The state's surging school-age population is creating a budget crisis worth at least $11 billion, the government's own figures show, raising the prospect of a shortage of thousands of classrooms for Sydney's children.

The funding shortfall, spread over the next 15 years, is revealed in documents from the Department of Education which also threaten to create schisms in Mike Baird's cabinet before the June budget.

Those documents lay bare the increasing gap between the department's old assumptions about the growth in student numbers and the ever-increasing reality. The projected boom in school-age public school pupils of 15,000 a year is three times higher than the department's previous assumption of 5000 a year.

In total, the NSW school system will be required to cope with an extra 225,000 students by 2031, 165,000 of whom will be in the public system. About 90 per cent of the increase will be in Sydney.

"There will be significant classroom shortages in government primary and secondary schools," the Education Department's analysis says.

A growing preference for public primary schools in inner-city areas among more affluent parents appears to be adding to the demographic pressure.

The increase in student numbers will require $10.8 billion in funding for 7500 new classrooms and buildings over just 15 years, according to the department's leaked long-term strategy. That represents growth of 50 per cent in the department's projected funding needs in just two years, according to documents previously obtained by the Herald.

The demand is already the source of an emerging division in Mr Baird's cabinet. The state's Treasurer and Education Minister back the need for increased funding. But it is understood Mr Baird told Treasury bureaucrats to revise the figures and consider alternatives before re-presenting the issue.

"We don't comment on cabinet matters," a spokesman for the Premier said.

But the expected funding shortfall may even grow more severe.

A source said soon-to-be-finalised estimates from the state's planning department were expected to once again pump up the shortfall. "It will rise by anywhere up to 20 per cent," the source said.

The increase is also acknowledged in the department's analysis. "New figures from the NSW Planning indicate that the actual growth is going to be much larger," it says.

The department's documents warn of "significant shortages" if funding targets are not met. They mirror a recent Fairfax Media analysis that found schools in the city's north, west, east and centre would soon run out of room.

Schools in these areas have already been forced to ban children from running due to overcrowding and enrolment boundaries are being restricted to just a few blocks.

Meeting the funding gap would require a huge increase in the department's budget, enough to dwarf the $1.7 billion lost through a federal refusal to fund the final two years of the Gonski agreement.

Despite the funding shortage, the states were offered no extra school funding by Prime Minister Malcolm Turnbull at the Council of Australian Governments meeting in March. This heightened tensions between Coalition state and federal government ministers.

The bulk of the increase in the school-age population is expected to take place in the next seven years, particularly in new urban centres close to public transport, where the price of land is continuously rising.

A spokesman for acting NSW Education Minister Leslie Williams laid the blame for the shortfall on the former Labor government. The spokesman would not comment on future plans to meet funding projections.

"Since 2011, the NSW government has committed almost $4 billion to school infrastructure and maintenance," he said. "This includes 23 new or relocated public schools and 50 major projects."

The department will require more than $5 billion over the next 15 years just to fund school repairs for its massive portfolio of land across the state. The value of its buildings alone is put at $21 billion, according to department documents, with the oldest of the buildings on the department's books built in 1854.

Crowding is particularly intense on Sydney's north, where previous state governments have sold education department land. One school has been forced to rotate its children through playing areas at lunchtime.

The department documents warn that inner Sydney secondary schools Alexandria Park, Dulwich Hill and Marrickville High could all be forced to absorb enrolments as Newtown High School of the Performing Arts, Sydney Secondary College and Tempe already struggle under student pressure.

Despite the numbers, the Department of Education has no plans to build extra primary schools in key areas such as Green Square or Pyrmont, which will become Australia's most densely populated suburbs by 2030.

It is understood the NSW School Asset Strategic Plan 2031 will be finalised by August.