Just four months into the financial year the council ran up debts while attempting to cope with the increased demands on services, particularly from children in care.
Acting director Bob Judges warned that the department's frontline services could suffer as a result but that would be a last resort. Other strategies, such as recruiting more foster carers in the city - a cheaper care option - are already underway.
The department is already in trouble. It currently has a zero star rating from the Social Services Inspectorate and is subject to special measures. This was followed by the surprise departure of director Sandra Taylor as the council attempted to restructure services (LGC, 23 August).
Susanna McCorry (Lab), cabinet spokeswoman for social services, is in talks with heath minister Jacqui Smith to discuss a possible rescue package.
The Department of Heath is already trying to find more money to help Birmingham cope with a large increase in the number of elderly in care.