Raleigh, N.C. — The Wake County school system needs to cut $20 million from its central services budget for the 2010-11 school year to erase a projected deficit, Superintendent Del Burns said Thursday.

"Given what we see in the leading indicators, we must take proactive steps now to address the problem of rising expenses and decreasing revenue," Burns said. "As we did last year, as information became apparent regarding our financial situation, we made decisions to absorb the impact. This year, we are trying to avoid going back to the classrooms for cuts."

District officials anticipate the state will cut its funding by $8 million as part of the state budget approved in August. Meanwhile, employee retirement, hospitalization, dental insurance and local salary supplements likely will go up by $6 million. There will also be $3 million less in reserve funds to balance this year's budget,

Growth and the opening of four new schools next fall also will add to the district's expenses, Burns said. About 3,800 more student students are expected.

"The impact in central services will ultimately impact the classroom. There will be changes in schools and classrooms, but we are working hard to minimize that," Burns said.

He told administrators to develop a cost-cutting plan that he can revise and include in his budget recommendation to the Wake County Board of Education in March. The school board will then submit its request for local funding to the county Board of Commissioners by May 15.

"There will be an indirect impact on our schools. However, we will do everything we can to mitigate that impact," Burns said, noting more than 88 cents of every $1 the district receives is spent directly in schools.

Last year, budget cuts forced the district to implement a hiring freeze on teachers in the sixth through 12th grades and not renew contracts for hundreds of other teachers. More than 900 school employees were rehired in August after lawmakers approved the state budget.