Penn State and several other Pennsylvania universities will get their state subsidies that are nearly six months overdue, but hundreds of state government employees could lose their jobs if a casino-expansion measure continues to flounder in the Legislature.

Gov. Ed Rendell on Thursday approved more than $700 million in university subsidies to avoid losing nearly $2 billion in federal stimulus aid for Pennsylvania that is contingent on the state maintaining its financial support for education.

But he said he will have to lay off a minimum of 1,000 more state employees unless the Legislature passes a bill by Jan. 8. The measure, a key element of October's state budget agreement, is supposed to raise $200 million by legalizing casino table games and diverting another $50 million from existing slot-machine gambling tax revenue.

"It's my hope that this is a circumstance that we won't ever have to reach, but the Legislature is on notice," Rendell said. "If it's the will of the Legislature not to pass table games then we're $250 million short and I have to act accordingly. I can't raise taxes. My only option is to make severe cuts."

David Fillman, who heads the largest state employee labor union, said he had heard nothing official about the governor's plans or statement Thursday, but said the union's network of activists would swing into action to encourage legislators to pass the bill before layoffs take effect.

"This is just another nightmare, part two, of the budget that should have been finished July 1st," said Fillman, executive director of Council 13 of the American Federation of State, County and Municipal Employees. "We're disappointed that this announcement came out especially at the holiday time."

In 2009, the Rendell administration has laid off more than 700 workers, about 1 percent of the state work force, as state officials worked to resolve a multibillion-dollar, recession-driven shortfall in tax collections.

The missing gambling revenue aside, the state's finances have tightened further this year as tax collections have fallen behind projections.

Officials at Penn State, Pitt and Temple expressed relief after collectively tapping reserves, cutting spending and postponing construction projects while waiting for Rendell to approve the state subsidies on which the schools rely each year.

Rendell also approved the subsidy for the University of Pennsylvania's veterinary laboratory, albeit at a nearly 13 percent reduction.

Several House Republicans accused the Democratic governor of simply switching hostages from the universities to state workers as leverage against the Legislature. It should be possible to cut $250 million in spending without laying off employees, they said.