Unnatural Axe Santa vs. Elf and the Mummy card
Unfortunately, the -5 added to Santa's level does not change the actual level. It is simply a Bonus/Penalty. It is much the same way the Elven Bow provides a +4 Bonus. The Bow does not change the character's Level. Rather, it changes the character's Attack, which is a derivative of the Player's Current Level plus all Bonus and Penalties.

Though there are some cards that specifically state "Adds X to Monsters Level", the Race/Class bonus/penalty is not one of those.