Councillors will vote next week on whether or not to proceed with the project to replace Perth High School.
The cost of the project has now soared to £80.2 million and could rise further.
On Wednesday, December 21 Perth and Kinross councillors will be asked to decide whether or not to press pause on the project due to the council's current financial pressures.
An update on Perth and Kinross Council's revenue and capital budgets - also going before councillors on Wednesday - reveals PKC faces a funding gap of over £28 million over the next three years.
The shocking budget update report reveals PKC will need to reduce its workforce by a "significant number" and "the impact will be felt across the whole council".
Bearing all that in mind, councillors will have to think carefully about whether or not to delay rebuilding Perth and Kinross' biggest school. Councillors have been told the cost of PKC's overall capital programme has "risen considerably" and "it is now unaffordable to deliver all the approved capital projects within the existing funding available".
Perth High School has a roll of around 1600 pupils and employs 139 members of staff.
The current Perth High School building - which is over 50 years old and beyond its design life - has been rated "C" or "poor" for suitability. Surveys undertaken by external agents seven years ago - in 2015 - concluded the current building could last 10 to 20 years.
A recent survey of staff and pupils showed 96 per cent of staff and 65 per cent of pupils thought the building was "not fit for purpose" or "needs to be improved greatly".
The report going before councillors states: "...the estimated annual spend required to maintain Perth High School in a satisfactory condition is estimated to be in the region of £800k - £1m."
PKC has spent £3.2 million maintaining the building over the past three years.
Over the last five years the school has made 284 calls to PKC's property helpdesk to report breakdowns and repair works. The maintenance needed has been a mixture of building, electrical and mechanical repairs of varying levels of priority.
In 2018 councillors budgeted £50 million for a replacement school but the costs have since escalated.
Planning permission for the replacement building was unanimously approved by councillors in March 2022 and at that point the estimated cost of the project was £68.7 million.
It has now risen to £80.2 million. Due to the Passivhaus design of the new building half of the cost would be secured from the Scottish Government through its Learning Estate Investment Programme.
Council officers warn there is a risk costs could escalate further "given the volatility of the market, high rate of inflation, increased cost of borrowing" but add: "This risk is minimised on reaching financial close, currently programmed for February 2023."
Officers have recommended councillors approve an £11.5 million increase to the project budget and proceed with replacing Perth High School.
Councillors will be asked to decide when they meet for the last time this year on December 21.
