Supporters of arts education say it could suffer under Chancellor Joel Klein’s new “fair” school funding formula, which may dissolve funding previously dedicated to arts spending into principals’ general budgets.

“We think it’s a bad thing for arts education at a time when it’s still in a dire situation,” the executive director of the Center for Arts Education, Richard Kessler, said, noting that for every 7,000 students, there is one dance teacher.

The fund, known as Project ARTS, was created in 1997 under the Giuliani administration to give principals incentives to increase arts education in their schools. For the past five years, the fund has allocated about $67.5 million to principals that must be spent on art teacher salaries, art supplies, or art programs.

Mr. Kessler said the previous schools chancellor, Harold Levy, had removed the restrictions on the fund several years ago, and a 50% reduction in art spending followed. Under Mr. Klein, the restrictions were restored.

A spokesman for the Department of Education, David Cantor, questioned whether removing the restrictions on the fund again would reduce spending on arts.

“The best way to support the arts is to hold schools accountable for high-quality arts programming,” he said. “We don’t earmark funding for reading or math — we just demand results. The same should be true of arts.”

Mr. Cantor said schools would be measured on their arts programs in the qualitative portion of the new accountability system.

Mr. Kessler said the plan would undermine the reason the fund was set up in the first place. “It realized that arts needed special protection … and led to a tremendous increase in arts in the school system,” he said. “We still need to protect arts.”