KSPS-TV, the noncommercial educational station here owned and operated by Spokane Public Schools, has laid off employees, curbed programming expenditures, and dipped into reserve funds over the last 12 months to try to counter dwindling financial support. The problem is, its next fiscal year, which begins Sept. 1, looks even bleaker.

"Membership is not growing, average gifts are down, and the thing that's really kicked us hard this year is the decline of the Canadian dollar. That's been a revenue loss, or decline, to us of about $300,000," says Claude Kistler, the station's general manager.

What's looming large for the 34-employee Public Broadcasting Service affiliate in the new fiscal year is a $150,000, or 58 percent, reduction in the funding it receives annually from the Spokane school district, its institutional licensee, due partly to the district's own financial struggles.

"It will be almost a fee-for-service contract," Kistler says of the station's future relationship with the district. "We've had (school district funding) reductions for about the last six years, but they've been manageable because we've been able to make that up through the Friends of Seven support organization."

That support won't be available to nearly the same extent in the coming fiscal year, he says, due to lagging donations and because the station, located at 3911 S. Regal, has drawn down its once-sizable reserve fund to about $400,000 and doesn't want to deplete it further.

Kistler says it's difficult to gauge yet whether the economy might swing upward enough next year to trigger at least the first inklings of a rebound in pledges and gifts from station supporters.

"We're still, in a sense, holding our breath," he says. "So much comes through individual campaigns (that the station holds regularly). The June campaign was behind projected dollars and where we were a year ago, so there really isn't a light at the end of the tunnel yet."

KSPS, which went on the air in 1967, serves parts of Washington, Oregon, Idaho, and Montana, and also has a substantial following in Alberta and British Columbia. It says its overall potential audience is more than 1.2 million households, and that more than 35,000 households support it financially as members of the Friends of Seven organization, through which it also receives corporate gifts. Friends of Seven fundraising support provides about three-fourths of the station's operating revenues, with the rest coming from the Corporation for Public Broadcasting, Spokane Public Schools, and a couple of other sources.

Mark Anderson, the school district's associate superintendent for support services and Kistler's direct superior, says the district's reduced direct funding to the station is about "getting down to trying to be as lean and mean as we can and continue our core mission."

Anderson notes that the district has had to deal with a nearly $9 million funding cut from the state in its latest budget and has cut 42 teaching positions. He also notes that the district continues to provide about a half-million dollars of "indirect" support to KSPS through its payment of lighting, heating, maintenance, and payroll costs.

"We're still very committed to working basically as a partner with the Friends to ensure the viability of the station," he says.

Kistler says the last time the station faced a funding crunch of this magnitude was in the early 1980s, just as he was starting out as manager. He adds, though, that the fundraising landscape is changing, and he doesn't foresee Spokane Public Schools, for example, ever again providing the high level of funding support it provided in earlier years.

KSPS opted last year not to fill a vacant marketing and promotion outreach position due to budget concerns, he says, and in the months since then has taken a number of other cost-cutting steps, including trimming travel and supply expenditures and reducing the frequency of its Prevue program guide mailing to eight times a year from 12 times.

Also, it decided not to proceed with a business-focused production it had wanted to launch, titled "Ventures," that was to spotlight businesses throughout the region and would have cost about $75,000 a year to produce, he says.

"We were never able to get it past the pilot stage because we could never get the funding" it required from a prime sponsor, Kistler says.

In May, continuing financial woes prompted KSPS to announce it would discontinue its contract with programming consultant Bill Stanley, effective at the end of this month. Stanley is a nearly 40-year veteran at the station who before moving to the consulting role had served in various positions there, from producer and director to station manager, and is a familiar face to viewers.

Then last month, the station issued layoff notices—also effective at the end of this month—to its chief engineer, its corporate manager of marketing and outreach, and a corporate support assistant, Kistler says. He says those personnel cuts were due partly to a structural change between KSPS and the Friends of Seven, also effective Sept. 1. That change will separate and more clearly delineate formerly overlapping responsibilities, making the support organization responsible strictly for fundraising and halting its direct funding of various areas of the station's operation, Kistler says.

"It's been a rough stretch," he says. "The layoffs are very difficult. We've lost some incredible talent."

Of laying off the chief engineer, which likely will require the station to contract for some engineering services, he says, "It's a significant risk on our part, one that costs me lots of sleep and will continue to do so."

Also, Kistler says, "There have been some programming acquisitions that we've had to pass on due to a lack of dollars." The station continues to participate fully in acquiring national programming through a pooled arrangement with other PBS stations, which is "what makes us who we are," he says, but is more limited for now in its ability to buy independent programming, such as from a noted producer like Ken Burns, or to buy or produce more local programming.

"I think if the economy were to improve and give us signs that we're moving out of this, it would give us the ability to be more active locally," Kistler says. "We can then make some forward funding commitments. It's just knowing we'll have some resources to back it up."

It might take some time, though, for the station to regain that confidence. Kistler says the average annual gift from supporters was around $105 two years ago, but recently has been hovering in the low to mid-$80 range. There also has been a decline in new member dollars, down probably around 5 percent this year.

Meanwhile, the station also is having to adjust to a much wider gap in the U.S.-Canadian currency exchange rate. Canadian membership dollars account for a substantial portion of the station's revenue and were trading at par, or close to par, with U.S. dollars in late 2007 and much of last year. KSPS accepts Canadian currency at par and budgeted in its current year for the Canadian dollar, or "loonie," to be trading at 95 cents to the U.S. dollar, but it actually plummeted late last year to less than 80 cents, causing the value of Canadian donations to the station to plummet. Since then, the loonie has rebounded some, but Kistler says KSPS is budgeting conservatively for it to remain at around an 80-cent exchange level over the next 12 months.

At $5.1 million, KSPS's budget for the new fiscal year will be about 11 percent smaller than this year's budget, but that's slightly less than the national average decline in revenue for PBS stations, he says.

A further drain on the station's coffers has been its required conversion, as with all TV stations, to an all-digital signal, which has cost it about $3.2 million over the last six years, though much of those costs have been covered by grants, Kistler says. Still needing to be completed, as part of that conversion, are the replacements of analog translators serving some rural areas, which likely will cost a couple of hundred thousand dollars, he says.

Through its digital conversion, though, the added spectrum the station gained has enabled it to supplement its main digital over-the-air channel, KSPS-HD (7.1), with two new channels, KSPS World (7.2) and KSPS Create (7.3), he says. All of the stations also are carried on some cable systems, including Comcast.

KSPS World, which focuses on documentary, public affairs, and news programming, and KSPS Create, which focuses on how-to programs, currently provide packaged four-hour bundles of programs that are repeated, but Kistler says KSPS hopes to expand that programming base over time.