Bloomberg - Philip Duff, Morgan Stanley’s former chief financial officer, last month fired 80 of the 100 people at his 11-month-old hedge fund, and now he’s looking to sublet excess office space in Greenwich, Connecticut.

Record losses and terminations at hedge funds like Duff Capital Advisors have reduced Connecticut’s tax revenue, and that means the city schools in Bridgeport, 25 miles north, may soon have less space. Facing an anticipated $12 million drop in state aid, Superintendent John Ramos says he may close some of his 35 schools.

Officials across the state face similar cuts. After income- tax-fueled surpluses that totaled $3.6 billion from 2004 through last year, Connecticut’s budget now has a $1.1 billion gap, according to state Comptroller Nancy Wyman. The deficit is forecast to grow by $6 billion by 2011. Quarterly taxes on bonuses and capital gains — which make up 40 percent of income tax collections — dropped 20 percent in one year to $568.2 million last month, Governor Jodi Rell said.

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Tags: bloomberg, capital-advisors, capital-gains, chief-financial-officer, gap, governor jodi rell, greenwich-connecticut, income tax collections, morgan stanley, nancy wyman, office space, record losses, state comptroller, superintendent john, surpluses, taxes on bonuses, terminations