Wandsworth schools are sitting on £9m of unspent cash, new figures show.
This week the Government withdrew plans to charge a levy to those that underspent, but urged schools to reduce their surpluses.
Wandsworth headteachers said it was normal for schools to save money over time to spend on expensive refurbishments and facilities such as new computers.
Government figures showed Wandsworth primary schools left £4m of their allocated budgets in the bank last year, while secondary schools left £3m.
A third of the borough's schools had an "excessive" surplus, defined as a secondary school that failed to spend more than five per cent of its budget or a primary school that failed to spend eight per cent of its budget.
Last year Southfields Community College in Merton Road left £1m in the bank, 13 per cent of its budget. The primary school with the biggest surplus was St George's School, Battersea, which had £187,000 left over last year, 17 per cent of its budget.
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