Schools could soon be facing severe financial hardship which could affect standards because of cuts to their budgets, head teachers warn.
A typical secondary school in Wales will be driven into deficits of more than £1m, the Association of School and College Leaders (ASCL) said.
The Welsh government has sought to protect school budgets.
It has increased education spending by 1% above the block grant that Wales receives from the UK government.
Last week, Education Minister Huw Lewis told a conference of head teachers that the education budget had seen a cut of 10%.
He also apologised for the Welsh government's decision to claw back £4.4m from this year's education budget in order to fund the NHS in Wales.
ASCL Cymru Secretary Robin Hughes said there was a picture emerging across Wales of "severe financial hardship for our schools".
"It's a hardship that puts the recent record-breaking results that we've seen with GCSEs and A-levels this summer at risk," he said.
"Without the resources to maintain that progress, clearly, that progress is at risk."
He said the budget cuts were happening alongside an increase in the costs schools must manage, including rising pension and National Insurance contributions.
Mr Hughes added: "It's not scaremongering to say that staffing levels will have to be looked at."
Over the next few years, the Welsh government intends to introduce many far-reaching changes to the education system.
Next year there will be new GCSEs in English, Welsh and double maths.
There is also a review of the entire curriculum, due to report back in the new year.
But Alun Llwyd, head teacher of Ysgol Dyffryn Ogwen in Bethesda, Gwynedd, and a member of the Welsh government's ministerial advisory board on education said: "This is all happening at the same time as there are big developments nationally in terms of the curriculum, qualifications, GCSEs and A-levels, with all the training implications which come with that."
The cuts to school budgets come at a time when the overall level of reserves held by schools in Wales are at their lowest level since at least 2001.
Across Wales, the overall amount held in reserves by schools amounts to £60m, or of £132 per pupil. This is a decrease of 13.9% compared with the previous year.
Sixty one secondary schools in Wales had negative reserves (i.e. deficits) totalling £13m.
Plaid Cymru's education spokesman Simon Thomas AM said policies to improve the education system "will not work unless adequate resources are put in place to implement them".
Angela Burns AM, the Welsh Conservatives' shadow education minister, added: "In 2011, average per pupil funding in Wales was £600 less than in England, equating to hundreds of thousands of pounds less for Welsh secondary schools.
"Motivated by shame Labour ministers stopped collecting comparable data on average school underfunding, but the National Union of Teachers estimates the gap is widening."
A Welsh government spokesperson said it remained committed to funding schools but it was facing a "very challenging financial position".
"Since 1999 local authority expenditure on education has increased from £1.4bn to over £2.6bn in 2014, an 86% uplift in cash terms and a 34% increase in real terms," the spokesperson added.
"Indeed, treasury figures released recently show that spending on education per head in Wales in 2013-14 was 8% higher than in England."