Cash-strapped state schools are hiring out their teachers to private schools to raise desperately-needed funds.

Schools are finding increasingly creative ways of making extra money, with new figures revealing almost one in four state schools are in deficit.

The Education Department has devised a new test to see if teachers and principals are ethical Credit:Sean Locke

Philip Rainford – the director of the Harlequin Group of Companies which helps 100 Victorian state schools manage their budgets – said schools were leasing out under-utilised teachers to make ends meet.

"If the teacher has got down time, rather than sitting them down doing nothing, the school arranges for them to work at another school. The school gets paid in exchange."