An extra £2 million could be added to the new Dorset Council's projected budget shortfall.

The additional funding is needed to help make up for higher than expected spending for children with additional needs.

There is also a warning that the shadow council may not be able to set a balanced budget in February.

The Government has been asked to agree a transfer between funding allocations within the ring-fenced schools budget to overcome the problem, but has yet to announce a decision.

In a warning to the shadow executive next week programme director Keith Cheesman says that unless the Secretary of State agrees to the request, or additional government funding is made available, the money may have to be added to the existing projected budget deficit, bringing it to £15.5million. Many other local authorities with education responsibilities are also facing similar issues, with the Local Government Association recently highlighting a £536m shortfall nationwide.

His report also warns that there is currently a high risk of the new council not being able to set a balanced budget by the time it comes into being in April next year.

Mr Cheesman's report to the Dorchester meeting says that the ongoing dispute between the shadow Dorset Council and the shadow Bournemouth Christchurch and Poole council over the transfer of debts and reserves has also yet to be resolved. And he says there is now also a question of some additional cost pressures which have built up in recent weeks.

“There remains a risk that at this moment in time there is no clear way to set a balanced budget,” he says. That process would normally take place in February. Finance officers and the programme team continue to work closely to address the challenge in the specific areas such as stranded costs, and evaluating transitional staffing structures which will help to significantly reduce the deficit.

He says that while most of the transitional costs have been as expected, there have been higher than anticipated costs in having to take on interim staff to carry out some projects involving changing to the new council – which will need additional funding.

“After several years of reducing the overall employee levels in the sovereign organisations, the availability of internal employee resource to fulfil the planning, design, development and management of the various projects and workstreams is very limited and so resource has been bought in. Wherever possible, this was done through fixed term employee contracts, but for expediency and to gain the right skills mix, interims have also been brought in. There is significant value in utilising interim and consultancy resource in terms of the additional experience and expertise but there is a premium paid for these resources.”