Budget to raid schools' bank interest

It is the first time the state government has implemented the measure, which came into effect this month.

It comes as the government cuts $45.9 million from education this financial year and a further $189.8 million over the next four years.

The total balance of all school bank accounts is about $40 million.

If those accounts were earning interest, it is looking at picking up well over $2 million based on interest rates.

But for individual schools it could be a good dent in the bank account.

Mountain Heights School at Queenstown is set to lose about $10,000, while Hagley Farm Primary School about $7000.

The interest is accrued on the school resource package each school receives from the state government.

This money is allocated to cover everything from the school's electricity bill, to relief teachers, teacher aides and educational programs.

Hagley Farm Primary School principal Peter Kearney said it may not have been a lot of money for a school but it, along with other funds it was able to save over the year and any interest it earned on that, acted as a back-up for the unexpected.

"Schools have been very good at putting money away, so when they need the money, they've got it," Mr Kearney said.

Mr Kearney said Hagley kept funds raised through school fund- raising in a separate account but he was unsure how other schools operated.

Education Department deputy secretary corporate services Andrew Finch said this was one of the tough decisions it had to make.

He said the interest gathered from the schools would be applied to budget management strategies.

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