Facing a $25.5 million budget deficit, the Camden School District yesterday sounded an alarm that it could have to lay off as many as 550 employees.

The district sent notices warning all employees hired in the last two years that their jobs could be eliminated, spokesman Bart Leff said.

Teachers, administrators and support staff could be among those affected. Camden, South Jersey's largest public school system, has about 4,000 employees and nearly 16,000 students.

Without a state bailout, the cuts could be needed to help plug a $10.5 million deficit from the 2005-06 school year, and a $15 million deficit this school year, Leff said.

The school board approved, 8-0, creating a reduction-in-force list at a special meeting that began Monday night and ended early yesterday.

The notices were sent as a precaution while the district works with the state to try to plug the budget gap, Leff said. Yesterday was the deadline to notify affected employees about possible job reductions.

"It's not a done deal at this point," Leff said.

The action surprised union leaders and sent shock waves throughout the district, which has been plagued by a cheating scandal and other problems.

"I didn't know this was occurring until it happened," said Kenneth McIntosh, president of the Camden Education Association, which represents about 3,000 teachers and support staff.

The district has a $311 million budget, funded mostly by state and federal tax dollars. Because the district is under state oversight, the state would likely intervene to prevent any job cuts that would impede student learning.

McIntosh said he had urged his members to remain calm until the issue was resolved. "I don't think they can lay off a whole lot of people - at least, I sincerely hope not."

Leroy Baylor, president of Communications Workers Association Local 1079, representing about 500 custodians, maintenance and food-service workers, said he hoped any job cuts would be made fairly. "We don't expect them to be all custodians."

In other action, the board voted, 8-0, not to renew the contract for security chief James Thornton, citing unspecified "conduct unbecoming a board employee." Thornton could not be reached for comment.