Hundreds of schools are operating in the red and extras like outdoor education programmes, new library books and computers could be axed.

The Ministry of Education's annual report on schools for last year shows about 15 per cent have three-year operating deficits.

Six per cent also have very low working capital ratios so they are unlikely to have enough cash to cover immediate bills.

"I'm not surprised. It is expensive to run a school and we don't get enough money for it," said Principals' Federation president Denise Torrey.


"So ... schools have to prioritise. And after that, they turn to the community to raise the money - which only works if your community is able to afford it."

Ms Torrey said of about 350 schools with three-year deficits, very few would be subject to mismanagement. Those in trouble were likely to be small schools or in less privileged areas.

New Zealand School Trustees Association head Lorraine Kerr said most of the time school administrators would know they were going into deficit, but would do so to avoid compromising curriculum delivery.

"There's always the plight around never enough," Ms Kerr said.

"Sometimes there will be programmes in the school and they don't want to drop them because they are raising achievement, so will work to a deficit."

She said, however, that meant starting the next year on the back foot - and if that happened too many times in a row it could be hard to get back on track.

"That's when you get the slash and burn and have to make huge cuts elsewhere - things like outdoor education programmes, those will go. You've seen it with swimming pools, those costs are considered too great," Ms Kerr said.

The Ministry of Education's head of sector enablement and support Katrina Casey said the 2014 figures in total had recorded a combined 1.1 per cent surplus. This was an improvement from 2013 when that was 0.8 per cent.


She said a deficit in itself did not mean a school was at financial risk or in debt, but could have a plan to provide additional resources or particular programmes to students over a particular time frame.

"If we see persistent problems with a school's finances then we will work with the board to help them manage them more effectively."