Jan Maez didn’t have to explain the situation to members of the local Board of Education. Her presentation slides were clear.

“You all know what red numbers on this page mean,” the Santa Monica-Malibu school district’s chief financial officer said. “We have fairly significant deficits that need to be addressed.”

Maez was referring to the roughly $10-million shortfall that looms over SMMUSD as it tries to address numerous other significant issues, including environmental litigation, longstanding achievement gaps and the possible creation of a separate Malibu district.

The deficit was brought to light during the school board’s meeting June 29, when Maez informed officials that general-fund expenditures totaling $150 million would take the district’s balance of approximately $30 million down to about $20 million.

The operating deficit stands in contrast to the hundreds of millions of dollars in bond money allocated to the district for technology and facility upgrades in recent years. A local ballot measure in November could provide additional funding to SMMUSD through a city tax, which the school board supports.

But the district must make some “pretty difficult choices” before the 2017-18 school year, Maez said, adding that many budgetary decisions must be made by Jan. 1 so the changes can be implemented.

“We have a pretty tight timeline,” she said.

A district budget committee of site administrators and staff will begin meeting next month and make recommendations to SMMUSD leadership by January.

The Local Control Funding Formula, which gives the district more responsibility in handling state funds, will be fully implemented by 2020-21. But most of the money has already been distributed, meaning the influx of state funds will slow over the next three years.

The district will receive $87.2 million in LCFF money this coming school year, when enrollment is expected to dip slightly to about 11,000, according to the latest projections.

Maez said the school board must consider cuts in all corners of the district, including maintenance, operations, transportation, food services, purchasing, human resources, fiscal services and educational services.

The district must “seriously analyze” the possibility of closing school sites as a way to cut costs, Maez said. Tweaks to the special education department are on the table as well, she said.

And staffing changes will likely have to be part of the solution, Maez said. Salaries and benefits comprise about 86 percent of district expenses for 2016-17.

“We can’t do everything,” she said. “We have to make choices. That’s going to be hard. That’s going to be difficult. But that’s going to have to happen.”

Board members Laurie Lieberman and Craig Foster suggested hiring School Services of California, a consultancy for educational agencies in the state, to take an unbiased look at the district’s finances.

“All of this is very difficult,” Lieberman said. “When you bring in someone with expertise across the state who knows how budgets compare and how they deal with these components, you have some objective measure and some objective source to help you and make suggestions.”

The district recently finalized a contract with Illinois-based Forecast5 Analytics for software that will allow local officials to examine financial data from agencies across the state and help them make budgetary decisions, Maez said.

jeff@www.smdp.com