In the wake of a narrowly averted multi-million dollar shortfall, the school district's ability to meet its financial obligations was given a thumbs up by the Los Angeles County Office of Education Thursday night.

Members of the county's office of education told Santa Monica/Malibu Board of Education members that the district's financial health was good.

Office of Education members were invited by the board to review the district's financial practices earlier this year. The office scrutinized revenue calculations and projections, expenditures, including the status of labor negotiations, and deficit spending.

"We're here at the invitation of the school district, which is a little bit unusual," said Ken Shelton of the Office of Education. "It's unusual that we're in by invitation and not by a district that's in fiscal turmoil."

The report found that while the district has authorized an influx of permit students as a way to boost income, district schools are nearing maximum capacity and the district will soon be faced with stagnant enrollment.

Office of Education analysts also cautioned district officials that grants received from the cities of Santa Monica and Malibu must be considered one time funds, an important consideration as they plot the district's financial course.