As mandated by state finance legislation of 1983, this report provides a plan for differential funding for California's community college districts, and presents the results of a study of differential funding. Part 1 of the report presents the differential funding plan, including a summary of the study and its findings and the basic principles and elements of the proposed funding plan. Part 2, divided into six chapters, focuses on the differential funding study. Chapter 1 presents background to community college finances, including a history of funding in the system, analyses of the impacts of changing funding policy and reduced funding levels, and a discussion of the expectations of differential funding. After chapter 2 reviews the study plan and procedures, chapter 3 considers differential cost funding in terms of state and local district interests and advantages and disadvantages. In chapter 4, the data needs of the funding mechanism are considered with regard to available data and plans for developing needed data. Chapter 5 provides an analysis of a differential cost funding approach for the community colleges, considering elements such as support categories, workload measures, support levels, and impact on individual districts. Finally, chapter 6 offers a plan for implementation, which identifies elements of the plan, suggests a schedule, estimates costs, and considers the legislative authorization needed. Appendices include a summary and analysis of data. (LAL)