Santa Monica's Budget Plan Assumes a $12 Million School Payment Ends

The city drew $26.7 million from reserves, not the $34 million it planned, and school tax Measure ES shapes what's next.

Santa Monica needed $26.7 million from its savings to get through last year's budget. It had planned on spending $34 million.

That $7.3 million gap is the good news city officials brought to the City Council on Tuesday, the Santa Monica Daily Press reported. Every dollar counts now. Unobligated reserves had dropped from $436 million to $98 million before the council adopted its Realignment Plan last October, much of it to pay childhood sexual abuse settlements. The city's announcement Thursday called year one stabilizing, with revitalization next, and said Santa Monica is on track to balance its operating budget by July 2027.

That target comes with a catch, the Daily Press reported: it assumes the city stops paying the Santa Monica-Malibu Unified School District about $12 million a year when a facilities agreement expires June 30, 2027. The two sides set that end date in 2022, but the district would like the money to keep coming, City Manager Oliver Chi told the council, according to the Daily Press.

Measure ES, a parcel tax for local schools that goes to voters Nov. 3, tips which way staff leans. A yes vote sends staff back to the district to build the tax money into a fresh agreement. A no vote means staff will recommend ending the payment, with the council free to keep it going as long as it finds the savings somewhere else. Staff will lay out the options in March.

So a vote about school funding is also a $12 million question for City Hall.

Source: smdp.com, retrieved October 16, 2026. Other sources: santamonica.gov.