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# Oops, SMMUSD Did it Again: A Big Surplus Instead of a Big Deficit
- URL: https://www.smdp.com/oops-smmusd-did-it-again-a-big-surplus-instead-of-a-big-deficit/
- Published: 2026-10-09T17:25:00.000Z
- Updated: 2026-10-09T17:24:59.000Z
- Author: Guest Author
- Tags: Opinion, Santa Monica

At the May 19, 2026 Santa Monica-Malibu Unified School District (SMMUSD) Board meeting, the District predicted a $9 million deficit for the 2025-26 school year ending in 2 months. On September 9th, they presented the 2025-26 unaudited actuals. The District ended up with an $8 million surplus of unrestricted and restricted funds. Why were they off by $17 million? Gerardo Cruz, the Chief Financial Officer, wrote: “The District uses conservatively estimated revenue and allocated expenditures during budget and interim reporting processes.”

With this conservative strategy, the District predicted an average $5 million deficit over the previous 5 years, yet ended with an average $14 million surplus. For the next 3 years, they are predicting an average deficit of $10 million. This current year’s deficit of $12 million has already been reduced by the announcement of an additional $11 million in revenues for this year. Fool me once, shame on you; fool me twice, shame on me. I don’t believe your projections anymore.

These projected deficits are why the District says it needs a very high level of reserves: 33%, or $79 million. With all the past surpluses, reserves for the unrestricted and restricted funds are now $89 million, $10 million over that high target.

The District’s finances are in great shape, despite the story they are telling to justify passing a new $495 parcel tax, Measure ES. This was put forward by “citizens” who are the school board president, a past school board president, and the chair of the School’s PAC to get around the Prop 13 two-thirds vote required to increase property taxes. This loophole would be closed if Prop 43 passes in November. Most of the $300,000 raised to get this measure on the ballot came from District and City vendors and 24 individuals.

Measure ES transfers the $12 million the City has been paying the District for the Joint Use Agreement for the last 24 years, to Santa Monica residents. The District doesn’t get more money; it frees up $12 million for the City to spend with no restrictions. Measure ES is a tax for the City disguised as a tax for the schools. They want us to prioritize the schools, so the City can de-prioritize the schools, parks, and recreation. The City gets an additional $12 million by being called an unreliable partner.

The City's CFO said that if Measure ES doesn’t pass, the City may need to cut services. That implies they would continue to fund the schools. What doesn’t make sense to me is why they would need to make cuts if they are just not getting extra money.

Even though Measure ES funding replaces the Joint Use Agreement payments, the agreement for the City to manage the after-school programs and access does not continue. The fate of the after-school programs the City provides at the elementary and middle schools for our youth is in jeopardy. To continue City programming, another Joint Use Agreement needs to be put in place. Most likely the District will want the City to pay for this new Joint Use Agreement. We’d be paying twice for this access, to replace the funding and then through the City’s new agreement.

The proponents of Measure ES and the City are tone deaf to the financial situation of the Santa Monica residents who are struggling financially. This includes almost a third of the District’s students who come from lower-income families. Affordability is the number one issue for Californians. They say it’s just a little more, but we’re getting hit with just a little more from everywhere, including the City’s recent increases in water rates; parking, user, and credit card fees. These are regressive taxes and fees that disproportionately affect lower-income residents. Supporting this measure makes it harder for families to put food on the table for the District to continue its surpluses.

District bond property tax payments increased by 58% last year, up $432 for each $1 million of assessed value. Santa Monica’s median property tax bill of $14,328 is the third highest IN THE NATION! Now they want to add another $495 on top of that.

Another argument for supporting this measure is that good schools increase property values. That makes it harder for families to live here. It affects homeownership and rental affordability, and school enrollment. The District's enrollment has declined by 23% in the past 10 years. As a Basic Aid District, funding is not based on enrollment. Revenues have increased by 53%, beating the 34% inflation rate and moving the per-pupil spending from 23rd to 8th place in the County.

If Measure ES doesn’t pass and if the City decides not to fund the District, a $12 million decrease would not be devastating. The average surplus of $13 million over the last 6 years would cover this decrease with no impact. Since the reserves are above the target, there’s no need to add to the reserves, saving $7 million. What happened to the additional $10 million the District started getting 3 years ago from Measure GS, the property transfer tax? What are they doing with the projected increase of $15 million this year in Basic Aid excess taxes, which are projected to increase from $20 million to $35 million, money regular school districts do not receive?

While enrollment declined by 23% in the past 10 years and classroom teachers decreased 14% from 572 to 494, non-teacher staff and administration have increased by 9% from 703 to 768 positions. Seems like there are administration positions that could be cut. The threat that teachers would need to be cut if this measure doesn’t pass is just fear-mongering.

Another way to make up a potential deficit is to reduce the number of permit students. Of the 8623 students in the District, about 1000, 12%, are permit students who do not live in Santa Monica. Because funding is not based on enrollment, not only is the District not getting additional money for these students, it’s taking money away from LAUSD.

I support our public schools. I went to public schools, and our son went to Grant, JAMS, and Samohi. I’m against using our schools to pass a tax that benefits the City. A City poll a year ago showed that if this were put on the ballot as a City tax, it would not have the needed support. Don’t let them pull a fast one on us.

Karen Melick