Local authorities suspected of disguising school budget cuts behind a 1 per cent efficiency saving face a probe by a spending watchdog, it has emerged.
Schools have complained that most councils are passing all or part of the efficiency saving directly on to them - instead of making savings in so-called back-office and central services such as payroll and administration.
The Assembly government has imposed the efficiency drive, and expects authorities to contribute to savings totalling pound;600 million across all public bodies by 2010.
But Jane Davidson, education, lifelong learning and skills minister, has said the savings should come from better management.
She added: "Concerns that local authorities are making budget cuts taken as efficiency savings will be investigated by the Wales Audit Office."
Heads hope the move will "name and shame" councils into stopping the practice. "An impartial body like the Wales Audit Office coming in to give an overview is welcome," said Phil Whitcombe, head of Bryn Hafren comprehensive, in Barry.
The move comes as cash-strapped primary schools in the Vale of Glamorgan say they have been "forced" to sign terms and conditions before accepting a one-off local efficiency grant of pound;5,000.
A letter sent by Martin Donovan, the Vale's head of strategic planning and performance, warns: "A failure by schools to work positively with the council's efficiency group may result in the local grant being withdrawn on an individual school basis at the discretion of the LEA."
But one head, who did not want to be named, said: "We all feel resentful that we are struggling to fund the basics, such as books, and we have been forced into signing these conditions under what appears to be cutbacks."