Granite City school officials say a major drop in funding is forcing them to dip into savings to keep the district financially stable for the next year. The situation may force them to lay off staff next school year if conditions don't improve.

"We have to come up with money to balance the budget in some form," said Superintendent Harry Briggs.

The district is dealing with a dip in money from the state and less funding from property taxes, the major source of revenue for public schools. The shortfall is taking a toll on the 2011-2012 school year budget.

District officials plan to cover costs by spending about $3.2 million from the school system's reserve fund. The account is mostly made up of money that wasn't spent in previous school years. It totals about $8.4 million.

The school board is scheduled to vote on the budget Sept. 27.

District Finance Officer Dennis Burnett said the solution does not solve the long-term funding shortfall, which could impact the 2012-2013 budget. He said layoffs may result, although it's too early to predict the exact scope of possible cuts. "If things don't turn around, that is a big possibility," he said.

The state budget has reduced funding by about $1 million for the Granite City school system. The budget also predicts a loss of $1 million as landowners pay less in property taxes, the result of plummeting home values.

Contact reporter Jim Merkel at 618-344-0264, ext. 138