A council's children's services department has overspent its budget by more than £5m.
Middlesbrough Council has made some savings to offset that, but still faces a £4.4m projected overspend by the end of the financial year.
It posed a "significant risk" to its finances unless dealt with quickly, a report to the authority warned.
A council spokesman said "additional measures and mitigations against the overspend" had been agreed.
The children's social care budget had been set at £34m for 2019-20 - about one third of the council's total £111.9m budget - but the expected expenditure has increased to £39.1m.
The largest bill - £18m - was for residential homes and fostering arrangements, the Local Democracy Reporting Service said.
Of this, £8m was spent on external residential places.
A report to the council's executive said: "The projected overspend of £4,406,000 could be covered by council reserves in 2019-20, however continued overspends of this scale would represent a significant risk to the council's financial position in the medium-term, and strong action is required to address this issue."
It said measures put in place to deal with budget problems identified at the beginning of the financial year had not had the expected effect.
The authority now plans to review external placements and redeploy services to support children with the highest level of need.
It is also seeking advice in cost saving from North Yorkshire County Council, which was rated outstanding by Ofsted.