POULSBO — A continuing downward spiral of state education funding in addition to increasing special education cost mandates matched with ever-rising prices at the pump have put the North Kitsap School District between a financial rock and a hard place.

The district’s Budget Advisory Team recently wrapped up the grueling process of prioritizing the perks the district offers, while facing a $1.7 million budget shortfall for 2006-2007.

The BAT’s study involved administrators, department heads, teachers, classified staff and program directors from across the district in order to decide how to spend the $58,395,058 of estimated NKSD revenue for the upcoming school year.

The budget strategy that the BAT produced is available in the 2006/2007 Budget Summary Citizen’s Review Copy, which can be picked up at the NKSD student support services center on Caldart Avenue. The NKSD board of directors will also be holding a public hearing on the budget at 7 p.m. July 13 at the NKSD student support services center.

And NKSD board president Catherine Ahl would like to see anyone with input from the community in attendance.

“This will be the seventh budget that I will have voted on and helped pass and part of the law says we have to have a public hearing,” Ahl said. “Every year we have one, and there has been no citizen who has come and spoken on the budget … it’s frustrating.”

Equally frustrating for Ahl and the NKSD are the chief contributors of the budget shortfall, which are an increase in state-mandated special education costs ($651,897) and an expected $202,910 hike in transportation costs.

Making fiscal matters worse, the district’s revenue is at somewhat of a plateau at this time.

The state’s basic education allocation, which accounts for almost 70 percent of NKSD revenue, is up by only 4.5 percent in 2006 while NKSD levy rates, approved by voters in February, remain constant and will have to be used to cover areas other than those previously stated.

“There are only so many dollars,” said NKSD executive director of finance Nancy Moffatt of the state funds. “You can’t have any more money if there isn’t any more. The last place that I want to be is competing with (the Department of Social and Health Services).”

With all of the heartburn suffered due to lack of state funding, the NKSD is well aware that schools are just one of many necessary state entities competing for the same dollars. It is also one of many school districts around the state that are fighting the same battle.

As a result, to cover its upcoming budget shortfall, Moffatt said the NKSD is looking within.

The No. 1 cost-saving measure, which the BAT utilized, is a controversial raise in class size — an additional one student per class at the K-6 level and an additional one-half student per class, 7-12. Though efforts in recent years have attempted to reduce class size, this setback could save the district more than $500,000.

“We couldn’t figure it out,” said Ahl, who has wrestled with the class size issue throughout this year’s budgeting process. “If we could have we would have, somehow we are going to have to figure that out next year. The teacher in the classroom is the most important thing in a child’s education, but there are other things that we fund that are also very important.”

In order to provide resources for its priorities, the district is also looking to cut its classified staff force as far away from the building as possible, Moffatt said, freeing up an estimated $155,000. While a new district energy policy, set to take effect in 2006-07, should generate around $70,000, she added.

The BAT also found savings with some technical book keeping, like in the district’s current math and literacy curriculum adoptions where it freed $185,000 which isn’t scheduled to be payed until next year.

“With regard to math, and consistency of instruction in math, were are now at that 9-10 level as we move through that K-12 adoption,” NKSD executive director of teaching and learning MaryLou Murphy noted of the math adoption’s importance.

However, teachers must have the resources to successfully deliver the curriculum, Moffatt noted. Therefore Beyond the BAT recommendations, savings are going to have to be earned, she said.

“Over time I think we will be looking at doing only what is legally required of us and all those peripheral things won’t be there,” Moffatt said of the future if funding stays on the decline. “I find hope in knowing that we’ve gotten through hard times before.”

Moffatt said the NKSD has already begun brainstorming ways of generating revenue outside of the traditional top-down funding system which appears to be flailing. In anticipation of another shortfall next year, the BAT will begin meeting in September — the earliest the group has ever met, Moffatt said — in order to get a running start on 2007-2008.