School officials have dropped a budget bombshell on the City of Warwick.  The school district has suddenly realized it is more than 2 million dollars in the hole.

Both the school committee and the city's mayor say they didn't know about the deficit until last Thursday.  And the problem gets worse when you combine this year's deficit with last year's short fall.

It is still not clear exactly how this happened but the mayor says it looks like the mistake could be the result of miscalculated salaries.  Now they will have to dip into the city's surplus to make up the difference, something that will bring the account down to one of its lowest points ever.

ABC 6 reporter Jennifer Gannon has more...