Oak Harbor School board approved a $60 million budget Monday that includes more revenue than ever thanks to money from the state and a levy approved by local taxpayers.

That doesn’t mean there aren’t challenges.

Enrollment is up, especially at elementary schools. State lawmakers opted to pay for full-day kindergarten, which left the district scrambling to find five extra classrooms and hire new teachers.

The Navy plans to move P-8A Poseidon squadrons to Whidbey Island and families are starting to arrive now — months sooner than school district officials expected.

“Virtually every elementary classroom space we have available is now full,” said Superintendent Lance Gibbon.

The district added two double portable classrooms at Broadview and Olympic View elementaries. Officials pulled money from the reserve fund and set it aside to pay for more portables to deal with the influx. At least one more double portable will be installed at Crescent Harbor Elementary around the turn of the year.

Officials are talking about whether the district needs to add even more classroom space, perhaps purchasing modular buildings that are quicker to install than traditional construction.

The district also conducted a feasibility study of whether they could buy Oak Harbor Christian School and use that property.

The Christian school is not for sale. The district is looking at its options.

The district is eligible to receive up to $10 million from the state for capital costs, which would pay to build more classrooms but not to buy property or remodel schools. To get that money, the district would have to come up with nearly $5 million in matching funds.

The state Supreme Court put pressure on state lawmakers to put more money toward schools under the McCleary decision. The problem is that money comes with strings attached and unfunded mandates.

In addition, the district is losing money from cuts to federal programs, including a 40 percent cut to a United States Department of Defense program that gives aid to communities with a large proportion of military personnel.

Oak Harbor is one of a handful of school districts nationwide that receive money from this program, said Vicki Williams, director of business services for the district.

The district also expects to lose nearly half a million dollars from a Department of Education aid program that helps districts that have a substantial amount of federal land. These lands aren’t taxable and don’t support the district.

At the high point, in 2002, the district received $5.5 million. This year, school district officials expect around $2 million less, she said.

The formula to determine how much the district receives from these two programs is complicated. The district has a good idea of what they will receive but won’t know for sure until the check arrives, she said.

During the school board meeting last week, board member Gary Wallin expressed concern that the district was drawing too much money from its reserves.

“You are right, we are cutting it close,” the superintendent said. “Closer than in the past.”

The district is down to a 3 percent fund balance, which meets its board policy, he said. With higher enrollment and more money from the state, the lower reserves are not as crucial, he said.

“As we can, we will be increasing fund balance up to 5 percent,” Williams said.