Building work at Canon Lee School will cost £400,000 more than expected.
And the overspend, which would be funded largely by York taxpayers, could be as high as £700,000 by the time the project is completed - and leave the school with a sports hall with less facilities than expected.
City of York Council leader Rod Hills today demanded to know why the overspend had been allowed to happen.
And he will urge the authority's head of financial services Simon Wiles to look at ways to ensure it can't happen again.
He said: "I want to make certain that we find out why this has happened, and put in place mechanisms so that it will never occur again."
The project at the school, in Rawcliffe, is to build a new classroom and extend and refurbish the existing school.
An urgent meeting of councillors was called today to ask for the extra cash so the final stage of the project, the sports hall, can be started.
Already, original plans for the hall have been changed to slash the price from £998,000 to £670,000.
It means it will have to be built without features including a kitchen and caf, a first floor viewing gallery and fitness suite and aerobics room. The reception floor area will be reduced.
Beverley Scanlon, the council's head of planning and policy, said: "The contractors, Weavers Construction, have confirmed that they are able to deliver a functional sports hall for £670,000.
"This is on the absolute understanding that there are no further additions or delays imposed by the client to the building of the sports hall."
But nothing can continue unless councillors agree to release the extra money, which they were considering today.
Mrs Scanlon estimated that £140,000 could be found from existing education budgets. The remaining £270,000 would have to be taken from council reserves.
adam.nichols@ycp.co.uk
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