Brent council in northwest London is dealing with its fourth recent case of alleged serious financial mismanagement in a school, the TES has learned.
Internal documents reveal that Malorees Junior School is proposing to slash teacher numbers by a quarter to deal with a level of overspending high enough to force it to close.
The problems raise questions about the ability of Brent Council to oversee school finances. The local authority said more than a year ago that it had tightened up its auditing, after bonus payments at Copland Community School led to the arrests of the secondary's former head, Sir Alan Davies, and six other people on suspicion of conspiracy to defraud. All seven remain on police bail.
This week, Brent Council revealed that it did not audit Malorees Junior for at least three years, between 2008 and 2011.
The school spent 101 per cent of its 2011-12 budget on staff, compared with the 80-85 per cent recommended for a school of its size. It also failed to carry out mandatory annual pay policy reviews for 18 years.
The school's chair of governors, Brent councillor Patricia Harrison, resigned in April after parents called for her departure and accused her of incompetence. One letter from a parent said the governors at Malorees Junior had "spectacularly failed the children in this school, their families and can only have left the teaching and support staff feeling vulnerable, professionally bruised and demoralised".
But Councillor Harrison, a Labour member, told TES that her decision to resign had nothing to do with the budget problems. She remains a governor at two other schools.
Malorees Junior has now developed proposals to cut the number of teachers from 16 to 12. The plans warn that if nothing is done, standards could fall, "with a risk that the school may not be able to function in the future".
The deficit at the junior school had been on course to top a quarter of a million pounds within two years, on an annual budget of around #163;1.4 million. Teaching and Learning Responsibility allowances of up to #163;4,035 a year are currently paid to nine of the school's 11 full-time classroom teachers, a situation that a staffing review has now concluded is unsustainable.
The payments are supposed to be for significant responsibilities not required of all classroom teachers. The review recommends paying the allowances to just four teachers, cutting the annual bill from #163;25,815 to #163;10,140.
Hank Roberts, Brent branch secretary of the ATL education union and the teacher whose whistle-blowing in early 2009 led to Copland's problems being uncovered, said: "Yet again there appears to be a financial scandal in a school that was undetected.
"It is bad, but you can bet your bottom dollar that it is worse in other places. The government has to take responsibility to ensure the proper financial auditing of all our schools. Millions and millions are being lost through financial fraud and the misuse of taxpayers' money."
The problems at Malorees Junior were uncovered during a financial audit in October, carried out shortly after new head Claire Fowler took over. She replaced Pam Thomas, who retired last summer after 26 years at the school.
The audit found that reviews of the school's pay policy, supposed to take place annually, had not been carried out since 1993. There were no up-to-date job descriptions or "clear lines of management" and reviews of staffing structures supposed to be carried out every two years had not taken place.
Both Malorees Junior and Copland have foundation status. This gives schools greater independence, but local authorities are still supposed to oversee their finances. After the Copland scandal was uncovered, it emerged that Brent Council had been allowing its foundation schools to appoint their own auditors.
An Audit Commission review in September 2010 reported that the authority was then carrying out its own audits of foundation schools and ensuring that they had met a national Financial Management Standard in Schools (FMSiS), which was a legal requirement for all schools in March 2010.
This week, Brent Council said it had given FMSiS to Malorees Junior in 2010. A spokeswoman for the authority would only add: "We have not yet been informed that staff have been given feedback on the restructuring consultation and therefore do not feel it appropriate to comment at this time."
Trouble in Brent
In April 2009, it emerged that nearly #163;1 million in bonuses had been paid over seven years to senior staff at Copland Community School. Seven people remain on police bail.
In 2010, Brent Council took control of the budget at Furness Primary and dismissed head Alan King after allegations of "serious mismanagement".
In February 2012, Brent Council took control of the budget at Kensal Rise Primary and suspended head Joyce Page after an "investigation into alleged breaches of financial regulation".
In March 2012, Brent Council said Ms Page's suspension had nothing to do with allegations of misspending of special educational needs (SEN) funding at Kensal Rise, but refused to explain anomalies in the school's SEN finances.