The Northern Territory has rejected the federal government's school funding reforms, calling them "a con" and accusing Prime Minister Kevin Rudd of being deceitful.
Chief Minister Adam Giles on Friday announced that the NT would not be signing up to the plan.
He said the federal government continued to release misleading calculations based on false assumptions about how much funding Territory schools currently receive.
"Kevin Rudd and Bill Shorten should be ashamed of themselves for making deceitful claims about a terrible model that makes false promises to Territory schools," Mr Giles said in a statement.
For weeks the NT has been subjected to Prime Minister Kevin Rudd and Education Minister Bill Shorten manoeuvring behind-the-scenes for political advantage without making sufficient improvements to the offer on the table, Mr Giles said.
"Kevin Rudd can say whatever he likes for the cameras but I am calling this model out for what it is - Gonski is a con that says more than 40 per cent of Territory students attend schools that get too much funding and need less," Mr Giles said.
Under the federal government's model, Darwin High School and Palmerston Senior College are overfunded by around $2 million, Moil Primary School is overfunded by more than $1.3 million, Taminmin College is overfunded by $2.5 million, and Bradshaw Primary School is overfunded by more than $900,000.
In recognition that many schools stand to be disadvantaged under its formula, the federal government has promised these 'losing' schools will receive the same as they did last year plus three per cent or close to inflation.
This would maintain - but not enhance - their current funding, which Mr Giles said would mean that for at least six years they would just be marking time.
Mr Giles accused Canberra of trying to hoodwink the Territory into signing up to a bad deal that diverts money away from urban students in Darwin, the rural area, Palmerston, Alice Springs and Katherine and redistributes it to remote schools.
"I more than anyone support our remote schoolchildren getting a better education, and I have already instructed the Education Department to begin an indigenous education review, but any new school funding formula must benefit all Territory schools," Mr Giles said.
Education Minister Peter Chandler said the NT government currently spent an average of $15,649 per student, above the national average of $9,466.
"We already punch above our weight, but we're punished for this under the Gonski formula," he said.
The NT government says it was originally asked to contribute an extra $625 million over six years, with the commonwealth providing $193 million.
Mr Giles said the Territory can't afford the extra burden because of the $5.5 billion debt left by the previous Labor government.
"It would risk our credit rating, force cuts in other areas and hurt Territory children who would ultimately have to pay off this extra debt," he said.
"We have tried to convince the federal government to narrow the funding gap but the offer on the table remains unaffordable."
Mr Chandler said that under the Gonski model, Canberra had to approve how the Territory distributed its funding to schools, and said the NT wasn't prepared to let Kevin Rudd take control.
"The decision to reject Canberra's version of Gonski has not been taken lightly, but we will not sign up to a broken formula that would hurt so many Territory students," Mr Giles said.