Education minister Leighton Andrews has attacked the schools sector for not being "radical" enough in its proposals to direct more cash to the front line.
Mr Andrews said that the scale of his planned spending review goes well beyond any ideas put to him by local authorities, schools and education bodies that were invited to contribute ideas.
Their recommendations were the latest stage in a major overhaul of education funding designed to make savings and help close the growing gap between schools in England and Wales. In the first phase of the review, auditors PricewaterhouseCoopers revealed that almost a third of Wales' annual pound;4.5 billion education budget fails to reach the classroom.
But in a statement this week, Mr Andrews said he had only been impressed with the response to his "challenge" from further education colleges, some of which are in talks to merge.
"Many of the responses however do not go far enough," he said. "A more radical approach will be needed to deliver the scale of cost shift required to protect services and strategic priorities and to deliver the best possible outcomes for our learners.
"We need to work together in new ways to achieve this and we need to think in new terms: not about the interests of individual institutions but about the wider structure of service delivery for the people of Wales.
"Therefore, my challenge to the education sector remains. We need a more transformational and consistent approach to deliver the scale of change required and those organisations that are still hesitating must catch up with those that are already moving ahead at pace."
The Association of Teachers and Lecturers predicts that Mr Andrews will force Wales' 22 local authorities to merge their "back office" education functions such as human resources and payroll.
"We are a small country with a small population, and yet there's a ludicrous waste of education resources," said ATL Wales director Philip Dixon. "We've got 22 different areas all with different education staff and different policies.
"We can't keep on spending so much money in this way. I believe the minister wants a system of mutual responsibility, where all heads will be responsible for the results in an area."
Rex Phillips, Wales organiser of the NASUWT, said: "If these proposals result in any compulsory redundancies or threatens anybody's jobs or livelihoods then this will be made with a trade union response, which includes industrial action."
Chris Llewelyn, director of lifelong learning at the Welsh Local Government Association, said he shared the minister's view that more needs to be done.
"Local government is committed to collaboration and transformation with the aim of improving leaner outcomes and raising standards," he said. "We also recognise that the forthcoming financial constraints are going to be challenging."
Original headline: Andrews lashes out at schools sector for not being `radical'