The Santa Monica-Malibu Unified School District ended the 2025-26 fiscal year in a stronger financial position than it had projected in June, closing the books with an unrestricted general fund balance about $9.85 million higher than expected, according to a year-end report the school board approved Sept. 9.
The Board of Education voted 4-0 at a special meeting to accept the district's Unaudited Actual Financial Report, the annual accounting of revenues and expenditures that districts submit to the Los Angeles County Office of Education after their books are closed. The figures remain subject to an independent audit by the firm CWDL, which is scheduled to begin the week of Sept. 28.
The district had estimated in June that it would finish the year, which ended June 30, roughly $3.7 million in the red. Instead its unrestricted general fund ending balance reached about $68.6 million — the improvement driven by higher one-time revenues, lower-than-projected spending and other year-end adjustments.
But district officials were careful to frame the result as a balanced year-end position rather than a windfall, stressing that most of the money is already committed.
"While our year-end position is better than we projected in June, many of these funds are already designated to address future deficit spending and maintain appropriate reserves," Assistant Superintendent of Business Services and Chief Financial Officer Gerardo Cruz said. "We will continue to carefully manage our resources while protecting the programs, services and educational resources that support our students and families."
The district took in about $6.1 million more revenue than projected. Roughly $4 million came from one-time state property tax backfill and additional funding allocated by the State Education Budget Committee in connection with the January 2025 Palisades and Franklin fires. Other gains included about $1.3 million more from the Measure R parcel tax, about $954,000 more in lease and rental revenue and about $1.6 million more in interest, partially offset by about $186,000 less in sales tax revenue from the city of Santa Monica.
Because Santa Monica-Malibu is a "basic aid," or community-funded, district — funded chiefly by local property taxes rather than by student attendance — it does not receive state reimbursement based on enrollment, and Cruz cautioned that the wildfire money will not recur.
"We wouldn't want to tie these one-time revenues to anything, any expenditure that's reoccurring in the future," he told the board.
That concern drew extended discussion from board members, who pressed Cruz to more clearly separate recurring revenue from the periodic, one-time allocations the state directs to districts. Board member Jennifer Smith argued that such funds can distort the district's true financial picture.
"We know that it is irresponsible to create programs around that money that we want to be sustainable. We cannot do that," Smith said, asking whether the budget could better flag one-time dollars. Cruz agreed, saying staff could "do a better job of making that connection." Smith called the change "enormously helpful."
Expenditures came in about $3.6 million below projections, largely because budgeted costs came in under estimates or were not needed. That included about $2.4 million in reduced consultant, legal and other operating costs, about $820,000 in lower spending on supplies, textbooks and technology, and a $700,000 transfer to deferred maintenance that was not needed this year and is expected to be used in 2026-27. The reductions were partially offset by about $344,000 in higher salary and benefit costs — a far smaller variance than the multimillion-dollar misses of recent years, which Cruz cited as evidence of improved forecasting.
The district's Local General Fund Contribution rose about $995,000, including roughly $754,000 in added support for special education and about $241,000 for the Routine Restricted Maintenance Account.
Officials emphasized that the ending balance does not represent money available for new ongoing commitments. The unrestricted general fund balance includes about $7.3 million for the state-required reserve, funds set aside for projected deficit spending in future years, and about $30.3 million toward a reserve of up to two months of operating expenses. The district said it aims to build toward a 33% reserve recommended for basic aid districts by School Services of California.
The district also continues to draw on restricted categorical and one-time block grant funding — including the Learning Recovery Emergency Block Grant and a state Student Support and Professional Development block grant — to cover allowable costs and relieve pressure on the unrestricted general fund. Those funds may be spent over multiple years under their respective spending plans.
A draft audit report is expected in November or December, with the final report anticipated for board consideration in December.