When it comes to funding First Nations education in the federal budget, there's far more at stake than just improving schools for native children.

As if that alone weren't enough, the future of Shawn Atleo's leadership of the Assembly of First Nations and the very nature of the relationship between Ottawa and aboriginal people are on the line as well.

Atleo took a political gamble last year by agreeing to a joint AFN-federal effort that would tackle First Nations education and take a collaborative, step-by-step approach to resolving the many outstanding issues on the aboriginal file.

The approach was risky, because many regional and band leaders are angry about deteriorating conditions on reserves and the lack of federal action.

But the criticism was kept at a simmer while Atleo and Prime Minister Stephen Harper put together a national panel on education and agreed to a summit on the government-First Nations relationship.

That summit produced many fine words, but little in terms of concrete action, leading First Nations to pin their hopes on next week's budget. But tension and confrontation have been on the rise since the summit, with regional anger flaring.

Expectations high for federal budget

The level of federal commitment will set the tone for the relationship between First Nations and the government for the coming years.

Numerous First Nations and government insiders say it will also be a major factor in Atleo's bid for re-election as national chief of the AFN this summer.

"It's in the Conservative government's interest to keep Atleo in place," said Pam Palmater, who holds the chair in indigenous governance at Ryerson University in Toronto. "He's not critical, he's very supportive and he doesn't push the agenda.

"The budget is kind of his last hope."

Palmater has not endorsed anyone for national chief in the July election, but has not been supportive of Atleo's leadership.

The AFN says it needs $500 million in the federal budget as the bare minimum to bring native schools up to provincial standards.

The budget is likely to contain serious funding, but not quite as much as the AFN has asked. One source put the amount at about $130 million a year, although details are under tight control.

But Atleo, in an interview Friday, said "I feel we're on the right track."

He points to the national panel on education and the philosophical commitments made by Harper at the summit, which were followed by all-party support for an NDP motion to ensure native education is put on the same footing as provincial schools.

New consensus on underfunding

If the government follows through with some "early relief" for schools in the budget, as well as a commitment to work jointly with First Nations towards a long-term plan that assures stable financing, Atleo says he will have been successful.

He said he's already seeing signs of success because there is now a new political consensus that First Nations education has been dramatically underfunded.

"Pretty much everywhere I turn in conversations that I have across the country, it feels to me that Canadians more broadly are increasingly committed to recognizing the importance of investing in our kids and making sure that there is fairness."

That wasn't the case in the past, he added.

Atleo says even if the budget does not deliver the fix-for-all-time for First Nations education, it will deliver something that is precious in the troubled relationship with government: "Momentum."

First Nations young people are the fastest growing demographic in Canada, but fewer than half graduate from high school.

Government officials say Harper is determined to use education as the key to reduce First Nations dependence on the state and bolster the country's labour force at the same time -- even at a time of tight budgets.

"The government is serious about getting the aboriginal workforce up to speed and plugged into the economy," said one top official.

Generally, the AFN wants to see native schools receive the same funding increases as provincial schools. The organization pegs the funding gap at between $56 million and $84 million a year.

Bringing curriculum development and teachers' pay up to par would cost an extra $182 million a year.

And capital spending for an estimated 48 new schools and 11 renovations needed on reserves across the country would total $235-million.