Public School 18 is housed in a converted candy factory a block from the Harlem River in New York City.

Crystal Felix teaches her sixth-graders in a windowless room. Rosemary Salce, the school's guidance counselor, uses a bathroom as an office. Principal Aurea Porrata-Doria worries because there are no crossing guards to help her pupils cross the four lanes of upper Broadway.

P.S. 18 is neither the worst, nor the best, of New York City's public schools. But it is the kind of school the state Court of Appeals had in mind when it ordered Albany to provide more funding for the city school system.

"We never get enough money for what we need," Porrata-Doria said, ticking off a checklist that included literacy and math supplies, science materials and books. "Dictionaries are a luxury," she said.

While education is arguable the most important service the state provides, the Legislature and Gov. George Pataki havn't come to grips with the fact that many public school pupils on New York City are not getting the "sound basic education" required by the state constitution.

Albany ignored the court order, and the Court of Appeals has created a committee to devise an equitable school aid formula. Part of that evaluation may look at the STAR program, which relieves suburban homeowners of some of the school tax burden, but offers much less relief in urban areas.

Of course, not everyone sees money as the sole solution to the problems in the big city's sprawling school system. Some point to the KIPP system of charter schools as an example of how schools can succeed with less. Other critics contend wasteful spending diverts resources from the classroom.

But Richard Mills, the state's education commissioner, said in an exclusive interview that it is not only the amount of money, but the way the money is distributed, that is at issue. "We haven't resolved the inequities in the state-aid system," he said. "That's self-evident."