The Treasury says student-teacher ratios in schools could be increased and some schools closed - with the savings used to improve the quality of teaching.
Finance Minister Bill English has not ruled out implementing the advice given to him in briefing papers.
"All Government departments are having to look at all their costs and education will not be an exception," he told Radio New Zealand yesterday.
"The fact is while we've put a lot more money into education and are keen and willing to invest more particularly through technology and ultra-fast broadband, we need to be sure it is actually adding to achievement."
Analysis by Professor John Hattie has shown that class size is one of the least important factors in determining student achievement.