CANNON BEACH — It's lunchtime at the Cannon Beach Preschool and Children's Center, and the 3-, 4- and 5-year-olds are checking out the sandwiches and other goodies they brought from home.

Sitting on kid-sized chairs at kid-sized tables in the large, bright playroom, the children are talking to each other and to their teachers about the morning's activities. It's just like any other day at the center for them.

But if the center doesn't soon get an infusion of cash and a permanent revenue source to fund an annual $60,000 budget shortfall, it could face closure.

"We aren't paying some pretty important bills," said Director Catriona Penfield, who has been at the center since September 2010. "As donations come in and tuition comes in, we pay the most important bills."

Barbara Knop, chairwoman of the center's board, agreed.

"We spend a lot of time prioritizing," she said.

The center is behind in paying for utilities, and, while the staff's wages are being paid, federal withholding payments are not. In the past few months, Penfield's salary also has been cut back.

"We're working very hard not to close it, but we're at a loss for more of what we can do," Knop said.

The center's board this month sent a letter to parents alerting them to the need.

"The center is currently experiencing a financial crisis and may not be able to remain open," the letter said.

It urged parents to attend a Cannon Beach City Council meeting Feb. 14 to show support for a request for the city to "establish a more permanent financial relationship" so the center could operate without significantly raising tuition.

But the city, which already allocates $60,000 a year to the center, can't afford to contribute more, the councilors said at the meeting. However, they agreed to put the center's funding as a line item in the budget instead of requiring it to compete with other nonprofit organizations for the city's community services grants.

At the crux of the problem is the higher number OF teachers required by the state to take care of the infants and toddlers. A lower staff-to-child ratio is allowed for the older children.

The center's maximum of 16 infants and toddlers requires four teachers to meet the state requirement of one teacher for every four children.

But the state requires only one teacher for every 10 preschool children at the center.

"That's one reason there are so few centers that have infants and toddlers," Penfield said.

But if the center, which is the only state-certified child care center between Tillamook and Warrenton, were to stop infant and toddler care, "that would change our mission," Penfield added.

"The center was founded to provide affordable child care for this county," she said.

Penfield estimates the center needs $55,000 more this year to balance the $270,000 operating budget. Tuition brings in $120,000; fundraisers add another $30,000; and, in addition to the $58,290 it gave earlier this year, the city kicked in another $6,900.

But this year's shortfall isn't new. Every year for the past several years, the center has had a deficit, ranging from $36,972 in 2008 to $14,520 in 2011.

Some of the problems started about five years ago when the center's building was forced to undergo massive remodeling because of structural and safety problems. As soon as that was completed, the center's heating system had to be replaced.

The children's center owns the building on Hemlock Street in Tolovana Park and leases the land from the city.

Usually, Penfield said, donations come through every month to pay the bills that are due, but those donations aren't coming in as often nor for as much as they used to because of the poor economy.

Still, Penfield added, the center is "incredibly grateful from all of the support from donors. They helped get us through."

The economy also has taken its toll on parents who have lost jobs or whose hours have been cut back. They no longer need child care because they are at home. As a result, the center has 10 fewer children attending, and few of the 35 who are attending are there full time.

While 18 of the children have parents or caretakers who live or work in Cannon Beach, the remaining families live out of town. Some come from as far away as Tillamook and Nehalem; others live in Jewell or Hammond.

Besides Penfield, there are seven full-time-equivalent staff members. Wages range from $8.80 to $10.50 an hour. Employees also receive medical insurance, which, say Penfield and Knop, helps to maintain a stable staff.

"There's a very high turn-over in child care," Penfield said. "We have a lead teacher who has been here five years, and we have employees who have moved back to town and want to work here."

Parents also appreciate the center's curriculum. One day, students might learn about Lewis Latimer and his work leading to the inventions of the telephone and incandescent lamps, and the next day they might do an exercise on how to show respect for others.

"The children's center is wonderful," said Amy Rahl, whose daughter, Megan, 5, attends preschool there. "The curriculum is structured, but there's enough time for children to have playtime. The teachers are educated and have fun with the children."

Every month, it seems, the center is involved in fundraisers, Knop said. Last weekend, the center held its annual "Casino Night." From March 8 to 11, the "Savor Cannon Beach" wine and culinary festival is planned; from that, the children's center will receive a maximum of $10,000, depending on ticket sales for the event's wine walk.

Other fundraisers are planned in June and October, as well as the popular annual "Chef's Night Out" every May.

But the fundraisers, which don't come near to closing the budget gap, take a lot of time to plan and are at the mercy of circumstances beyond control. Last year's "Savor Cannon Beach," for instance, occurred the day after the March 11 tsunami in Japan, which caused a scare on the Oregon Coast. The Sandcastle event last June, where the center sells refreshments and sweatshirts, was essentially rained out.

Knop said other approaches have been tried: The center changed the staff's paydays to better coincide with the receipt of tuition checks, and Penfield has applied for grants. Mailings requesting donations have been sent with utility bills. Businesses are constantly approached for contributions and event sponsorships.

"We're all feeling a lot of desperation," Knop said. "Every night we dream of another solution."

Tuition for infants and toddlers ranges from $65 a month for one half-day per week to $649 a month for a full day five days a week. Preschool monthly charges range from $60 for a half-day per week to $590 for five full days weekly.

If the center raised tuition, Penfield said, she fears fewer students would be able to attend. The center already accepts state and military subsidies, she said.

Although the financial problems have been worrying Penfield and the board for some time, they are only beginning to talk about it publicly.

"I, personally, the board and the parents will do everything possible to keep the center open and keep the financial issues from affecting the children," Penfield said. "We want the teachers to focus on caring for and teaching them."