Every head in the east London borough has been ordered to comply with a council-wide directive to freeze spending. Heads will not be able to renew contracts for some temporary administrative staff. Education director Liz Reid has warned them they will be personally liable for the spending if they breach the order.
However, Ms Reid said the order would not stop schools spending their basic budgets. Instead schools would have to freeze some spending that heads control, including grants from the central Standards Fund, as the authority has to match-fund this.
As the council's education department cannot even renew the contracts of its wn temporary staff, school visits by local authority advisers could also be affected.
In a report, council treasurer George Jenkins forecast the council would be pound;13 million in debt by the end of the financial year unless cuts were made. The budgetary position will be reviewed on November 6.
Ms Reid added: "We recognise the immense difficulties that this will cause in schools, but the alternative is that the district auditor will stop all expenditure."
She stressed that the education department was on track to break even this year. The overspend had been by other departments.
The news is the latest in a series of setbacks for Hackney.
Only last month, Ms Reid and two senior officers announced their resignations - one citing unhappiness with the council's recent restructuring.