The City of Newberg, Oregon, has operated a tunnel reactor compost system for over 15 years to produce a Class A biosolids product. As the city has grown and solids quantity has increased, the compost system capacity is being tested. During facility planning, it was observed that low solids content of feed stocks required relatively large throughput volumes to ensure that process moisture content was not excessive. Biosolids moisture content is relatively high (16 percent solids concentration), and available sawdust bulking agent has been in the range of 45 percent solids. To maintain a minimum of 40 percent solids in blended feedstock, the operation has evolved toward using substantial volumes of recycled product as a bulking agent. A preliminary assessment indicated that by upgrading biosolids processing to generate more concentrated cake, the amount of recycle and total blended feedstock volume could be reduced (see Table 3). Upgrading from belt filter press dewatering to centrifuge dewatering was projected to cost $2.5 million. The alternative of drying sawdust came up in a facilities plan review meeting. A manufacturer of sawdust drying equipment was identified. An interesting option for this equipment was to fuel the dryer with sawdust. In Oregon, grant funds are available for renewable energy and energy conservation projects. For Newberg, it appears that the system may be eligible for a grant of up to 30 percent of capital cost for the renewable energy equipment (estimated to cost $500,000). In addition, the energy conservation benefit as electric power to run blowers will be significantly reduced with the smaller blended feedstock volume. It is anticipated that bulking agent volume will be reduced by at least 30 percent and total throughput volume to the system will be correspondingly reduced. Effectively, this will reduce operating costs, extend the life (and capacity) of the compost system, and postpone more costly capital improvements. This presentation will review the history of the Newberg biosolids compost system including the original tunnel reactor design and recent improvements to the aeration system and product curing. The focus will be on sawdust drying including detailed evaluation of feedstock blend ratios and operational controls. Funding incentives will be described along with a comparative cost analysis.