By Ann K. Williams
Lookout Staff

March 3, 2011 -- The California Legislature is expected to vote on Governor Jerry Brown's budget next week, and the Santa Monica-Malibu Unified School District (SMMUSD) is scrambling to stay on top of the numbers, if and when it passes.

To that end, the school board will hear a report Thursday night that forecasts a number of 3-year budget scenarios, some better, some worse.

The district is required to prepare interim budget reports, and, since the 1st interim report on the FY 2010-2011, it's needed to revamp its numbers due to “changing conditions,” according to the agenda item signed by Superintendent Tim Cuneo and Chief Financial Officer Janece L. Maez.

The report shows that SMMUSD expects to receive nearly $7.8 million from the City of Santa Monica and more than $2 million from district PTA's during fiscal year 2010-2011. And in August, it received more than $1.5 million in one-time monies from the Save Our Schools fundraising drive.

“We are so appreciative of the support of our city and the electorate,” Maez told the Lookout Wednesday. “They step up to the plate to help us out all the time.”

But the lion's share of the schools' money comes from the state – and that's where the numbers get dicey. Since no one yet knows how much the state is going to pay, no one can really say what kind of shape the district is going to be in down the line.

In a set of 3-year projections included in the report, district finance staff try to account for the various possibilities.

There are several variables. First, will the Governor's budget even pass?

Then, if it does, will voters approve “tax extensions” that will raise money for the schools – extensions that Brown hopes to place on the June ballot?

And mental health costs that have been paid by the county with state funds may fall on the district's back, depending on whether a line-item veto suspending the funds is upheld.

Scenario 1 – more or less the best case – anticipates that the governor's budget is passed and that voters approve tax extensions in June.

Even under this relatively optimistic scenario the district would have to take money out of its general fund over the next three fiscal years. But it would still maintain some $6 million over its mandatory 3 per cent reserve. SMMUSD would lose $19 Annual Daily Attendence (ADA) per student – the accounting method the state uses to divide money among its school districts.

In Scenario 2, the budget passes but the tax extensions don't. In that case the state will have less money for the schools – that's called “Prop 98” money, so named for the proposition that earmarked a percentage of the state's general fund for education.

If this happens, the ADA will drop an additional $330 per student and the district's deficit spending would increase by some $3.6 million a year. The district's reserves would be quickly depleted.

And if the district factors in money lost because former Governor Schwarzenegger blue-penciled mental health funds the county uses to support students in residential programs – funds the district may now have to pony up, – the picture is bleaker.

Scenario 1a shows an additional cost to the district of $1.2 million, just for this fiscal year if the district has to cover these mental health costs.

Scenario 2a reflects the same amount, and Scenario 2b deducts an additional $6 million for a total of $7.2 million over the next three fiscal years.

Under Scenarios 2 and 2a, the district's general fund would drop below the mandatory 3 percent reserve, but still be positive. Under Scenario 2b, the district would wind up with a negative fund balance.

And there's another scenario – call it scenario 3. If the Governor's budget passes and the tax extension fail, the state may still have to cut more money from education. That could mean additional ADA reductions of from $300 to $600, Maez said, putting the district deeper into the hole.

So as the state wrangles with its budget, and teachers and parents worry about class sizes and layoffs, district finance officers have their hands full trying to balance their books.

To examine the interim report item and other school board agenda items, see http://www.smmusd.org/board/meetings.html