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.
Analysis by Professor John Hattie has shown that class size is one of the least important factors in determining student achievement.
The Treasury said student achievement could be raised by improving the quality of teaching "which the evidence shows is the largest in-school influence on student outcomes".
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