The 2003 New York State Court of Appeals ruling in the "Campaign for Fiscal Equity" ("CFE") case has created a historic opportunity to reform New York City's troubled schools. This opening was created because the court not only required changing the state aid formula to ensure a "sound basic education" for all New York City pupils, it also ordered that city schools be accountable for actually producing results. Unfortunately, as the deadline approached for presenting the trial judge with a plan to rectify the situation, state officials seemed focused on increasing funding statewide without mandating change in how the city manages its schools. Twenty years of evidence shows that increasing school aid without structural reforms will not improve city schools. Between 1982-83 and 2001-02, total revenues for public education in New York nearly tripled--and the state's share of education funding grew even faster in New York City than elsewhere. What did increased funding buy? More staff and higher salaries, mainly. Nonetheless, city schools did not improve, according to key pupil performance measures. The data point to the city's real problem: poor management. The teachers contract prevents administrators and principals from effectively using the increased number of teachers to significantly reduce class size. Contractual restrictions and budget allocation policies in the New York City school system help to ensure that the least experienced, lowest paid teachers are assigned to poorly performing schools. The author concludes that "CFE" can be the lever for changing a very flawed and wasteful approach to public school funding in New York State. But if the case simply results in a new cycle of "leveling up" spending across the board, on the same basis as the huge school aid increases since the early 1980s, it will be the latest cruel hoax to be foisted on both the state's most needy students and its taxpayers. (Contains 5 figures, 12 tables, and 38 endnotes.)