Education is one of the better services in Argyll and Bute, but school buildings in the authority are in a poor state and many are under-occupied, an Audit Scotland analysis concludes.
Secondary schools perform above the national average, although some subjects in some schools do not fare well.
A report on education in the authority from the inspectorate and the Accounts Commission in June last year gave it a positive rating and that is confirmed by the latest inquiry.
But Audit Scotland targets a need for more school closures. Around 64 per cent of the council's primaries are significantly under-occupied and need substantial investment in terms of repairs and upgrading.
In 2003-04, high running costs contributed to an average spend per pupil of pound;4,211, compared with the Scottish average of pound;3,537.
The spending watchdog says the council has used an innovative private sector approach to invest in buildings. Any profits will be used to enhance education. Some 60 per cent of secondary schools will be upgraded or replaced and 16 per cent of primaries. This will lead to improved facilities for two-thirds of secondary and one-third of primary pupils.
Audit Scotland warns that the council faces tough decisions on closures in isolated communities.