Teachers and support staff at Lancaster Royal Grammar School have been asked to attend a meeting on Monday amid fears of redundancies.
An email sent to all staff at the school last week blamed “financial pressures including reductions in government funding next year” for the decision to make savings.
The email, from head Dr Chris Pyle, said: “The school needs to look at ways of significantly reducing expenditure for 2015/16 onwards including reduction in staff costs and numbers.”
Staff will initially be offered voluntary redundancy in a bid to avoid the need for any compulsory losses.
One longstanding teacher at the school, who did not wish to be named, said: “Morale is at an all-time low among staff.”
However, Dr Pyle said external auditors Baker Tilly recently gave the school a clean bill of health.
And he denied a claim that the school had been put into voluntary special measures on financial grounds.
He said: “We have just had the auditors in and they are very happy. They specifically commented that we are a going concern.
“We think what we provide for our pupils is exceptional.
“However, there are financial pressures on schools and cuts in sixth form funding and that’s not unique to this school. It’s a sector wide concern.
“The next few years are going to be about prudent financial management.
“It’s about working smarter and doing things differently.
“There’s a real challenge that all schools like ours are facing but our job is to carry on doing the job we have been doing, and I am 100 per cent confident that we will carry on doing that.”