Santa Monica Schools Braced for a Deficit and Ended $6 Million Ahead

The forecast miss lands weeks before voters decide Measure ES, a $495-a-year parcel tax meant to replace $12 million in city money.

In May, Santa Monica-Malibu Unified School District officials expected the school year to end about $9 million in the red. It ended about $8 million in the black, Karen Melick wrote Friday in a guest column in the Santa Monica Daily Press.

Melick, a Santa Monica resident whose son went through Grant, JAMS and Samohi, is using that $17 million swing to argue against Measure ES, the $495-a-year school parcel tax on the Nov. 3 ballot. "I don't believe your projections anymore," she wrote to the district.

The district's own year-end report tells a smaller version of the same story. The school board voted 4-0 on Sept. 9 to accept the 2025-26 unaudited actuals, and the Daily Press reported that the unrestricted general fund, the district's everyday operating money, finished about $9.85 million better than the June estimate.

In June, the district had expected to lose about $3.7 million. Instead it closed with a surplus of roughly $6 million and an unrestricted balance of about $68.6 million, which the Daily Press called a record.

So which miss is real? Both. Melick starts from the May forecast and counts restricted and unrestricted money together; the district starts from June and counts only the unrestricted fund. Either way, the year beat the forecast by millions.

Where the money came from matters. Revenue ran about $6.1 million over projections, roughly $4 million of it one-time state money tied to the January 2025 Palisades and Franklin fires. Spending came in about $3.6 million under, mostly in consultant, legal and other operating costs.

In a written explanation Melick quotes, Chief Financial Officer Gerardo Cruz said the district budgets with "conservatively estimated revenue." At the Sept. 9 meeting, he told the board that much of the year-end money is already set aside for future deficit spending and reserves.

Board member Jennifer Smith pushed on the one-time part. "We know that it is irresponsible to create programs around that money that we want to be sustainable," she said at the meeting, asking staff to flag those dollars more clearly in the budget.

The reserve is the second fight. The district has parked about $7.3 million in the reserve the state requires and about $30.3 million toward a cushion of up to two months of operating costs. It's working toward a 33% reserve that School Services of California recommends for districts funded mainly by local property taxes. Melick counts reserves across both funds at $89 million, about $10 million above that target.

Then there's this year. The budget the board adopted in June plans for about $226.2 million in revenue against $237.9 million in spending, a gap of roughly $11.7 million, the Daily Press reported. Melick writes that the gap has already been cut by an extra $11 million in revenue announced since.

The district's August revision did add about $11.23 million. But Cruz said most of it is restricted, the Daily Press reported: the biggest piece is a $7.49 million one-time block grant, and only about $3 million in special education money meaningfully eases the operating fund.

Measure ES is where the numbers land on people. It would charge $495 a year, adjusted for inflation, on each taxable parcel in Santa Monica, though nonprofits, religious groups, affordable housing and seniors who qualify would be exempt. It's estimated to raise about $11 million a year and can't be spent on administrator salaries.

That money would replace the city's master facility use agreement, which sends the district about $12 million a year and ends June 30, 2027. The board endorsed the measure unanimously Aug. 6. Melick argues it's really a tax for the city, since it frees up the $12 million Santa Monica has been paying.

Malibu homeowners, who share the district, won't pay it. Board member Stacy Rouse, a Malibu resident, voted yes but said she "wouldn't carry the burden that other people carry."

Auditors from the firm CWDL started on the 2025-26 books the week of Sept. 28. The final audit is due to the board in December, a few weeks after Santa Monica voters have already decided.

Source: smdp.com, retrieved October 9, 2026. Other sources: smdp.com (2), smdp.com (3), smdp.com (4).