OLYMPIA — For years, the Granite Falls School District has received help from the state to keep pace with larger, urban districts.

That might soon end under cuts proposed by Gov. Chris Gregoire.

With a $2 billion budget hole to fill, the governor is proposing to slash what the state spends trying to close the gap in taxpayer support between rich and poor school districts. Her plan would end so-called levy equalization payments to 96 school districts, including Granite Falls and seven others in Snohomish County.

“It kind of took our breath away,” said Superintendent Linda Hall, whose district would lose $639,551 if it goes through. “The program equalizes the playing field. It helps us offer what some of the larger districts offer. It would be very devastating for us to lose 100 percent of it.”

And it might not be the only hit the governor makes to the district budget.

Gregoire also is looking to whack millions of dollars funneled to school districts to keep elementary and secondary classes small. She estimates it will add an average of two more students in every class between fourth and 12th grades.

Either cut alone is problematic, but combined they would be a staggering blow that educators say will result in classes of 30 students or more and a lot fewer teachers.

“It will be survival mode for us,” said Hall, who calculated the district stands to lose $1 million under Gregoire’s proposals.

Lake Stevens School District faces a loss of $3 million in levy equalization and class-size dollars.

“It’s a huge hit for our district,” said Arlene Hulten, director of communication for the Lake Stevens district. “It will have a direct impact in classrooms and services. There’s no way of getting around it.”

Gregoire has outlined $1.65 billion in cuts across state government which she wants lawmakers to consider in a special session of the Legislature starting Nov. 28. She also backs shifting $330 million in spending from this budget to the next by delaying an apportionment payment to public schools.

Aside from that accounting maneuver, the governor has detailed $365 million in reductions for schools. The two biggest pieces are cuts to spending on levy equalization ($150 million) and class size reduction ($137 million).

Of the two, slimming down the levy equalization program is sure to encounter the greater political opposition, because most state lawmakers represent school districts receiving aid.

Today, the state pays out $300 million a year in tax subsidies to 229 districts which, because of low property values, do not generate as much money from their tax levies as districts with higher property values. Another 66 districts receive no payments.

Gregoire is proposing to divide the 229 districts into four tiers, based on an array of factors including assessed value of the properties and relative need.

In Snohomish County, school districts in Arlington, Darrington, Everett, Marysville, Monroe, Snohomish, Sultan and Granite Falls are slated to lose all their equalization funding. Lake Stevens is in a group that would lose half of its funding.

When she tried to revamp the program earlier this year, the governor’s idea received no support in the Legislature. But with the size of the deficit, lawmakers may have no choice but to consider modifications at some point.

Dan Steele, government relations director for the Washington Association of School Directors, said he expects a robust discussion to get started in the special session.

“I think the philosophy (of tiers) is correct,” he said. “Whether the actual tiers are the right tiers, I’m not sure.”

Under Gregoire’s plan, funding would not be cut off until 2013, to give trustees of the districts time to consider going to voters in 2012 to pass a higher levy to make up the difference.

“Certainly that would be something the board would study and evaluate,” Hulten said.

Hall said it is an option but not one she’s looking to pursue at this point. While the community strongly supports the district, many residents are struggling to survive in this economy.

“We can feel our community bleeding,” she said. “We aren’t going to make the cut any deeper.”

Jerry Cornfield: 360-352-8623; jcornfield@heraldnet.com

What they might lose

How much school districts in Snohomish and Island counties might lose under the governor’s plan for reducing levy equalization.

Arlington: $979,724

Darrington: $148,675

Everett: $1,536,898

Granite Falls: $639,551

Marysville: $4,512,961

Monroe: $1,763,502

Oak Harbor: $1,088,888

Snohomish: $1,346,114

Sultan: $856,148

Lake Stevens: $1,470,805

These districts receive no levy equalization payments: Edmonds, Mukilteo, Stanwood-Camano, South Whidbey and Coupeville.

$PHOTOCREDIT_ON$Source: State Office of Financial Management$PHOTOCREDIT_OFF$