As it stands, the Education Department covers the cost of liabilities as well as rates, but following a meeting with 32 farm principals in mid-May, they have been asked to consult with their school communities by the end of June to determine whether they want to cover these costs in the future.

The audit has been kept secret and hidden from the public after being taken to cabinet, meaning it is covered by a confidentiality agreement.

Some sources have said that the schools who choose to sell off property, animals and equipment would be able to keep 75 per cent of those funds.

That money would then have to be spent on school infrastructure projects. 

However, the department would not confirm this.

The 158-year-old Hagley school has operated with a farm since 1936, is one of the best known in the state and has been recognised nationally for the work it does not only with its own students, but with the thousands it has hosted since 1976.

The 64-hectare commercial operation includes cattle, sheep, small pine plantation, poppy crop, a museum, old school display and runs cottage industry classes for visiting students.

Those associated with the school would not comment yesterday.

Department deputy secretary Andrew Finch said they were not proposing to change funding arrangements.

He said the outcome of the audits were discussed at the recent meeting and take place on a rotational basis as part of normal business.

Mr Finch said it covered issues including financial and risk management of farms as well as improving learning opportunities.

``The aim of the exercise is to work towards best practice management arrangements around school farms,'' he said.

Mr Finch said the May meeting was the first step in a consultation phase with relevant schools and would continue through the rest of the year.

These comments echoed what Education Minister Nick McKim said to opposition education spokesman Michael Ferguson when questioned in estimates on Tuesday.

Mr McKim would not say why the audit was made confidential.

However, he said if a school wished to explore selling part of the land attached to their school and investing that money back into it, they would look at it.

Australian Education Union state president Terry Polglase said by taking away the option of an alternative type of education, you give less options to students who struggle in the regular classroom environment.

Tasmanian State School Parents and Friends president Jenny Eddington said the period of consultation with the school community was too short.