This story has been updated. Please see editor’s note below.
Not even a Dilbert comic could lighten the mood.
The Santa Monica-Malibu School District Board of Education stared down a $7.4 million deficit during Monday’s review of the preliminary budget for the 2015-16 school year.
The projected deficit weighing on a $94.9 million unrestricted general fund budget is due largely to a combination of proposed increases in special education and district-level staffing as well as the rising costs of employee benefits, reduced revenues for the district’s technical training program and an expected shortfall in annual fundraising.
Expenditures are forecast to top $102.3 million on the unrestricted general fund, which does not include restricted funds.
“We’ve got some hard numbers to swallow here,” board member Richard Tahvildaran-Jesswein said. “These numbers are problematic.”
The board’s study session came as the district prepares for the third year of its transition into the Local Control and Funding Formula program, which SMMUSD chief financial officer Jan Maez said puts more responsibility on the district to manage state funds.
The formula, which will be fully implemented by 2020-21, provides grants by grade level and supplemental money based on the number of English language learners, lunch discount recipients and foster youth.
Amid rising costs, the district is anticipating a slight decline in enrollment, from 11,295 students this year to 11,173 in 2015-16.
Administrators and board members expressed concern about the deficit and said the budget would have to be altered before being finalized.
“We shouldn’t accept it at all,” Maez said. “We’re gonna have to figure [it] out. That’s how the numbers play out at this point. It’s a concern … We’re really having to look at our general fund and set priorities and make some budgeting decisions.”
Another budget will be drafted by early June and public testimony will be heard June 24, but the obvious conclusion drawn by district officials was that cuts will be required before a final budget is approved June 29.
“If we put these numbers before the county, they would be sending our budget back to us,” Maez said.
This was reinforced in an email by district spokesperson Gail Pinsker, who said in no uncertain terms that the budget will have to be fixed.
“The L.A. County Board of Education will not accept a budget that shows a deficit, so this will be remedied prior to adoption for the upcoming school year,” Pinsker wrote.
Maez said the district will have to consider reducing school-based costs by $1 million, a move that would likely necessitate cuts in staffing. She said the district may have to reduce overhead costs by an additional $500,000.
According to Pinsker, though, “there are no implications for staffing layoffs within this report.”
Maez also brought up what she sees as inefficient school sizes across the district.
“I won’t be the most popular person in the room, and I’m not suggesting that any school close, but we are running some really small schools,” she said. “Essentially, it’s catching up with us. We’re not able to do it all, and we have to seriously decide what things are most important.”
Board member Oscar de la Torre said the district should consider hiring a grant writer to apply for additional state funds.
The board’s budget review came amid otherwise encouraging projections at the state level, where April tax revenues were $1.5 billion ahead of initial forecasts.
Amid the many budgetary additions which account for the deficit — including an increase in textbook costs through adoption of the common core, additional special education teachers, administrative and custodial staffing increases and an increase in employee benefits — the preliminary budget report also points to a deficit in Santa Monica-Malibu Education Foundation funding as a punch in the gut to the budget.
It’s likely that the SMMEF will not reach its goal for the second cycle in a row.
Tasked with raising $4 million annually to pay for instructional aides, literacy coaches, arts programming and other enrichment activities, the district’s fundraising arm collected $3.2 million in its previous campaign and has collected about $2.2 million in its current drive, which ends June 30.
The embattled agency’s shortfall could cause the board to make programming cuts in Santa Monica and Malibu schools.
Moving forward, money for literacy coaches and support staff will come out of the general fund, according to district officials. Professional development, which has been covered in part by SMMEF money, will come out of Title II funds.
Board members have suggested responsibility for a large portion of this shortfall rests on the shoulders of Malibu parents, whom they claim are withholding funding as they work to separate from the SMMUSD.
According to Pinsker, the district is working hard to present a balanced budget.
“We plan to continue offering our rigorous and robust educational opportunities, performing arts programs and athletics and can assure parents that their students will continue to enjoy an exceptional education in SMMUSD,” Pinsker said in an emailed statement.
A version of this story originally appeared in the Santa Monica Daily Press. Additional reporting by Emily Sawicki.
Editor’s note: the print version of this story did not specify that the $94.9 million budget was the unspecified general fund. The total budget is approximately $140 million.