Today Federal Judge Richard Smoak approved a $325,000 legal fee settlement between the Holmes County school district and lawyers for a Ponce De Leon High School student.

Heather Gillman sued the school district with the help of the American Civil Liberties Union and won, but the huge lawyers' fee is just part of the school board's headache.

The board members have to come up with more than $1 million in cuts. It's was a meeting of the minds. The hope was to come up with a way to off set an enormous budget deficit.

"For the 2007 -2008 year we are looking at somewhere in an excess of a million dollars," Holmes County School Board Officer Larry Hawkins said.

Officials say expenses such as food, electricity, and fuel has skyrocketed. When the increases are coupled with state cuts, the current school year's budget is in the negative $1.6 million.

What's not paid from that balance will be carried over to the 08-09 school year, which already has a projected short fall of $1 million, fora grand total of about $2.6 million in the red.

"This is certainly placing us in a more dire straits, and were going to have to really sharpen our pencils to determine how to handle the situation," Hawkins added.

One of the line items on next year’s budget is almost $350,000 for new buses, and Holmes County Superintendent Steve Griffin says they want to scrap the new buses and cut many of their other expenses.

"At this point in time we are trying to absorb positions where people retire, or possibly they move on to another job, we encouraging our coaches to reduce the number of athletic contests or anytime they can schedule boys and girls game so that they can travel together so we can save on gas."

Officials say gas is one of there biggest concerns, and there will be changes to many bus routes, but despite cuts, School Board chairman Vernon Lewis says there just isn't enough revenue to go around.

"Holmes County, being a rural area, we don't have the beach front properties, so we don't generate the tax base."

One possible money-saving move the board discussed is a four-day school week.