MONTGOMERY, Ala. (AP) -- A sharply divided Alabama Senate couldn't agree on a state education budget at the end of the 2008 legislative session late Monday, forcing a special session and likely prompting pink slips for thousands of school workers.

State Superintendent of Education Joe Morton said school systems have to notify non-tenured employees by the end of school this month if they are not going to be retained. And many school systems will send out dismissal notices with no state budget to use for planning.

"The tragedy is many of them will go to Georgia, Florida, Tennessee or Mississippi and they won't come back if we get a budget in a week," Morton said.

The House voted overwhelmingly in April to approve a $6.3 billion budget for the new fiscal year starting Oct. It was $368 million less than this year's budget due to the economic slowdown. It cut K-12 schools by 3 percent and universities by 11 percent.

The Senate spent its final meeting day Monday divided into two factions: one led by Senate budget committee Chairman Hank Sanders that wanted to hold the line on spending and another that wanted to add $25 million to the budget for universities. That would have dropped universities' budget cut below 10 percent.

Gov. Bob Riley spent most of the night at the Statehouse, conducting shuttle diplomacy between legislators, lobbyists and educators on both sides of the divide. Meanwhile, senators supporting more money for universities tied up the Senate.

Senate Rules Committee Chairman Lowell Barron, D-Fyffe, tried to get the Senate to cut off debate at 10:35 p.m. and vote on the budget, but the 17-14 vote to end debate fell one vote short of the necessary number. With little time left before the mandatory midnight adjournment, legislators began to talk about a special session to reconsider the budget.

"It's sad we couldn't put our differences aside for the children of Alabama," Sen. Quinton Ross, D-Montgomery, said.

Riley said he was uncertain when he might call a special session.

With the Senate tied up on the education budget, little else happened in the Legislature on Monday. The House did not consider a Senate-passed bill to restrict smoking in many public places and workplaces, and the Senate did not taken up a House-passed proposal to remove the state sales tax on groceries.

The Senate also let die House-passed bills giving a tax break to small businesses that supply health insurance to their employees, requiring 44 national corporations to pay more state income tax by closing a tax loophole, and making sure the state income tax is not levied on the federal economic stimulus checks being received by Alabama taxpayers.

The fight over the education budget pitted K-12 groups, including the Alabama Education Association, against universities.

Sen. Jim Preuitt, D-Talladega, said Alabama universities can't afford to take a disproportionate cut because they are already having trouble retaining faculty and administrators.

"We are not able to pay them as much as other states," he said.

Malcolm Portera, chancellor of the University of Alabama System, said Alabama colleges are at a disadvantage with neighboring states because Tennessee's cut is not as large Alabama's, Georgia is raising the appropriation for higher education, and Mississippi is maintaining the status quo.

Sandra Givens, a bus driver for the Lawrence County school system in north Alabama for 28 years, was one of many education employees who lined the halls of the Statehouse. She predicted many of her non-tenured support workers will get pink slips in a few days and will have found other jobs by the time a budget gets approved.

"We are not going to have enough employees when school starts in August," she said.

The state's other budget, the General Fund budget for non-education agencies, was passed by the Legislature on May 8 and sent to the governor.

The $2 billion General Fund budget is up from $1.84 billion this year. The biggest portion of the increase, $150 million, goes to the state Medicaid Agency to maintain services for the poor.