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It is a fight over changes to teacher and principal evaluations, as the city and union announced last June that they had agreed on a basic framework to try out new evaluations for the staff at 44 of the city's most struggling schools.

That agreement opened the door for the state to grant the city almost $60 million this school year to improve or replace those schools.

But the agreement last spring was missing the specifics of how the evaluations will work, and now six months later, they still have not agreed.

In June, one of the sticking points was how much student test scores will count toward a teacher or principal's grade.

Now state officials say if an agreement is not reached by December 31, the city will lose close to $60 million and also potentially lose another $80 million in related funds.

Meanwhile, the 44 schools have already been spending the money, so the city could be on the line for millions already shelled out.

Both Schools Chancellor Dennis Walcott and the teachers' union president Michael Mulgrew released statements saying they have been trying to work out these issues and have further meetings scheduled this week.

New evaluations were supposed to be put in place this year for teachers and principals in every school across the state, but that has also been stalled over disagreements with the unions.

This smaller group of city schools was supposed to pilot the larger program.

The only way the state can really hold the city Department of Education accountable is by withholding money. In the past, the state has not been willing to do that, even when the DOE has been out of compliance with various laws and regulations.

The new state education commissioner, John King, says he means business this time.