Australia's largest public-school system has received "record funding" but will push for more money after principals were told hundreds of millions worth of accumulated funds could no longer be spent.
NSW Education Minister Prue Car told a budget estimates hearing on Tuesday decisions were made to ensure money went towards teaching and learning, rather than sitting unspent, accumulating for bigger projects.
"All that accumulated bank balance is actually the tally of lost learning," she said.
An education department briefing to secretary Murat Dizdar in January, seen by AAP, said the accumulated consolidated funds balance from past unspent funding would reach $394.6 million and be available for schools to spend until the end of 2025.
However, the funds were frozen in 2024.
School Infrastructure NSW acting deputy secretary Lisa Harrington clarified projects were being honoured where the funds had been transferred by the end of 2023.
There were about 2000 projects, some of them up to five years old, she told Tuesday's estimates hearing.
Principals accumulated funds because they could not find teachers to spend them on during a staffing shortage and enrolments were also falling, Ms Car said.
"Unfortunately that plays into how much money we can allocate to public schools," she said.
Teacher vacancies had fallen below 1700, with 24 per cent fewer vacancies compared to term three 2023, the education minister announced on Tuesday.
Paying teachers more while easing their administrative workload and improving their job security and conditions was convincing people to stay in the profession, with resignations and retirements also dropping, Ms Car said.
The "record funding" Ms Car said has been given to public schools was being spent differently than under the previous coalition government, which had also acknowledged the funding model was not working, she said.
Principals had reported being "caught short" by the freezing of funds and resorting to fundraising from parents, committee chair Abigail Boyd said.
Ms Car said contracts for projects already signed would be honoured and the decision to centralise decision-making would allow principals to focus on leading their schools.
"We should have a system that supports principals centrally to be able to do that, instead of making them scrounge around for money," she said.
Under the Local Schools, Local Decisions program introduced in 2012, principals were given more authority to make decisions relating to their schools.
The former coalition government announced the program would be "fine tuned" in 2020.
An evaluation later that year found the program had not delivered an improvement to student outcomes and there was limited information about how the funds were spent.
The freeze on accumulated funds came after wage rises for teachers, as several states remain locked in a stoush with the commonwealth over school funding.
Ms Car did not want to prejudice negotiations but told the committee negotiations were continuing and NSW would not sign up to a deal that short-changed public school students.
