Cambridgeshire’s overspending on high needs education has increased more than fivefold in three years according to the county council.
The situation means some of Cambridgeshire's schools face making cuts and potentially even redundancies as the county council looks to transfer funds between budgets to meet the shortfall.
The high needs budget supports children with special education needs and disabilities.
Funding for schools is set to increase nationally, including in Cambridgeshire, but a council report on the high needs education budget says funding is not keeping pace with the rising pressures.
The county council is expecting Cambridgeshire's 2020/21 high needs funding from Government to increase by about 8.4 per cent compared to this year, but a council report to the schools forum on November 8 said it "simply isn't enough" and is not matching the growth in demand or "higher expectations".
The council said the anticipated increase in funding is around £2m less than it was expecting "and will result in the need to make further significant savings on these budget areas".
The council is proposing moving £6.5m or 1.8 per cent of the "schools block" grant - the money that makes up individual school budgets - to a separate budget for high needs education.
The council says 70 per cent of the high needs block is spent in Cambridgeshire schools.
The council issued a consultation on the proposals to Cambridgeshire's schools earlier this month and is seeking an endorsement from the school's forum, but the decision will ultimately be taken by councillors on the county's children and young people committee.
At the most recent meeting of the schools forum on November 8, Dr Kim Taylor, head teacher at Spring Common Academy in Huntingdon, said: "The high needs block needs to be the main focus. We do know if we don't invest in our children at a younger age then it's going to cost you even more as adult services and the life-long cost and the life-long impact on that person is considerable.
"At the end of the day, we have in the UK a culture that children are all entitled to an education and we are getting to a point where we haven't got the money to deliver it, and I think that's why we need to be very open with our colleagues about that."
She said the county's special schools are "very cost-effective" and "give very good outcomes".
Despite a broad recognition across the schools forum for the need to address the high needs funding shortage, teachers warned of the impacts elsewhere in the system.
Head teacher of Cambridge's St Matthew's Primary School, Tony Davies, said a transfer of 1.8 per cent could see some schools facing redundancies.
He said: "The real thing is, however we decide in the end to move forward, there are going to be cuts, because really it is all one budget. It's really saying 'there is going to be a deficit, whose budget is it going to sit in?' If the money is not transferred then some of the services that the schools get from the high needs fund will be cut, and we'll have to find another way of paying for them - so the money will come out of the schools budget anyway.
"The upshot is there isn't enough money there, so I don't see how we come out of this without services to our most vulnerable children being cut to some extent."
If the council does go ahead, that transfer of funds will only help meet existing and forecast cost pressures, and will still leave a £16.2m cumulative deficit on the dedicated schools grant, which the consultation says will need to be repaid with further savings.
According to the council, as of April this year, Cambridgeshire has the fourth-highest designated school grant deficit in the country, and it forecasts it will rise to third in March 2020.
The council report says "there is no funding to meet the increasing number and complexity of high needs pupils. To the contrary significant savings need to be delivered".
The high needs budget has moved from an overspend of £1.3m in 2015/16 to £8.8m just three years later.
The county overspent on its total dedicated schools grant last year and had to submit deficit recovery plans to the Department for Education.
A consultation for the affected schools is set to run until December 2019.