Schools and colleges could be missing out on thousands of pounds of funding because the grants system is too confusing and bureaucratic, teachers' unions have warned.
Local authorities in Wales can apply to the Assembly government and other bodies for more than 100 grants earmarked for children, young people and learning. But there is evidence that most councils are making use of less than a third of the grants available.
The Assembly's finance committee has launched a major inquiry into the system amid concerns that there are too many grants, they are unco- ordinated, and the application process is "too long-winded".
In its evidence to the committee, NUT Cymru said the way the system operates "leaves a lot to be desired." The union carried out its own research and found that most local authorities apply for only 30 education grants for their schools.
David Evans, the union's secretary, said some schools were being starved of desperately needed cash as a result: "If local authorities are failing to access all available funding via grants, it's clear that individual schools are being short-changed."
NAHT Cymru also has "significant concerns" about the system. Anna Brychan, director of the heads' union, told the committee that heads were increasingly dependent on grants for activities that should be paid for out of a school's core funding. She said the uncertain, short-term nature of grants meant schools often struggled to plan for the long-term.
The sheer number of grants also causes bureaucratic nightmares for local authorities, which are having to employ dedicated staff to deal with the administrative burden.
NUT Cymru wants an analysis of how much this bureaucracy costs annually compared with the value of the grants.
The Welsh Local Government Association told the committee that deficiencies in the system far outweighed any benefits. It called for a simplification of the process: "The current arrangement is unsustainable and a poor use of resources at a time when public funds are under increasing pressure."
Wales's FE body, fforwm, said colleges had to apply for too many grants. It called for the cash to be included in their overall budgets.
College staff often waste time applying for grants for which they are ineligible because the criteria are unclear, fforwm claimed.
Jane Hutt, the education minister, welcomed the inquiry and said she looked forward to its findings.