The bill establishes a framework for the formation of isolated school districts in Arkansas, detailing the process for detaching an isolated school from a larger district and the requirements for creating a new district. It introduces a new subchapter in the Arkansas Code, specifically addressing the formation of isolated school districts, which can occur if a petition is submitted by local voters. The petition must include signatures from either at least 350 registered voters or 51% of the registered voters within the isolated school's boundaries. The resulting or receiving school district board is responsible for verifying these signatures and calling an election to determine the outcome of the detachment.

Additionally, the bill outlines the governance structure for isolated school districts, mandating a board of directors consisting of five members elected by local voters. It also establishes funding mechanisms, including the determination of millage rates and eligibility for state funding based on prior-year average daily membership. The bill specifies the transfer of ownership of facilities, property, and funds from the local public school district to the newly formed isolated school district, ensuring that the new district has the necessary resources to operate effectively.