A new policy will require NSW public schools spend all of their funding within a year.

NSW education minister Sarah Mitchell says schools must spend “every dollar allocated” on support measures and student services under the new Carry Forward Policy.

“Gonski funding is there to lift student outcomes - it’s not there to be saved for a rainy day,” she said in a statement this week

“Principals will no longer be able to roll over funds across years, and measures will be put in place to provide additional support to invest the funding in current students. This may take the form of guidance on teaching practice and learning programs, or extra staff and resources in areas of need.”

The new policy applies to annual state and federal budget allocations, but does not affect funds from local school and community sources.

The NSW Government says there is currently $1.49 billion in public school funding leftover from previous years.

The new rules come alongside additional training and tools to simplify school budgeting, which the NSW Government is billing as a “renewed focus on school success”.

“We have fought hard to achieve a needs-based, sector-blind funding model and we must ensure the necessary system-wide tools are in place to deliver this investment to support the current student cohort,” Ms Mitchell said.

“Introducing this policy also provides our schools with clarity to spend the balances that they have accumulated from past budgets. Schools will be supported to spend these balances evenly over the next four years in alignment with school Strategic Improvement Plans.

“Under the new School Success Model introduced this year, a range of individual targets have been set for schools to meet. Schools that have ‘underspends’ who are not meeting targets will receive instruction on how to spend their unspent funding to lift their results.”