The 170 pupils at Connor Downs junior and infant, near Hayle, are being taught in six classes this year.
A drop of pound;12,000 in the school's budget means that it is having to supplement its salaries' bill from reserves. But next year, "unless something turns up", it may have to lose a key stage 1 teacher.
Allan Lawrence, headteacher of Connor Downs, said "We received funding for a class teacher which reduced our infant class size from 35 to 25."
Connor Downs now has 25 children in each of its three infant classes. The juniors are taught in three mixed-year classes with 35 children in each. If a key stage 2 teacher was made redundant, then these classes would rise to 45.
The law states that infants must not be taught in classes of more than 30 pupils. Between 1998 and 2003, the Government made pound;775 million available to implement this limit.
The ring-fenced class size grant stopped in April 2003 and class size funding is now given to local authorities to distribute.
Mrs Doris Ansari, Cornwall's executive member for lifelong learning, said the council had given as much money as it could to schools this year.