Health and safety regulations could threaten this year's Witney Carnival's procession.
Four schools have already pulled out of the event, while many others are struggling to meet strict health and safety regulations.
Helen Marshall, who is organising a procession for Our Lady of Lourdes Primary School, said it was impossible to get insurance for a float, so the school's children would be walking instead.
Meanwhile, Beaver group leader Lisa Kinahan, of Witney Buttercross Scout Group, said she was struggling to find insurance needed just for her group to walk the carnival.
The Rotary Club's organising committee has asked all participants to prove they have public liability insurance seven days before the carnival, on Saturday, July 12.
Mrs Marshall said: "It's quite sad really. We're trying to ring round to get insurance but school budgets should be spent on education - not one-off events like this.
"In the past seven years, they've never asked us to show public liability documents. The very essence of the carnival is the schools, playgroups, church groups and children joining in.
"It's very frustrating from our point of view. We're trying to support an event and the regulations get so tight, it isn't easy."
Mrs Kinahan said no haulage firms would agree to insurance demands for pupils to use their lorries as a float.
She added: "We quite simply cannot get the insurance. It's heartbreaking for the kids.
"I've been doing this for seven years and no-one has ever fallen off a float."
Sue Moore, owner of Farmhouse Nursery, said it was not taking part this year because of "organisational difficulties".
She added: "With insurance and getting a lorry, it would be a nightmare."
The Blake Primary School has won the award for best float in the past two years, but will not take part this year due to staffing issues.
Headteacher Marilyn Trigg said: "We've never had to get insurance in the past. It can cost quite a lot of money to put this all on."
West Witney Primary School and Tower Hill Primary School have also pulled out.
Mayor Alvin Adams said: "It's not a rock festival, it's just a street parade, with people having fun.
"I'm saddened this is stopping schools and community working together to enjoy themselves."
The carnival is run by the town's Rotary Club. A spokesman said: "We have not received any complaints from any group.
"The form sent out to all participants has no major changes - groups have always been asked to make sure they have full public liability insurance."
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