Saskatchewan school boards say there's confusion over how the government wants them to meet a 3.5 per cent budget cut in compensation to employees.

The boards received a letter last week from the deputy minister of education that says the cut can't be achieved through staff reductions.

On Monday, Finance Minister Kevin Doherty said school boards could lay off employees as a last resort, but it would be an option.

"I'm hearing some things that are contradictory to what's in this letter and we need clarity around those contradictions, because how can we meet a directive if the story keeps changing?," Shawn Davidson, president of the Saskatchewan School Boards Association, said Tuesday.

Saskatchewan school boards are also being told to freeze the compensation cuts for three more years.

The Saskatchewan government is trying to wrestle a $1.3-billion deficit down to $685 million in the year ahead.

Davidson says the letter suggests that the 3.5 per cent compensation cut is on top of an average three per cent loss in operating funding for school boards this year.

"That appears to be how this letter is worded and we really need clarification on that because that's getting really deep. That's really, really significant."

Boards have already been trying to find savings through things such as joint purchasing and joint transportation, Davidson said, but that won't be enough to make up for the $55 million the province has cut overall.

Doherty suggested boards should negotiate with employees as to where money can be saved, even though some contracts are already done deals.

Davidson said schools boards do not intend to break existing contracts.

A provincewide agreement for more than 13,000 teachers expires at the end of August and negotiations for a new contract are to begin next month.

Each school board also negotiates a local agreement with teachers that covers things such as leave, preparation time and professional development. Those contracts all expire at different times.

Boards also negotiate contracts with other educational support staff.

Education Minister Don Morgan says the government is not encouraging anyone to break contracts, but that savings must be found.

"There's always a possibility that layoffs might take place," Morgan said Tuesday.

"The goal we'd like to find is to try and manage the reduction targets within and by way of attrition or by way of finding other savings, but the finance minister was correct that nothing can be taken off the table."

Morgan says he also wants to talk with Davidson about concerns from the Saskatchewan School Boards Association that legislation introduced last week takes away board autonomy.

The legislation keeps elected trustees on schools boards, but gives responsibility to make decisions to the minister of education. Davidson says that leaves elected trustees as the face of schools, but without any voice to make decisions.

Morgan says the government will not enshrine board powers in legislation.

"The ultimate responsibility for our education of our children rests with the province. We want it delivered by the trustees, but we need to the ability to say to trustees, 'You have not worked with us on joint procurement. You will do joint procurement. We want you to work with us on joint busing,"' he said.

"So ultimately, some of those things are decisions that we're going to control."