A standoff between the city and the state over how to spend $258 million in school funds is testing Governor Spitzer’s promise to “inject greater accountability” into school budgets, advocates and lawmakers said yesterday.

The state is offering more money than ever before to schools in New York City and other districts — with the caveat that state officials hold veto power over each district’s proposal for how to spend the funds. But final state approval of the proposals, dubbed “Contracts for Excellence,” has been delayed for more than four months, leaving hundreds of millions of dollars up in the air.

Spokesmen for the state and city education departments have said the delays are due to “cooperative” conversations between city and state officials, and note that New York City is not the only district whose plan is still being negotiated.

Several advocates who have been briefed on the ongoing negotiations, however, said the city’s resistance to making revisions to its plan is behind the delay.

The city’s proposal would allocate portions of the funding to each of the five goals designated by the state, including cutting class sizes. But critics, including the group whose lawsuit led to the increased funding, the Campaign for Fiscal Equity, have denounced the proposal for not including a specific five-year outline for how to create smaller classes and for not sending money to the lowest-performing schools, both of which are state requirements. An analysis of the city’s plan by the Campaign for Fiscal Equity found that 40% of the city’s funds are going to schools performing at or above state standards.

A Department of Education spokeswoman, Debra Wexler, said New York City is cooperating with the state. “We are confident that our proposal supports our high-needs students, and we will continue to work collaboratively with the state to provide any additional information they request,” she said.

Leonie Haimson, the executive director of a nonprofit advocacy group, Class Size Matters, said the stakes for the ongoing negotiations are high. “If state education gives in and doesn’t hold New York City accountable, then it will show that Spitzer’s whole promise of accountability was a fraud in the first place,” Ms. Haimson said. Mayor Bloomberg’s power over the city’s schools — a provision the state Legislature will reconsider in 2009 — could also suffer if state legislators feel their specifications for how to spend the historic increase are flouted, she said.

Assemblyman Ivan Lafayette, a Democrat of Queens who is the deputy speaker, said he is concerned that the city might not agree to revise its plan. “We’re offering all that extra money, but the city refuses to use it as they’re requested to do,” he said. “They’re like petulant children.”

Mr. Lafayette said the resistance has convinced him that his support for mayoral control of the schools was a mistake. “The one nice thing we did about this turning the power over to the mayor is that it sunsets in ’09,” he said.

A spokesman for the state education department, Tom Dunn, said the state will approve contracts only “when we are confident that they meet the requirements of the law and regulations adopted by the Regents.”

Several members of the Board of Regents, the body that governs state education policy, said they have been assured that the city will add a five-year plan to reduce class size and revise its distribution of funds among schools.

“If you don’t like the rules, you just don’t pick up your marbles and walk away,” the Regents vice chancellor, Merryl Tisch, said. “The mayor and the chancellor are such responsible leaders that they would never adhere to ‘I’m picking up my marbles and walking away,'” she added, referring to Mr. Bloomberg and the schools chancellor, Joel Klein.