PROVIDENCE, R.I. -- The financially troubled city of Providence on Tuesday issued layoff notices to all its nearly 2,000 teachers because city officials say they must make an unknown number of cuts in the budget, and they want "maximum flexibility."

State law requires school departments to notify teachers by March 1 if they will be laid off the following school year. The notices do not mean that the teachers will lose their jobs, just that they could at the end of the year.

School Superintendent Tom Brady on Tuesday wrote to teachers that the school budget outline for the next academic year is dire, with a projected deficit of nearly $40 million.

Providence Teachers Union President Steve Smith told The Providence Journal the decision was "beyond insane" and creates chaos and anxiety among teachers.

Providence's financial problems have caused enough alarm at the state level that Gov. Lincoln Chafee has instructed two of his top fiscal officers to meet with city officials. A recent audit showed Providence had nearly depleted its rainy-day fund and overspent its budget last year by more than $57 million. This year's budget gap is expected to be even larger.

Mayor Angel Taveras last month created a Municipal Finances Review Panel to review the city budget across all departments. It will offer recommendations to the mayor in the next two weeks.

Taveras said in a statement that although he was sensitive to the uncertainty and anxiety that many teachers felt when they received the notice, "putting Providence back on solid financial footing will require shared sacrifice across our community."