The Government and local authorities are again at loggerheads over education spending.
A pay rise for teachers on the back of further cuts to other council services is unacceptable, local authorities have told the School Teachers' Review Body.
They insist the Government should provide "adequate" funding for the award to avoid crisis and allow them to compete with other potential employers.
The National Employers' Organisation for School Teachers said failure by ministers to provide any real funding for the 1996 pay increase had put many schools in an extremely difficult position.
And it warned: "Repeated failure on this score inevitably leads to unacceptable lowering of standards of educational provision."
Kenneth Clarke, the Chancellor, has told the review bodies governing public-sector pay that salary increases should be at least offset by efficiencies and other economies. He wants increases lower than this year's rises so he can reduce public spending by Pounds 5 billion to finance tax cuts.
And although Mr Clarke has said he will not dictate the increases, he has indicated they should be broadly in line with inflation - between 2 and 3 per cent.
Gillian Shephard, the Education and Employment Secretary, believes this year's 3.75 per cent award was "relatively generous" and, in its evidence to the review body, NEOST acknowledged that the relative value of teachers' earnings was now higher than it had been over most of the past 20 years.
But it said education was facing serious financial difficulty and required significant additional resources to make up for recent tough financial settlements.
In a joint claim to the pay review body, the four classroom teacher unions have demanded a rise of at least 4 per cent, while the two headteacher organisations have asked for a "substantial" increase.
NEOST told the review body that it was vital that teachers' pay was seen in the context of total local authority spending.
"It is unacceptable to expect other important public services to continue to be cut to fund pay increases for teachers, as has been the reality in recent years."
It said increases in the standard spending assessment - ministerial estimates of what needs to be spent in an authority - would do nothing unless matched by rises in Government funding and the relaxation of capping limits.
Local authorities are already spending Pounds 668 million above Government estimates of what needs to be spent on education, and councils have told ministers they need an extra Pounds 1bn to avoid further cuts.
NEOST said: "The review body must face the likelihood that, even with a theoretical nil-inflation scenario, there will be a significant shortfall between what needs to be spent in schools and what the Government plans to make available."
The classroom teaching unions, in their joint submission, want no class of more than 30 children, with lower limits for certain classes, and for their members to be under no obligation to cover for absent colleagues after the first day.