CHICAGO - The Illinois Appellate Court yesterday upheld a lower court's dismissal of a lawsuit that claims the state's school funding system is unconstitutional.

In its decision, the court rejected claims brought by a group of school districts, parents, and students that the system violates the Illinois Constitution's mandate to provide "a system of high quality public educational institutions and services" because the state fails to correct differences in per pupil spending among districts.

The court ruled that the constitution does not "mandate equal educational benefits and opportunities among the state's school districts as the constitutionally required means of establishing and maintaining an ~efficient' system of free public schools."

A spokesman for Gov. Jim Edgar said that Edgar was studying the decision and would have no immediate comment.

Also rejected by the court was the group's claim that the funding system violates the equal protection clause of the state constitution.

"I think it's the right decision," said Rita Novak, an assistant state attorney general, who defended the state in the case.

However, officials of the Committee for Educational Rights, a school funding advocate group of 75 school districts that is one of the plaintiffs in the case, said they would appeal the decision to the Illinois Supreme Court.

"We expected this decision to go to the Supreme Court, as most cases of this nature in other states have," said Randolph Tinder, superintendent of the Carlinville, Ill. school district and chairman of the committee.

The group vowed to continue fighting in court and in the Illinois General Assembly to change funding for elementary and secondary schools.

"The appellate court affirmed a decision that allows an inadequate, unfair and inequitable system of funding education to continue," said Richard Laine, the committee's executive secretary.

Regardless of the decision, Laine said, "it is very clear the legislature and the governor must answer and must fix the current system of education funding" to create a finance system that is "truly quality."

The suit, which was filed in November 1990, was dismissed two years ago by a Cook County Circuit Court judge who ruled that the funding question belonged in the Illinois General Assembly and not in the courts.

A decision by the state high court to overturn the lower court's dismissal would send the case back to circuit court for trial.

If the schools' case ultimately prevails, Fred Hess, president of the Coalition for Educational Rights, said Illinois could be faced with spending $3 billion a year more on education under a scenario where the state chooses not to fundamentally change how schools are funded.

However, if the state decides to make fundamental changes, as Michigan did earlier this year when it cut property taxes and increased state taxes to raise more state funds for education, Hess said that the cost to Illinois might only be $1 billion.

Meanwhile, school funding has become a campaign issue in the race for governor of Illinois. Republican incumbent Edgar and state Comptroller Dawn Clark Netsch, his Democratic opponent in the Nov. 8 election, have both offered plans to give more money to schools.

Edgar's plan calls for giving school an additional $1 billion through a state and local government matching fund program that would rely on earmarking for education all increases in riverboat gambling revenues.

Netsch proposes to increase school funding by $1 billion a year by raising the state income tax to 4.25% from 3% and in turn reducing property taxes.

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