The Alcorn County school system borrowed $3.5 million in January to cover its bills for the rest of the fiscal year.

Now the time has come for the district to deal with anticipated staff reduction and other cost slashing measures to address a deficit of $420,000 discovered in January.

The school board approved a $3.5 million tax anticipation note in January to see the district through the end of the year, said financial consultant Margaret Dennie, who is helping the district work through its money woes.

The note will be due by June 30, when tax receipts should be in for the next fiscal year, she said.

Superintendent Stacy Suggs said principals have been notified that their new contracts may not contain the same terms as the previous year, although they have been assured job security.

Suggs said no employees will be terminated midyear but it is likely some staff contracts will not be renewed for the 2008-2009 school year.

Suggs said spending reduction recommendations will soon be made to the school board.