Unlike the vast majority of California public school districts, SMMUSD is a Basic Aid or “community-funded” district. This means the bare minimum level of school funding as set by the state is met through local property taxes. Since becoming a Basic Aid district in the 2017-18 school year, SMMUSD receives little to no general funding from the state, and depends primarily on local property taxes and other revenues to fund its operations. According to SMMUSD's 2025-26 Adopted Budget, three City of Santa Monica-linked revenue streams flow directly into the district's unrestricted general fund: the Joint Use/Master Facilities Use Agreement (MFUA, $11.8 million), Measure Y and GSH ($18 million), and Measure GS ($10 million). Together, these three sources total approximately $39.8 million, representing roughly 25% of SMMUSD's unrestricted general fund revenue. This concentration is rare among California school districts, and it means SMMUSD is disproportionately exposed to any financial distress that the City faces. (Source)

The approximately $12 million contributed under the MFUA, which Measure ES would replace, represents about 7% of the unrestricted general fund revenues (SMMUSD 2026-27 Adopted Budget). This is a significant amount that equates to the salaries of about 73 teachers or 1 teacher per grade level at each school. With a sudden revenue shortfall of $12 million, SMMUSD would have to make structural cuts to services and programs in that amount, which may include eliminating staff and teaching positions impacting all schools including disadvantaged students, early childhood education, and art, music, and STEM instruction.

The District’s annual budget sometimes reflects a positive ending fund balance, which is not an indication that the budget has a structural surplus. SMMUSD’s positive ending fund balance includes restricted funds, legally required reserves, and other non-discretionary amounts that are not available for unrestricted general fund expenses. In simple terms, an ending fund balance is not the same as a budget surplus.

Although student enrollment has been trending down across the state, the cost of educating each student has gone up, through increased costs of salaries, benefits, and material supplies. The money from this measure will replace what the City has been allocating all along, allowing the District to maintain its current budget instead of reducing staffing levels and educational programs.