RALEIGH, N.C. — The state Senate on Monday unveiled a budget plan that is $900 million less than what Gov. Beverly Perdue sought just three weeks ago.

Senate budget writers announced their spending proposal will be just over $20 billion, compared to nearly $21 billion in Perdue's plan. The difference largely is attributed to how the Senate accounts for some Medicaid money it's receiving through the federal stimulus package.

Sen. Linda Garrou, D-Forsyth, co-chairwoman of the Senate Appropriations Committee, said the plan would save $320 million annually by increasing the average size of public school classrooms by two students. Perdue is opposed to the idea.

"A lot of studies say the most important thing is we have a good teacher," Garrou said. "Look at neighboring states. They have more students in the classroom than we do."

The North Carolina Association of Educators reacted sharply to the proposal, saying larger class sizes could put North Carolina out of compliance with federal measures tied to the economic stimulus package.

"The consequences of the Senate's budget proposal will not only do lasting damage to student performance and learning, it could also cost this state billions in federal stimulus money," NCAE President Sheri Strickland said in a statement.

The budget would lay off state 711 workers and keep another 900 positions vacant, Garrou said. Perdue's plan called for eliminating 1,033 positions, some of which are vacant.

Under then Senate plan, education spending would be cut by 1.45 percent, public safety spending would drop by 7 percent and the Department of Health and Human Services budget would be cut by 6 percent.

University of North Carolina President Erskine Bowles and North Carolina Community College System President Scott Ralls issued a joint statement in support of the Senate proposal, saying it provides needed support for worker training and job development.

But Bill Harrison, chairman of the State Board of Education and CEO of the Department of Public Instruction, said he has "major concerns" that the Senate budget "is the wrong direction for North Carolina."

Among other things, he said, it would cut 7 percent funding from public schools and DPI, eliminate 300 of 475 state-funded positions at DPI and could lead to the elimination of 6,200 teaching positions.

Senate budget writers said the plan would be balanced by finding another $580 million in revenues, but details haven't been finalized. Perdue called for increasing cigarette taxes by $1 per pack and alcohol taxes by 5 percent.

The Senate proposal would give individual agencies fewer mandates and more flexibility to reach the necessary budget cuts. Employee furloughs could be one option, although lawmakers would have to approve that move.

"Whether it's reducing overtime pay, using temp workers or (cutting) utility expenses," Garrou said, any reductions will be accepted.

Senators also proposed closing several prisons, but they said it wouldn't be as many as the seven facilities targeted in Perdue's budget plan.

"People have asked us during this time, like at home, to make significant cuts. We have done that," said Sen. A.B. Swindell, D-Nash co-chairman of the Senate Appropriations Committee.