Warwickshire County Council wants to sell a comprehensive to the Nicholas Chamberlaine Schools Foundation, in a deal which would bring in Pounds 1 million to upgrade the school, and as much as Pounds 3m for other schools in the county.
The move is thought to be unprecedented in recent times; most church foundations do not have enough money to invest on this scale. Warwickshire is bucking a trend which has seen voluntary-aided secondary schools fall nationally by 24 per cent over the past five years.
But this week the Local Government Association (LGA) suggested that the county's proposal could provide a model for local education authorities struggling to find the finance for capital works. Warwickshire is already looking at private funding for its early-years programme.
The deal centres on the Nicholas Chamberlaine School in Bedworth. Despite the name, the school has no formal link with the trust; both were named after the same local 18th-century churchman, an astute businessman who founded the trust with a gift of lucrative land holdings.
The terms of the trust mean that the money can only be spent on church schools in the town. The foundation, part of the Coventry Church of England diocese, already owns five voluntary-aided infant and junior schools, which feed into the 1,430-pupil secondary school.
The comprehensive would become voluntary-aided, and so qualify for 85 per cent Government funding for capital work, with the rest funded by the trust.
Warwickshire is short of capital funds after spending some Pounds 30m on a major re-organisation.
County education officer Eric Wood said: "We have a long list of outstanding capital requirements which at the moment we simply cannot meet.
"What we are doing here is something that local education authorities are increasingly going to have to do - look creatively at our capital programme. "
David Whitbread, head of education at the LGA, said he could not recall a similar case since re-organisation in the 1960s and 1970s, when some church schools moved into LEA buildings. Even then they usually had to sell their own land to finance it.
The Warwickshire deal was similar in some respects to private finance initiatives, which usually involved building new schools.
"You could do that sort of deal with an existing school, and sell it to an outside body, which becomes responsible for maintaining it. The issue is whether you are getting value for money," he said. "I think some local authorities are looking at that option now, but the difficulty is putting the package together."
Although most Church of England dioceses are unlikely to have the capital to follow the Bedworth trust's lead, there could be scope for similar deals by other faiths, such as the Jewish or Islamic communities.
Both Warwickshire and the trust have approved the sale in principle. Consultations are under way, and they hope the transfer, which must be approved by the Education Secretary, will take place on January 1, 1998.
Nicholas Chamberlaine School needs Pounds 1m in repairs, mainly to leaking flat roofs and rotten window frames.
Parents are being reassured that the school will not become exclusive or selective, and staff have been told their terms and conditions will remain unchanged. That has calmed teachers' concerns although county National Union of Teachers secretary Bob Crowther said some were worried about a single church school serving Bedworth's multicultural community.
Trust, county and school already have close informal links; county councillor Harold de'Ath is chairman both of the foundation and of the school governors.
He said: "The foundation wants to expand but doesn't want to take in any other primary schools or there will be no choice for parents. Bedworth has a long tradition of church schooling and our five primaries are very popular. Now we will be providing church education at secondary level for those that want it."
The sale would also allow Nicholas Chamberlaine to create a separate sixth-form block.
Headteacher Kevin Scott said: "Nobody really opposes it because everybody benefits. It's one of those fortunate windows of opportunity where several things come together, and youngsters in this town will benefit enormously. "
The county is already talking to at least one private developer about designing, funding and building a number of nursery school extensions to existing county primaries in a programme to be phased over a period of three to four years. The county admits nursery provision has been "fairly patchy".
County councillors will be asked to approve both proposals in June.