New Jersey Attorney General Anne Milgram yesterday urged the state Supreme Court to validate Gov. Corzine's revised school-funding system, effectively ending the decades-long lawsuit that has led to enhanced, court-mandated aid for some poor, urban districts.

Milgram said Corzine's new funding formula, implemented during the current school year, provides enough money to meet the constitutional requirement of a "thorough and efficient" education for all New Jersey students, including needy children in districts covered by past rulings.

She hoped to persuade the justices to end the funding requirements that past decisions have ordered for 31 districts - including Camden, Burlington City, Gloucester City and Pemberton Township - covered by the Abbott v. Burke cases.

"We are asking this court to do away with those remedies because the formula gives you what you need," Milgram said in a court hearing yesterday. "All of the needs for a through and efficient education are achieved."

Corzine's plan, she said, is "based on children's needs, not children's zip codes."

But David Sciarra, an attorney for the so-called Abbott districts, said the new plan already has shortchanged those schools.

"We've heard a lot about models. . . . The record that's relevant here is the real world, the reality check, which the state never did," he said.

Sciarra argued that the Abbotts should be able to apply for "supplemental" aid outside Corzine's formula. Milgram said that provision would damage the administration's goals of transparency, predictability and equity.

At stake in the case is a determination for how roughly $8 billion of state money is doled out to schools throughout New Jersey, which could affect property taxes.

If Corzine's plan is approved, it would be the first unified school-funding system since 1976 to get a court OK. It would free the administration and Legislature from court orders that have required billions of dollars in spending for urban districts left behind by past policies. And it could end the Abbott v. Burke case that has guided New Jersey school aid since the 1980s.

The mandates that flowed from that case created one of the most divisive issues in recent state history, driving a wedge between Abbott schools and districts that faced largely flat funding and coped by raising taxes, cutting programs or both.

One of the main points Corzine argued in pushing his reform is that 49 percent of low-income students live outside Abbott districts, in areas that have received little additional help.

The Abbott schools get 55 percent of state aid while educating 23 percent of New Jersey's students.

"We have separated the Abbott districts for too long," Milgram said.

Challenging Sciarra's charge that Corzine's plan doesn't give enough to Abbott schools, Justice Barry T. Albin said: "The governmental purse is not inexhaustible."

Justice Roberto Rivera-Soto asked: "What's so bad about setting a level of fiscal discipline?"

Milgram's presence on behalf of the administration and the audience in the courtroom reflected the importance of the case. Watching the arguments were Corzine chief of staff Ed McBride, Education Commissioner Lucille Davy, retired Supreme Court Chief Justice Deborah Poritz, and former Attorney General Peter Verniero, who argued school-funding cases under Gov. Christie Whitman.

Corzine's funding formula, unlike past systems, is based on a measure of what schools realistically need to educate children, Milgram said.

The plan - developed with the help of educational experts and representatives from the Abbott districts - aims to calibrate how much is needed per pupil for an "adequate" education in each district. Extra money is allowed for low-income students and those with limited English skills, and for districts with high concentrations of "at-risk" children.

Based on enrollment and demographics, the formula spits out a number for what each district should spend. The state pays a share, and each district is expected to contribute a portion locally. Wealthier communities pay more, while poorer ones get more state help.

Under the system, most Abbott districts are overspending and face years of flat aid. With fixed contractual costs growing, Sciarra said, they will be forced to cut back. Some have done so already, he said.

"We don't have to wait to know what's going to happen. We can already see it in the cuts," he said.

Superior Court Judge Peter Doyne, appointed by the high court as a special master in this case, held hearings on the new formula this year and found that it provides the funding needed for education in the state. But he recommended allowing Abbott districts to apply for extra support.

Sciarra urged the court to allow for supplemental aid. He said that past formulas have been undercut by political and budgetary limits, and that this system is likewise vulnerable.

In his proposed state budget, Corzine, facing dire fiscal times, has capped state aid increases at 5 percent, even though many districts are due for much more state support under the formula.

Milgram said applications for supplemental aid would go against the idea of a unified system and "eliminates all incentive for fiscal discipline."

She said some districts have not managed their funds properly. The system will be reevaluated every three years, providing a chance to fix problems, Milgram added.

Five justices heard the case. Chief Justice Stuart Rabner, Corzine's former chief counsel, and Justice Virginia A. Long did not participate.

It was unclear when the court would rule.

If the Abbott case is ended, Sciarra said, another suit could begin if the formula proves too damaging to a thorough and efficient education.

Contact staff writer Jonathan Tamari at 609-989-9016 or jtamari@phillynews.com.