DRASTIC job cuts are ''just the tip of the iceberg'', a former Education Department finance manager has warned after the Premier, Barry O'Farrell, said NSW had to learn to live within its means.
''Not much point in having a school system across the Sydney network that people can't get to either on roads [or trains],'' Mr O'Farrell said. ''There are day-to-day running costs but there's also capital needs.
''We're also trying to ensure our recurrent costs, the cost of operating our schools, our hospitals, our police stations and the like, [are] also protected.''
Ken Dixon, a former general manager of finance and administration, said the government's decision to cut 400 administration jobs from the department was ''drastic''. He said a software program had been introduced to manage human resources, finance and payroll systems - to take the place of 1600 jobs.
''The 400 jobs are just the tip of the iceberg,'' he said. ''There were 1600 jobs factored into the business case.''
The so-called learning management and business reform program has been dogged with teething problems which have delayed its implementation.
In December, the Auditor-General, Peter Achterstraat, said the $386 million information technology system had failed to deliver.
Mr Dixon, now retired, said the policy to give principals more autonomy over school budgets was driven by cost savings.
''The Local Schools, Local Decisions policy is just a formula to pull funding from schools over time,'' he said.
''It is the same way they have structured the TAFE budgets.''
Mr Dixon said independent and Catholic schools, which had originally been warned of a $67 million annual budget cut, ''have come out more lightly than they should have''.
After lobbying by bishops and parents, the government introduced a four-year funding freeze for non-government schools for a saving of $116 million.
Mr Dixon said a better way to save money would be to amalgamate small public schools in remote areas.
''We have 2250 government schools, which is a couple of hundred schools too many,'' he said.
''In some country towns we have small schools one kilometre apart … If they were amalgamated, we could run them more cheaply. Schools with less than 50 students cost a fortune to run.
''It is always difficult closing schools but if it is done the right way, it is a better way to go.''
But Mr Dixon said it was unrealistic to expect a National party minister to close any schools in country areas.
The Education Minister, Adrian Piccoli, rejected the proposal and said that closing schools would provide only ''marginal'' savings.
The chairman of the Catholic Education Commission of NSW, Bishop Anthony Fisher, said the funding cuts to Catholic schools appeared to go much deeper than he first thought.
''It has now become apparent that there will be no allowance in state grants for teacher salary increases or other inflation over the next four years, so that the value of the grants in real terms will decline each year,'' he said.
''There will be no allowance for increased enrolments: for fast-growing areas such as western Sydney.''
Correction: The original headline on this story incorrectly said that 1600 more education jobs would go.