The extra 0.3 per cent leaves them some pound;110 million out of pocket, they say. The Local Government Association claims the money can only be found from cash set aside for projects such as numeracy and literacy - or by raising council tax.
Graham Lane, education chair of LGA, predicted the deficit would mean massive problems for the authorities which are having to match money from the Government's Standards Fund - now standing at around pound;1.6 billion.
"If Chancellor Gordon Brown had any sense he would find this extra money - pound;110m might sound small but it could cause real problems," he said.
However, the Government has claimed the 3.3 per cent rise is not only good for teachers but affordable.
Education Secretary David Blunkett said it would cost the 172 councils in Englnd and Wales an extra pound;420m. Money for the threshold payments will be paid by special grant from central government and administered by councils.
He said that in England, education spending would rise in 2000-02 by pound;1.1 billion (5.4 per cent) compared with 1999-00. He insisted that the rise "will be affordable within the resources available to local authorities".
The Standards Fund has become a central feature of education funding accounting for at least 38 types of grant. These cover cash for school improvement, early-years training, drugs education, work with gifted children and teaching assistants.
There are also grants to cover peformance-management and threshold-assessment training.
Seventeen years ago grants for education support and training stood at just pound;4m. Labour has increased the amount in the pot but councils have to raise matching funding if they want to access most of it.