ALBANY - The state Board of Regents on Monday proposed a $1.94 billion increase in school aid for the 2008-09 fiscal year, which if adopted would bring total school aid to more than $20 billion a year for the first time.

The proposal would drive most of the increase to high-needs, mostly urban schools in an attempt to reduce the performance gap between students in poor districts and those in wealthier ones.

The proposal would work through the “foundation aid” system of directing state aid adopted earlier this year. That system replaced complex formulas that the Regents said failed to provide aid to the schools that needed it most.

The Regents proposal released Monday would increase school aid to New York City by $783 million, to a total of $8.1 billion. In the current fiscal year, New York City schools get $7.3 billion, after an increase of $616 million in the 2007-08 budget adopted in April.

The current amount of school aid statewide is $19.5 billion, after the Legislature and Gov. Eliot Spitzer agreed to a 9.5 percent increase over the previous fiscal year, worth about $1.8 billion.

The proposal now goes to Spitzer who will consider it while drafting his 2008-09 budget proposal expected in January. That proposal would then go to the Legislature, which will try to reach agreement on a budget by the April 1 start of the fiscal year.

Earlier this year, the Spitzer administration warned that declining revenues will make the 2008-09 state budget now being crafted difficult because of a projected $3.6 billion deficit and Spitzer's promise of no tax increases.

Spitzer budget officials said the executive budget to be presented in January will likely increase spending by more than 5 percent before it goes to the Legislature. The Legislature usually adds $1 billion to $2 billion to the budget.