The Grove Academy in Harrogate is a pupil referral unit (PRU) which takes students who cannot be educated in mainstream education for various reasons.
But this specialist school is facing an 83 per cent cut to its budget as a result of a £5.5 million black hole in North Yorkshire County Council's educational high needs budget.
The county council has just closed a consultation with one proposal which would see the majority of PRU budgets reallocated to mainstream schools in North Yorkshire.
NYCC says the number of permanent excluded students and referrals to PRUs is growing at an unprecedented rate in the county, and as such the multimillion deficit will continue to grow unless something is done.
Staff, parents and students are fighting to keep The Grove Academy open, pointing out that the solution to reducing exclusions is not as simple as taking away provision for those excluded students.
But NYCC say it is not the only authority experiencing unprecedented and increasing demand on their special educational needs and disability budget.
Council leaders across Yorkshire say the system is buckling and are calling on both the Chancellor and Secretary for Education to ensure that a full funding increase becomes a top priority for the next spending review to stem spiralling overspending.
Leader of North Yorkshire County Council, Carl Les, said: “Unless the Government agrees in the spending review to fund special educational needs provision fully, council overspending in this area will increase further and become totally unsustainable. The system will buckle.
“We are diverting money urgently needed for other vital services as well as seeking to move money from mainstream schools when they are already struggling with their budgets. This cannot go on.”
In the four previous years from 2014/15 through to 2017/18 councils spent nearly £86 million more than they received in funding, drew on their reserves by over £44 million and top sliced nearly £42m from schools budgets.
The authorities claim this crisis has developed because the Government introduced legislative reform in 2014 which supported children and young people with special educational needs and disabilities through new Education and Health Care Plans, increasing the age range and demands on budgets, without increasing the finance available.
Moreover the numbers of children and young people with Education and Health Care Plans continues to rise.
There has been a 46 per cent increase regionally in the number of such Plans since the reform was introduced in 2014 and the rate of increase shows no signs of slowing.