This report summarizes the findings and recommendations of the Community College Funding Formula Task Force and proposes a new funding formula. Sections include: (1) Principles (Identifies twelve principles for an effective community college funding system); (2) Iowa's System of Community Colleges (Discusses mission, access, quality, and history; provides a statistical profile of Iowa college students and institutions and enrollment trends from 1988 to 1995; provides information on instructional programs and degrees awarded; describes the funding of the community college system, the sources of revenue, and data on revenues and expenditures for 1980, 1990, and 1997); (3) Funding Study Process (Lists the members of the Task Force and briefly describes the activities of the Task Force); (4) Funding Study Recommendations (Describes a proposed process for determining appropriation requests from the legislature and distributing state general aid to the colleges); (5) Fiscal Year 1999 Appropriations Request; (6) Funding Issues (Identifies important issues: inequities in funding; property tax/state aid equalization; rising student tuition; employee salaries; new program development; adult education needs; and program modernization); and (7) Future Action. Appendices include: sources of general operating fund, 1980-1997; general fund refinements; changes in reporting; student funding, 1997; and student tuition and expenses, 1995-97. (Contains 12 tables and 4 figures.) (RDG)