The state's financial watchdog reported that in 2014 Victorian TAFEs recorded a combined deficit of $84.3 million.

A report from the Victorian Auditor-General, tabled in Parliament on Thursday, revealed the IT system's value had been written down to about 32 per cent of the total amount spent on it. So bad was it that many institutes avoided installing it.

The Education Department originally spent $94.9 million on the student management system, which is now worth $30.6 million.

"This indicates the state did not receive value for money," the report said.

The system is used for student monitoring and enrolments. Australian Education Union TAFE spokesman Greg Barclay said it remained problematic despite the money spent on it.

"Some TAFEs chose early on not to opt in to the system," he said.

Mr Barclay said he had received reports the system required huge amounts of data entry and was prone to failure.

"The institutes have to pay for use of the system, which is still inefficient," he said."The amount of labour required to get the system running is totally inefficient as well."

A spokeswoman for Training and Skills Minister Steve Herbert said the previous Labor government invested $70 million to develop the student management system but the cost blew out under the Coalition.

She said constant changes to subsidy rates and mismanagement of the system caused "significant financial strain" for TAFEs while the Coalition was in government.

But the Opposition spokeswoman for training and skills Steph Ryan said the report confirmed Labor's "legacy of failure" in its training reforms.

She said the Coalition had delivered almost $200 million to help TAFE's transition to the "competitive environment".

The previous Labor government introduced an open-market system for training providers in which TAFEs had to compete with private institutes for government funding.

An Education Department spokesman said the decision to write down the value of the student management system was based on independent advice.

He said the write-down was an accounting measure that had no impact on the day-to-day operations of institutes.

Annual reports for TAFE institutes tabled in Parliament in April outlined huge losses in the sector.

The Auditor-General's report found that six TAFEs had been assessed as having a high financial sustainability risk with short-term challenges that needed to be tackled.

Auditor-General John Doyle said not all TAFEs had responded "in a financially sustainable way" to changes to the funding structure since 2012.

Former Holmesglen TAFE chief executive Bruce Mackenzie is leading a review of the training sector's funding structure. The final report is due this year.