Dorset county council’s budget shortfall will be cut by £2.8m after an extra government grant was afforded to the county’s primary care trust.

The PCT will use funds from the £5.2m grant to help with current spending pressures on adult social care services. As a result, the county’s local authority now has to find savings of £54.9m over the next three years, compared with previous estimates of £57.7m.

A report to the council’s cabinet has put forward additional cost-saving proposals, including saving £750,000 by combining the council waste management services and £480,000 from school improvement services.

A further £125,000 would be derived from contributions to the Dorset safety camera partnership, with £1m coming from a review of staff terms and conditions.

Chief financial officer Paul Kent said that the funding picture was bleaker than anticipated, with budget proposals for 2011-12 set to be considered by the cabinet on 2 February.