Cornwall Council claims it has been left with an £11 million funding black hole for new school places after a U-turn by the Government.
In April, the council submitted an £18.8 million bid to the Education Funding Agency (EFA) to provide an additional 840 school places in Cornwall.
The bid for what's called Targeted Basic Need Funding was to provide additional places in eight areas where there is the greatest pressure on school places, including at schools in St Austell, Newquay, Bodmin and Redruth.
The council said it was told in July that all eight school expansion schemes would be funded. But the authority said when it was contacted a month later by the agency, it was told it had only been allocated £7.8 million for all eight schemes – £11m less than the bid submitted and previously approved.
A letter from the EFA said that the level of funding was based on expected construction costs, which are calculated on a national construction framework for the building of new schools, rather than the expansion of existing schools.
Councillor Andrew Wallis, the council's lead member for children and young people, said: "To say I am disappointed with the Government would be a massive understatement.
"I find it hard to believe that on one hand the Government informs the council that we have all our bids and funding approved, but then find out the actual funding does not even cover the basic build costs.
"This leaves the council in a difficult position regarding having to provide extra school places without the correct funding to do so."
Council officers have since reviewed the expansion plans but said even adopting a scaled-down approach would still cost around £11.2 million – leaving a minimum shortfall of £4.2 million.
Schools affected have been informed of the problem while the council has asked the EFA to reconsider its decision.
A spokesman for the Department for Education, though, dismissed the council's complaint.
"It is nonsense to suggest funding has been withheld from Cornwall," he said. "In fact councils were only asked to bid for the number of school places required, with the funding rate set by government.
"Cornwall Council's bid for an extra 840 additional places was successful, and the council was allocated £7.8 million. This is in addition to the £17.96 million funding the council will receive through their annual allocations to create school places."
He said the overall spend of £5 billion by 2015 on creating new school places was "more than double" that spent by the previous government in the same timeframe.