Albany - The state's highest court struggled for guidance yesterday in defining a "sound, basic education" as it heard arguments in a landmark case that could force the state to funnel more money to schools, including an estimated hundreds of millions of dollars to New York City.

Saying the state has a constitutional duty to provide a "meaningful high school education" to every student, the Campaign for Fiscal Equity, an umbrella group of children's advocates and educators, pressed the Court of Appeals to dictate the standards of a basic education and to force the state to analyze the cost.

The Campaign, which is pressing a final appeal of its 10-year-old case, contends that the state's arcane formula for doling out school aid shortchanges New York City and other districts with high concentrations of poor students, depriving them of their constitutional right to a sound education.

But the cost, potentially a billion dollars more in statewide education funding, clashes with the state's budget realities.

"Isn't ability to pay also relevant?" Associate Judge Richard Wesley asked Michael Rebell, executive director of the Campaign.

Several of the six judges repeatedly asked attorneys on both sides what they would consider a basic education. Is it the eighth-grade level as the Appellate Division ruled in favor of the state, the Regents diploma now required, the "adequate education" advanced in the state's case, or the "meaningful" one advanced by the Campaign?

"Basic competence," answered Deputy Solicitor General Daniel Smirlock, arguing on behalf of Gov. George Pataki.

Such answers led to more questions during the two-hour hearing, double the time usually given to Court of Appeals cases. The judges questioned what data, including dropout rates, ability to serve as jurors and post-school job salaries, should be used to determine whether the state had met its constitutional duty to students. They said they didn't want the issues to be tied up in what Associate Judge Albert Rosenblatt described as a "50-year morass of litigation," which has happened in other states.

Some of the judges disagreed that a Regents diploma - which requires passing grades in four Regents exams - was necessary to be "competitive" and to avoid "menial" jobs in modern times, as attorneys Rebell and Joseph Wayland argued for the Campaign for Fiscal Equity.

Wesley, whose wife is a kindergarten teacher, said his law clerk is "brilliant" even without a Regents diploma and that he's grateful to his auto mechanic when his car breaks down.

"I like to go find my mechanic who has a high school diploma and not a Regents diploma and he does very well, thank you," Wesley said. "Don't you agree you don't have to pass earth sciences to understand global warming, campaign finance reform ... ?"

But the judges also sounded troubled by state and Appellate Division arguments that pointed to an eighth-grade level education as sufficient.

"I wouldn't peg it to a grade level," Smirlock said. He said some students learn quicker than others, but by 11th grade, the "vast majority" of students possesses basic education skills.

Smirlock downplayed education statistics that Rebell cited in an attempt to prove the public schools were in the midst of a "sustained" and systemic failure. For example, he said the 30 percent dropout rate was misleading, partly because that counted students who may have failed to prove they transferred to another school district, and instead said the average city dropout rate was 5 percent, just above the 3 percent average statewide.

Earlier, Wesley noted a "multitude of socio-economic" causes, rather than funding, could be blamed for the dropout rate.

Smirlock blamed many of the woes on the now-defunct city Board of Education, rather than on funding, and pointed to the city school reorganization as a better fix than a court ruling that would set policy, stepping on the toes of the State Legislature.

Wayland countered by saying it's foolish for the state to say "trust us" in making sure students get a good education. "We had a constitutional violation for two decades," he said. "We can't trust them. They must be told."

A ruling is expected by the end of the court session on June 30.