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The six-classroom, double-storey extension will cater for the growing school roll and the funding announced by Ms Kaye yesterday meant building could start soon, acting school board chairman Chris Clark said.
''We had a board meeting a couple of weeks ago and basically the funding figure that was originally approved for us [$1.25 million], it was obvious when tenders came in for the building there wasn't going to be sufficient funding, so we went back to the Ministry of Education,' he said.
The new amount approved by Ms Kaye meant work could start soon and was ''great news for the school and school community,'' he said.
''It's the first double-storey block at the school and it'll be the centrepiece and a fantastic environment for the children to learn in.''
The existing school building was opened in 1996 and there had been rapid growth in the school roll, particularly in the past 18 years.
''We'll be pushing [a roll of ] 500 by the end of this year and we expect to pretty much fill up all the new classrooms by the end of next year.
''The buildings should be ready to use by the start of the first term next year, Mr Clark said. Ms Kaye said the Queenstown Lakes district had experienced a population increase of more than 22.9% since the 2006 census and local schools had experienced steady growth during the past decade.
The new Arrowtown classrooms were part of an expansion of school facilities to accommodate that growth, along with three new teaching spaces recently added to Remarkables Primary School and construction beginning on a new school near Queenstown, which would open for the 2015 school year, she said.
Planning was also under way for Wakatipu High School to be relocated by 2018, to cater for expansion.