A quarter of secondary schools have recorded a deficit in the past three years, and are relying increasingly on overseas-student fees and other business ventures to make ends meet.
Two-thirds of 322 state and state-integrated secondary schools surveyed in July and August reported having a worse financial year in 2012 than 2011 - and that's before the extra costs of the Novopay fiasco are accounted for, a Council for Educational Research report says.
Chief researcher Cathy Wylie said the three-yearly survey showed government funding remained a key issue for schools, and principal and teacher morale had slipped since 2009.
There had been some positive changes since the curriculum became mandatory in 2010, and most secondary schoolteachers enjoyed their jobs, but 37 per cent said their high workload meant they could not do justice to all their pupils.
Competition among schools for pupils was now more the norm than exception, with only half of principals reporting sharing of resources, professional development and information about individual pupils with other schools.
"To encourage enrolments, some schools are spending more on marketing and property than they would like."
Secondary Principals' Association president Patrick Walsh agreed with the findings. "Even very well run schools with experienced principals are finding it increasingly difficult to make ends meet."
It was a tighter economy, fewer parents were able to give donations, fewer community funds were available, and international pupil numbers were dwindling. Schools were forced to bridge a funding gap through other means, he said.
"Our surveys indicate that, on average, operations grants only cover 75 per cent of the actual costs. I think the morale in the secondary school sector has been the worst I have seen it."
A lot of that was to do with a "strained" relationship with the Ministry of Education after controversy over class sizes, Novopay, Christchurch school closures and the resignation of the education secretary, he said.
Wellington High School principal Nigel Hanton said the school worked hard to keep incoming funding matching outgoing expenses.
However, it relied on its adult education courses, foreign students and other business activities to keep afloat.
Of the 1477 parents surveyed, all but 9 per cent were happy with the choice of schools they had available to them, and were largely more positive about their child's experience at secondary schools than in 2009.
- The Dominion Post