(1) The department shall, annually on or before October 15, distribute funds appropriated for purposes of this section to (a) local systems as defined in section 79-1003 or (b) a combination of school districts. The funds distributed pursuant to this section shall be distributed based on a pro rata share of the eligible costs submitted in grant applications.

(2) Local systems or combinations of school districts may apply to the department for base funds and matching funds pursuant to this section to be spent on approved accelerated or differentiated curriculum programs. Each eligible local system or combination of school districts shall receive one-tenth of one percent of the appropriation as base funds plus a pro rata share of the remainder of the appropriation based on identified students participating in an accelerated or differentiated curriculum program, up to ten percent of the prior year's fall membership as defined in section 79-1003, as matching funds. Eligible local systems or combinations of school districts shall:

(a) Provide an approved accelerated or differentiated curriculum program for students identified as learners with high ability;

(b) Provide funds from other sources for the approved accelerated or differentiated curriculum program greater than or equal to fifty percent of the matching funds received pursuant to this subsection;

(c) Provide an accounting of the funds received pursuant to this section, funds required by subdivision (b) of this subsection, and the total cost of the program on or before August 1 of the year following the receipt of funds in a manner prescribed by the department, not to exceed one report per year; and

(d) Provide data regarding the academic progress of students participating in the accelerated or differentiated curriculum program in a manner prescribed by the department, not to exceed one report per year.

If a local system or combination of school districts will not be providing the necessary matching funds pursuant to subdivision (b) of this subsection, the local system or combination of school districts shall request a reduction in the amount received pursuant to this subsection such that the local system or combination of school districts will be in compliance with such subdivision. Local systems or combinations of school districts not complying with the requirements of this subsection shall be ineligible for grant funds in the following year.