Hawai'i's public school system is more than $24 million in the red this fiscal year, even as it prepares for severe budget cuts next year.

In the midst of discussions about how to cut more than $69 million from the state Department of Education's budget next year, education officials revealed last week that the public school system doesn't have enough money to cover its electricity, bus transportation and food bills for the current fiscal year, ending in June 2009.

The severity of the situation is escalated by the likelihood that Gov. Linda Lingle will not initiate an emergency appropriation for the DOE to deal with its current projected budget shortfall.

"Considering the state has a $225 million shortfall, I don't know where that money will come from," said Georgina Kawamura, director of the state Department of Budget and Finance.

She said all state agencies — not just the DOE — are dealing with budget shortfalls for this current fiscal year.

"There is no extra money," she said.

Because the governor is not likely to grant an emergency appropriation to cover DOE's budget shortfall, assistant superintendent of business services Randy Moore said the DOE will have to come up with internal cuts to deal with the situation.

"Obviously costs have escalated dramatically. Anything carbon-based has gone way up in cost," Moore said.

$20M IN BUDGET CUTS

The largest of the budget shortfalls is in the area of student transportation, where costs have gone up more than $13 million. For the current fiscal year, the state Legislature appropriated about $47 million to cover the cost of school buses, but because of wage increases and higher gas prices, expenses have risen to some $60 million.

"The expenditures exceed the budget," Moore said. "In a world of 3 percent inflation, we would expect it to go up. Why they've gone up by 20 percent? It's in part because of the cost of carbon-based fuel."

Similarly, the DOE is short about $5 million for its electricity bill. Costs for the current fiscal year are estimated at more than $46 million, while the DOE only has about $41 million to cover those expenses.

The shortfalls come after the DOE was forced to cut this year's budget by about $20 million. About $10.2 million was cut by lawmakers in this year's Legislature. The BOE also approved $9.3 million in budget cuts to meet 4 percent across-the-board reductions imposed by Lingle.

"When you think of the $20 million that was cut from this year's budget, that has caused problems," said Donna Ikeda, the Board of Education's chairwoman.

The DOE's cuts covered non-school hour programs and the A-Plus after-school program, and froze vacant positions across the public school system.

The DOE has identified money within its budget that could be used to deal with a portion of the shortfall, but it would not cover all of it, said James Brese, the DOE's chief financial officer.

The DOE has about $12 million in "carryover" funds, which is essentially money originally appropriated by the Legislature for a specific purpose that has gone unspent, Brese said.

In addition, the DOE has about $3 million in U.S. Department of Defense funds and U.S. Department of Education Impact Aid money that can be used to help pay for a portion of the budget shortfall, he said.

"We're lucky that we have some funds that will allow us to pay for the shortfalls. We'll still be short. There's no way to make up that deficit without cutting even more," Ikeda said.

NO MORE 'NICE TO HAVES'

Brese said the DOE is instituting cost-cutting measures to cover the remaining budget shortfall.

Superintendent Patricia Hamamoto has instituted a 10 percent restriction on operating funds at state and complex offices. The restrictions include less spending on supplies and equipment, restricted travel to Neighbor Islands and less spending on workshops.

"We're asking everyone to look at everything that is discretionary. It may be a 'nice to have,' but maybe not required," Brese said.

He said he wasn't sure whether the "austerity measures" would cover all of DOE's current budget shortfalls.

Meanwhile, the DOE is bracing for some of the most severe budget cuts in recent memory in next year's budget.

Lingle requested that all state agencies come up with 10 percent, 15 percent and 20 percent budget-cut scenarios for their 2009-11 discretionary budgets.

The BOE recently sent the governor a $45.6 million budget-cut proposal — just short of the 15 percent mark.

State finance director Kawamura then asked the BOE to revisit its budget-cut proposal and submit reductions up to $69 million, or 20 percent.

Board members have warned that a reduction of $69 million would cripple school-level programs and staff positions.

All other state agencies have submitted 20 percent budget-cut scenarios to the governor, said Russell Pang, spokesman for Lingle.