Local education authorities claimed they had to have an extra Pounds 630 million next year - and a further Pounds 460m to cover inflation.
They called on the Government to fully fund next year's public-sector wage rise - at a cost of Pounds 100m for every 1 per cent recommended by the School Teachers' Pay Review Body.
Gillian Shephard, the Education and Employment Secretary, was urged in a report from the LEA associations to come up with Pounds 190m to cover increased pupil numbers, and another Pounds 174m to stop class sizes rising even further.
And the local authority associations said they needed Pounds 131m to spend on children with special educational needs.
Mrs Shephard's new super-department gives her greater Cabinet influence and spending power. Shire councils and metropolitan authorities have united to call for pupil:teacher ratios to be brought down to 18:1, as they were two years ago - this would cost Pounds 173m.
Peter Martin, Kent's treasurer and expenditure negotiator for education for the local authority associations, said: "Education is under pressure from rising demands and expectations. It has been persistently underfunded by Government in recent years, with consequences on the ability to deliver. "
The gap between the amount local authorities say they need to spend and what the Government will allow now exceeds Pounds 1.5bn.
This year, councils cut Pounds 324m from budgets and the Audit Commission, the Government's spending watchdog, which previously said Pounds 500m could be slashed, now believes that savings of only Pounds 96m are possible next year.
Education, which takes up the lion's share of local authority spending, has borne the brunt of the cuts in local authority budgets. It lost more than the combined total for social services and highways .
A survey of more than 3,500 schools by the National Governors Council and CIPFA (Institute of Public Finance) revealed a reduction of 2.2 per cent on the amount of money spent per pupil, despite an increase of nearly 2 per cent in the number of pupils. More than a third of primary children will be in classes of 30-plus from September.
The survey shows a boom in pupil numbers at opted-out schools - a 2.9 per cent increase in 12 months in nursery and primary schools, and a 3.1 per cent rise in secondaries. This compared to increases of 2 cent and 1.5 per cent respectively in local authority schools.
It also revealed that by 1996 when local authority schools will have had to cut the number of full-time teachers in nursery and primaries by 0.7 per cent and by 0.9 per cent in secondaries, staff numbers will have increased in opted-out schools.
By next year, the number of teachers in grant-maintained nursery and primary schools will have risen by 5.6 per cent since 1994, and by 3.8 per cent in opted-out secondaries.
Cuts in the number of deputy heads hit both sectors hard and it is estimated that between January 1994 and January 1996, the number in secondary schools will have fallen by 11 per cent.
In the LEA sector there will be a cut of 10.9 per cent, and among the GM schools 8.6 per cent.The amount spent per pupil in LEA primary and nurseries this year was Pounds 1,424 compared to Pounds 1,556 in the grant-maintained sector, and in local authority secondaries Pounds 2,031 compared to Pounds 2,229 in opted-out schools.
In both sectors, however, the amount spent will be down on last year - by 0.6 per cent in LEA primary and nurseries and 0.5 per cent in the GM schools, and by 0.2 per cent in local authority secondaries and 1.1 per cent in opted- out schools.