Prime Minister Julia Gillard will detail ''the biggest change to school education in 40 years'' on Sunday, announcing that schools would get an extra $14.5 billion over the next six years. This equates to an average of an extra $1.5 million per school.

But the federal government will use deep cuts to universities worth $2.8 billion to help pay for school funding, raising concerns that Labor is undermining future education opportunities.

Queensland would receive about an additional $3.8 billion over the six years in public funding for schools, with government schools standing to receive the largest share of the funding pie. Under Labor's proposal to the states, the government school sector would get an additional $12.1 billion over the next six years. Catholic schools would get an extra $1.4 billion and independent schools would get an extra $1 billion.

On Sunday, states are also expected to learn how much the federal government will contribute and how much it expects the states and territories to contribute to its overhaul of school funding, which has been a major sticking point in the debate between the states and the Commonwealth.

NSW Premier Barry O'Farrell has voiced strong support for the review of schools funding, warning against the ''perils'' of ignoring recommendations made by the Gonski report.

The Council of Australian Governments will meet in Canberra on Friday to try to reach an agreement on the school reforms. Time is running out with only five parliamentary sitting weeks left before the federal election and the present school funding formula due to expire at the end of the year.

The federal government has set a bottom line that states must maintain their present levels of investment in schools and commit to Labor's National Plan for School Improvement, that aims to have Australia in the top five countries in the world in reading, science and maths by 2025.

Labor would also like to see states commit to an overall 3 per cent growth in their school funding, which the federal government would then beat with a 4.7 per cent growth rate.

With the government searching for finance to support its reforms, Minister for Tertiary Education Craig Emerson announced three ''substantial savings'' in the higher education sector on Saturday.

Universities will be hit next year with an efficiency dividend of 2 per cent and 1.25 per cent in 2015, saving about $900 million. A further $230 million would be saved by cutting the 10 per cent discount students and parents now enjoy if they pay their university fees up front. In addition, $1.2 billion would also be saved by requiring students on Start-up Scholarships to pay the money back, when they had hit an earning threshold.

Dr Emerson said there was still strong growth in the sector and that nothing in the measures he announced would stop students from lower-income backgrounds from attending university.

This followed an announcement from Treasurer Wayne Swan that the government would save $520 million by cracking down on tax deductions for self-education expenses, such as textbooks and stationery.

Universities Australia chairman Glyn Davis said the efficiency dividend would place ''severe strain'' on the sector, which had been encouraged to expand enrolments to enable greater access to higher education. He added that the cuts came on top of the $1 billion that had been taken out of the system six months ago as part of the midyear economic and fiscal outlook.

Fred Hilmer, vice-chancellor of the University of New South Wales, slammed the cuts, describing them as ''shortsighted'' and ''cynical''.

"This is a bitterly disappointing, shortsighted move on the part of a government which claims education as one of its highest priorities. It is an absurdity to seek to provide students with a better education at school by providing a worse experience at university,'' he said.

Opposition Leader Tony Abbott said the only way to get the investment needed in education was to ''build a stronger economy''.

''And you never build a stronger economy by taxing it and regulating it in the way this government has,'' he told reporters in Sydney.

The school funding reforms stem from the Gonski Review, commissioned by the federal government in 2010 and released in February last year. Headed up by businessman David Gonski, the review found Australia is spending far too little on education and the lowest-performing students were not meeting minimum standards of achievement.

with Farrah Tomazin