Education Minister Hekia Parata, has startled the unions representing teachers and principals by not ruling out linking school funding with how much students learn each year.
The unions say similar policies have failed overseas and the government should not even consider them.
Ms Parata says media reports "mischaracterised" what she said about performance-linked funding.
She told Radio New Zealand that if the funding system is reviewed, a wide range of factors will be discussed, but that discussion is not happening now.
But the Post Primary Teachers Association and the Educational Institute want Ms Parata to be more explicit.
They want the minister to completely rule out performance-linked funding, which they say will harm schools in poor communities.