DURHAM County councillors have criticised plans to increase the proportion of funding given directly to schools.
The Government is putting more financial responsibility on school heads under its fair funding system.
But county councillors are concerned that the increases will put pressure on heads and threaten central services provided by the county council, such as transport and special needs education.
They also resent claims that the move will reduce the cost of bureaucracy, saying that the council's administration costs are low and that there is an economy of scale in running some services centrally.
The council has agreed to protest to the Government and local MPs.
Councillor Brian Walker, a cabinet member, said: "If the target is 90 per cent it will totally destroy the educational service we provide and the schools are proud of, buy into, and congratulate us on."
Council leader Don Robson said: "Does the head of a small school of 70 pupils want to be deciding which pupils get a bus pass. It doesn't make sense. It is crazy."
Liberal Democrat Nigel Martin said the Government was only concerned with "spin and headlines" and that changes to funding did not allow schools to plan long-term
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