Modifies the allotment formula for small school system supplemental funding to each county school administrative unit with a daily membership of fewer than 4,080 students. The allocation formula must (1) round all fractions of positions to the next whole position, (2) provide 5.5 additional regular classroom teachers in certain counties, (3) provide additional program enhancement teachers adequate to offer the standard course of study, (4) change the duty-free period allocation to 1 teacher assistant per 400 average daily membership, (5) provide a base for the consolidated funds allotment of $717,360 for the 2013-14 and 2014-15 fiscal years, and 6) allot vocational education funds for grade 6 as well as 7-12. Includes a phase-out provision for those units that become ineligible because of population increase. Require the State Board of Education to report to the Joint Legislative Education Oversight Committee by May 1, 2014, if it determines counties have supplanted funds. Encourages local boards to use at least 20% of the funds to improve the academic performance of children performing at Levels I or II on reading or math end-of-grade tests in grades 3-8.

Directs the Joint Legislative Education Oversight Committee (Committee) to study other education funding formulas and make recommendations to the General Assembly on (1) revamping funding formulas to reward high performance, (2) reweighting the formulas for allotting funds to low-wealth counties, and (3) adjusting average daily membership four times a year to accurately reflect the number of students in each local school administrative unit. The Committee must report its findings to General Assembly when it reconvenes in 2014.

Effective July 1, 2013.