The fund helps schools meet government targets and is currently divided into 38 separate funding streams. Councils bid for money on behalf of their schools and provide match funding.
The LGA believes this process eats up money. It says the fund is restrictive because it is distributed annually, set nationally without regard for local circumstances and must be spent in the year received.
Finance chair Dave Wilcox said: 'If the government is serious about cutting red tape for schools, then it should slash the number of hoops headteachers go through.'