New London - Before they've even completed their proposed 2012-13 budget, members of the Board of Education learned Thursday that they will have to make drastic cuts to close a $4 million gap.

The school district will need to find about $700,000 in special education costs; between $600,000 and $700,000 for teachers who will receive a 2 percent raise; and $1.3 million to cap the hole left by the federal EduJobs grant, which the board elected to use this fiscal year.

In addition, the board learned of other substantial increases, including three new positions in the Winthrop Magnet School.

The cuts, which have yet to be made, will equal a 10 percent decrease in funding for each of the district's seven schools, Superintendent of Schools Nicholas A. Fischer said.

"There are a number of things we're unsure of, including an exact amount in benefit costs, which is among the most significant increases for the budget," Fischer said. "This is the beginning of a series of conversations to address how we're going to meet these reductions in cost."

The school board needs to submit its budget to the city by March 15. The finance committee portion of the board plans to meet next week to continue its budget talks.

School board Chairman William Morse said he was "overwhelmed" by the additional increases, which he and the board saw for the first time during the meeting.

"I think we're going to be in for a very difficult time. We need to prioritize what's important to the school district. I wasn't aware of the breadth of the challenges we're going to be facing," he said.

For the last three years, the school's budget has been flat-funded, and just to maintain the status quo, Morse said, the board will have to find $4 million.

Last year, the school board was forced to cut $923,928 from its proposed 2011-12 budget after the City Council voted to flat-fund the budget at $39.28 million.

As a result of the cuts last year, a substitute physical education teacher from the middle school was laid off and a part-time business teacher position was eliminated, but the teacher was reassigned.

j.hanckel@theday.com