Santa Monica College will eliminate approximately 70 positions as the institution confronts a projected $16.7 million deficit that could deplete its financial reserves by the 2026-27 school year, Superintendent/President Kathryn E. Jeffery announced in a letter to the college community.
The layoffs, which affect classified staff and management positions, represent the latest effort to address a structural budget deficit that has steadily eroded the college's fund balance from $43.9 million in 2021-22 to a projected $13.1 million by the end of the current fiscal year and a loss of $3 million by next fiscal year.
"This decision weighs heavily on me," Jeffery wrote. "These are not just positions on a spreadsheet — they represent real people, colleagues who have dedicated themselves to our students and our mission."
The college has already notified affected employees and is working with the California School Employees Association to support those impacted by the reductions. The layoffs come after the college implemented $8.6 million in budget cuts for the 2025-26 fiscal year, including a 5% reduction in class schedules, attrition-based position eliminations and discretionary budget reductions.
Despite those measures, the college faces an additional $10.1 million deficit in the adopted 2025-26 budget, with projections showing the shortfall could grow to $16.7 million the following year — resulting in a negative fund balance of $3.6 million by June 2027.
The financial crisis stems from multiple factors that have converged over the past several years. The college's enrollment has declined approximately 13% since 2018-19, dropping from 19,501 full-time equivalent students to 17,089 in the current year. More significantly, changes to funding at the state level have been chipping away at SMC’s finances for years.
Under the funding formula implemented in 2018-19, California community colleges receive allocations based on three components: base enrollment (70%), supplemental support for low-income students (20%), and student success metrics (10%). When the formula was introduced, 27 districts — including Santa Monica — saw funding decreases and were placed in "hold harmless" status, receiving their previous year's allocation plus cost-of-living adjustments.
During the COVID-19 pandemic, the state extended those protections through 2024-25. However, starting in 2025-26, colleges in hold harmless status no longer receive annual cost-of-living increases, effectively freezing their state funding even as expenses continue to rise.
At a budget workshop last year the school said it wasn’t alone with 51 of the state's 73 community college districts currently in hold harmless or stabilization status.
However, SMC’s funding freeze compounds challenges from declining enrollment that began before the pandemic. The college's resident credit enrollment dropped from 19,501 students in 2018-19 to 17,551 the following year, then rebounded to 19,101 in 2020-21 with the help of $16.7 million in federal Higher Education Emergency Relief Fund dollars. As that one-time federal support expired, enrollment resumed its downward trajectory, falling to 16,075 by 2022-23 before modest increases in recent years.
Non-resident enrollment has followed a similar pattern, declining 33% from 4,259 students in 2018-19 to 2,764 in 2021-22, with a slight recovery to 2,841 projected for 2025-26. That decline has reduced non-resident tuition revenue by approximately $311,666 from the previous year's peak of $28.3 million. Total revenue from non-resident tuition is down about $7M from pre-pandemic levels.
State apportionment and non-resident tuition together comprise 87% of the college's unrestricted general fund revenue. In the 2025-26 adopted budget, total unrestricted revenue is projected at $224.9 million while expenditures are budgeted at $235.1 million.
The college's expenses have significantly outpaced revenue increases since 2021-22. Salaries have increased 18.9% from $118.1 million to $140.4 million over that period, while benefits have grown 24.8% from $59 million to $73.7 million. Together, salaries and benefits now represent 91% of the college's unrestricted expenditures.
Utility costs have proven particularly volatile, increasing 78.7% from $3.8 million in 2021-22 to a projected $6.7 million in 2025-26. Insurance costs have similarly surged 57.6% over the same period, from $1.6 million to $2.5 million.
The financial pressures are reflected in the college's fund balance, which measures the institution's reserves. After receiving $32.9 million in federal pandemic relief funds between 2020-21 and 2022-23, the college's fund balance peaked at $43.9 million (22.65% of expenditures) in 2021-22. As the one-time federal support ended and structural deficits persisted, the fund balance has declined steadily.
The California Community Colleges Chancellor's Office recommends districts maintain reserves of at least 16.67% of annual expenditures — approximately two months of operating costs. The college's fund balance dropped to 11.99% in 2023-24 and is projected to fall to 5.57% by the end of the current fiscal year, well below recommended levels. Current projections show the fund balance turning negative in 2026-27 without additional interventions.
"The 2026-27 deficit is projected to be $16,730,361, resulting in a negative fund balance in 2026-27," budget documents state.
The college has been working to address the structural deficit since April 2023, when the Budget Committee first reviewed multi-year projections showing the fund balance would fall below 5%. For 2023-24, the college planned $7.7 million in budget reductions but achieved only $3.5 million in actual savings, with $4.1 million in planned cuts not materialized — including $2.9 million from schedule efficiencies and $1.1 million from attrition and hiring freezes that did not produce expected savings.
For the current year, the college implemented more aggressive measures totaling $8.6 million, including a 5% reduction in class schedules ($2 million in savings), a 5% reduction in counseling schedules ($206,961), position consolidation and attrition ($2.8 million), funding shifts to restricted sources ($1.8 million), and discretionary budget cuts ($620,200). The Santa Monica College Foundation also provided $1.2 million in one-time reimbursements, with $202,410 in ongoing support.
Despite these actions, the college continues to operate with significant structural deficits. Budget documents show annual deficits of $9.9 million in 2022-23, $6.9 million in 2023-24, and $3.6 million in 2024-25, with the 2025-26 deficit now projected at $10.1 million.
In her letter, Jeffery acknowledged the difficult choices ahead while emphasizing the college's commitment to its educational mission. "There are no easy options," she wrote. "Each budget-balancing strategy carries real impacts for our students, staff, faculty, and programs."
The college is considering additional measures including salary reductions for all employee groups, further furloughs, additional class schedule reductions, new revenue enhancement initiatives, and other proposals.
The college is also pursuing enrollment growth strategies to eventually increase state funding, though such efforts face headwinds from declining high school graduation rates. According to Western Interstate Commission for Higher Education projections, California high school graduates are projected to decline 29% by 2041, with key feeder districts for Santa Monica College seeing even steeper drops in the coming years.
The college maintains multiple fund types beyond its unrestricted general fund, including restricted grant programs, capital outlay funds, and bond funds for construction. However, these restricted sources cannot be used to address the unrestricted fund deficit.