The debate is on in Albany: Will performance based competitive grants help schools across the state, or just a select few? $250 million is waiting for schools that show performance improvement and management efficiency. But as our Brian Dwyer reports, many smaller and rural upstate schools aren't bothering to apply because they feel cuts have already made it impossible to compete.

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WATERTOWN, N.Y. -- Watertown Superintendent Terry Fralick says having Deputy Education Secretary David Wakelyn visit the district this week was a great opportunity to show, not just discuss, the need for more aid. Three of his schools are on the list for improvement.

"Last year we let go 15 teaching assistants and six teachers. We cut back on three major instructional programs. We want to restore as much of that as we can. That's how we get student achievement up where it should be," said Terry Fralick, Watertown CSD Superintendent.

And herein lies the debate. Governor Cuomo says New York State will not continue to be number one in education spending and near the bottom in performance.

"As a former mayor I can tell you one story after another of our school district, the money we would put in and the money per capita per students sometimes did not show the results we intended," said Lt. Governor Bob Duffy.

In his Executive Budget, Cuomo has even set aside $250 million to be given out as competitive grants for both performance and management efficiency.

"I think it's important considering the tough times that we've had, that we need to generate some new ideas that can be shared about how to save money across districts," said Deputy Education Secretary David Wakelyn.

But so many smaller, rural schools upstate are in the same situation as Watertown, saying the performance can't improve if the money isn't there to help. In fact, some aren't even going to bother applying for the grants, feeling they have no shot.

And now the push is on to get that money freed up and spread around all schools.

"Right now the schools need the aid so they can keep running and provide the courses that the students need to get into college and be able to compete," said Patty Ritchie, (R) State Senate.

But the administration doesn't want to budge, saying the grants represent only one percent of total aid.

"That's why we've got 99 percent of the state aid directed to the formula. That provides and helps with teacher salaries and staffing positions and things like that," said Wakelyn.

"If anything I would like to see the performance expanded in the future," said Duffy.

But Senator Ritchie isn't giving up, telling us her conference's Senate budget plan will include that grant money being moved to direct aid.