A heated exchange between City School District officials and the dean of the state legislative delegation could signal continuing difficulties for the district as the 2005 budget season approaches.

During a meeting Wednesday at which 16 Rochester high school students were onlookers, Assemblyman David Gantt took issue with the district's plan for spending at least $8 million of a $20 million state loan before an audit of district finances is completed next month.

"I'm not going to let you get away with that," said Gantt, D-Rochester. "It's not something I agreed to. It's not something the Assembly agreed to."

Gantt said the district wasn't supposed to spend any of the money before the state comptroller's audit is finished, and the money could be used only if the audit shows that the district needs it.

"We're not trying to get away with anything at all," school board member Domingo Garcia retorted.

The politicians and Superintendent Manuel Rivera went back and forth over the issue. Rivera said he had a letter that proved the district isn't in violation of any agreement.

After the meeting, Rivera produced the letter. Dated Sept. 17 and sent to Assembly Speaker Sheldon Silver, Rivera commits to using the audit's results to determine the district's actual deficit and then using the loan money to reconcile the deficit. The unused money from the loan, which the district estimates at $11 million to $12 million, would carry over into next year's budget.

"We're not in violation of that agreement," Rivera said.

Gantt did not return calls seeking comment on the district's interpretation of the agreement.

The flare-up was the latest signal of a rift between the school district and Gantt that has been growing over the past several years, since former Superintendent Clifford Janey parted ways with the Rochester school board.

Gantt, who supported Janey, has since championed a proposal that would have taken some control away from the board. Then, earlier this year, Gantt blocked the $20 million loan for close to two months on the grounds that the district was financially irresponsible.

Regina Eaton, executive director of the Alliance for Quality Education, an advocacy group, said struggles such as the one pitting Gantt against the district would be eliminated if the state reformed its school funding methods. She said the current formula leaves districts begging for money from their legislators.

"There is this constant struggle for resources ... for the City School District," Eaton said. "The state doesn't fund any district on the basis of needs."

The Alliance for Quality Education has teamed with the Campaign for Fiscal Equity, a group that brought a successful lawsuit against the state, claiming its funding of New York City schools didn't provide the sound, basic education guaranteed in the state constitution. Both organizations have asked Gov. George Pataki and the Legislature to reform the funding system, but it hasn't happened.

Judy Wadsworth, deputy executive director of the Monroe County School Boards Association, said the current system doesn't put enough money into the regular education budget, so districts have to lobby their legislators for pork-barrel leftovers.

"Additional money is coming from this fund that they somehow have access to through the (Assembly) speaker or the (Senate) majority leader," Wadsworth said. "We are very dependent on their goodwill."

That's why, in a year when the courts are expected to order the cash-strapped state to send billions more to New York City schools, it could be crucial for the City School District to get along with Gantt and the rest of the local delegation.

Pataki is scheduled to release his proposed state budget Jan. 27. His spending plan typically includes less funding for schools than what legislators, such as Gantt, fight for before the budget is adopted.