HB2089 proposes changes to the withholding of state aid for community colleges in Arizona that exceed their expenditure limitations in fiscal years 2024-2025 through 2026-2027. The bill modifies the amounts to be withheld based on the percentage by which the community college district exceeds its expenditure limitation. For excess expenditures less than 5% of the limitation, 10% of the excess will be withheld; for 5% or more but less than 10%, 20% will be withheld; for 10% or more but less than 12%, 50% will be withheld; and for 12% or more, the amount will be calculated according to existing statutory withholding amounts.

Additionally, the bill sets a cap on the maximum amount of state aid that can be withheld from certain community college districts based on their location and establishment date. For provisional community college districts established before December 31, 2015, in counties with populations not exceeding 300,000, the maximum withholding is limited to 1% of the district's budget. For districts in counties with populations not exceeding 1,000,000, the maximum withholding is limited to 0.5% of the district's budget. The act is retroactive to June 30, 2023.