HONOLULU -- Gov. Linda Lingle is warning of a "fundamental restructuring" of state government because of continuing budget woes.

In a webcast Thursday, the governor said she believes more layoffs will likely have to happen.

"The second round of layoffs will, by necessity, require a fundamental restructuring of state government," Lingle said.

The governor has already issued layoff notices to 1,100 employees to begin November. The state has also notified 900 non-union state employees that they will begin three furlough days a month in the middle of September.

As part of her plan to cut the nearly $1 billion shortfall the governor said she wants to decrease payments to social service program beneficiaries and eliminate programs that can effectively be provided by federal or local agencies, or by volunteers.

She said some state offices will be closed and administrative duties will be consolidated.

"We will consolidate programs, close some offices and eliminate some services that can be covered by other state agencies or that are not a core function of a department's mission," Lingle said.

Lingle said there will be no further cuts for public schools or the University of Hawaii system. However, she said she will urge educators to find other money to operate nonessential programs.

Lingle provided no details. She also said more layoff notices for state workers are likely in coming months.

"We have volunteered to take furlough days beginning in October. It is a combination of all these different things that is going to lead us back to where we need to be economically," Hawaii Government Employees Association Executive Director Randy Perreira said.

The governor has already issued layoff notices to 1,100 employees to begin in November.

The state begins binding arbitration proceedings with Hawaii's largest public workers' union, the Hawaii Government Employees Association, to try to resolve stalled contract talks. Binding arbitration begins with the United Public Workers union next week.

Arbitration proceedings are expected to be completed by Dec. 21 and both sides will have to live with the decision, but contract talks could be resolved at any time before then.