More than $800 million of state money earmarked for Victorian schools has disappeared into a black hole, the Andrews government has claimed.
A week before the state budget, Education Minister James Merlino has accused the former Coalition government of diverting $800 million of funding set aside under the Gonski school funding agreement for the 2016 and 2017 school years into prison beds and "their own priorities".
"When you have an immediate black hole of $800 million plus election commitments that we will deliver on, that's our first priority," Mr Merlino said. "Dealing with the mess of the former Liberal government is our first priority."
The government will announce on Tuesday that former premier Steve Bracks will head a review examining school funding.
The state opposition has previously strenuously denied short-changing state schools when in government.
Mr Merlino said finding the funds to fill the shortfall in the May 5 budget would be a challenge.
Asked if he was hosing down expectations for funding in the state budget for the final two years of the Gonski agreement, Mr Merlino said he did not want to "pre-empt the budget".
Mr Merlino said he was "absolutely committed to Gonski" but did not explicitly say he would fund the final two years of the agreement.
The government also did not provide any documents backing its claims of a school funding black hole.
The government, which pledged to make Victoria the "Education State" before the election, has suffered a backlash from the Australian Education Union and other public education advocates over school funding. They have been criticised over new laws that link private school funding to 25 per cent of that given to state schools and urged to commit to the final two years of the Gonski agreement.
He said that schools had not seen "one cent" of Gonski funding. That agreement was supposed to increase funding per student and provide additional support for those with disabilities and from disadvantaged backgrounds.
Mr Merlino said the former state government had spent the the money "on their own priorities".
"They spent it on prison beds ... they certainly didn't spend it where it was intended and where they agreed to spend it, and that is in education," he said.
Earlier this year Opposition Leader Matthew Guy denied claims the Coalition had short-changed schools by $50 million in the 2014 and 2015 school years. "I'm very proud to say that when we departed office late last year the Coalition was putting more money into education than any other government in Victoria's history," he said in February.
Mr Bracks will examine how government funds are allocated and used. He will also investigate how the Student Resource Package, funding allocation per student for schools, is calculated and distributed.
It will also look at Commonwealth contributions to school funding and how to provide principals and school communities with "clarity and transparency" about funding.
The government said it had commissioned the review after its own investigation revealed a "black hole" of more than $800 million in missing state Gonski funding for the 2016 and 2017 school years. In February, Mr Merlino said the same investigation had unearthed a $53 million black hole in Gonski funding for the 2014 and 2015 school years.
Under the original six-year agreement signed by the former state and federal governments, Victoria committed to contributing $5.4 billion in Gonski money with the Commonwealth to pour in $6.8 billion.
Mr Bracks said the review would consult widely, and would look for a "way forward" so that schools could receive the full level of Gonski funding.
Although he had only received a preliminary briefing, Mr Bracks said the $800 million shortfall across the 2016 and 2017 school years could explain why schools felt they had not received additional funding.