A school near Reading was left devastated after teachers were notified that West Berkshire Council would be taking thousands of pounds from them.
This is due to a new proposal by the council regarding schools with 'excessive funds,' where extra funding will be returned to the local area to improve services for children and young people.
However, school business manager at The Downs School in Newbury Rebecca Brophy, 39, said that they had vital plans for this funding that was obtained largely through fundraising and parent's donations.
"We are not apposed to the claw back but we only just found out that it would take place within this year very recently, before we had any time to set our plans in motion" she said.
"We were plodding on through the financial year and then we're told we're getting a claw back of £490,000. It has been so stressful for all of us here."
The school had planned to use part of the money to expand their sixth form centre which will see over four hundred students attending in September.
The building is currently too small to accommodate the new intake of students, so the school had engaged with an architect to see if they could go up on a second floor.
In an email sent out to parents a spokesperson for the school also revealed that without the funding they will no longer be able to improve toilet facilities or make necessary adjustments to sports facilities.
"This has all taken a huge amount of time," Ms Brophy continued. "These big ticket items take so much time and effort and we already had the ball rolling.
"It's not a case of us sitting here on lots of money not doing anything with it, we want to invest it in the pupils."
Over the last four years The Downs School set up its own trust to help raise vital funds that would go towards improving the school.
Organisers would set up in their own time things like school fetes, bake sales, and colour runs all with the aim to gather more funding.
All the money then goes into the trust and the parents are notified via email of all the school's plans of how they will be spending the raised cash.
Ms Brophy continued "We kept some money aside for these bigger projects. We fundraised this money and also have three years worth of lettings which have generated further funds."
A spokesperson for the council clarified that schools in West Berkshire recently voted overwhelmingly in favour of this proposal which would see excess funds currently held by schools redistributed to support local children.
They continued "It is not the intention of West Berkshire Council or the Schools Forum to take income which has been raised by or on behalf of the school and which should be kept in a separate account to the grant funding.
"Schools will have the opportunity to provide financial information to show the source of accrued funds and which will be considered by the Council before any funding is returned for redistribution."
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