The Vashon Island School District is facing a $850,000 shortfall in its upcoming budget, a deficit that could climb as state lawmakers grapple with the latest revenue predictions in a state still gripped by the recession.

Last week’s news that the state will lose another $780 million in tax collections over the next two years has added to Washington’s already grim financial straits; budget writers in Olympia have to figure out a way to close what is now a $5 billion gap in the state’s $37 billion two-year budget.

The implications for Vashon’s schools, even before the latest news, were already considerable, said Michael Soltman, the school district’s superintendent. Last week, he told the principals at the three public schools to sketch out scenarios where each school lost two teachers.

“It’s plain depressing,” he said. “It becomes a process of taking apart something you’re proud to have built.”

Now, with more bad news out of Olympia, he added, “It just means that what we’re looking at in terms of cuts could get worse.”

Bob Hennessey, a member of the school board, agreed.

“It gets harder and harder every year,” he said. “Every year, we feel pain, and there will be pain again this year.”

The school board will begin preliminary discussions on its 2011-12 budget at Thursday night’s meeting, gearing up for a May 15 deadline — the date by which the district has to let teachers know if there will be any layoffs of certificated staff. The board also plans to hold two community forums about the budget — one at 7 p.m. April 19 and another at 9 a.m. April 20.

But Soltman said he hopes to once again offset the extent of the cuts by bringing more off-Island students to Vashon and turning to the community for financial support. Last year, after an increase in the number of commuter students and an aggressive fundraising campaign, the district had to trim its budget but was able to stave off most of the predicted layoffs.

“It all depends on the community continuing to value the programs we have and supporting them, because the state hasn’t,” Soltman said.

Last year, Soltman and several community leaders raised $450,000 for the district. This year, a newly formed schools foundation — helmed by Islander Erin Sheridan — will attempt to raise $550,000, Soltman said.

“If financially it can’t be done, we’ll have to make significant reductions,” he said.

The school district is expecting a 5.6 percent decline — or $548,000 — in state and federal support for its upcoming budget, Soltman said. Couple those losses with built-in salary increases, escalating health care costs and higher utilities, and the district is braced for an $850,000 budget gap.

According to a chart Soltman handed out to the school board last week, he hopes to raise $150,000 to $200,000 through the enrollment of another 40 to 50 off-Island students, bringing the total number off-Island students at all three schools to about 200, or nearly 15 percent of the 1,500-student district. Depending on the outcome of the new foundation’s fundraising efforts, Soltman said he expects the actual shortfall to come in somewhere between $150,000 and $400,000.

Soltman, in another chart for the board, also sketched out some potential areas for cuts, including furloughing administrative staff; reducing library or counseling services; reducing the district’s support of co-curricular programs, such as drama, debate and after-school sports; and decreasing custodial and groundskeeping support.

Laura Wishik, who chairs the school board, said the cuts this year will be difficult. “Frankly, there aren’t a lot of choices. It’s not like we have extra teachers,” she said.

The district is already feeling the impact of a few years’ worth of budget cuts. Last year, for instance, the school district’s financial contribution to co-curricular activities was cut by about $40,000, forcing clubs, sports teams and other after-school activities to turn to booster clubs, parents and students for greater financial support.

Kevin Linnell, who coaches boys and girls basketball at McMurray Middle School, said a booster club called Hoopsters has helped; the group purchased uniforms and basketballs for one of the teams, he said.

Linnell also went through the necessary training so that he could drive the school bus that transports the team to away games, saving the district a few thousand dollars in the course of the season. Other coaches act as bus drivers, too, he said.

“I did it to save my program,” Linnell said. “I don’t want it to go away, because we’re doing some amazing things with these kids.”

But it’s hard, he added. “At the end of the day, I’m totally wiped.”

Meanwhile, at Vashon High School, the student newspaper The Riptide is facing a potential shortfall because of a decision last year that advisors — in this case, journalism teacher Greg McElroy — need to be paid out of the club’s ASB account, rather than the district’s general fund. The journalism program has already had to do away with a scholarship it provides each year to a promising journalism student, and now Riptide staff are pushing harder on ad sales and fundraisers to ensure the year’s remaining issues can be printed, McElroy said.

“We’ll be soliciting donations, sponsors, advertising. … We’re in the same place the whole district is in,” he said.

But school district officials are hopeful that the community will once again step up and support its schools, much as other communities routinely do. Mercer Island, for instance, annually raises $1 million for its schools, Soltman said; on Bainbridge, an annual fundraiser brings in $750,000.

Hennessey worries that some Islanders will balk. “People are contribution-weary,” he said. But with the state’s anti-tax climate, he and others say it’s likely the wave of the future.

“I would like to get to a place where every family who has a kid in school makes it part of their regular giving,” Hennessey said.

Soltman said he’s optimistic that the new foundation’s goal of $550,000 will be met. “This community has such a strong commitment to its schools that I think it can be done,” he said.

The board will hold two forums to discuss the district’s budget — one at 7 p.m. Tuesday, April 19, at McMurray, and the other at 9 a.m. Wednesday, April 20, at Chautauqua. It will also address the issue at its meeting at 7 p.m. this Thursday at McMurray.