HONOLULU -- The University of Hawaii campus at Manoa is preparing for a 4 percent cut in its programs to deal with the state's budget shortfall.

About 500 classes for the fall could also be eliminated, although the school hopes some federal stimulus money could offset those cuts, Manoa Chancellor Virginia Hinshaw said.

This week, the federal government announced it will release $129 million to help offset the state's shortfall in education. That money has already been earmarked for the next two years, state officials said.

"It will be between the Department of Education and University of Hawaii. If we had not gotten those stimulus funds you would have seen much larger cuts in education K-12 and higher education. This allows us to move forward," Gov. Linda Lingle said.

Next week, the school board will decide on additional areas that may have to be cut.

State libraries are facing closing some branches.

The governor also plans to compete against other states for a new pot of federal money called "Race to the Top Funds," which are expected to be available later this year.