ATLANTA - A Georgia law that cleared the way for a surge in new charter schools was struck down by the state's top court in a high-profile decision that will affect thousands of students and could reshape how the state's public school system is funded.

The Georgia Supreme Court's 4-3 decision Monday overturned the Georgia Charter Schools Commission, which allowed the state to approve and fund charter schools over the objection of local school boards.

The ruling written by Chief Justice Carol Hunstein concluded that while lawmakers' goals were "laudable," the legislation is "clearly and palpably unconstitutional."

The 2008 legislation sparked a revolt by upset school districts, which filed a lawsuit a year later claiming the commission broke the law by moving millions of dollars of local tax dollars without the approval of local taxpayers.

Charter school supporters say it is designed to re-direct state money to charter schools that need the funding.

In a dissent, Justice David Nahmias asserted the ruling was too broad and that "four judges have wiped away a small but important effort to improve public education in Georgia."

The ruling overturned a decision by a Fulton County judge in May who found the commission was constitutional and affirmed it wasn't breaking any laws by moving money from public school districts to charter schools.

The challenge was filed by school district officials eager to rein in the commission's scope. The districts in the lawsuit are among the state's largest - Gwinnett County, DeKalb County and Atlanta Public Schools - along with four smaller districts: Bulloch, Henry, Candler and Griffin-Spalding schools. At least 37 other districts have signed on to support the challenge.

Charter schools get public support but aren't subject to many regulations that apply to conventional public schools. The commission was created in 2008 by frustrated lawmakers who said they were upset that local school boards were turning down charter petitions because they didn't like the competition.

The commission has so far approved more than a dozen schools that are designed to eventually serve about 15,000 students. Dozens of other charter schools have been approved by local school boards.