The Toronto District School Board (TDSB) floated the idea of selling some land as a way of generating money for the board, which desperately needs the cash.
But a heated debate Wednesday night resulted in a vote of 15 to 7 against the proposal.
Coun. Janet Davis told CBC News the TDSB needs to consult the public and find a more creative solution for finding the money.
"The City of Toronto, I believe, has a real interest in ensuring that these green spaces ... should be protected," she said. "We live in a dense urban environment where school playgrounds may be the only green space."
However, trustees haven't ruled out revisiting the idea of selling off school properties in the future.
The Ministry of Education has frozen some funds until the TDSB pays off a $50-million deficit.
Cathy Dandy, the trustee for Ward 15 Toronto-Danforth, said that there may be land that can be sold, but trustees weren’t prepared to move forward with the defeated proposal.
"We did not vote against selling land, we voted against going forward and linking it to our capital plan," Dandy said during an interview on CBC Radio's Metro Morning.
"I think there are many trustees who want to responsibly assess our properties and understand how we can take advantage of that, but we weren’t prepared to be rushed into it and link it to a capital plan that was a non-starter."
Dandy said the ministry did not approve a capital plan the TDSB had brought forward, a decision she said was made because of a cost overrun on a specific project.
"The bottom line is we have a capital plan," Dandy said.
"They wanted a different capital plan that included cutting off some of this property and hurrying it through. We’re not ready to do that yet. We might be, but we’re not yet."