The director of the National Centre of Excellence in Traditional Music in Plockton has described talks on its future as positive.
Highland Council is to withdraw more than £300,000 in funding from the school as part of spending cuts.
Centre bosses and the local authority held talks on how to reduce the school's operating costs and new ways of raising revenue.
Director Dougie Pincock said he was pleased with the efforts being made.
Earlier this month, musicians campaigning against the cut in funding were among more than 100 protesters who gathered in Inverness as Highland councillors met to set the 2011/12 budget.
The local authority's SNP group were among councillors opposed to the withdrawal of funds.
The vote went 43 in favour of ending support and 25 against, with three abstentions.