REDUNDANCY notices are being sent out this month to 120 of 340 staff at the doomed Funding Agency for Schools.
The quango, set up to administer the Conservatives' grant-maintained schools policy, officially ceases to function on April 1.
Around 25 key staff have been offered incentives worth thousands of pounds to stay until the end. Most incentives involve increasing redundancy entitlements from three to six months of annual pay - working out in some cases to around Pounds 8,000 extra.
The staff and board members, responsible for overseeing the transition of GM schools to the new "foundation" status and to light-touch education authority control, will close up the FAS's York headquarters for the final time next October.
Staff at FAS have been told by the DFEE that they will be shown no favouritism in recruitment to the Local Authority Support Group to be based in Darlington, for which vacancies will be advertised in the press.
But the DFEE told them that 20 FAS staff will be transferred to a new DFEE capital funding team - also to be based in Darlington - from the current FAS capital funding team.
Chief executive Michael Collier, 55, is one of those with no job to go to. But he is upbeat about the way the agency has continued to provide services to GM schools during its "orderly" closingdown.
He said: "Morale is not excellent, but is surprisingly better than you might imagine.
"Where we have drawn quite a lot of satisfaction is that quite a number of our ideas and developments have taken root and will be perpetuated into the new framework."
The agency is anxious that GM experience - particularly in self-management and financial regulation - is not lost to the rest of the state sector, as local authority schools prepare for the greater delegation envisaged in the Government's Fair Funding proposals.
The FAS has a financial management database that includes 1,200 GM schools, and a standards and performance database covering all schools, which it hopes will be used by the Government and education authorities.
Mr Collier remains convinced that maximising schools' autonomy - within an effective but not overly bureaucratic regulatory framework - increases the benefits to pupils.
He said: "The grant-maintained thing was not an isolated aberration. I could see the same principles being thought of in health and elsewhere in the public sector. It's to do with more directly meeting what people want, what parents want from schools and patients want in respect of hospitals.
"It doesn't always work but that's what it's about - making those provider organisations more accountable to the people they serve."