Nebraska might have to pay millions more to schools than expected, dimming what had been a bright financial outlook. The added expense also raises the specter of higher taxes or budget cuts over the next couple years.

Department of Education officials have notified lawmakers that state aid to schools will have to be about $39 million more than expected next fiscal year.

That sharply decreases the balance lawmakers expected to have on the state's budget ledger the end of next year.

Senator Lavon Heidemann of Elk Creek says the ongoing costs could have the biggest impact during the next budget cycle, increasing a projected shortfall by more than $140 million. That could prompt talk of raising taxes and cutting spending.

The governor's office rejects the notion that tax hikes or spending cuts will be required.

A spokesperson for Governor Heineman says the governor's message to lawmakers on the issue will be that the formula that has brought about this situation needs to be simplified and streamlined.