NSW public schools would receive 95 per cent of their needs-based funding two years earlier than planned under a $400 million Labor election pledge.
The opposition says the funding injection and a promise to eventually hit 100 per cent of the resourcing standard will end historic underfunding of public schools, improve student outcomes and end chronic teacher shortages.
Labor says the fund will also create a permanent literacy and numeracy tutoring program for children who need the most help.
"Everywhere I go I hear of children falling behind at school, due to cancelled classes and falling outcomes," Opposition Leader Chris Minns said on Monday.
"This government has had 12 years to turn education around in this state and they've failed."
Under the schooling resource standard (SRS) model developed in the 2011 Gonski review, schools receive base funding plus loadings based on factors including students' socioeconomic statuses, backgrounds and disabilities.
The federal government provides 20 per cent of the resource funding for public schools while the remainder comes from the states.
A McKell Institute analysis in December showed under the bilateral arrangement, NSW public school students receive about 92 per cent of the standard - slightly higher than the 90 per cent national average.
Labor said it would hit 95 per cent by 2025, two years earlier than planned.
It would close the gap completely during the life of the next bilateral agreement, either with its own funding or by negotiating with the federal government to increase its share.
That state-federal agreement, under negotiation, is expected to run until 2029 or 2030.
Victoria has also been pushing the federal government to boost its share.
NSW Teachers Federation president Angelo Gavrielatos said the resourcing agreement struck by the state coalition and federal Morrison governments left public schools underfunded while private schools were over-resourced.
"Labor's announcement shows they are prepared to end this injustice and ensure that every public school across NSW is fully funded," he said.
"If Labor wins the election in March, we want to see an agreement struck with the Albanese government on full funding of public schools as soon as possible."
Labor's tutoring program would be a permanent solution to the current NSW government's COVID Intensive Learning Support Program.
It would operate in both primary and high schools and focus on the 2023 year 10 cohort that, Labor said, "recorded some of the worst NAPLAN outcomes in the state's history".
The program would help 18,000 students by the end of the year, the party said.
The Productivity Commission in December highlighted the benefits of small-group tutoring with a review of research papers suggesting that it sped reading outcomes by up to four months and mathematics outcomes by up to three months.
The NSW coalition government says it will deliver a record $1.41 billion in needs-based funding in 2023 as part of the $10.93 billion spent on public schools over the year.
