Santa Monica-Malibu District Prepares to Seek State Bail-Out

The Santa Monica-Malibu Unified School District may be forced to ask the Legislature for emergency assistance to avoid ending the 1985-86 school year with a budget deficit.

The Board of Education took the first step Monday night by approving a letter informing the state that the district might not end the year with a balanced budget.

In a grim quarterly report in which she described the district’s financial condition as “precarious,” Sharon Hoaglund, the district’s financial services director, asked the board to approve the letter.

Hoaglund said the district faces a $487,000 shortfall in its $31.6-million budget this year. She said that the district’s overall financial problem is primarily the result of declining enrollment. Also, she said, the district will receive less than the $2,600 per student it had expected from the state.

The letter warning of pending financial difficulties is required under a new state law which took effect in January. It will be submitted to the state controller and the state superintendent of public instruction.

Hoaglund said that the district has received some indication from the state that it will fund the district’s shortfall without the need for an emergency allocation. “But this has not yet occurred and we cannot be certain that it will in fact be made up in full or partially,” she said.

Because state education codes require school districts to keep a balanced budget, the shortfall must be covered before June 30, or the district will be forced to ask the state for emergency relief. Hoaglund said that if the district seeks relief from the state, the district will have to pay the money back from funds for the 1986-87 school year.

That budget already carries another $400,000 shortfall despite the recent decision by the board to lay off 44 teachers and six librarians to cut costs by $1.2 million.

In the past, the district was able to cover problems with cash flow by taking money from its reserves.

“For years the district has been forced to spend more than it takes in because of declining enrollment,” she said. “Normally, our reserves have been able to take care of any shortfall, but last year we reached the end of those reserves.”

The district enrollment peaked at nearly 14,000 in 1977, but has steadily declined since then to the current level of about 9,600 students. The district expects that enrollment will continue to drop next year.