And a second ''last-chance'' education program, run by the welfare group the Exodus Foundation, will close at the end of the year due to a lack of funds.

The closure of the Exodus program and the threat to Margaret Jurd College places pressure on the few remaining schools that cater for vulnerable children who don't fit in with the mainstream education system.

Margaret Jurd College, in Newcastle, faces losing up to $276,000 in funding from Family and Community Services.

The principal, Melise Sutton, said the 26-year-old facility helped 24 year 9 and year 10 students.

''The young people we cater to are the most damaged in the community,'' she said. ''They just don't fit the mainstream system. If we're gone there is nowhere else for them.''

With 95 per cent of students completing the program going on to work, cutting funding to the school would be a false economy, she said.

''For 24 students to end up on Newstart for 12 months is $331,000,'' she said. ''It's over $150,000 to keep one person in juvenile detention for a year.''

A spokesman for the Community Services Minister, Pru Goward, said no decision had been made on funding for the school.

The Exodus Youth program, which has sites in Ashfield and Redfern, helps students gain a year 10 equivalent. The program is not affected by the state government cuts, but The Sun-Herald understands that after faltering support from private donors the foundation has a debt of about $1.5 million.

The foundation's Reverend Bill Crews confirmed the closure, as Exodus had decided to focus on helping homeless people.

But another Exodus program called Multilit, which provides literacy support for indigenous children in conjunction with Macquarie University, will receive financial support from a tour next month by the former world heavy weight boxing champion Mike Tyson.

''The money we raise will enable the young kids to continue learning to read and write,'' Mr Crews said.

Other schools for at-risk children are looking to grow.

Sylvestro Lavite, a teacher at East Sydney High School, which caters for about 60 troubled students up to year 10, said there was strong demand for the program. He hoped the program could expand to cater for year 11 and 12 students.

Tears of frustration into tears of pride

TWELVE months ago Gail Watson was at the end of her tether. Her teenage daughter Ranee Watson-Bennett had been suspended from school three times and it looked as if she would drop out of education entirely.

A year later, the 15-year-old is on the verge of completing year 10 at the college and is planning to start year 11 at a mainstream school next year.

''I was in tears of frustration before and now I'm in tears of pride because of how far she has come,'' Ms Watson said. ''That school has turned her life around.''

For Ranee, the change in her life has been priceless. As well as continuing her education, she is also planning to undertake a traineeship in aged care.

''If I hadn't been able to come to Margaret Jurd I would have failed year 10 or I would not be at school,'' she said. ''The school has been great. I've matured heaps. I've grown up and realised what's right and wrong.''

with Natalie O'Brien