Pennsylvania has signaled that it intends to stop paying Virginia to house inmates, a move corrections officials said would financially strain Virginia’s prison system.

In a Sept. 29 memo to employees, Virginia Department of Corrections Director Harold W. Clarke said Pennsylvania has given “informal notice” of the state’s intent to transfer inmates currently housed at the Green Rock Correctional Center in Chatham.

“The transfer of the Pennsylvania inmates from Virginia will place the Department in a difficult financial situation,” Clarke wrote. “The revenue from out of state inmates not only pays for the operation of Green Rock, it also provides funding to other inmate beds.”

Larry Traylor, a Department of Corrections spokesman, said all of the 965 inmates at Green Rock correctional center are from Pennsylvania. He said Pennsylvania pays the department about $20.4 million each year to house the inmates.

Clarke wrote that, under the terms of the contract, Pennsylvania must provide 180 days of written notice to terminate the agreement. He said that has not yet happened but he expected it would.

If the funding stream dries up, he wrote, the department could consider requesting additional funding during the 2012 General Assembly session, making “significant reductions” in operations or seeking additional contracts to house prisoners from other states.