Councils have the power to let maintained schools plan for a deficit budget, where their spending will exceed their income.
When schools are allowed to set a deficit budget, the government says that they should have three years at most to repay the money.
When a school with a deficit becomes an academy, either the local authority or the Department for Education has to repay it.
According to guidance, when a school chooses to academise, the DfE reimburses the council, then recovers the money from the academy. The guidance says that if the size of a deficit could prevent such a school from converting, the council could “agree to absorb part or all of the deficit”.
A paper from last month’s Norfolk Schools Forum said “the DfE do not, in many cases, now have sufficient funds available to support deficits at the point of conversion”.
When a school with a deficit is forcibly academised under an outside sponsor, “the deficit remains with the LA, to be funded from its core budget”.
Average deficits in local authority maintained schools hit their highest for at least seven years in 2015-16.
The average deficit of £120,434 last year represented a 68 per cent increase on the figure for 2013-14.
The figures exclude academies and show that the proportion of maintained schools with deficits last year was the highest for five years, at 6 per cent.
The figures made the gloomiest reading for maintained secondary schools, where 17.9 per cent were in deficit in 2015-16, with an average amount of £373,173.
Among maintained primary schools, 4.5 per cent were in deficit, with an average of £36,975.