ALBANY -- A state Appellate Division court rejected a lawsuit Thursday by smaller city school districts seeking billions more in school aid.

The decision ended - for now - the lawsuit by the New York State Association of Small City School Districts that argued the state has failed its constitutional duty to provide enough funding resources to assure a sound, basic education.

The court found that unlike the Campaign for Fiscal Equity, which helped force the state to spend billions more each year for New York City schools, the New York State Association of Small City School Districts lacked appropriate standing in the case to sue the state for more money.

The court upheld a lower court's ruling in the case, begun in 2005, that city school districts can't challenge state government or the state Legislature on constitutional issues.

Although the association led the action, and some parents were added, the court found that an association of public entities that can't sue on their own can't gain the proper standing to sue just because they band together.

The court also ruled that although the association showed low test results and that low graduation was common in the city districts, the case didn't fully prove the harm of the state's funding practices.

The school districts, however, find themselves in a different position than when they lost the first round in state Supreme Court.

Under the new administration of Gov. Eliot Spitzer working with the state Legislature, far more school aid and school construction aid is being appropriated from Albany.

The $123.6 billion budget adopted April 1 includes a $1.8 billion increase in school aid, to about $19 billion a year, near the highest in the nation per pupil.