Teachers at Moor Park High School, Preston, said they were resigned to being undervalued as professionals, but had serious concerns for the prospects of colleagues.
Moor Park has a mature and experienced staff of 34 full-time equivalent teachers, with none higher than point 13 on the pay spine. Senior staff at the 420-pupil school believe they can avoid any compulsory job cuts.
Dick Ogden, deputy head with responsibility for finance and administration, said: "We managed to maintain a reserve in the past two years of around 9 per cent of our Pounds 1 million budget, which was not accumulated but put aside and used to supplement the budget."
The full implications of the pay award and a potential reduction in budget of 5.5 per cent by the education authority have yet to be tackled, but it is unlikely Moor Park will carry over any money next year.
Mr Ogden said: "The maturity and experience of our staff is a problem in itself, because under LMS we are not funded for teachers at their salary level but given a notional amount."
The pay award will cost the school around Pounds 9,000, a third of what it would have had to find had the local authority not agreed to fund it to the tune of 1.6 per cent. Moor Park will now have to see whether projects, such as a new study area for Year 7 pupils, can be sponsored privately.
Headteacher Kath Moss said one of her greatest concerns was that the momentum of rising standards could be lost because of budget cuts. The percentage of pupils achieving five or more A-C grades at GCSE has risen in the past two years from 6 per cent to 18 per cent in 1994.
Mrs Moss, who is on point 26 of the pay spine for heads and deputies, said: "Schools cannot continue to produce a high-quality education service in the face of substantial budget cuts. These will destroy the efficiency and quality of education both locally and nationally.
"It is hard for staff who have worked unstintingly to raise achievements here to receive a minimal pay rise which can only be funded at the expense of all that they have worked so hard for."
Head of geography, Michael Kaye, one of Moor Park's younger teachers at point 7 on the pay spine, said: "I am not in the job for the money. The issue for me is that jobs could be cut when we need job security and stability for the pupils. Teachers are resigned to the fact they are undervalued."
Jeff Balmer, head of the upper school on point 13, said teachers resented the fact that millions of pounds had been "wasted" revising the national curriculum while teachers had barely been rewarded for years of implementing the changes.
He added: "This is another example of the Government tightening the screws. We have lost a number of staff over the years through natural wastage and early retirement. We are down to the bare bones and we cannot afford to lose any more."