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Mayor Michael Bloomberg spent Wednesday morning welcoming city kids back to school. But in Lower Manhattan, City Comptroller Bill Thompson was gearing up to unleash an attack on the mayor's education record.

Bloomberg's chief political rival unveiled a new audit claiming the Department of Education misspent tens of millions of dollars the state gave the city to reduce class size.

"It is high time the present administration emerge from a childish Neverland of fantasy education improvement into a real world of results we can believe in," Thompson said.

Thompson claims that nearly 27 percent of the state money allocated through a program aimed at creating smaller classes was misused. In total, that amounts to about $50 million. Thompson says the funds went to schools that either didn't have class size problems or have the space to add new classrooms.

"Had the Department of Education performed even a minimum level of due diligence they would have easily identified schools that should not have received the money in the first place," Thompson said.

The Department of Education shot back at the audit, claiming that the state class size reduction program Thompson looked at is no longer in place.

In a statement, a DOE spokesperson said, "During the audit year, state funding that had previously been allocated for class size reduction was wholly unrestricted. Accordingly, we reject the Comptroller's findings, and suggest that in the future he stick to auditing the administration of programs that actually exist."

Thompson's office said Chancellor Joel Klein had vowed to voluntarily continue the program. The mayor's campaign shot back too, attacking Thompson's record as head of old board of education.

"Under Bill Thompson, graduation rates were flat, test scores were flat, billions of dollars were squandered and school violence was rampant," said Bloomberg campaign spokesperson Jill Hazelbaker.

Thompson says that's all in the past, and that voters should instead look at what's going on today.