2) The inability to offer students comparable programs and services is attributable, at least in part, to the fact that the local school system has full-time equivalent counts less than base sizes specified pursuant to Code Section 20-2-181 or the affected school or schools have full-time equivalent counts less than the base sizes referenced pursuant to Code Section 20-2-181; and

(3) The state board has found, based upon a study it has completed within the past five years, that merger of local school systems or the consolidation of schools pursuant to Code Section 20-2-291, whichever applies to the specific situation, is unfeasible because consolidation of schools would result in a proportion of students whose travel time to such schools would be in excess of the state board prescribed criteria concerning travel time to and from assigned schools; or

(4) The state board has concluded based upon a study pursuant to subsection (e) of Code Section 20-2-291, that merger of local school systems and the resulting consolidation of schools is feasible and the local school system has met the state board prescribed criteria concerning efforts to effectuate such a merger of the local school systems, but officials or voters of the other local school system or systems party to such merger efforts have rejected the proposed merger; or

(5) The adjoining local school system or systems have refused to participate in a study pursuant to subsection (e) of Code Section 20-2-291 to determine the feasibility of a merger; or

(6) The state board has concluded that the local school system would still be unable to offer comparable educational programs and services to its students or a portion of its students even if the local school systems were merged or if schools were consolidated, since the resulting schools would still be smaller than the base sizes specified pursuant to Code Section 20-2-181.

(b) The State Board of Education shall conduct a sparsity grant needs study for each local school system meeting the conditions set forth in subsection (a) of this Code section. The needs study shall include at least the following:

(1) The identification of all instructional, administrative, and support service resources essential to the provision of educational programs and services to all students in a manner comparable to those educational programs and services which are typically offered to students in this state under the provisions of this article with the funds provided for this purpose;

(2) The identification of resources which will actually be provided under the provisions of this article; and

(3) The assignment of cost to all such resources which are identified as needed under paragraph (1) of this subsection but not identified as being provided under paragraph (2) of this subsection.

The sparsity grant to an eligible local school system shall be equal to the total cost assigned to resources needed but not being provided pursuant to paragraph (3) of this subsection, adjusted annually to reflect changes in the salaries and operational costs similar to those changes made under the provisions of this article.

(c) Once a local school system receives a sparsity grant under the provisions of this Code section, it shall continue to be eligible for such grant; provided, however, that it meets the following conditions:

(1) It continues to meet the conditions of subsection (a) of this Code section;

(2) A feasibility study pursuant to subsection (e) of Code Section 20-2-291 concerning the merger of school systems has been done within the past five years by the State Board of Education if the local school system has a full-time equivalent count less than the base size specified pursuant to Code Section 20-2-181 or the potential party local school system or systems have refused to participate in such a feasibility study or have refused to adopt its recommendations; and

(3) A sparsity grant needs study pursuant to subsection (b) of this Code section has been done within the past five years.

(d) Beginning with the 2001-2002 school year, a school system may be eligible to receive a sparsity grant to supplement funding for alternative education programs operated pursuant to Code Section 20-2-154.1. Funds shall be distributed based on rules and regulations adopted by the State Board of Education subject to appropriation by the General Assembly.