Hundreds of schools in Birmingham have been warned they risk having money taken off them after it was revealed they sat on a cash stockpile of nearly £70 million last year.
Four secondaries had more than £1 million unspent with a further 18 having more than £500,000 in reserve during the last financial year. More than 66 per cent of all schools in the city had surpluses beyond what is considered acceptable.
Under new rules introduced four years ago, the city authority could "claw back" the unspent money and redistribute it to schools that are in more need.
Figures from Birmingham City Council show 49 schools had a budget deficit of £7.7 million during the 2006/07 financial year.
A budget surplus of eight per cent is considered acceptable for nursery and primary schools, falling to five per cent for secondaries. Nearly 300 out of the city's 439 schools had stockpiles of cash beyond this.
A total of 234 out of 336 nursery and primary schools (70 per cent) had surpluses beyond the permitted amount.
For secondaries, 42 out of 76 (55 per cent) had unacceptable budget surpluses and for special schools there were 15 out of 27 (also 55 per cent).
Schools argue they often need to save up money to spend on major capital projects such as new classrooms or repair work.
Birmingham City Council believes the Government is being too strict on the amount of surplus cash in schools. It thinks a 12 per cent budget surplus is acceptable - a view that is supported by the NUT.
Arthur Terry School in Sutton Coldfield had the biggest budget surplus of £1.7 million - 29 per cent of its budget.
School head Chris Stone said the cash had since been mostly spent on a massive £16.9 million PFI rebuild.
"We had to come up with £1.3 million of our own. When you take that out we are running a surplus of about four per cent which is well within the parameters schools should have."
Swanshurst School in Kings Heath - which had a surplus of £1.4 million - said it has also spent much of its surplus on six new classrooms. The two other schools with over £1 million surpluses - The College High in Erdington and George Dixon International School in Edgbaston - failed to respond when contacted by The Birmingham Post.