This estimate from the Convention of Scottish Local Authorities comes in the wake of last week's public expenditure statement by the Scottish Secretary. For the fifth year in succession salary increases for all council staff, which will add Pounds 100 million to the local government pay bill on the basis of past settlements, have to be self-financed with no cash coming from central Government.
Keith Geddes, Cosla president, said education could not be completely protected from cuts next year despite it coming top of the Government's spending priorities. Only classroom activities and pre-school education would be ring-fenced. The prospects for council budgets in 1998-99 were "tight and demanding," Mr Geddes added.
Councils have had to absorb Pounds 110 million in teachers' pay rises over the past four years, but Cosla says "efficiencies" to increase salaries further are now virtually exhausted.
The authorities continue to hope that the Millennium Review of education, a joint investigation by the unions and management which includes pay and conditions, can come up with solutions. But the unions remain adamantly opposed to any trade-off which offers a long-term loss of conditions for a short-term salary gain. The last attempt to strike such a bargain fell before the 1992 general election.
Cosla's warning of further belt-tightening comes despite the Pounds 146 million extra for education announced by the Secretary of State last week. The local authorities' share is Pounds 108 million payable through general Government grant.
But Pounds 89 million of that is already committed to improving standards and upgrading schools, following the Chancellor's July budget. This sum is not capped, so authorities will not be penalised for incurring the expenditure. But authorities have to demonstrate that it is spent on classroom improvements, including school rationalisation. It is not available for teachers' pay.
This leaves the authorities with an extra Pounds 19 million for education, but councils have discretion on what to do with the money. It is also subject to capping restrictions so, if authorities go over budget in spending the additional amount, they could be penalised for "excessive" expenditure.
Donald Dewar, the Secretary of State, has nonetheless allowed councils to spend an extra Pounds 191 million before capping is imposed, which is Pounds 150 million more than the regime planned by the previous Government.
Councils spending close to Government limits will be allowed a greater increase in their expenditure than those spending well above the ceiling.
Mr Dewar also pointed out that the additional money is on top of Pounds 9 million extra for pre-school education, Pounds 7 million for early intervention next year, and Pounds 1 million for a programme to develop alternatives to school exclusion. These sums will be paid out in specific grant, which means they cannot be spent on anything else and are free from capping restrictions.
Further education leaders unimpressed: FE Focus, page 24