The council turned down the Grants for Education Support and Training cash after ministers made clear it would still have to find Pounds 145,000 - 40 per cent of the cost of sufficient cover for teachers supervising the key stage 1 tests.
Around 80 per cent of the county's 350 schools are believed to have scrapped the tests. A council spokesman said: "We must now decide what to do about applying for GEST funds for next year. It is not a legal requirement for us to apply for GEST."
By law, all schools must submit the results of the tests to the Department for Education and Employment. However the DFEE has not taken any action against Nottinghamshire, saying it has received no complaints from parents.
A spokesman said: "We feel if pupils do not do the tests they will suffer because the valuable information they provide will not be available. We could write to the authority and inform them it is a statutory duty but it would not be a warning in any sense. We do not want to be heavy-handed over this. "