The panels of the National Endowment for the Arts need help, a congressional committee was told yesterday.

An extra million dollars would be a good place to start, according to P. David Searles, the Endowment's deputy chairman for policy and planning. He and other Endowment officials were defending the Endowment's budget request before the House Appropriations Subcommittee on Interior and Related Agencies, chaired by Rep. Sidney Yates (D-Ill.).

According to the Endowment, the panels which make the crucial recommendations on grant applications are overworked and underfunded. Not enough panelists are able to visit applicants' operations. Panel meetings, lasting into the small hours, are always held in Washington, though the Endowment would prefer to hold meetings throughout the country.

"We often make decisions on whether to approve travel requests as to whether they're across the Mississippi," said Searles.

"From which direction" responded Rep. Clair Burgener (R-Calif.).

Yates said he was "worried about the fair shake an applicant gets. He also questioned why the National Council on the Arts, the all-star advisory body which approves panel recommendations, places "so much emphasis on policy" and spends only 4 1/2 minutes on an average grant application.

The Endowment's panels, particularly its literature panel, also have been criticized for lax observation of the conflict of interest guidelines adopted by the National Council on the Arts, and for what is said to be secrecy surrounding their proceedings.

But Endowment chairman Livingston L. Biddie Jr. Told the committee that "the regulations are rigorously followed by all panel members." Furthermore, he added, "all panelists are visible and they're known in the field. They are not star-chamber performers in any sense of the word." Citing the large percentage of applications that are rejected, he said it would not be difficult for rejected applicants to surmise that the panelists were biased against them.

Yates brought up the Endowment's conflict of interest guidelines on another matter. Three former program directors of the Dndowment now work on Endowment-financed projects, and Yates read a paragraph from the conflict of interest guidelines: the rules "also govern. where applicable, relations between the Endowment and former council members and former consultant-experts for one year following termination" of their employment.

Though the three program directors in question were not council members or consultant-experts, Yates said he felt the same regulations should apply to them.

Biddle replied that he and the Endownment's counsel had concluded that "these people were unique resources, exceptional cases."

Yates drew a comparison of this situation with former military officials who work on Defense contracts and said, "We have to walk a very tight line when you're making a judgment of quality." He also questioned the Endowment's use of consultants and its dispensation of funds to regional arts councils.

One outside contractor of particular interest to Yates was Cultural Resources, Inc., an organization which is on a renewable one-year contract with the Endowment and formerly occupied offices in the Endowment. Cultural Resources drew Yates's attention because it is led by Carl Stover, who recently proposed replacing the Endowment with another kind of arts agency.

Biddle said he disagreed with Stover's suggestion but he believes Cultural Resources "serves a valuable purpose" in "enlisting other funding sources for the arts." He said he hadn't decided whether to renew the group's contract.

"Don't you think you're being very big about this?" asked Yates. "There's something here that doesn't meet the eye."

At one point Searles explained that each artistic discipline now has two panels, one to plan policy and one to approve grants. The policy panels "think big thoughts," he said.

"Aren't your council members supposed to think big thoughts?" asked Yates. "That's what they want to do."

"They think even bigger thoughts." replied Searles.

"When do you reach the ultimate?" asked Yates.

"My chairman thinks the biggest thoughts," responded Searles.

The hearing continues today.