The Vashon Island School District, buffeted by declining enrollment, a state funding formula that is wholly inadequate and a history of overspending, is facing another $246,000 in cuts, according to Superintendent Terry Lindquist.

The latest budget news, announced to the five-member school board last week, comes on top of other shortfalls the superintendent has already begun to address. All told, the district’s projected expenses have outstripped projected revenues by more than $800,000 for the 2008-09 budget, a $14 million spending plan.

To close the gap, Lindquist and his administrative staff have decided to combine students into three split classes at Chautauqua Elementary School — blended classes that will put first- and second-graders together, third- and fourth-graders together and fourth- and fifth-graders together. Such a move is necessary in part because of both declining enrollment and the district’s financial inability to hire additional teachers, Lindquist said.

He also presented to the school board several other possible scenarios, including raising the fees students pay to participate in sports programs, reducing the amount of money the district puts into its reserve fund and moving district offices to three empty classrooms at Chautauqua.

“It’s tough. It’s tough all over,” he said in an interview at his office last week.

He said he hopes to get the district onto a “sustainable budget” by next year. “But it will likely take another year of some hard choices,” he said.

Just how hard those choices are became apparent at last week’s board meeting, when Shirley Ferris, a part-time counselor, stood before the board and talked about the district’s decision not to replace her when she retires next month after 41 years in education. The decision means the high school will have one full-time and one half-time counselor for a student body of more than 500 students or so, not enough, Ferris said, to support young people with the kind of compassion and care the small district has come to expect of itself.

“We know them,” she said of the students. “We know when an internship position comes available who it’s meant for. … We know who’s just come out of treatment. We know who’s mother is ill. … It’s what will go missing if services are cut. These are our own kids, our neighbors’ kids, our first husband’s kids.”

“I know you’re in a tough spot,” she added. “I just hope you’ll think carefully about this for the sake of the students.”

Another parent stood before the board and talked about the role counselor Laurie Martin played in her daughter’s life. “The only reason she got it together to graduate was because of Laurie,” the mother told the board.

Tough budget situations are plaguing districts throughout the state, Lindquist said, in large part because of the state’s unfunded mandates and the Legislature’s decision earlier this year to require districts to increase teachers’ pay by 5.1 percent. The legislatively mandated cost of living adjustment or COLA, which the Legislature had frozen for the last two years, was higher than the 3.9 percent COLA the district had forecast and placed in its budget assumptions, board members said.

As an example of an unfunded mandate, a requirement to offer services without providing adequate funding, Lindquist pointed to special education services; the Vashon Island district receives $400,000 less in state and federal money than state and federal laws require it provides, he said.

Vashon’s own difficult situation has been compounded by spending practices in the past, Lindquist added. The $55,000 a year the district pays to rent office space at Sheffield, for instance, could have been avoided if the district had found a more creative way to house its administrators when disrepair forced it to tear down its old district offices, he said. What’s more, he noted, the district had “a culture of saying ‘yes,’ a sort of entitlement,” that he’s working to change.

“We’re dealing with budgetary decisions that need to be made now that should have been made previously,” he said.

Board members praised Lindquist, who needs to have a balanced budget to the board by July 1, for the way he’s tackling the situation. They also noted that there’s no easy solution to the crisis.

Board Chair Bob Hennessey, for instance, said that he and other board members are going to try to find a way to replace Ferris after she retires in June. The position is too critical to go unfilled, he said. But that will mean searching for other places to cut in what has already become a very lean budget.

“We’re having to cannibalize one area to pay for another, and that never feels good for any of us,” he said.

School board members are also hoping to find other creative ways to fill financial gaps. Because Vashon is neither diverse nor low-income by statewide standards, it fares poorly in the competition for grants, Lindquist and board members said. As a result, some say, the district needs to look to the community — and private philanthropy — to support some of its basic needs.

“It would be fantastic to get private donors activated, and I’ve been talking to my colleagues about how to do that,” said board Vice-Chair Laura Wishik.

Hennessey concurred. “If there’s any cause for optimism here, it’s that we live in a community amazingly supportive of education. Until the state steps up and fulfills its obligations, I’m afraid private money will have to enter the picture.”

Meanwhile, district administrators and teachers are already discussing how they’ll make some of the new realities — particularly the blended classes at the grade school — work. Kate Baehr, the principal of Chautauqua, said she choose teachers for those new blended classes carefully, as they can be challenging classes to teach. She sent a letter to parents last week suggesting the blended classes will provide leadership opportunities for older students and academic richness for the younger ones.

“I don’t want to make light of the fact that this is something we’re doing,” she said in an interview last week. “But teachers in those placements are embracing them, and I think they are the right teacher for those placements.”

The budget crunch is coming at the same time that Lindquist is negotiating a new three- or four-year contract with the Vashon Education Association (VEA), the union that represents teachers at the three schools in the district. VEA president Tina Taylor, a teacher at Chautauqua, did not return a telephone call or an e-mail seeking comment about the budget situation. But Tom DeVries, a high school science teacher and a member of the VEA’s bargaining team, said that he’s sympathetic to the district’s plight.

“There’s no way that either side can bargain an improvement to the financial situation,” he said.