OPINION -- SMMUSD Budget: Challenges and Opportunities Ahead

By Dr. Ben Drati
Superintendent

We are well on our way into the 2019-20 school year. Students are engaged in learning, and our staff is excited to be educating them.

I believe that I speak for all staff when I say that we appreciate all parents and supporters of the Santa Monica-Malibu Unified School District, as we recognize that educating our youth is a partnership effort.

In the complex world of technology advancements, globalization, climate health, and human relations in which our students are coming of age, it is more essential than ever that we prepare them to address the challenges and opportunities ahead of them.

We know that teaching our students today involves helping them gain significant 21st-century competencies, which include academics, of course, but also intentionally promotes the development of strong character, citizenship, collaboration, communication, critical thinking skills, and creativity.

We believe that through our commitment to deeper learning, students will develop the knowledge, skills, and wherewithal to succeed.

Beginning this year and over the next two years, I will be sharing information about our fiscal challenges and also how we can turn those challenges into opportunities.

I am convinced that as we align our district’s resources to face our fiscal challenges, we will actually come out better as an educational institution.

In this letter, I want to provide you with an overview of our district’s fiscal position and invite you to learn more through various meetings (school site PTA / PTSA, faculty), where I will present in greater depth.

Many of the challenges we face are common among districts. For example, we are faced with a growing teacher shortage, a crisis that confronts school districts throughout the nation.

At the same time, housing prices on the westside of Los Angeles have risen dramatically, which impacts our employees, many of whom cannot afford to live nearby and must endure long commutes to and from work.

As many of you are aware, the State of California’s funding for schools is inadequate. California ranks 41st in the nation in education funding, and state funding has been extremely volatile for years.

Like many other districts in the State of California, SMMUSD has been challenged by a structural fiscal deficit spending cycle for a long time. This means that our operational expenditures are greater than the revenues we receive in combined state, federal and local funding.

This is a function of many factors, including increases in healthcare and other employee-related costs and in general operations, including the costs of supplies and services, that exceed increases in revenue.

We have been able to survive both the volatility of state funding and the existence of a structural deficit in previous years in a variety of ways.

We are fortunate that our community has had the wherewithal, the commitment and the generosity to augment state funding through the passage of local funding measures, including Measure R in Malibu and Santa Monica and Measures YY and GS in Santa Monica.

In addition to the enhanced local funding our district receives, our district has benefited significantly from funds received pursuant to our joint use agreement with the City of Santa Monica and from former Governor Brown’s “year-by-year” allocations of “one-time” state funds that helped increase our district’s fund balance or “savings account.”

We are currently facing new and different fiscal uncertainties than we have in the past, because we are in the process of transitioning to becoming a “basic aid,” or community-funded, district.

Basic aid districts receive little state funding, because their revenue from local property taxes exceeds what they would receive under the state’s Local Control Funding Formula.

In the long run, basic aid will likely be very positive for our district, but in the short term, it creates unique challenges, including the loss of funding guarantees for certain expenses that were previously funded by the state.

This uncertainty forces us to have higher reserves than districts ordinarily maintain.

At this point, SMMUSD’s fund balance is too low for comfort; our reserves are lower than they should be, and there is no indication in the near future that there will be an increase in revenue from state, federal or local sources of funding.

Given the district’s chronic structural deficit and our transition to basic aid, we need to take a fresh look at our expenditures and develop a sustainable budget.

This is often painful for a school community to do. And yet, I believe that there are opportunities for us to successfully address these issues in our district.

In the face of projected budget reductions over the next several years, I am creating a budget planning process that involves participation from community stakeholders, including staff, parents/caregivers, students, and others, who will work with executive staff and me to formulate recommendations that will form the basis for supporting the outcomes to which we aspire for our students.

More information will be shared as we get closer to starting the process. I view this as an opportunity to realign our resources with our district goals and the student outcomes we seek.

Our focus on traditional excellence, combined with innovation and the most current practices, are the cornerstones of the budget re-alignment we seek.

The stakeholder process will include an examination of data, educational trends, best and promising practices, as well as strategies to better align our district’s budget with our resources.

I firmly believe that with the help of our stakeholders, we can achieve a sound fiscal foundation that supports our vital educational mission and ensures that our great district continues to improve and prepare our students for the 21st century.