Proponents of smaller class sizes yesterday asked a state judge to put on November’s ballot a proposal to set aside 25% of the money generated for city schools by the Campaign for Fiscal Equity lawsuit for the purpose of reducing class size.

A lawyer for the city argued that the proposal should be kept off the ballot, suggesting that it would be unprecedented and confusing to ask city voters to appropriate money before it was even made available. The ongoing CFE lawsuit has been in state courts for more than a decade and seeks to force Albany to spend more money on city schools.

After listening to more than two hours of arguments, Judge Lewis Stone of state Supreme Court in Manhattan did not issue a decision from the bench. Some of his comments and questions, though, suggest that many political obstacles confront voters and education leaders who seek to directly influence how CFE-mandated money is spent.

Even if the proposal went on the ballot and was approved, Judge Stone noted that the Legislature could bypass it as a political favor to the mayor by simply labeling in a different manner the money it sent to city schools. Lawyers said the proposal concerns only unallocated money.

“Whoever the mayor will be will go up and whisper, ‘Don’t call it the CFE pot – if you don’t call it the CFE pot, I won’t have to deal with it,’ ” Judge Stone said, imagining future dealings between a mayor and the Legislature. “It won’t surprise me if there is a lot of whispering.”

The plaintiffs have blamed Mayor Bloomberg for keeping the proposal off the ballot last year.

“The fact that the mayor doesn’t like it, that it messes up his control of things, that is his problem,” Judge Stone said.

The proposal did not make the ballot in 2005, even though proponents were able to gather more than 110,000 signatures each time. In an effort to put the proposal to a referendum this upcoming November, a number of parents and educational leaders such as president of the United Federation of Teachers, Randi Weingarten, filed suit last year.

Lawyers for both sides focused their arguments yesterday around a single question: whether city voters had the authority to earmark money passed down from the state for funding education. Advocates of smaller class sizes have said the parents and the general public should vote directly on the matter, but city lawyers questioned whether the city’s charter allows an issue of educational funding to be put to a referendum.

According to data from the mayor’s office, average class size in October 2004 was just under 21 students in kindergarten classes to about 28 students in each eighth grade class.