Schools and colleges in England need a "multi-billion cash injection" and a long-term approach to funding, say MPs on the Education Select Committee.
Its report on school funding confirms the concerns of head teachers and teachers' unions who have protested about worsening budget shortages.
The committee found that schools and colleges "desperately need" extra cash. A Department for Education spokeswoman accepted that schools were facing "budgeting challenges".
ASCL head teachers' union leader Geoff Barton, said the report was a "damning indictment of the government's dreadful record" on school funding.
Robert Halfon, who chairs the committee, said the report showed the need for a "comprehensive, bottom-up national assessment" of what it really cost to have an "education system fit for the 21st Century".
The cross-party report says that schools have faced increased financial pressures from rising numbers of pupils and growing demands, such as supporting more pupils with mental health problems.
MPs say funding "has not kept pace" and the government needs to put in more cash.
"The government needs to cover the 8% funding gap currently faced by schools," says Mr Halfon, with the report saying this would require a "£3.8bn uplift".
The committee's report also calls for extra support for pupils with special needs and disabilities, to tackle a "projected £1.2bn deficit".