The process, which will begin with the 2008 fiscal year, will replace the old system, in which 172 specified arts groups were given certain "line item" amounts each year (amounting to $13.2 million total for 2007), all other groups competed for a small pot of money from the Department of Cultural Affairs ($3.8 million in 2007) and city council members could negotiate funding for any group into the budget ($8.8 million total in 2007).

Those 172 groups — which include Roundabout Theatre Company and Lincoln Center Theater — will now have to compete for funding as part of the same merit-based process as everyone else.

The new plan also involves stabilizing the allocations for the separately-funded Cultural Institutions Group, a collection of 34 arts organizations in city-owned buildings, including the Public Theater/New York Shakespeare Festival, Brooklyn Academy of Music, City Center, New York State Theater and Carnegie Hall. Instead of the old system, in which in 2007 the groups got a set figure of $102 million plus $22 million negotiated by city council members into the budget, these organizations will get a guaranteed $119.7 million in 2008. The groups will be monitored under a performance-based review process called CultureStat.

In a statement, Bloomberg said that the reforms would "increase transparency and accountability and shorten the budget dance we see every year."

Applications for funding for 2008 will be available at the Department of Cultural affairs website beginning Feb. 16. The deadline will be March 26, and groups will be informed of their allocations after July 1. For more information visit www.nyc.gov/culture.