Indiana's school chief warned school superintendents Thursday that declining state revenues could force cuts in public education spending, education officials said.

In a conference call, superintendent Tony Bennett also encouraged school districts to stall any major expenditures and teacher contract decisions, according to an e-mail sent by Dennis Costerison, executive director of the Indiana Association of School Business Officials, who was on the call.

The call took place after Bennett met with Gov. Mitch Daniels on Tuesday to discuss state finances, Costerison said in the e-mail.

Costerison sent the e-mail to members of the Indiana Association of School Business Officials, one of whom forwarded it to The Associated Press. That member declined to be named because he did not want to be tied to the controversy.

Costerison confirmed he sent the e-mail and that the details were accurate. Department of Education spokesman Cam Savage confirmed the conference call conversation.

Daniels had told Bennett that October state revenues were significantly down from projections, and that tax collections were $310 million below forecast for the first four months of the year, Costerison said in the e-mail.

The governor was scheduled to give an update on state revenues on Friday. Daniels' spokeswoman, Jane Jankowski, said he had met with Bennett earlier this week but that she did not know what had been said.

Costerison said Bennett told superintendents that Daniels' intent had been to maintain K-12 funding, but the state's fiscal situation was so dire that nothing was off the table.

"Dr. Bennett made it clear that cuts in K-12 were possible, but no decision had been made at this time on an amount," Costerison wrote in the e-mail. "He did say that the worst of the state's financial woes are still ahead of us."

Bennett said he would stay in contact and that he anticipated hearing something in the next month or so, Costerison said in the e-mail.

"He encouraged that major expenditures be held at this time and that school corporations wait for collective bargaining decisions until the state's fiscal impact is resolved," the e-mail said.

Costerison told the AP that Bennett made it clear that no decision on school cuts had been made, "but the potential is there."

He said he understood that the state's finances were dwindling but that his organization had recommended to Bennett to make no cuts for the rest of the calendar year. He also said he asked that any cuts in school funding be announced as early as possible so school districts can work out how to deal with the lost revenue.

The two-year budget approved in June increased basic school funding by 1.1 percent in 2010 and 0.3 percent in 2011.

Daniels said last month that tax collections for the first three months of this fiscal year were $254 million below forecast. That's 8 percent less than projected and 14 percent less than the state took in for the same period a year ago. He warned that budget cuts might be needed soon.

Daniels said employee layoffs would be a last resort, and cutting money for schools could not be ruled out. The only thing off the table, he said, were tax increases.