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# Santa Monica College faces accreditation threat over financial crisis
- URL: https://www.smdp.com/santa-monica-college-faces-accreditation-threat-over-financial-crisis/
- Published: 2026-08-21T17:52:13.000Z
- Updated: 2026-08-21T17:52:13.000Z
- Author: Matthew Hall
- Tags: Education, Santa Monica College

The years-long failure to arrest Santa Monica College’s enrollment decline and fiscal crisis has endangered the school’s accreditation according to a new warning sent by the institution responsible for evaluating community colleges.

The Accrediting Commission for Community and Junior Colleges (ACCJC) notified SMC Superintendent/President Kathryn Jeffery in July that the college had scored in the "at-risk" category on the commission's Composite Financial Index, based on data submitted in the college's 2026 annual fiscal report. Institutions that score at-risk are automatically placed on enhanced monitoring, a designation ACCJC uses to track member colleges' fiscal stability throughout the accreditation cycle.

"Federal regulations and ACCJC policy require the Commission to monitor member institutions' fiscal stability throughout the accreditation cycle, in order to ensure that accredited institutions are able to continue to meet their missions and ensure ongoing viability for the students they serve," ACCJC Vice President Melynie Schiel wrote in the letter.

Schiel's letter cited four factors behind the at-risk designation: an unresolved structural deficit, marked by expenses exceeding revenue in each of the last three reporting years, from 2022-23 through 2024-25; a significantly unfunded Other Post-Employment Benefits liability with no district contributions over that same three-year span; a 34% decline in the district's ending cash balance over three years; and multiple expired collective bargaining agreements that remained unresolved.

The commission required SMC to submit an update describing the actions it is taking to address those factors, and cautioned that colleges that remain on enhanced monitoring for three consecutive years without resolving their fiscal issues could face adverse action from the commission.

The ACCJC serves as the primary accrediting agency recognized by the U.S. Department of Education for two-year institutions across California and the Pacific, overseeing 136 colleges as of 2024\. This institutional seal of approval is the critical mechanism that grants member colleges access to federal Title IV financial aid, ensures the transferability of credits, and maintains the essential academic legitimacy required to serve their student populations.

Jeffery said the data behind the designation was backward-looking and predated a series of cost-cutting steps, including layoffs, contract non-renewals, elimination of vacant positions, furloughs and pay freezes for classified and management employees. The college submitted its formal response to ACCJC and Jeffery said the district has since resolved two of its extended labor contracts — with the California School Employees Association and the Santa Monica College Police Officers Association, both ratified this spring with no ongoing salary or benefit increases — while negotiations continue with the faculty association. She also noted SMC is expected to move out of "hold harmless" state funding status and into the Student-Centered Funding Formula this year, making it newly eligible for cost-of-living adjustments, though the unfunded liability remains unaddressed pending resolution of the college's core operating imbalance.

Faculty leaders say the crisis has been building for months. Academic Senate President Vicenta Arrizon noted the state Chancellor's Office has separately directed SMC to take part in its Fiscal Health Assessment and Fiscal Forward Portfolio sessions in 2027, and pointed to a Fiscal Responsibility Resolution the Senate brought to the Board of Trustees in April warning that the administration's failure to develop and present a fiscal plan "directly jeopardizes compliance with ACCJC Standard Three." Arrizon said the college's tentative 2026-27 budget projects a structural deficit of about $7.6 million with no clear plan yet shared with the campus to close it, and has renewed calls for a campus-wide budget forum this fall along with more frequent, timely updates on the district's response to both ACCJC and the Chancellor's Office.

The fiscal picture has been further complicated by enrollment trends discussed at the college's most recent Board of Trustees meeting. While domestic enrollment has grown moderately, non-resident enrollment has declined 10.44% in the summer term and 8% in the fall, a drop tied in part to a recent U.S. Department of Homeland Security ruling that replaces open-ended F-1 international student visas with a strict four-year admission window. Because SMC international students take an average of 3.5 years to complete their degrees, administrators say the change has introduced significant transfer anxiety among that population. The college is responding with targeted phone outreach aimed at converting applicants into enrolled students and a bilingual marketing campaign promoting SMC's $46-per-unit cost.

Trustees also aired sharp criticism of the state's Student-Centered Funding Formula, which SMC will fully transition into for 2026-27 as its hold-harmless protections expire. Under the formula, cost-of-living adjustments and enrollment growth funding are calculated across 32 separate metrics rather than as flat, system-wide percentages — a shift that reduces SMC's effective COLA to 2.23%, or $3.7 million, compared with $7.2 million the college would have received under the old formula's statutory 4.37% rate. Because growth funding is calculated using socioeconomic and education demographics within each district's boundaries, SMC's enrollment growth rate is capped at 0.3462%, or roughly 60 full-time equivalent students worth about $352,000 — tied for the lowest growth allocation in the state.

Trustee Rob Rader said the formula has recreated the funding disparities the state's equalization efforts were meant to resolve. "One of the complaints about prior to equalization was that there were such different rates for every district," Rader said. "It seems that we've done nothing but return to that on steroids, if you will." He said large urban districts, including Los Angeles and San Francisco, are also faring poorly under the growth formula and predicted "a lot of agitation for change."

Trustee Margaret Quiñones-Perez said the formula's structure reflects the outsized influence of smaller, rural districts on the state body that oversees it. "Unless the CEOs of the big districts start booting them out of that committee, our formula is not going to change, because it's not happening with the board of governors," she said. "It's all those small districts that are doing it."

Trustee Anastasia Foster pointed to broader fiscal pressure on the city of Santa Monica and voiced support for statewide funding measures, including Proposition 3, which would extend the state's tax on income over $1 million. "Extension of what's known as the millionaires' tax has gone a very long way toward supporting our general fund budget," Foster said, noting that 40% of the revenue is directed to Proposition 98, which funds public education from transitional kindergarten through community college.

The fiscal warnings follow a turbulent spring at SMC. The Board of Trustees voted 6-2 in May to finalize the termination of 45 classified employees — including custodians, administrative assistants, parking enforcement officers, tutors, a plumber and a painter — effective June 30, as the college confronted a projected $14.7 million deficit heading into the current fiscal year. The cuts came on top of $8.6 million in reductions already made for the current fiscal year, including a 5% cut to class schedules.

The school’s reserves peaked at $43.9 million in 2021-22 with help from federal pandemic relief funds and have fallen every year since, a decline of more than $27 million, or about 61%, in four years.

Rising labor costs have driven much of the structural gap: combined academic and classified salaries have grown more than 20% since 2021-22, and benefits 25%, adding nearly $40 million to the college's expense base. A wave of retirements — about four times the typical annual rate — is adding further pressure through higher payouts, with the college projecting roughly $1.1 million in mandatory vacation and banked-hours payouts alone.

Arrizon has said SMC meets five of seven Chancellor's Office indicators of systemic fiscal distress and warned the structural deficit extends into the 2027-28 fiscal year. The college's final adopted budget is expected in September, following a state budget revision that will inform next month's tentative budget presentation.