The next education minister will have to find an immediate solution for a NIS 400 million budget cut.

The funds are being cut due to decisions by the outgoing government, as well as Education Minister Yuli Tamir's promise to share the costs of the New Horizon elementary and middle school reform.

Education Ministry officials have been looking for a solution for the past few weeks. Several sources have suggested reducing teaching hours and laying off teachers.

"The ministry is facing a budgetary disaster. There is nowhere to cut from," a source said.

No budget cuts occured under Tamir, who delayed the implementation of several cuts. However, Tamir committed to forgoing NIS 1 billion over several years to pay for the reform.

This means that every year, the ministry will have to find approximately NIS 140 million to cover the missing funds.

In the proposed 2009 budget, the ministry will face about NIS 250 million in cuts. The new education minister will also have to subtract another NIS 140 million of the annual promised cuts for the New Horizons program.

"It is impossible to deal with such severe cuts without reducing teaching hours," a senior ministry source told Haaretz. "Even if all the programs are shut down, we will not be able to find the necessary funds."

There's not much time: The agreements with the two teacher unions state that teachers must be told by May 31 if they will not be returning for the next school year.

This means that the new education minister will have to decide to lay off teachers within the next two to three weeks.

"By the end of March we need to know where we are making cuts - either in elementary or secondary education," one of the sources said. "Cutting elementary teaching hours will seriously undermine the reform. But during the era of big cuts, most of the damage was to secondary education. This is a difficult dilemma and the new minister will have to address it immediately upon assuming office."