Northavon Liberal Democrat MP Steve Webb outlined the problems faced by South Gloucestershire Council.
Although the council passported 102% of education funding to schools, he found one infant school was selling nearly stale crisps donated by a local shop.
?When schools get to the stage of having to sell nearly stale crisps to try to avoid having to sack teachers, something is wrong,? he said.
South Gloucestershire was one of the worst-funded councils, and the problems had continued despite the new funding system, he added.
The transitional floors-and-ceiling system meant the council lost £4.7m of which £2m would have gone into schools.
Junior education minister Ivan Lewis said he could not scrap the ceiling as the new system was fairer. But he recognised the need to phase in the changes and promised: ?There is light at the end of the tunnel.?