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RALEIGH – As the Wake County school board starts preparing for the upcoming school year, they face many challenges with the budget.

The school board has been working on about $20 million worth of cuts for the next year. On Tuesday, administrators say they need to prepare for a state reduction of another 3 percent – an additional $20 million.

"We just have to be very frugal in how we look at the dollar expenditures right now," Ron Margiotta, Wake County school board chair, said. "It's not going to be easy. And the sad part is the following year is probably going to be the worst year once we lose all the federal stimulus funds."

There's also debate about a magnet schools grant that could be worth up to $12 million over three years.

"It seems to me that this resolution here is to get the magnet money without the intent of supporting diversity throughout our school system," school board member Anne McLaurin said.

Some board members are concerned that past resolutions supporting community-based schools weakens the application, which requires a voluntary desegregation plan. But others say the new resolution they're offering encourages those voluntary efforts.

"That's when you get real desegregation: when people volunteer to be a part of it and engage in it. And if we as a system can encourage that and show that we're proud to be culturally diverse, we're going to do some great things," board member John Tedesco said.

The school system also needs to deal with about 3,800 more students next year, and the opening of four new schools. But there are still so many unknowns about funding at the federal, state and local levels.

The resolution for the magnet schools grant application passed its first reading tonight and will have to pass one more time. Meanwhile, the specifics of the budget cuts, as well as what will happen with school start and end times, will be discussed more thoroughly at the finance committee meeting next Wednesday.