The allocation formula upon which funding for handicapped student programs and services in the California community colleges is based for the 1979-80 academic year represents the first stage in a transition to a permanent formula based upon services actually rendered to handicapped students. The formula is based upon three major components (each given one-third weight): direct excess costs budgets, gross budgets, and a statewide count of disabled students, weighted by disability category according to services needed by each disability group and multiplied by $162.06. Four minor adjustments were made to the average of the three components: (1) no district is to receive more than three times its Weighted Student Count multiplied by $162.06; (2) no district is to receive more than it reported in its 1979 gross budget; (3) every district will receive at least 10% more than its 1978-79 allocation; and (4) 1% of the amount appropriated by the Legislature will be set aside for Program Accountability and Development Services. The formula is to reflect, as nearly as possible, amounts needed for services actually provided to disabled students. A rationale for the formula; school district handicapped enrollment data and allocations figures; and information relative to the community college budget bill are included in the report. (Author/AYC)