The Prime Minister says there is no more money for primary teachers and principals after the latest offer from the Government was rejected.
Jacinda Ardern said today she understood the frustration from teachers, however there were "competing demands and cost pressures".
"This is something that has been brought into stark relief for me."
Ms Ardern said her involvement in Budget discussions is a period "where I just get to see with even greater emphasis just how many competing demands and cost pressures there are on this Government in a range of areas that I would describe as long-term significant challenges for New Zealand".
"Without a doubt education is one of them."
However, when asked if there was more money available to offer, Ms Ardern said: "No, there isn't."
It comes after primary school teachers and principals rejected the latest offer today, warning strike action is possible.
NZEI president Lynda Stuart said they were fighting for "significantly" improved time, pay and support offers.
NZEI's Sose Annandale, who was on the principals’ negotiating team, said the latest offer was "very similar" to November's rejected offer, saying the Government had refused to "budge from its 'envelope' of $698 million over four years".
Ms Ardern said the offer meant the "vast majority of teachers would receive... more than they did for the entire period of the [previous] National Government".
"I understand the frustration of teachers and principals... But from the Government's perspective we’re facing a range of competing needs I know teachers care about too."
Thousands of primary teachers walked off the job last August in an attempt to combat what they said was an underfunded education sector, and in November, they carried out rolling strikes across the country for a week-long protest.
National's Nikki Kaye said the Government "needs to find a circuit breaker to break the stand-off".
"It appears that there will be no agreement if the Government doesn’t either shift on additional learning needs, workload and recruitment issues."