Falling Feeder

Santa Monica College is the top community college feeder to transfer students to UCLA. However, it, like other community colleges is having fiscal problems due to falling enrollment and other factors. The impact could be felt at UCLA due to legislative mandates concerning transfers.

From the Santa Monica Daily Press: Santa Monica College will eliminate approximately 70 positions as the institution confronts a projected $16.7 million deficit that could deplete its financial reserves by the 2026-27 school year, Superintendent/President Kathryn E. Jeffery announced in a letter to the college community. The layoffs, which affect classified staff and management positions, represent the latest effort to address a structural budget deficit that has steadily eroded the college's fund balance from $43.9 million in 2021-22 to a projected $13.1 million by the end of the current fiscal year and a loss of $3 million by next fiscal year...

The college has already notified affected employees and is working with the California School Employees Association to support those impacted by the reductions. The layoffs come after the college implemented $8.6 million in budget cuts for the 2025-26 fiscal year, including a 5% reduction in class schedules, attrition-based position eliminations and discretionary budget reductions... The financial crisis stems from multiple factors that have converged over the past several years. The college's enrollment has declined approximately 13% since 2018-19, dropping from 19,501 full-time equivalent students to 17,089 in the current year. More significantly, changes to funding at the state level have been chipping away at SMC’s finances for years.

Under the funding formula implemented in 2018-19, California community colleges receive allocations based on three components: base enrollment (70%), supplemental support for low-income students (20%), and student success metrics (10%). When the formula was introduced, 27 districts — including Santa Monica — saw funding decreases and were placed in "hold harmless" status, receiving their previous year's allocation plus cost-of-living adjustments. During the COVID-19 pandemic, the state extended those protections through 2024-25. However, starting in 2025-26, colleges in hold harmless status no longer receive annual cost-of-living increases, effectively freezing their state funding even as expenses continue to rise.

...The college is... pursuing enrollment growth strategies to eventually increase state funding, though such efforts face headwinds from declining high school graduation rates. According to Western Interstate Commission for Higher Education projections, California high school graduates are projected to decline 29% by 2041, with key feeder districts for Santa Monica College seeing even steeper drops in the coming years...

Full story at: https://www.smdp.com/layoffs-coming-to-santa-monica-college-as-the-school-runs-out-of-money-next-year/.

Note that similar trends are likely to affect other big feeder community colleges to UCLA such as Pasadena. Santa Monica College has undertaken considerable capital investments over the years. Voters tend to be friendly with regard to approving bonds for educational purposes. But ultimately, the fixed costs of paying off those bonds have to be paid, even if falling enrollment leads to excess capacity. The same trends are affecting K-12 districts.