ACCJC Enhanced Fiscal Monitoring of SMC / Steps Taken: An Update

The following was sent to the District (SMC employees) at 4:01 p.m. on Aug. 5, 2026:

SMC Colleagues:

On July 31, I shared with the Santa Monica College Board of Trustees and all constituency leaders (SMC Academic Senate, Faculty Association, CSEA, and SMC Management Association) that we received a formal notification from the College’s accrediting body—the Accrediting Commission for Community and Junior Colleges (ACCJC)—that SMC has been placed on enhanced fiscal monitoring.

The ACCJC took this step after reviewing the College’s 2026 Annual Fiscal Report and taking into consideration factors including reserves, operating results, salaries and benefits, enrollment, audit findings, and other indicators of financial condition. Crucially, the data and report reviewed by ACCJC, which resulted in this “at-risk” fiscal designation is largely backward-looking, reflecting financial conditions through the 2024-2025 fiscal year; it does not account for far-reaching actions the College has taken since, including workforce-reduction (layoffs and contract non-renewals); step & column and longevity freezes for classified, confidential, and management employees; elimination of vacant positions; management and classified furloughs; and other operating reductions to reduce the structural deficit and avoid creating additional ongoing obligations.

Why SMC has been placed on enhanced fiscal monitoring:

ACCJC identified four factors based on its “Composite Financial Index” that contributed to SMC's at-risk fiscal designation:

1. An unresolved structural deficit, reflected by expenditures exceeding revenues and a negative trend in the general fund balance during the three fiscal years from 2022-2023 through 2024-2025;
2. A significantly unfunded Other Post-Employment Benefits (OPEB) liability, with no contributions during those three reporting years;
3. A 34% decline in the District's ending cash balance over the same three-year period; and
4. Multiple extended open collective bargaining agreements.

Actions Already Undertaken, Addressing Fiscal Conditions Identified by ACCJC:

As mentioned earlier, the College has been actively addressing the fiscal conditions identified by ACCJC through its multi-year fiscal-recovery efforts. Since the period of time taken into consideration by the ACCJC, the SMC Board of Trustees and the District/College have taken major steps to address the fiscal conditions identified. These include:

• Substantial expenditure reductions and workforce-reduction related measures as part of the College’s fiscal-recovery plan, including reductions in staffing (contract non-renewals and layoffs), elimination of vacant positions, management and classified furloughs, the aforementioned step/column & longevity freezes for certain employee groups, and other operating reductions.
• Significant progress has been made in resolving the extended collective bargaining agreements: an agreement with CSEA covering 2024-2025 through 2026-2027 was ratified by the Board of Trustees on May 25, 2026 (no ongoing increases to salary schedules or benefits); an agreement with the Santa Monica College Police Officers Association (SMCPOA) for the same timeframe was ratified on June 9, 2026 (no ongoing increases to salary schedules or benefits). These agreements are consistent with the College’s commitment to bargaining in good faith while avoiding new ongoing financial obligations that are not supported by ongoing revenues. Negotiations are underway with the Santa Monica College Faculty Association (SMCFA), whose prior agreement ended in August 2025, with the continued objective of reaching a fair agreement that is fiscally sustainable with available ongoing resources.

Other Important Developments/Factors to be Addressed:

• Based on current enrollment projections, and as taken into account at the time the tentative SMC budget for 2026-2027 was adopted by the Board of Trustees in June this year, Santa Monica College is projected to transition out of “hold harmless” funding status (a designation that does not provide COLA, or Cost-of-Living-Adjustment funding) to being funded under the Student-Centered Funding Formula (SCFF) and will be able to benefit from COLA going forward. 
• The fiscal recovery measures taken thus far have been designed to bring ongoing (i.e., not one-time) expenditures into alignment with ongoing revenues which in turn will protect reserves and reduce the continued use of cash to support operating deficits.
• The unfunded OPEB liability identified by ACCJC remains an area that will need to be addressed as part of SMC’s longer-term fiscal planning. The immediate priority and focus has been on correcting the underlying operating imbalance so that future financial commitments—including OPEB funding—can be addressed from a sustainable financial position. A plan—approved by the Board of Trustees on September 3, 2013—is in place to resume OPEB implementation as soon as sufficient funding becomes available.

Next Steps:

The College provided its response to the ACCJC letter this morning (August 5) that addresses each of the identified fiscal factors. Our response includes details about actions already taken and the measurable progress already made through the fiscal recovery plan. Our response also states that the College is developing the next phase of permanent budget-balancing actions for consideration through collective bargaining, participatory governance, and the Board of Trustees’ public budget process, and commits to identify permanent measures sufficient to close the projected 2027–28 structural gap before adoption of the 2027–28 Adopted Budget.

ACCJC has indicated that institutions remaining on enhanced monitoring without successfully addressing their fiscal issues for three consecutive years may ultimately be subject to adverse Commission action.

While ACCJC's at-risk designation reflects legitimate fiscal concerns, the factors cited by the Commission are consistent with issues already identified and addressed by the College’s leadership. Setting our course straight during adversity and amid an uncertain fiscal landscape has not been easy, but we will continue to make measurable progress towards safeguarding SMC’s ability to deliver on our life-changing mission for generations to come.

I will keep you informed of any important developments related to this notification from the ACCJC. 

Sincerely,

Kathryn E. Jeffery, Ph.D.
Superintendent/President