Ministers have been accused of abandoning a pledge to make all school buildings fit for purpose by 2010, with a new report suggesting a pound;749 million shortfall in the cash needed to repair crumbling classrooms.
But headteachers have welcomed concessions on school funding which they say will help them hold local authorities to account if they divert education cash to other services.
TES Cymru reported last week (July 7) how 12 of Wales's 22 LEAs plan to spend less on education this year than the Assembly government has given them, although overall councils plan to spend pound;7.8m more than the government's "indicator-based assessments" (IBAs).
In the past, ministers have said IBAs should not be used as targets. But in a statement this week, Jane Davidson, minister for education, lifelong learning and skills, said IBAs should be used as "the local target for education spend" in 2007-8.
"Each authority will be asked to report on the reasons why it may have chosen to set a budget for education which differs from its education IBA, and to make that report available for consideration by its schools budget forum, its full council and by the Assembly government," she said.
"This will help to assure the public that local budgets are decided on the basis of a thorough analysis of circumstances, and will aid both transparency of funding and local accountability."
She also said schools could expect three-year budgets by 2008.
Ms Davidson was making her first response to a report on school funding produced by the Assembly's school funding committee, with a more detailed announcement due in September.
The committee also recommended moving away from funding based on historical spending levels to actual needs, establishing a minimum per-pupil funding level, and reviewing the use of free school meals as a measure of deprivation.
Brian Rowlands, secretary of the Association of School and College Leaders Cymru, said: "There is no excuse for local authorities not to spend at least to their allocated amount from the Assembly government for education.
"We are pleased the minister is happy that this should be the target and that authorities should make a full report if they are unable to do so."
He added: "The move away from historic funding to identification of actual need, added to three-year budgets from 2008, will help greatly the planning process for heads and governors. A minimum level of funding is essential."
Meanwhile, the Lib Dems have accused the Labour government of abandoning a 2003 pledge to make all school buildings fit for purpose by the end of the decade.
Lib Dem education spokesman Peter Black said finance minister Sue Essex now claimed this was an "aspiration".
"Trying to downgrade that commitment to an aspiration will not fool anybody, nor will it help teachers, children and parents whose schools contain damp and draughty classrooms, unsafe playgrounds, outside toilets, dry rot and falling masonry."
Ms Davidson conceded last week that bringing schools up to scratch would "go beyond 2010". She put a pound;620.6m tag on the repairs backlog bill.
However, a report commissioned by the Welsh Local Government Association puts the funding gap at pound;749m. Not a single LEA will reach the "fit for purpose" target by 2010 because of funding and a lack of capacity to deliver the works programmes, it says.