Almost half of the €200 million allocated to replace or upgrade dilapidated primary schools has still to be spent, the Minister for Education and Science, Ms Hanafin has acknowledged.
The Department's failure to spend the money means scores of building projects - some promised before the last election - remain unfinished.
Last night, the Irish National Teachers Organisation (INTO) said it would insist that all money budgeted for school buildings must be spent this year.
Mr Paul McGrath, the Fine Gael deputy whose Dáil question prompted Ms Hanafin's disclosure, said the primary school building programme faced a crisis.
Under spending rules, all but 10 per cent of money left unspent in a financial year reverted to the Exchequer, he said. The INTO said last night it would not accept money being returned to the Exchequer. "
Every single euro not spent on school buildings this year will be a betrayal of children, teachers and parents," it said.
Mr McGrath said while some delays in major building projects were not unexpected, the Minister should have reassigned the funding to hundreds of smaller projects. "A huge number of projects have now been pushed back," he said.
Figures released to Mr McGrath show that only €103 million of the €201 million allocated to the programme has been spent this year.
Last night a Department spokesperson said building projects could be subject to unexpected delays as it was a "lengthy process involving tendering, the awarding of contracts and the commencement of works on site".
Last year's Estimates outlined a €1.2 billion rolling five-year school modernisation programme for primary schools, but the failure to spend last year's allocation may undermine the feasibility of the entire plan.
Last night the Department said it could retain 10 per pent (or €20 million) of unspent money under the five-year plan. This would be available, it said, to projects which were unable to draw down their allocation this year.
The INTO meets the Department early next month to discuss the school-building programme.
Last night, its general secretary, Mr John Carr, said he was concerned to find that with two months of the year to go, only half the budget was spent. "It is imperative that this money is spent. Any school building project that is ready to go now should be started straight away."
The 2004 building programme had been characterised by delays. Calls to schools show that projects due to go to construction in the first quarter of 2004 only got going in the second half of the year.
He said the INTO was aware of the Department cutting back project funding. In some cases schools were reporting tender prices far exceeding sanctioned funding. Individual schools could not fund this difference, Mr Carr added, saying these projects must be reviewed urgently.
