Paterson Sued Over Money Withheld From Schools ALBANY - A coalition of teachers" unions and local school officials mounted a legal battle on Wednesday against Gov. David A. Paterson, arguing that his decision to unilaterally withhold hundreds of millions of dollars in scheduled payments to school districts violated New York's Constitution. Alan B. Lubin, vice president of a state teachers' union, said it was "a terrible thing to have witnessed" state money being revoked. The educators asserted in a lawsuit filed in State Supreme Court in Albany County that Mr. Paterson had no power to withhold money after its expenditure had been authorized by the Legislature. "This is a terrible day in New York's history," said Alan B. Lubin, vice president of the New York State United Teachers, one of the groups that helped draft the lawsuit. For this coalition to stand back and watch the governor take the money that was allocated by the State Legislature for schools, for programs, for children, and pull it back, is really a terrible thing to have witnessed. Mr. Paterson announced Sunday that he would withhold the money after weeks of failed negotiations with the Legislature over how to close a $3.2 billion deficit. He also said that if the economy did not improve and if state revenues did not rise next year, the money being withheld could become the basis for cuts in next year's budget. At a news conference at the Capitol minutes after the lawsuit was filed, Mr. Paterson reiterated that the payments being withheld were part of the roughly $750 million in local aid that he was not distributing because the state was projected to run out of money before the end of the year. "I am being sued for trying to keep New York State's finances solvent," Mr. Paterson said. This is a desperate attempt by special interests to put their needs ahead of the people of the State of New York. This lawsuit does nothing to help us solve a severe cash crisis that threatens our ability to pay our obligations at the end of the month. The lawsuit was filed by the state teachers" union and groups representing school district superintendents, school board members and administrators. Leaders of the groups suggested, in a news conference on the steps of the Capitol, that children would suffer if the money, about $582 million in school aid and property tax reimbursements, was not restored. School district officials also suggested that they should not have to dip further into their own reserve funds - which total $1.1 billion statewide - before Mr. Paterson had exhausted the state's own emergency fund. L. Oliver Robinson, president of the New York State Council of School Superintendents and superintendent of the Shenendehowa School District outside Albany, said Mr. Paterson's decision would force cuts in critical services. "When I go back to my school district," he said, "and meet with the kids in classrooms, the questions they're asking me are, "Dr. Robinson, will we still have this? Will we still have sports? Will we still have music? Will we still have robotics?" " A spokesman for Mr. Paterson said that the governor's order meant that $120,000 was being withheld from Mr. Robinson's district and that the school system had about $3.8 million in reserve funds. Mr. Lubin proposed options to avoid the loss of school aid. Mr. Paterson, he said, should consider buying prescription drugs for state health plans from Canada, cooperative purchasing of school supplies or higher income taxes on the wealthy - a move that would raise taxes on high earners for the second time in less than a year. "I would have him look at the revenue sources available in New York State, and some of the programs that he's refused to look at for the past 16 months," Mr. Lubin said. Mr. Paterson singled out school officials and advocates for criticism, noting that while he had tried to delay payments equally across the board, those who filed the lawsuit were in essence arguing that their funding was sacrosanct, even amid the worst state fiscal crisis in a generation. "What these school districts and unions and otherwise have done is said: "We aren't the special interests - we're extra special," " Mr. Paterson said. " "We're supposed to get all the money and everybody else can just divide up the crumbs." "