Welsh school reserves increased by pound;4 million last year, leaving heads with bank balances worth pound;69m - the equivalent of pound;143 for each pupil.

The National Association of Schoolmasters Union of Women Teachers Cymru called for the money to be spent on education rather than saved for “pie in the sky” projects.

But the Secondary Heads Association Cymru has warned against judgements based on “simple, raw data” and described the figures as a “red herring”.

Schools are permitted to hold reserves for contingencies, although the Welsh Assembly government says they must have a good reason for keeping back more than 5 per cent of their budgets.

Up to March 2004, more than half of Welsh schools exceeded the 5 per cent threshold and held pound;53.8m between them. Around a fifth of these retained more than 10 per cent, or pound;21.4m.

The lion’s share, pound;41.2m, was held by primary schools, reflecting their greater number - 1,609 compared with 230 secondaries.

But while primary schools cut their overall reserves by pound;500,000, secondary school balances increased to pound;24.9m, from pound;20.4m in 2003.

SHA recommends a reserve of 2 to 3.5 per cent but defends those with higher levels.

It argues that the accounting method used by many local education authorities does not take into account unpaid bills.

Schools have to save for one-off costs, such as new computing equipment, and those with dwindling rolls need high reserves to cover variable staffing levels. However, it concedes that schools should avoid “excessive” reserves.

Anna Brychan, director of the National Association of Head Teachers Cymru, said: “Money identified as reserves in March may well be earmarked for the rest of the school year.”

But Geraint Davies, secretary of NASUWT Cymru, said: “The pound;69m currently being held in reserve by schools should be used to maintain staffing levels, to properly implement the workload agreement for teachers and to provide the best possible education.

“This money is meant for the current cohort not, for example, a pie in the sky extension to the science department.”

Schools in Carmarthenshire had the biggest reserves (6.7 per cent or Pounds 6.1m), equivalent to pound;221 per pupil. More than a quarter of the county’s primaries held more than 10 per cent of their budgets.

Education director Alun Davies said schools were saving because of concern over funding continuity.

“Schools, like the council, would like a three-year settlement. which would bring more stability.”

Last year Anglesey’s schools had the highest reserves at 7.6 per cent, now down to 6.2 per cent.

“In most cases 5 per cent should be sufficient,” said director of education Richard Parry-Jones. “But when you look at very small schools 5 per cent is insignificant, so they have to build up more.”

Not all Welsh schools have stayed in the black. Some 163 primary schools, 33 secondaries and three special schools had budget deficits totalling Pounds 3.9m.

An Assembly government spokesperson said: “Authorities must have a monitoring regime in place for balances of 5 per cent or more.

“We would expect LEAs to talk to schools with significant balances to determine how they had arisen and what purpose schools intended to put them to.”