ALBANY, N.Y. -- The state Appellate Division on Tuesday upheld Gov. George Pataki's stay of a multibillion dollar education funding lawsuit while it's appealed, but agreed to speed the case along by more than seven months.

The mixed decision by the mid-level appeals panel means the lawsuit won by the Campaign for Fiscal Equity won't blow apart the 2005-06 state budget adopted March 31. CFE Executive Director Michael Rebell said any court-ordered payment by the state will likely now be part of the 2006-07 state budget.

CFE sought to have the case heard by the Appellate Division by the end of June _ a year earlier than normal. That would have allowed for a decision and the likely appeal to the Court of Appeals to be concluded before the end of the current fiscal year.

But that's unlikely now because the Appellate Division will hear the full case in October and could take months to render a decision that would almost certainly be appealed by the losing party to the state's highest court.

"CFE will continue to do everything possible to press the governor and Legislature to do the right thing this spring and not allow hundreds of thousands of children to lose another year of their constitutional right" to a sound education, Rebell said.

The Court of Appeals in June 2003 upheld a judge's ruling and found Albany failed to provide a sound education as required by the state constitution. In the current case, the Pataki administration is challenging a new element: Whether the courts are violating the separation of powers by ordering the executive and legislative branches to spend more on school aid.

In November, a court panel ordered the state to pay $23 billion more in operating and capital funding over five years. That would include $1.41 billion more in the first year, increasing to $5.6 billion more per year. New York City schools now get about $5.85 billion of the state's $15.4 billion in annual school aid.