More than a hundred of New York’s most influential citizens gathered at IBM’s Palisades conference center on Thursday and Friday to talk about the issue that has catapulted to the top of agenda for state and city government: finding more money for public schools.

Earlier last week, a court-appointed panel called for Albany lawmakers to increase operating funds for the New York City schools by $5.6 billion, or 45%, over the next four years, and invest another $9.2 billion in construction and renovation of school buildings. Their recommendations grew out of last year’s decision from the state Court of Appeals, which found that too many of the city’s 1.1 million schoolchildren aren’t getting the “sound, basic education” guaranteed by the state constitution.

The majority of those who spoke at the conference, sponsored by the Citizens Budget Commission, agreed with the thrust of that ruling and supported a massive infusion of dollars not just for the city schools but for public education across the state. One skeptic at the event, the former city parks commissioner and gadfly Henry Stern, remarked after one panel discussion that it sounded like “a gathering of the education lobby.”

Yet the mood was decidedly more grim than celebratory. Virtually everyone agreed that the road to education reform will be bumpy and treacherous, and that the people behind the steering wheel – Governor Pataki and the Legislature – might well drive the effort off a cliff.

Former presidential candidate Howard Dean, who survived a similar process during his term as governor of Vermont, set the tone with his after dinner remarks Thursday night.

“This is not going to be easy,” he warned. “You’re going to have a horrible, bloody, nasty, awful fight. When you raise money and move around resources, people are going to get mad.”

He noted that Governor Florio of New Jersey- who was sitting at the head table – had pushed through the state’s first income tax to satisfy a similar court mandate to increase funding for education.

“He did what had to be done,” Dr. Dean said. “It cost him his governorship.”

But Dr. Dean counseled New York politicians to “bite the bullet,” implicitly comparing the years ahead to surgery without anesthesia. “Once in a while, leadership means doing something the public doesn’t support and letting them catch up with you,” he said.

In his own comments, Mr. Florio said “activist” courts had “bludgeoned” lawmakers into raising taxes – and he was glad. “There’s something fundamentally wrong about providing a quality of education to a child that depends upon which town they happen to come from,” he said.

Friday morning, the state comptroller, Alan Hevesi, added a cheery note by explaining that New York City and New York State both must close multibillion-dollar deficits in their next year’s budgets, even without the additional education money factored in. He further predicted that the national economy, which has been rebounding from the post-September 11 recession, will sour in the near future.

“I’m for the decision,” he said of the ruling in the school-funding lawsuit. “I think it’s fair. I don’t know how we’re going to do it.”

“It’s a mandate, so it’s going to be paid for,” Mr. Hevesi said. “But then how do you provide relief to local governments that are bleeding from Medicaid? How do you pay for the MTA capital plan? I think education is the highest priority…but there will be consequences, severe consequences, for the other significant needs.”

“I come away with a desperate feeling,” said a longtime student of state government, Gerald Benjamin of the State University of New York at New Paltz. “Here I am a SUNY dean, and there’s a $14 billion pre-emptive claim on the resources of the state….What happens to the universities?”

“Crisis is one way of focusing the system and creating a context for action,” Mr. Benjamin said. “But that requires leadership, and that requires political institutions that work. I’m afraid we haven’t seen leadership. What we’ve seen is enmity among the people situated to lead.”

As the sponsors of the conference, the Citizens Budget Commission did not shrink from recommending a roadmap for reform. Among other things, it calls for such politically unpopular steps as redirecting education aid from other parts of the state and keeping New York City schools open year-round. It supports a wholesale expansion of the state lottery that would raise $2 billion a year but – recognizing that won’t be enough to satisfy the court mandate – also calls for a hike in the income tax.

This idea was seconded by the head of an Albany think tank, Frank Mauro of the Fiscal Policy Institute, who pointed out that out-of-state commuters account for about 15% of New York’s income tax revenue.

But the president of a business organization, Kathryn Wylde of the Partnership for New York City, questioned the fairness of this approach, noting that half of the income tax revenue comes from just 4% of the population.

“They are almost all people who work in Manhattan,” Ms. Wylde said. “So any increase falls disproportionately on a small group of people, and falls disproportionately on New York City.”

As an alternative, Ms. Wylde suggested, quite seriously, that New York should consider legalizing gambling on sporting events, which she described as a $30 billion business in New York City alone.

“We ought to figure out a way to tap into that money,” she said. “Right now everything has to be pursued.”

Just how eager Albany politicians are to debate such ideas was symbolized by how few of them made their way to Palisades for the conference. A few state legislators were there, including Assembly Education Chairman Steven Sanders of Manhattan and three members of the Board of Regents, an appointed body that sets education policy. But there were no representatives of the governor’s office or the Republican majority in the Senate.

At one point, a member of the City Council who was a lead plaintiff in the lawsuit over school funding, Robert Jackson of Washington Heights, said the crisis could have been avoided if Albany had not shortchanged the city on education aid over the decades.

“If you cannot get your act together…they should put you in jail, lock the door, and throw away the key until you come up with a solution,” Mr. Jackson told Mr. Sanders during one panel. “Millions of students from New York City have been permanently damaged for the rest of their lives as a result of the failure of the Legislature and the governor to deal with this problem.”

The experience of other states offers another sobering perspective on New York’s situation. There has been similar litigation over school funding in no less than 45 states. The plaintiffs won the vast majority of cases, and state lawmakers have raised taxes and plowed billions into schools. Yet rarely have the courts been satisfied with the results. New Jersey, for example, was first sued in 1969 and – Mr. Florio’s self-sacrificing efforts notwithstanding – is still embroiled in litigation over inadequate funding for schools.

An education scholar from Harvard, Martin West, reported that nationwide spending on schools, after adjusting for inflation, went from $3,300 a pupil in 1960 to $9,000 a pupil in 2002, and that America spends far more than any other major country, including many with higher test scores. New York, by the way, has the distinction of spending more than any other state, at about $12,000 a pupil.

“If money alone were the only problem for American schools, the problem would now be solved.” In reality, he added, “student achievement had barely budged,” and high school dropout rates have actually worsened since 1970.

The director and chief counsel of the group behind the school funding lawsuit in New York, Michael Rebell of the Campaign for Fiscal Equity, expressed frustration at the reaction of some newspaper editorials to the proposed cost of reform.

“The predominant message is: ‘$5.6 billion? It’s going to bankrupt the state. How are we going to pay for that?'” Mr. Rebell said.

“Let’s remember what the goal here is. The question should be, ‘Can we carry out the historic, important task of really providing educational opportunity to kids from a broad range of backgrounds?’ “

He said the $5.6 billion price tag represents the consensus of experts, including consultants that Governor Pataki used in resisting the lawsuit.

“CFE did not pick the highest cost to go with,” Mr. Rebell said. “If we had, it would have been two or three billion higher….This is not a number out of the air. This is a modest figure.”

Mr. Rebell acknowledged, however, that money doesn’t guarantee success, and urged lawmakers and the public to hold schools accountable for how they spend the extra money.

“I don’t want to come back five years from now and find we’ve put five billion into the system and there’s been no change,” he said.