Councils in England, facing a funding shortfall of more than half a billion pounds for educating children with special needs, are planning spending cuts and service reviews, according to figures compiled by the Observer.

Campaigners fear children could lose some of their support as local authorities try to clear yawning historical deficits, with government rules stopping them using other reserves to help to fund the special educational needs and disabilities (Send) system.

Figures covering 131 of England’s 151 “upper tier” local authorities show the combined forecast “overspend” on high needs budgets comes to £503m for the 2020-21 financial year.

The figures were obtained from freedom of information requests and council documents, and show forecasts made late in the financial year.

Surrey council confirmed it overspent its high needs budget by £35m in 2020-21, and is forecasting a further overspend of £24m in 2021-22. Kent forecast an overspend of £35.8m in 2020-21, and 14 other councils forecast overspends of £10m to £18m.

Cambridgeshire has a forecast deficit of £13.7m in 2020-21. It is planning to reduce top-up funding for Send children in mainstream schools, as well as launching a variety of reviews covering individual support packages. A council spokesperson said: “In addition to the continuing rise in the number of education, health and care plans (EHCPs) being allocated to those in need, we are seeing an increase in the complexity of need among our children and young people. Our funding allocation is not sufficient to adequately match the increase in demand.”

Almost 20,000 children with special educational needs such as autism are attending school outside their council area because of shortfalls in local provision – with the number rising by nearly a fifth in two years, the Observer can reveal.

Figures obtained under the Freedom of Information Act show that some children are studying hundreds of miles from home as the special education needs and disability (Send) system struggles to cope with a funding crisis.

Parents of children with Send are preparing for a national day of action on May 30 in protest at the lack of funding, with more than 25 demonstrations across England and Wales and a rally in Westminster.

The Observer’s figures show that in 2018-19, 19,771 special needs children of compulsory school age attended school outside their local authority area. The true figure will be higher, as only 113 of England’s 151 councils provided data. Among the 100 councils that provided figures from 2016-17 to 2018-19, the number of out-of-area school placements rose by 18% from 15,503 to 18,229.