The post-16 funding system in Wales is failing schools and colleges because it is too complicated, bureaucratic and inflexible, it has been claimed.
Teaching unions and other educational bodies said the annual uncertainty over the amount of cash being allocated to the sector is damaging the curriculum and putting significant extra strain on headteachers and principals.
School sixth-form funding figures for 201011 released this week showed huge variations across Wales, with some local authorities seeing large increases while others face cuts of almost 10 per cent.
The Assembly's cross-party finance committee is currently carrying out a major inquiry into the way post-16 education is funded.
Its members have found it difficult to examine how much the government plans to spend in the sector because, they say, the figures are not clear.
They are also concerned that the government wants the further education sector to make a 5 per cent efficiency saving in 201011, compared with just 1.6 per cent for other groups.
In their evidence to the committee, teaching unions and a range of organisations, including the Welsh Local Government Association, have attacked the National Planning and Funding System (NPFS), which was intended to create a level playing field for post-16 education.
The system is supposed to be transparent, flexible and demand-led, but critics claim it is none of these things.
The National Union of Teachers Cymru said it has failed to achieve its aims and that many schools have seen a significant reduction in funding since it was introduced.
In its evidence, the union said: "The funding system is over-complex, bureaucratic, requires huge amounts of data to operate and imposes significant data checking burdens on schools.
"It is unfit for purpose and those who administer it have failed to secure the trust and confidence of schools in their ability to manage it and their willingness to accept and act on constructive criticism."
Welsh medium union UCAC said funding allocated through the NPFS is not enough to fund the true cost of providing post-16 education in the 21st century.
The Association of Teachers and Lecturers Cymru claimed the so-called "funding fog" had spread from schools into the post-16 sector, and that there had been deliberate attempts by officials to make the system difficult to understand.
In their joint evidence, headteacher unions ASCL Cymru and NAHT Cymru said the NPFS is now used as a method of dividing up a decreasing pot of money without considering the actual cost of provision.
The unions said school leaders should be fully involved in the process, and called for a "dampening mechanism" within the system to keep annual funding fluctuations within acceptable limits.
The Welsh Local Government Association and the Association of Directors of Education in Wales said post-16 funding is "idiosyncratic" and not subject to the same scrutiny and analysis as other aspects of education funding.
They said: "There is considerable anxiety in local government about how post-16 learning is funded.
"We have a funding arrangement that is not seen to deliver the best outcomes for learners, is neither clear nor transparent, and does not enable any of the learning providers to plan with security."
This time last year post-16 providers were left reeling after the Assembly government unexpectedly slashed budgets by 7.43 per cent, or pound;8 million.
Although there have been no similar surprises this year, ten local authorities are set to lose varying amounts of post-16 cash in 201011, based on decreased volumes of learning at their sixth forms.
Neath Port Talbot faces the biggest cut, of 9.76 per cent, or pound;146,832.
A spokesman for the Assembly Government said local authorities are funded fairly in line with the formula, based on recorded learning activity, and any variations in funding reflect the annual changes in activity delivered by each authority.
Education minister Leighton Andrews has yet to give evidence to the committee but in a letter to its chairwoman, Angela Burns, he said: "The Assembly government expects FE institutions to continue to seek efficiencies to release resources for the delivery of front line services."