The reality of a $10-million operating deficit probably would have been hard enough for the Santa Monica-Malibu school district to swallow if it planned to stay together forever.

But as a committee explores the possible separation of the district into separate entities, the financial portrait of the two theoretical districts appears to be just as troubling.

Even as the district plans to reduce expenditures over the next several years, projections reveal that a “significant imbalance” would remain in the district’s budget.

“Reorganizing [SMMUSD] into two unified districts in this fiscal environment would place at risk the fiscal status of both new districts,” reads a consultant’s report, which was presented to the committee this month.

“While the District enjoys a large fund balance which allows the District to deficit spend and yet remain solvent, this situation cannot persist. … While this adverse fiscal situation would not be a direct consequence of the reorganization, if left uncorrected, the two newly formed districts would inherit this budget imbalance and face an immediate threat to their solvency.”

The report was prepared by School Services of California, which was hired to assist the separation committee in exploring a possible split. The consultancy, led by Robert Miyashiro and Michael Ricketts, analyzed information from past reports as part of its work.

The six-member committee, which meets again tonight at Malibu City Hall, has been tasked by the local Board of Education to resolve financial and other obstacles to separation. Santa Monica and Malibu teams were picked in January to unpack the matter, a topic of discussion in the district and among Malibu advocates for years.

Issues to be resolved include the division of cash assets and voter-backed bonds as well as the protracted battle over chemical testing and cleanup at Malibu schools.

The aforementioned report identifies several areas for possible cuts as SMMUSD works to improve its budgetary outlook. The document notes that the district’s student-teacher ratio is 18-percent lower than those of comparable districts and 10-percent lower than the statewide average. Almost 30 percent of district staffers make annual salaries of more than $90,000, according to the report.

The district also contributes more towards employee health benefits and spends far more on insurance per student than other similar districts, according to the report. Health and welfare benefits increased from $7,364 per full-time-equivalent staffer in 2005-06 to $13,069 in 2014-15, an average annual increase of 6.6 percent during that span.

The district’s relatively high costs for administrators and classified staff also “may warrant further examination,” according to the report.

Complicating the fiscal picture is a the potential increase in state expenditures as a result of a potential split.

“Our baseline forecast shows net state costs resulting from the establishment of an SMUSD and MUSD ranging from $7 million to $9 million annually during the first four years of a reorganization, beginning in 2017-18,” the report reads. “The increase in state costs is due to additional state aid that is needed for the LCFF in SMUSD as result of the loss of Malibu property tax revenues.”

State costs would decline annually thereafter and be eliminated by 2026-27, according to the report.

jeff@smdp.com

Print Friendly