Financial documents obtained by The Age reveal that the needs-based funding has been used to help schools get out of the red.

It follows revelations in The Age that one in four Victorian state schools are in deficit, with principals struggling to balance their books

One principal, who did not want to be named, said it was not what the Gonski money was intended for.

"But that's the reality of the situation. Our budgets are inadequate," the principal said.

Australian Principals Federation president Julie Podbury said that she had no problem with the money being used to pay off debts.

She said schools had incurred the debts by providing programs that benefited students, and anticipated that they would receive funds in upcoming budgets.

Philip Rainford – the director of the Harlequin Group of Companies which helps state schools manage their budgets – said schools were in this situation because they were not funded properly.

"The costs of running the schools is increasing faster than the allocations being granted," he said.

"The net effect is that some of the Gonski funds are being used to pay off the deficits instead of doing what it is meant to do."

Australian Education Union Victorian branch president Meredith Peace said she had fielded questions from concerned teachers and principals who wanted to know whether the equity funding would disappear if schools were running a deficit.

"That is not what Gonski is about and our kids will continue to miss out if that is the way the money is being managed," she said. ""You shouldn't simply use Gonski money to fill up a black hole."

She said that many Victorian schools had used their Gonski funding to set up reading programs, hire speech therapists and expand their curriculum, despite being in deficit.

The union has been calling on the federal and state government to commit to the final two years of the six-year Gonski school funding agreement, when the bulk of money is expected to flow to schools.

The Andrews government went to the state election promising to build the Education State, and is pumping an extra $493.3m into schools over four years to help them target social disadvantage.

A spokeswoman for Education Minister James Merlino said that the funding should not be used to offset deficits.

"Every Victorian school should use their equity funding to improve teaching outcomes, address disadvantage and ensure our students are given the best chance to succeed," she said.

She said that schools in deficit due to falling enrolments were given financial management advice and workforce bridging funding to help them return to a healthier financial position.

In Victoria, every public school student received $2253 less state and federal government funding than the national average in 2013-14, making them the lowest funded in the country.

Schools are becoming increasingly creative when it comes to raising much-needed funds. Some schools have cut back on the time students spend in class, while others have used crowd-sourcing, and hired out their teachers to raise extra money.