Parents to bank $400 bonus in Victorian family budget

The scheme will cost $287 million and involve one-off payments for children at government schools and eligible concession card holders at other schools.

Parents will be able to use the cashless program for education supplies from term four in anticipation of next year.

It can also be used for uniforms, school camps, excursions and sporting events.

Ms Allan said the bonus was part of a family-focused budget.

"We're delivering a budget that's helping Victorian families – and the school saving bonus sits at the heart of our plan to ease cost-of-living pressures for families right across the state," Ms Allan said.

"We won't let any child miss out on the things that make Victorian education great, so we're giving families the flexibility to use the School Saving Bonus on the things they need."

It comes as the state is edging closer to another credit downgrade if it doesn't rein in spiralling debt and spending on major projects.

S&P Global Ratings will be scrutinising the Victorian state budget when it is unveiled by Treasurer Tim Pallas on Tuesday.

The agency downgraded Victoria's credit rating two notches in 2020 from AAA to AA, the lowest rating of any Australian state or territory.

Fellow ratings agency Moody's followed suit, stripping the state of its AAA status in February 2021 and downgrading it from AA1 to AA2 in 2022.

Credit rating downgrades make it more expensive for governments to service debt, leaving less money for hospitals, roads and schools.

Latest forecasts estimate Victorian taxpayers will be paying $24 million a day in interest by 2026/27 to service $177.8 billion in net debt.

S&P Global Ratings credit analyst Anthony Walker said Victoria's chances of a ratings upgrade were "very remote" in the medium term.

"Right now it's a stable outlook, we're not expecting to change," he told AAP.

"But the data trajectory is potentially heading more towards AA- than a AA+.

"Where we could see some downside pressure is if the debt levels rise beyond 240 per cent of operating revenues - they're currently at 215 per cent in our forecasts."

Another downside trigger would be if the state's annual interest costs rise beyond 10 per cent of operating revenues, with S&P forecasting that figure will hit 8.3 per cent in 2026.

"The other downside scenario could be a lowering of financial management if we continue to see these major cost escalations - North East Link, Suburban Rail Loop kicking off - these are the things that could cause a downgrade," Mr Walker said.

The Victorian budget will be handed down on Tuesday and is likely to point to a surplus by 2025/26. (Diego Fedele/AAP PHOTOS)

In the lead up to his 10th budget, Mr Pallas has flagged government infrastructure spending will be moderated to give the private sector breathing room to build more housing.

Mr Walker was sceptical the treasurer would be true to his word.

"We really need to see the overall capital spend not just peak but come off and we're not seeing that year-on-year," he said.

Even if projects are deferred or delayed, Mr Walker warned it could lead to further cost escalations and drive up overall infrastructure spending.

Victoria is expected to return a modest surplus of $1.1 billion by 2025/26 based on the latest sums from December, but it's not a silver bullet in S&P's eyes.

"We would say unless things change overall in terms of fiscal trajectory, running a operating surplus is not enough," Mr Walker said.