This report to the Santa Monica College (SMC) Board of Trustees focuses on the college's programs and achievements, especially as they relate to community development, and proposes a new city government and school relationship with respect to educational finance. The report proposes creation of the Santa Monica Educational Authority (SMEA), a voluntary educational partnership between the City of Santa Monica, the Santa Monica-Malibu Unified School District (SMMUSD) and SMC. The purposes of SMEA would include arranging institutional cooperation in community development efforts; meeting the recreational, educational and cultural needs of the community; building new institutions to contribute to community and economic revitalization; and meeting educational funding shortfalls with city revenues and reserves. The report proposes that the city of Santa Monica annually allocate the maximum amount possible for public educational revitalization in the City of Santa Monica, consistent with an estimated annual unfunded need of at least $18,000,000. Of this amount, 70% would be allocated to SMMUSD, 25% to SMC and 5% to new programs serving children under the age of six. Recommendations include meeting with community, city and SMMUSD representatives to discuss and revise this proposal, and preparing a legal opinion to assess means of ensuring municipal support for this proposal. (PGS)