Judith Elderkin, head of Marlborough Road primary, Salford, who has decided to sacrifice her own job to balance the books and avoid losing classroom teachers, has condemned her education authority for failing to support the school. It has been completely cleared by an employment tribunal of more than 70 complaints of bullying, victimisation and racial discrimination made by Rita Mehra, a teacher it sacked in July 2004.
But because the governors acted against Salford council's advice in deciding to dismiss Mrs Mehra, the authority has said the legal bill is the school's own responsibility.
Mrs Elderkin, a former National Union of Teachers president, said that because the teacher was appealing, there is no immediate way of recovering the costs.
So to avoid the school going into deficit, the 63-year-old is retiring two years earlier than planned, in August. A deputy will cover her post for a year allowing the primary to save her pound;57,000 salary, which with pension and national insurance costs, will cover the bill.
Mrs Elderkin said: "As I was the only member of staff old enough to take retirement and go legitimately, it was easier for me to go than anyone else.
"I think most schools would think that if they are ever in this situation they would be supported by the LEA.
"What is the point in delegating decisions over staff to schools if the authority then says 'Unless you take the decision we want then you are on your own'? We were not supported by our employer. They did not want to know."
She said every school could face the same problems if they decided to sack a teacher, as they are all responsible for their own budgets.
Salford council said it correctly warned the school that the matter could end up at a tribunal and suggested that governors should give Ms Mehra a final written warning instead of sacking her.
But Mrs Elderkin said: "The governors have disciplinary responsibilities.
They have a duty of care to the children and the parents. We took the right decision."
A Salford council spokesman said: "The final decision was a matter for the governors, in full knowledge of the possible outcomes.
"It is obviously a matter of great concern that the employment tribunal which resulted from this case has incurred such high costs for the school.
Whilst those costs are the responsibility of the school's governing body, the LEA will work sympathetically with the school to help them manage the situation and to manage the impact of this unexpected level of expenditure."